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The Year in Review



For printing ink manufacturers, 2013 has been a fairly good year, with packaging, inkjet and UV continuing to be highlights.



By David Savastano, Editor



Published November 27, 2013
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The Year in Review
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Rick ClendenninFor ink manufacturers, 2013 has been a fairly good year. In particular, packaging printing continues to be a good area, and raw materials have stabilized, although prices remain high.
For printing ink manufacturers, 2013 has been a fairly good year, with packaging, inkjet and UV continuing to be highlights.

Siegwerk CEO Herbert Forker said that Siegwerk did well this year.

“We were able to increase our financial performance and grow as planned in the emerging markets,” said Mr. Forker. “Our focus on packaging inks is especially paying off, benefiting from rising demands, especially in countries like China and India, where we have a strong presence. However, like our competitors, we are still facing volatile raw material prices, and the publication ink market is decreasing even faster than expected. Overall, we are confident that we will close 2013 with a good result.”

“We are enjoying a good year considering the economic atmosphere and the uncertainty surrounding all of us in the marketplace, especially in some segments,” Rick Clendenning, president and CEO of INX

Herbert Forker
International Ink Co., said. “We did a lot last year to prepare for 2013, and it helped tremendously to show the improvement we are experiencing as of mid-October. I expect a strong finish in the fourth quarter and am optimistic as we approach 2014.”

John Copeland, president and COO of Toyo Ink America, LLC (TIA), said that overall, Toyo Ink America improved in most segments.

“Our sheetfed sales are up again over 2012 levels,” Mr. Copeland noted. “UV ink sales are improving and are well into double-digit growth areas. Water and solvent flexo sales were flat for us. There are many new flexo opportunities we expect to benefit from in 2014.”

“Considering that many print market segments remained stagnant, the adjustments we have made to our business are beginning to pay off in

T.L. Hensel
2013,” said James LaRocca, COO of Superior Printing Ink.

“Overall, Wikoff Color’s sales are on pace for modest growth in 2013 compared to 2012,” said Geoff Peters, Wikoff Color’s president and CEO. “Not all of our markets are as strong as they have been historically, but we have seen very good growth in other markets to offset that weakness.”

“With some printing industry segments and local markets weakening, the turnover was behind the expectations,” said hubergroup CEO T.L. Hensel. “The hubergroup continued to adjust its structure for improving effectiveness and service to the customer. Efficiency improvements and new products have created benefits which contributed to the sustainable business of the group.”

Bill Miller, president Print Media at Flint Group, said that 2013 was another tough year for the printing industry,
and Flint Group felt the impact.

Geoff Peters

“Still, our long-term strategies remained in place, helping us maneuver through current conditions and keeping us strong,” Mr. Miller added. “In fact, even through the ups and downs, we continue to invest in our businesses to help customers remain competitive. As in years past, the packaging industry in 2013 fared better than the Print Media industry. That trend is likely to continue into the foreseeable future, but changing trends and new technologies will bring new possibilities in both market segments. The ink industry has a tough road to hoe, but there is also a lot of room for continued success.”

Felipe Mellado, chief marketing officer, Sun Chemical, said that Sun Chemical has had a very successful 2013.

“We developed new groundbreaking solutions for the marketplace, showcased our leadership in the industry, invested in the construction of

John Copeland
new state-of-the-art facilities, developed a new customer-focused website and proudly provided the inks and services that helped some of our customers to achieve significant worldwide honors,” Mr. Mellado said. “All of our accomplishments in 2013 have occurred because of our focus on meeting the individual needs of our customers and helping them grow their businesses and succeed.

“Some of our customers produced printed materials using Sun Chemical inks that were named either ‘Best of Show’ or the ‘Best of the Best’ in global competitions,” Mr. Mellado added. “We have also made key investments in new manufacturing facilities that allow us to better serve our customers. Most importantly, we have seen marketplace needs and provided solutions to help address those challenges our customers are facing. From high speed inks that avoid print defects to metal decorations solutions or a water-based dispenser program for the flexo/narrow web markets, we have found ways to provide products and services that meet the goals our customers want to achieve.”

Felipe Mellado

Growth in Printing, Ink Industries

Leading ink industry executives say there are growth areas in printing, such as packaging, digital and energy curing, while publication and commercial offset continue to struggle. Meanwhile, Asia Pacific and Latin America are growing more rapidly than North America and Europe.

“Print media offset and newsprint are currently sore spots, and those markets unfortunately don’t have an exciting forecast,” Mr. Hensel said. “All ink makers know that packaging printing is quite stable compared to the previously mentioned segments. The focus of the larger ink manufacturers is on all areas of packaging printing applications. Market dynamics are not extremely high anywhere, given the slow global economy.”


Ed Pruitt
“It is a mixed picture,” Mr. Forker said. “There are regions like Asia and Latin America where we encounter a rising demand for inks, but there are also lowlights, especially the European publication gravure market, which shows disastrous tendencies, while European heatset and coldset markets are still declining. I am not expecting any long-term recovery here.”

“Everyone in our industry knows that the commercial offset segments continue to suffer, which every company has dealt with for the past several years,” said Mr. Clendenning. “The product volumes available for ink makers to compete in this area are shrinking even more than anticipated. Our industry continues to build idle capacity, which causes other problems that hurt the industry even more.”

Mr. Clendenning said that INX International Ink’s activities in the packaging and digital segments are strong and growing.

“We are very fortunate to be in multiple business segments and have the technology to support and offer our services to many types of printers,” Mr. Clendenning added. “We have good people who are flexible and cross trained, so this helps when we need to redeploy valuable resources into areas of growth and react to new opportunities.”

“A number of markets in the printing industry, especially packaging and label, have recovered nicely, but there are a few that are struggling,” Mr. Peters said. “In the ink industry, just like last year, some companies, including Wikoff, are experiencing good top line growth. Bottom line growth continues to be under pressure, however, due to raw material costs remaining at relatively high levels compared to prior years.”

“We have not seen overall growth in offset printing. However, we continue to see modest growth in the packaging producers,” Mr. LaRocca said.

“Commercial printing is still slowing down even though our sales are growing,” said Mr. Copeland. “Energy curable UV and EB printing is on the rise in all print segments. Flexo continues to grow at steady and increasing rates.”

“From a market perspective, we have seen continued growth in the packaging market overall and significant growth in the flexible packaging segment in particular,” Mr. Mellado said. “The packaging market faces different challenges than other market segments, such as migration, the push toward smaller package size, recyclability and other efforts to reduce the impact of packaging on the environment, but these challenges are great opportunities for growth at Sun Chemical. We’re working with brand owners and major packaging groups to provide them with solutions for specialized packaging.”

Mr. Mellado said that energy curing and inkjet were strong markets for Sun Chemical.

“At Sun Chemical, we saw growth in the UV/EB market in 2013 compared to 2012,” Mr. Mellado noted. “UV inks for commercial sheetfed were up marginally, with most growth coming from the packaging market, especially UV flexo, narrow web, tag and label, folding carton and other emerging applications in flexible packaging. We have seen continued growth in wide and super-wide formats in the graphics market. Narrow web and label opportunities have increased as digital press capabilities are being realized. Imprinting and personalized print applications have grown in all geographies, and we have seen deployment of systems designed for commercial print and publication markets using aqueous ink technology.”

Raw Materials

For ink manufacturers, raw material supply and pricing were major concerns for the past few years. While supply and costs have generally stabilized during the past year, albeit at higher levels than before, ink industry executives remain cautious.

“This topic will remain important in the coming years,” Mr. Forker said. “Though the global demand is rising, reduction of production capacities jacks up the prices again and makes them hard to predict. We were able to absorb some price increases with our excellence programs and spare our customers, but of course this approach has its limits. To remain successful, we have been investing a lot of effort into finding alternative raw materials and establishing multi-supplier solutions. I am confident that our extensive know-how and our global research projects continue to contribute to cost savings. Still, price increases have been unavoidable in the past and I expect the same for the future.”

Crude oil, gum rosin and pigment intermediates are areas that Ed Pruitt, chief procurement officer for Sun Chemical, is watching closely.

“Despite the improved stability we have enjoyed in a number of raw materials in 2013, there are several key areas that expose ink manufacturers to continuing cost and supply risk,” said Mr. Pruitt. “The first is crude oil, which impacts the cost of petrochemicals and many other oil-derived raw materials. Geo-political events in 2013 drove up the price of oil for an extended period and we will continue to face that type of risk for the foreseeable future.

“Secondly, gum rosin prices out of China have risen by more than 70% in 2013 as gum sellers and traders have been attempting to force a rebound in prices,” Mr. Pruitt noted. “Other global producers of gum rosin have also started to raise prices, and we are seeing the impact in increased costs for rosin resin, a key raw material for offset printing. Whether these current high prices can persist in the face of relatively moderate demand will be a key question and risk for 2014.

“Finally, the supply and cost of pigment intermediates continues to be heavily influenced by the growing efforts in China and India to address significant environmental issues,” Mr. Pruitt added. “Many industrial areas in these countries face overtaxed waste water treatment plants, excessive emissions or discharges from manufacturing sites, or general public safety concerns. As governmental officials take actions to improve regulatory compliance by the chemical producers in these countries, we have increasingly experienced disruptions to the pigment intermediates supply chain, and as a consequence to the availability and cost of classical pigments. We expect this supply and cost risk to remain a key concern for the next several years.”

Mr. Peters said that compared to 2010 and 2011, raw material prices have been relatively stable, but he also pointed to pigment intermediates and gum rosin as areas of concerns.

“There are a few areas we are watching closely,” Mr. Peters said. “Supply of pigment intermediates, particularly those used to produce reds and yellows, is becoming more of a concern. Most of these materials are produced in China, and the Chinese government’s continued effort to clean up the environment has resulted in some factory closures. As supply of these pigment intermediates tightens, upward pressure on pigment prices is a possibility. We have also seen a recent rise in Chinese gum rosin prices. This has not yet trickled down to our rosin resin prices, but higher gum rosin prices were a major factor in the drastic rise in rosin resin prices in 2010.”

“Some raw materials have stabilized on a rather high level,” Mr. Hensel said. “Some have fallen over the last 12 months but were more than compensated by others, such as pigment precursors, to mention only one example. The most recent, dramatic development is the spiking gum rosin yet again. In general, availability of raw materials is better than two years ago.”

“Raw materials are always a concern in recent years,”said Mr. Copeland. “We do not feel any great shortages or problems as of now. Toyo is continuing to improve our global supply chain systems to meet future needs and growth.”

“We have seen some stabilization with raw materials but not all,” said Mr. Clendenning. “The problem is overall, raw materials have stabilized but at much higher levels, and it doesn’t appear prices will drop anytime soon. Raw material cost continues to be our biggest concern as we enter 2014.”

Highlights from 2013

For the most part, 2013 was a quiet year in terms of mergers and acquisitions, but the ink industry had a number of highlights during the past year. For example, Mr. LaRocca noted that Superior Printing Ink installed its cartridge filling equipment, which is now is 100% operational.

For Wikoff Color, 2013 has seen the company grow its inkjet operations and expand further into international markets.

“We were extremely pleased with the continued growth of our inkjet business in 2013 and the ongoing expansion of our international markets,” Mr. Peters said. “Sales to flexible packaging and label customers once again experienced double digit growth rates. Our two newest branches, one in Leeds, England, and the other in Sacramento, CA, both had outstanding results in their first full year of operations.

“And of course, we couldn’t be more pleased with the customer reception of our new inkjet cleanroom and manufacturing facility,” Mr. Peters added. “Wikoff was also very proud to celebrate the first two 50-year employees in the company’s history – which we attribute in large part to our employee-ownership culture.”

Mr. Forker said Siegwerk emphasized improving its operations and adding new food packaging inks.

“To globally improve our performance, we introduced excellence initiatives in all major functions,” Mr. Forker said. “We strive for improvement in all parts of the value chain to remain a valuable partner for our customers. Managing a worldwide matrix structure, I am excited to see how our regions and business units grow together and Siegwerk really acts as a global player. Furthermore, sustainability is becoming increasingly important to our customers and Siegwerk acts on this. Already in 2008, the board committed to a sustainability resolution and the efforts pay off.
 

“We introduced a new ink series for food applications, Tempo NUTRIPACK 2, which fulfils the highest standards of low migration,” Mr. Forker added. “We are also the first ink producer to make available all product safety data sheets online, so that customers can easily access them. And in everyday work, we continuously reduce the carbon footprint of our products by recycling solvents and reducing energy, waste and water consumption.”

Toyo Ink also is expanding its operations.“TIA high performance UV inks are performing well in the market place and are a bright spot for us,”said Mr. Copeland. “Another subject of anticipation is our new 70,000 square foot location in Carlstadt, NJ, slated to open around the middle of the year.”

Mr. Clendenning noted that INX International is celebrating the promotion of Dr. Kotaro Morita to Sakata INX president.
 

“A few months ago in June, we were very excited for INX International’s chairman, Dr. Kotaro Morita, as he was promoted to president of Sakata INX,” said Mr. Clendenning. “Dr. Morita has helped us here in the U.S. for years in many management roles, starting with his assignment in R&D. We look forward to supporting him with his new responsibilities. We have a strong global group of companies that are working closer together under Dr. Morita’s guidance and leadership, offering Sakata’s technologies and services to our many customers with worldwide needs.

“Also, we were all very proud and pleased when John Hrdlick, INX International’s senior vice president and chief operating officer, was honored at the 2013 NAPIM Convention in April. He was presented with a Printing Ink Pioneer Award for his dedication and support of our industry throughout a nearly 40-year career,” Mr. Clendenning added.

 

Mr. Mellado reported a number of highlights at Sun Chemical. Outside of a wide variety of new inks, Sun Chemical Performance Pigments opened its new state-of-the-art pigment dispersions manufacturing facility and on-site technical service labs in Rio de Janeiro, Brazil.
 

The company also reinforced its commitment to printers and brand owners operating in the narrow web tag and label, wide web, folding carton, and corrugated markets, with the opening of its new flexographic printing plate manufacturing facility in Concord, CA in July. As part of the investment, Sun Chemical upgraded its Maumee, OH facility by adding a mirrored digital HD sheet photopolymer system.
 

Fernando Tavara was named president of Sun Chemical Latin America and is responsible for all of Sun Chemical’s Central and South American and Caribbean ink business. Mr. Tavara brings 30 years of experience and knowledge to the position, most recently as vice president of sales at Sun Chemical Latin America where he managed all sales and operations from Mexico throughout Northern Latin America, including the Andean Region, the Caribbean and Central America.
 

Tom DeBartolo, a technical director for Sun Chemical, received the 2013 National Association of Printing Ink Manufacturers (NAPIM) Printing Pioneer Award.
 

Flint Group strengthened its sheetfed operations in Europe and introduced new inks for narrow web and packaging.
 

“In Europe, we have expanded and strengthened our sheetfed packaging organization with additional technical resources and a completely dedicated business development team,” said Peter Baird, marketing director – Sheetfed Europe for Flint Group. “In addition, we have added resources into our UV sales and applications team by appointing a business development director and revamping our entire UV ink and coatings range, including innovative low energy curing and LED inks.”
 

Meanwhile, Flint Group’s global narrow web team developed and launched more than 25 new products as of September 2013, including Lithocure ANCORA, the newest range of UV offset inks designed to meet the most stringent migration performance criteria for all types of narrow web label and food applications, and EkoCure, UV LED inks for UV flexo and UV rotary screen.
 

On the packaging side, Flint Group launched FlexiBase HDP high definition solvent flexo bases for process printing, designed for surface and reverse coated flexographic printing for use on bags and pouches; Veloce family of high speed surface and lamination whites; and Ultraking 4500 LM Premium and Ultraking 4600 LM PLAS Premium low migration UV curable offset inks for food packaging applications.


Expectations for The Coming Years

Ink industry leaders know that while there is growth, there are also challenges ahead that must be faced.

“In the years to come, we will follow a two-fold strategy,” Mr. Forker said. “On the one hand, we put our focus on profitable growth in the emerging markets. This is crucial because our customers in countries like India, China or Brazil are growing, and they expect us to follow their example. In these markets, we are heavily investing in infrastructure and capacity and thus giving evidence to our customers that we will remain reliable suppliers.

“On the other hand, we will all face stagnating or even decreasing volumes in the European markets and the U.S.,” Mr. Forker added. “For some areas like publication, the downward trend will continue, and the raw material situation remains uncertain. So it will be essential for us to put all our efforts into restructuring and efficiency-increasing projects. We are investing more money in our supply chain than ever before, in equipment as well as in process development. It is our aim to supply our customers with competitive prices while keeping the renowned Siegwerk product quality. We want to remain a reliable partner.”

Mr. Mellado said that whether it is costs, sustainability or compliance issues, customers face more challenges than ever.

“These challenges our customers have faced require a change in the way they do business,” said Mr. Mellado. “Our customers have to know that we are here to help them with their problems.”

“We expect to continue to be successful with our products and our service-oriented strategy,” Mr. Hensel said. “The ink industry faces hard times due to eroding margins and the high level of competition. It is not a secret that failure of single companies from the ink industry cannot be excluded any longer. The overall expectations for the ink industry are such that in a stagnant global market, growth can only be achieved by those with the most effective structures and the best business model. We would expect to see some changes in how the market is served and the strong effort to create maximum customer retention.”

“We have great products in all areas we are focused on,”said Mr. Copeland. “We are excited as we open up new modern manufacturing and blending sites here in the U.S., so there is a lot of optimism for both the near and long term future of TIA.”

“In spite of the inroads into the print marketplace by the electronic media, I’m optimistic about the near future of the ink industry providing we focus on, and invest in, the development of new print application products and technology,” Mr. LaRocca said.

“My expectations for INX International in 2014 and beyond are positive, even though I do not expect the industry to change much in the short term,” Mr. Clendenning said. “I am optimistic because we are very fortunate to have dedicated resources and strong technologies, and we continue doing the right things to support our industry and customers in all of the segments we service.”

“Wikoff Color expects very good growth in 2014,” Mr. Peters said. “In addition to strong sales in our traditional markets, we are forecasting continued expansion of our inkjet and international businesses. We expect that the ink industry will continue to work its way through the uncertain global economy, but we would not be surprised to see further consolidation in the industry in the coming years.”

For more information on The Year in Review, including highlights from the past year, see the online version of this story on www.inkworldmagazine.com.
 


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