David Savastano, Editor11.01.14
The printing supply chain has undergone major changes. As the publication market contracts, consolidation on the publication and commercial ink side has been occurring frequently, with the latest major acquisitions – R.R. Donnelley acquiring Consolidated Graphics in 2013 and Quad/Graphics purchasing Brown Printing this past May – further shrinking the number of large printers.
Meanwhile, the packaging industry has been strong, and while there is consolidation as well on that side of the printing industry, all signs point to further growth.
On the raw material side of the supply chain, acquisitions have contracted the number of suppliers of key ingredients, with Eastman’s proposed acquisition of Taminco for $2.8 billion in September the latest major merger of note.
The printing ink industry has been relatively quiet in the area of mergers and acquisitions, but that changed in 2014 with two significant moves. The most significant was the acquisition of Flint Group by Goldman Sachs Merchant Banking Division and Koch Equity Development LLC from funds managed by CVC Capital Partners. The acquisition was finalized on Sept. 5, 2014.
The number one or number two supplier in most of the market segments it serves, Flint Group operates nearly 140 sites in 40 countries and employs approximately 6,600 people. Flint Group had reported sales of $2.9 billion in 2013.
With estimated annual sales of $115 billion in 2013, Koch Industries, Inc. is one of the largest privately-held companies in the world. Its products range from building and consumer products, transportation fuels, electronic connectors, fertilizers, fibers, membrane filtration and pollution control equipment. Among its subsidiaries is Georgia-Pacific LLC.
Antoine Fady, CEO of Flint Group, said the acquisition offers new opportunities for the company.
“The management team of Flint Group is excited about this planned new ownership, and the opportunities this now presents,” said Fady. “The investment by Goldman Sachs Merchant Banking and Koch is a clear vote of confidence in our vision, strategic plans, and ‘can do’ culture. Flint Group now goes forward with a much stronger capital structure and additional flexibility. With that, we can put greater momentum behind the strategies that have already made Flint Group an industry leader. Ultimately, that benefits everyone we do business with.”
The other major acquisition was American Inks & Coatings’ (AIC) purchase of Color Resolutions International (CRI), which was competed in May 2014.
The merger combines two of Ink World’s 2013 Top 20 North American ink companies. Headquartered in Pine Bluff, AR, AIC is the 11th largest North American ink manufacturer, with sales of $100 million in ink and coatings in 2013. CRI, located in Fairfield, OH, was the 19th largest North American ink company in 2012, with estimated sales of $55 million.
AIC and CRI were both focused exclusively on packaging. AIC is primarily in flexible packaging, specializing in water- and solvent-based flexo and gravure inks and coatings as well as UV and EB coatings. AIC also has a leadership position in the multi-wall bags and gift wrap segments. CRI largely concentrated on corrugated printing.
“With the merger, the combined companies are well positioned to focus on the changing needs of both the flexible packaging and corrugated market as they continue to consolidate,” Jerry Mosley, AIC’s founder and CEO, said.
While these two deals were the major highlights of the past year for the printing ink industry, there was plenty more happening in the industry. For the most part, the industry’s largest ink manufacturers reported good years in terms of sales, particularly on the packaging ink side.
Siegwerk CEO Herbert Forker noted that so far, 2014 was again successful for Siegwerk, with a continued solid financial performance and slightly increased sales compared to last year.
“With regards to regions, not surprisingly the North American market has stagnated on the high level of recent years,” Forker noted. “The same holds true for the European market. In Asia, we experienced significant growth.
“To support this development, we substantially invested in infrastructure and people,” Forker added. “Broken down to divisions, our packaging segments have continued to prosper, whereas, in line with the general market, our publication segments suffer from consolidation on the customer side and declining volumes.”
Rick Clendenning, president and CEO of INX International Ink Co., reported that INX International and its parent company, Sakata INX, both are having strong years.
“Through the first three quarters, we have done well and I hope it continues as long as the volumes do not drop too much in the last quarter,” said Clendenning. “We expect some drop off during the holiday months, but are looking for a stronger finish than we normally experience during this time. Globally, both Sakata INX and INX International are doing well. We saw some downturn in business in some European markets, but I’m hoping it will improve for 2015. Our worldwide inkjet business continues to grow with many opportunities coming our way.”
“Business remains challenging due to the high raw material cost, which – up to now - has been largely absorbed by the ink makers,” said Robert Doerffel, corporate communications Europe, MHM Holding GmbH. “Ink market conditions in North America are similar to those in other large economy areas and not far from the situation a year before. The hubergroup is continuing to work on growing the packaging printing inks sector with success, and even if the industry would appreciate to see more positive signs in the overall market dynamics, realistically that is unlikely to happen.”
Geoff Peters, president and CEO of Wikoff Color, said the company enjoyed an excellent year in terms of sales.
“Wikoff Color fared well in 2014 with strong growth in the narrow web label and flexible packaging markets, in addition to energy-curable inkjet growth,” Peters added. “Moderate growth in the folding carton and commercial markets also contributed to one of Wikoff’s best revenue years ever.”
John Copeland, president and COO, Toyo Ink America, reported that UV is a highlight for Toyo Ink.
“Toyo Ink America had a slow start for the year,” said Copeland. “Our commercial sheetfed and packaging business have been relatively flat. However, in the second and third quarters, we saw aggressive gains in our UV and LED product line sales. We believe 2014 will end with favorable results.”
“Offset ink demand continues to grow in Southeast Asia and India,” said Yu Adachi, who handles corporate communications at Toyo Ink SC Holdings Co., Ltd. “In Japan, sales of high UV sensitivity and hard coat products used in touchscreens remain strong, while demand for sheetfed printing, web offset printing and newspaper inks has been weak, resulting from the shrinking printing market associated with digitization and the significant impact of April’s consumption tax hike.
“Sales of eco-friendly inks for packaging continue to grow in China, Southeast Asia and India,” Adachi added. “Domestic sales of gravure inks for printed construction materials to be exported remain strong.”
Felipe Mellado, chief marketing officer, Sun Chemical, said that Sun Chemical has had a very successful 2014, including its purchase in early 2014 of the remaining shares held by Inversiones Mundial (Grupo Mundial) in their Colombian joint venture companies Tintas SA and Sinclair SA. With annual sales of more than $100 million, the Tintas/Sinclair Group sells printing inks and related graphic arts products primarily to the packaging market in the Andean region of Latin America, which covers Colombia, Ecuador, Peru and Venezuela.
In March, Sun Chemical teamed up with T+ink to form T+Sun, an organization that now provides conductive ink solutions to make packages and objects communicate, engage customers and manage inventory systems. Drawing from the global resources of Sun Chemical, including the company’s electronic materials, packaging and brand protection groups, T+Sun utilizes Sun Chemical’s global R&D, technical support, manufacturing infrastructure, supply chain, marketing, and sales. The partnership is focusing on making packaging smart and interactive.
James LaRocca, COO of Superior Printing Ink, said that Superior has had a good year in 2014. “Changes to our business model, investments in new equipment that provided the foundation for productivity improvements and the cultivating our recent entry into new print markets made the first three quarters of 2014 good for us,” LaRocca said. “I’m confident it will carry over.”
Highlights from 2014
Aside from the major acquisitions, ink manufacturers were active on a number of fronts. Toyo Ink was active around the globe, opening new facilities to meet regional needs.
“The Toyo Ink Group continued to expand our global manufacturing footprint in 2014,” Adachi said. “We set up our first production site in Brazil, in Sao Paulo, for offset and liquid inks. The new factory is expected to meet the increased demand for consumer goods resulting from Brazil hosting major sporting events, including the Olympics. In Gujarat, India, the Group’s second offset inks factory was established to supplement production of our Delhi plant, thus ensuring a stable supply of high-quality products on a global level. Moreover, a second polymer plant was completed in Thailand, a new coatings plant in Indonesia as well as further expansion and reinforcement of our ink manufacturing capability has been progressing in northern and inland areas of China.”
“One of the exciting highlights this year has been the opening of our new plant in Carlstadt, NJ,” Copeland added. “This new facility will contain offices, a laboratory, manufacturing and warehousing for flexo, inkjet and offset inks. Some R&D functions will take place in Carlstadt as well as customer service, color matching and ink blending to better service our customers.”
INX made a large number of capital investments during the past year.
“It’s been an exciting year for us,” Clendenning said. “We have focused on investing in our manufacturing infrastructure to stay ahead of our continued growth. We installed more equipment at two of our major manufacturing sites in the U.S. - the metal decorating ink plant in Charlotte, NC, and at our energy curable facility in Edwardsville, KS. We also recently opened our new inkjet manufacturing facility in the Czech Republic (Prague), which will supply most of our customer needs in the EMEA. Currently we are finishing construction of our new solvent ink manufacturing facility in Lebanon, OH near Cincinnati, and expect it to be operational in early 2015.”
Likewise, Siegwerk has been actively adding new manufacturing and testing capabilities.
“In terms of infrastructure, Siegwerk is currently engaging in a number of high-profile investment projects – both in emerging and mature markets, to build additional capacities as well as to upgrade applied technology,” Forker noted. “In this respect, we are modernizing our site in France to become a center of excellence for water-based inks and polyurethane. At the same time, our new Center of Printing Excellence in Des Moines, IA, USA, was successfully introduced to customers. With this center, we offer customers on-press testing capabilities for both flexo and gravure, including analysis of print issues as well as formulation optimization on-press.
“Looking at our emerging markets, we are investing in a new building for our offices and laboratories at our site in Shanghai, China, where we also recently opened a new UV workshop and lab to meet increased customer demand in the growing UV segment,” Forker added. “Moreover, Siegwerk opened a new branch in Peru at the beginning of this year, thus increasing our local presence in Latin America.”
Sun Chemical reinforced its commitment to package printers in Turkey, the Middle East and Africa by announcing that a new plant will be built in Alosbi, Turkey, to produce solvent-based liquid inks for the packaging market.
“The Alosbi site was chosen based on the growing Turkish market,” Mellado said. “The country’s well-developed transportation links, highly skilled labor force, as well as local demand for liquid inks for packaging applications, were all key reasons for a third Sun Chemical manufacturing plant in Turkey.”
Doerffel said that hubergroup is modifying some of its structures to be perfectly prepared for the future.
“Such activities cause extra effort for our employees, and we are extremely proud to have this incredibly powerful group of companies and their dedicated personnel to support all these development steps,” Doerffel said.
“Wikoff’s biggest highlights in 2014 came from continued strong growth in our international markets and in industrial inkjet as well as with new products that had immediate market penetration,” Peters said.
Growth in the Printing Industry
Not surprisingly, ink manufacturers see packaging, inkjet and energy curable markets as the best areas for growth.
“We observed the biggest growth in the packaging markets and in the Asian region, where we also grow the most. Especially in Asia, but also in other emerging markets, such as Latin America and Eastern Europe, increasing living standards, growing urbanization, higher incomes and smaller households increase the demand for more packaging in general as well as smaller and more convenient packaging sizes,” Forker said.
“Growth in Latin America has slowed down a bit while North America and EMEA show no significant growth anymore. The European printing inks market shows decline in almost all segments,” Forker added. “We see growth mostly in UV and on a lower level in the solvent-based ink segment. Another important development is the rising demand for food packaging inks and a focus on low migration. To provide close individual guidance and support in this sensitive field, we operate a dedicated worldwide network of experts.”
“Certain markets continue to perform better than others,” said Daryl Collins, vice president - sales and operations for Wikoff Color. “The packaging market, both folding carton and flexible packaging, continues to perform well. The label market also continues its growth, and inkjet technologies increasingly shape certain segments, i.e. commercial and label.”
Clendenning noted that the sheetfed market stabilized for INX, which is a good sign. “We have experienced continued growth in our packaging segments and see some stability in our commercial printing elements, which is good news after years of decline,” Clendenning said.
“In the Japanese market, we have been seeing a sales increase of advanced products, including high UV sensitivity and hard coat products for touchscreens,” Adachi said. “Sales of gravure inks for printed construction materials for export have also been strong. Sales of eco-friendly inks for packaging continue to expand in China, Southeast Asia and India. Demand for gravure inks for construction materials also remains strong in North America.”
“We are seeing substantial growth in the energy curable and inkjet printing markets,” Copeland said.
“There are always some markets regarding location that are growing faster for a certain period of time,” Doerffel said. “In average, those aspects are put into perspective when looking to a longer period. Currently there is obviously no growth in the industrial print market – not true for digital, of course.”
“We have sold more UV litho inks and more inkjet inks than previous years, a trend I expect to continue for a few more years,” LaRocca said.
Regulatory Climate for Ink Manufacturers
With new regulations on their way in terms of food packaging, ink manufacturers are working closely throughout the supply chain to make sure their products meet new standards.
“Although there are many more regulatory requirements ink companies must deal with, INX has a strong corporate EHS group that works very closely with our R&D resources,” Clendenning said. “It has proven to be a successful combination in meeting all our regulatory needs. These resources are an important part of doing business today and a costly time consuming requirement if you are operating in the packaging segments.”
“We are allocating more resources towards these areas in both North America and on a global basis,” Copeland said. “Toyo Ink America is also in sync with the NAPIM guidelines and suggestions.”
“Our staff is working on REACH, etc will the help of NAPIM and some other outside consultants,“ LaRocca said.
“Wikoff has a complete offering of products for our customers required to print with extremely low migration levels,” said Don Duncan, Wikoff Color’s director of research. “We have always had this as we have been making printing inks and coatings for food packaging that meet all migration level requirements for many years.”
Forker reported that Siegwerk is operating a worldwide network of product safety experts that is centrally coordinated from the headquarters in Siegburg.
“These safeguards guarantee an optimal internal exchange of information concerning worldwide specific legal requirements (such as the European REACH regulation or various food packaging legislations) and customer-/end-user specifications as well as the compliance with these demands,” said Forker. “To support this, Siegwerk is active in overarching industry associations, holding leading roles in the expert commissions of the European Printing Ink Association (EuPIA), which not only contributes actively to the elaboration of statutory regulations, some with global effects, but also sets down specifications in the form of pioneering guidelines for the entire printing ink industry. Siegwerk is also active in the U.S. NAPIM (National Association of Printing Ink Manufacturers) and the Chinese CPIA (China Printing Ink Association).”
In order to ensure highest possible legal compliance and consumer protection, Siegwerk has implemented consequent and strict internal policies and procedures.
“Our global expert team coordinates the entire process of introducing new raw materials on a worldwide basis,” Forker added. “Raw material suppliers first have to qualify. This includes proof that the raw materials supplied are not toxic, mutagenic or carcinogenic, for example, and also satisfy strict purity requirements (e. g. with respect to heavy metals or undesired trace contaminants like e.g. dioxins or primary aromatic amines) and represent no danger to humans or the environment. Indispensable here is compliance with the strict requirements of the pertinent chemicals legislation, e.g. substance inventories in the countries where Siegwerk is operating, the REACH regulation on the European level, or other relevant national legislation.
“Every single raw material must successfully complete this approval process before it receives a unique raw material code that is valid throughout Siegwerk,” Forker noted. “Only then the raw material can be used to formulate Siegwerk products. This guarantees that Siegwerk inks are safe, thereby also ensuring their sustainability. For the sensitive field of food packaging applications, this means that all respective Siegwerk inks are highly optimized with regards to their migration potential. In addition, Siegwerk experts provide customers with a wide range of guidance and support regarding the application of these products and solutions.”
Mellado said that while market awareness of the issues surrounding migration from packaging has been increasing over the past years, Sun Chemical has been promoting the use of low migration offset printing technology for use on packaging for more than 25 years.“Today, Sun Chemical offers a full range of low migration solutions that meet both the strictest and most recent compliance measures worldwide, including REACH, and help prevent inks on packaging from migrating into food, pharmaceutical, and tobacco products,” Mellado added.
“The hubergroup Product Safety team is expanding in line with the increasing REACH and regulatory work,” Doerffel said. “We cooperate closely with our raw material suppliers. With regard to inks for food packaging, the hubergroup is a pioneer, offering suitable inks for more than a decade now. Processes for raw material selection, ink formulation, and control are in place and continuously adapted and amended. Carry-over and cross-contamination is prevented by optimized and elaborated production design.”
Consolidation Among Printers
Consolidation among printers and suppliers alike have changed the landscape of the printing ink industry, and ink industry leaders say it is likely that more changes are on their way.
“We are seeing some movement in the industry where large players are divesting their non-core activities to focus instead on their core business,” said Charles Murray, president, North American Inks, Sun Chemical. “This gives them cash to work with in pursuit of acquisitions. From a supply standpoint, we are seeing specialist manufacturers of resins and intermediates give signs that they intend to leave the publication market.”
“We continue to see consolidation in both the printing industry as well as the supplier side,” Copeland said. “The number of printing establishments in the U.S. is nearly half that of 1994, which was over 54,000. On the supplier side, we often see only one or two suppliers of certain raw materials, whereas 20 years ago, there were six to eight.”
“In 2014, we did not see any major consolidation,” Forker noted. “However, especially for the publication printing market, we do expect the consolidation process to continue, with printing capacities being adapted to the reduced demand.”
“We expect more consolidations in the printing industry and our supply chain,” LaRocca noted.
“We have seen consolidation in both our supply chain and customer base,” Clendenning said. “Both types of consolidation are not particularly good for us ink makers; one reduces the material supply choices by eliminating competition and the other reduces product sales outlets, especially if you have the relationship on the wrong side of an acquisition or takeover.”
Doerffel said that hubergroup sees a continuous shift towards customers growing in size, in several markets.
“This leads e.g. to more supplies in IBCs and other larger packaging solutions,” said Doerffel. “A field which can also be considered part of the supply chain is about specific concepts in color communication. The ‘color’ is a topic that has always been seen as a technical property of the ink, which is also true but doesn’t reflect its entire potential within the supply chain. For the customers growing in size, it becomes increasingly important to align ‘color’ in their supply chain.”
Ken Klug, director of purchasing for Wikoff Color, said that Wikoff continues to see consolidation within the printing industry and does not expect that trend to slow.
“Pressure continues to increase for Asian manufacturers as pigment and intermediate suppliers have reduced capacity due to the cost to upgrade plants to meet the environmental regulations beginning Jan. 1, 2015,” Klug added. “Those suppliers, without the funding to upgrade their processes, are being forced to merge or close their operations.”
Expectations for the Coming Year
Ink manufacturers are looking ahead to new opportunities in the coming year. For example, Forker said that Siegwerk is continuing its globalization efforts.
“Globalization is not a new development, yet it is not completed. Our customers and potential partners are still becoming increasingly international,” Forker said. “We will continue to follow suit and expand in the respective regions. As of now we expect further expansion of our business in the emerging markets in Asia and LATAM. The markets in EMEA and North America will continue to stagnate and there we will further focus on efficiency. We recognize more demand in the field of food packaging safety with higher consumer demands and legal regulations.
“In this context, customers benefit from our proven practical expertise and our work in overarching associations and organizations,” Forker added. “Looking ahead at the raw materials market, lower oil prices may bring some relief to solvents. Organic pigment prices will remain adversely affected by environmental and market restrictions of lower feedstock availability. The TiO2 outlook is improving somewhat, driven by weaker demand but industry consolidation is expected to push price levels up. Gum rosin prices have also dipped a bit, but still remain on a much higher level than last year. Polyol shortages driven by force majeure may also lead to increases on polyurethanes. Some relief may be expected on styrene-based acrylates – most other pigments will not change much in USD terms. Overshadowing a mostly calm market will be the much weaker EUR vs. USD.”
Forker noted that the industrial digital printing market will gain in importance.
“Siegwerk has already been very active in this area and will soon launch UV LED curable inkjet inks plus open a dedicated inkjet center with state-of-the-art equipment,” he said. “Further educating our existing staff and training of new talent will remain crucial to keep up the high level of quality around the globe. The same holds true for establishing additional sites. We are prepared to keep investing – for the customers’ benefit but also to secure our own future.”
“We expect the industry to continue moving towards digital technologies,” Copeland said. “Energy curable inks will continue to advance and take market share from conventional print. Toyo Ink America will continue to strengthen our earnings base of existing business with a focus on liquid inks and pursue the expansion of new businesses, such as inkjet inks. With the new Carlstadt site expanding our research and production capability, we see the near future for Toyo Ink to be very promising and better than the last couple of years.”
“INX is in good position to continue growing in 2015,” Clendenning said. “We have the right combination of qualified dedicated resources and leading technologies in the market segments where we are focused. As we grow, we will continue to invest in areas where needed so we can take care of our customer needs and requirements in the future.”
“We expect to increasingly profit from our own strong abilities and our sound structure,” Doerffel said. “We strongly believe that being close to the customer is the key to success. Our new products are expanding the range of application options and the existing ones are tailored to market requirements – thus we trust, that we will continue to represent the medium-to-large, quality ink maker. We expect the industry to increase networking with their customers in order to maximize efficiency in application and earnings. Creating even stronger bonds will propel joint efforts in research and development, which can only serve the case. We also expect a further shift from certain print material to digital printing technologies. The industry will also spend more time on a growing number of not harmonized regulations causing quite some administrative challenges.”
“We see growth in the printing industry and forecast for strong growth, both organically and through possible acquisition,” said Peters. “Printers continue to make investments in their operations, and suppliers to the printing industry will take part in its growth. The ink industry will also continue to change as new print technologies evolve, with Wikoff well positioned to take advantage of emerging technologies.”
“In my opinion, the printing ink industry did not need to evolve at a rapid rate to prosper in the past because printing was done profitably and successfully using the same technology for decades,” LaRocca concluded. “Now that print technology changes occur in a blink of an eye it seems, ink companies will need to invest, must learn to prepare in advance at this accelerated pace, and respond in kind. Those that only react will not survive.”
For more information on the Year in Review, including new products released during 2014, see the online version at www.inkworldmagazine.com.
Meanwhile, the packaging industry has been strong, and while there is consolidation as well on that side of the printing industry, all signs point to further growth.
On the raw material side of the supply chain, acquisitions have contracted the number of suppliers of key ingredients, with Eastman’s proposed acquisition of Taminco for $2.8 billion in September the latest major merger of note.
The printing ink industry has been relatively quiet in the area of mergers and acquisitions, but that changed in 2014 with two significant moves. The most significant was the acquisition of Flint Group by Goldman Sachs Merchant Banking Division and Koch Equity Development LLC from funds managed by CVC Capital Partners. The acquisition was finalized on Sept. 5, 2014.
The number one or number two supplier in most of the market segments it serves, Flint Group operates nearly 140 sites in 40 countries and employs approximately 6,600 people. Flint Group had reported sales of $2.9 billion in 2013.
With estimated annual sales of $115 billion in 2013, Koch Industries, Inc. is one of the largest privately-held companies in the world. Its products range from building and consumer products, transportation fuels, electronic connectors, fertilizers, fibers, membrane filtration and pollution control equipment. Among its subsidiaries is Georgia-Pacific LLC.
Antoine Fady, CEO of Flint Group, said the acquisition offers new opportunities for the company.
“The management team of Flint Group is excited about this planned new ownership, and the opportunities this now presents,” said Fady. “The investment by Goldman Sachs Merchant Banking and Koch is a clear vote of confidence in our vision, strategic plans, and ‘can do’ culture. Flint Group now goes forward with a much stronger capital structure and additional flexibility. With that, we can put greater momentum behind the strategies that have already made Flint Group an industry leader. Ultimately, that benefits everyone we do business with.”
The other major acquisition was American Inks & Coatings’ (AIC) purchase of Color Resolutions International (CRI), which was competed in May 2014.
The merger combines two of Ink World’s 2013 Top 20 North American ink companies. Headquartered in Pine Bluff, AR, AIC is the 11th largest North American ink manufacturer, with sales of $100 million in ink and coatings in 2013. CRI, located in Fairfield, OH, was the 19th largest North American ink company in 2012, with estimated sales of $55 million.
AIC and CRI were both focused exclusively on packaging. AIC is primarily in flexible packaging, specializing in water- and solvent-based flexo and gravure inks and coatings as well as UV and EB coatings. AIC also has a leadership position in the multi-wall bags and gift wrap segments. CRI largely concentrated on corrugated printing.
“With the merger, the combined companies are well positioned to focus on the changing needs of both the flexible packaging and corrugated market as they continue to consolidate,” Jerry Mosley, AIC’s founder and CEO, said.
While these two deals were the major highlights of the past year for the printing ink industry, there was plenty more happening in the industry. For the most part, the industry’s largest ink manufacturers reported good years in terms of sales, particularly on the packaging ink side.
Siegwerk CEO Herbert Forker noted that so far, 2014 was again successful for Siegwerk, with a continued solid financial performance and slightly increased sales compared to last year.
“With regards to regions, not surprisingly the North American market has stagnated on the high level of recent years,” Forker noted. “The same holds true for the European market. In Asia, we experienced significant growth.
“To support this development, we substantially invested in infrastructure and people,” Forker added. “Broken down to divisions, our packaging segments have continued to prosper, whereas, in line with the general market, our publication segments suffer from consolidation on the customer side and declining volumes.”
Rick Clendenning, president and CEO of INX International Ink Co., reported that INX International and its parent company, Sakata INX, both are having strong years.
“Through the first three quarters, we have done well and I hope it continues as long as the volumes do not drop too much in the last quarter,” said Clendenning. “We expect some drop off during the holiday months, but are looking for a stronger finish than we normally experience during this time. Globally, both Sakata INX and INX International are doing well. We saw some downturn in business in some European markets, but I’m hoping it will improve for 2015. Our worldwide inkjet business continues to grow with many opportunities coming our way.”
“Business remains challenging due to the high raw material cost, which – up to now - has been largely absorbed by the ink makers,” said Robert Doerffel, corporate communications Europe, MHM Holding GmbH. “Ink market conditions in North America are similar to those in other large economy areas and not far from the situation a year before. The hubergroup is continuing to work on growing the packaging printing inks sector with success, and even if the industry would appreciate to see more positive signs in the overall market dynamics, realistically that is unlikely to happen.”
Geoff Peters, president and CEO of Wikoff Color, said the company enjoyed an excellent year in terms of sales.
“Wikoff Color fared well in 2014 with strong growth in the narrow web label and flexible packaging markets, in addition to energy-curable inkjet growth,” Peters added. “Moderate growth in the folding carton and commercial markets also contributed to one of Wikoff’s best revenue years ever.”
John Copeland, president and COO, Toyo Ink America, reported that UV is a highlight for Toyo Ink.
“Toyo Ink America had a slow start for the year,” said Copeland. “Our commercial sheetfed and packaging business have been relatively flat. However, in the second and third quarters, we saw aggressive gains in our UV and LED product line sales. We believe 2014 will end with favorable results.”
“Offset ink demand continues to grow in Southeast Asia and India,” said Yu Adachi, who handles corporate communications at Toyo Ink SC Holdings Co., Ltd. “In Japan, sales of high UV sensitivity and hard coat products used in touchscreens remain strong, while demand for sheetfed printing, web offset printing and newspaper inks has been weak, resulting from the shrinking printing market associated with digitization and the significant impact of April’s consumption tax hike.
“Sales of eco-friendly inks for packaging continue to grow in China, Southeast Asia and India,” Adachi added. “Domestic sales of gravure inks for printed construction materials to be exported remain strong.”
Felipe Mellado, chief marketing officer, Sun Chemical, said that Sun Chemical has had a very successful 2014, including its purchase in early 2014 of the remaining shares held by Inversiones Mundial (Grupo Mundial) in their Colombian joint venture companies Tintas SA and Sinclair SA. With annual sales of more than $100 million, the Tintas/Sinclair Group sells printing inks and related graphic arts products primarily to the packaging market in the Andean region of Latin America, which covers Colombia, Ecuador, Peru and Venezuela.
In March, Sun Chemical teamed up with T+ink to form T+Sun, an organization that now provides conductive ink solutions to make packages and objects communicate, engage customers and manage inventory systems. Drawing from the global resources of Sun Chemical, including the company’s electronic materials, packaging and brand protection groups, T+Sun utilizes Sun Chemical’s global R&D, technical support, manufacturing infrastructure, supply chain, marketing, and sales. The partnership is focusing on making packaging smart and interactive.
James LaRocca, COO of Superior Printing Ink, said that Superior has had a good year in 2014. “Changes to our business model, investments in new equipment that provided the foundation for productivity improvements and the cultivating our recent entry into new print markets made the first three quarters of 2014 good for us,” LaRocca said. “I’m confident it will carry over.”
Highlights from 2014
Aside from the major acquisitions, ink manufacturers were active on a number of fronts. Toyo Ink was active around the globe, opening new facilities to meet regional needs.
“The Toyo Ink Group continued to expand our global manufacturing footprint in 2014,” Adachi said. “We set up our first production site in Brazil, in Sao Paulo, for offset and liquid inks. The new factory is expected to meet the increased demand for consumer goods resulting from Brazil hosting major sporting events, including the Olympics. In Gujarat, India, the Group’s second offset inks factory was established to supplement production of our Delhi plant, thus ensuring a stable supply of high-quality products on a global level. Moreover, a second polymer plant was completed in Thailand, a new coatings plant in Indonesia as well as further expansion and reinforcement of our ink manufacturing capability has been progressing in northern and inland areas of China.”
“One of the exciting highlights this year has been the opening of our new plant in Carlstadt, NJ,” Copeland added. “This new facility will contain offices, a laboratory, manufacturing and warehousing for flexo, inkjet and offset inks. Some R&D functions will take place in Carlstadt as well as customer service, color matching and ink blending to better service our customers.”
INX made a large number of capital investments during the past year.
“It’s been an exciting year for us,” Clendenning said. “We have focused on investing in our manufacturing infrastructure to stay ahead of our continued growth. We installed more equipment at two of our major manufacturing sites in the U.S. - the metal decorating ink plant in Charlotte, NC, and at our energy curable facility in Edwardsville, KS. We also recently opened our new inkjet manufacturing facility in the Czech Republic (Prague), which will supply most of our customer needs in the EMEA. Currently we are finishing construction of our new solvent ink manufacturing facility in Lebanon, OH near Cincinnati, and expect it to be operational in early 2015.”
Likewise, Siegwerk has been actively adding new manufacturing and testing capabilities.
“In terms of infrastructure, Siegwerk is currently engaging in a number of high-profile investment projects – both in emerging and mature markets, to build additional capacities as well as to upgrade applied technology,” Forker noted. “In this respect, we are modernizing our site in France to become a center of excellence for water-based inks and polyurethane. At the same time, our new Center of Printing Excellence in Des Moines, IA, USA, was successfully introduced to customers. With this center, we offer customers on-press testing capabilities for both flexo and gravure, including analysis of print issues as well as formulation optimization on-press.
“Looking at our emerging markets, we are investing in a new building for our offices and laboratories at our site in Shanghai, China, where we also recently opened a new UV workshop and lab to meet increased customer demand in the growing UV segment,” Forker added. “Moreover, Siegwerk opened a new branch in Peru at the beginning of this year, thus increasing our local presence in Latin America.”
Sun Chemical reinforced its commitment to package printers in Turkey, the Middle East and Africa by announcing that a new plant will be built in Alosbi, Turkey, to produce solvent-based liquid inks for the packaging market.
“The Alosbi site was chosen based on the growing Turkish market,” Mellado said. “The country’s well-developed transportation links, highly skilled labor force, as well as local demand for liquid inks for packaging applications, were all key reasons for a third Sun Chemical manufacturing plant in Turkey.”
Doerffel said that hubergroup is modifying some of its structures to be perfectly prepared for the future.
“Such activities cause extra effort for our employees, and we are extremely proud to have this incredibly powerful group of companies and their dedicated personnel to support all these development steps,” Doerffel said.
“Wikoff’s biggest highlights in 2014 came from continued strong growth in our international markets and in industrial inkjet as well as with new products that had immediate market penetration,” Peters said.
Growth in the Printing Industry
Not surprisingly, ink manufacturers see packaging, inkjet and energy curable markets as the best areas for growth.
“We observed the biggest growth in the packaging markets and in the Asian region, where we also grow the most. Especially in Asia, but also in other emerging markets, such as Latin America and Eastern Europe, increasing living standards, growing urbanization, higher incomes and smaller households increase the demand for more packaging in general as well as smaller and more convenient packaging sizes,” Forker said.
“Growth in Latin America has slowed down a bit while North America and EMEA show no significant growth anymore. The European printing inks market shows decline in almost all segments,” Forker added. “We see growth mostly in UV and on a lower level in the solvent-based ink segment. Another important development is the rising demand for food packaging inks and a focus on low migration. To provide close individual guidance and support in this sensitive field, we operate a dedicated worldwide network of experts.”
“Certain markets continue to perform better than others,” said Daryl Collins, vice president - sales and operations for Wikoff Color. “The packaging market, both folding carton and flexible packaging, continues to perform well. The label market also continues its growth, and inkjet technologies increasingly shape certain segments, i.e. commercial and label.”
Clendenning noted that the sheetfed market stabilized for INX, which is a good sign. “We have experienced continued growth in our packaging segments and see some stability in our commercial printing elements, which is good news after years of decline,” Clendenning said.
“In the Japanese market, we have been seeing a sales increase of advanced products, including high UV sensitivity and hard coat products for touchscreens,” Adachi said. “Sales of gravure inks for printed construction materials for export have also been strong. Sales of eco-friendly inks for packaging continue to expand in China, Southeast Asia and India. Demand for gravure inks for construction materials also remains strong in North America.”
“We are seeing substantial growth in the energy curable and inkjet printing markets,” Copeland said.
“There are always some markets regarding location that are growing faster for a certain period of time,” Doerffel said. “In average, those aspects are put into perspective when looking to a longer period. Currently there is obviously no growth in the industrial print market – not true for digital, of course.”
“We have sold more UV litho inks and more inkjet inks than previous years, a trend I expect to continue for a few more years,” LaRocca said.
Regulatory Climate for Ink Manufacturers
With new regulations on their way in terms of food packaging, ink manufacturers are working closely throughout the supply chain to make sure their products meet new standards.
“Although there are many more regulatory requirements ink companies must deal with, INX has a strong corporate EHS group that works very closely with our R&D resources,” Clendenning said. “It has proven to be a successful combination in meeting all our regulatory needs. These resources are an important part of doing business today and a costly time consuming requirement if you are operating in the packaging segments.”
“We are allocating more resources towards these areas in both North America and on a global basis,” Copeland said. “Toyo Ink America is also in sync with the NAPIM guidelines and suggestions.”
“Our staff is working on REACH, etc will the help of NAPIM and some other outside consultants,“ LaRocca said.
“Wikoff has a complete offering of products for our customers required to print with extremely low migration levels,” said Don Duncan, Wikoff Color’s director of research. “We have always had this as we have been making printing inks and coatings for food packaging that meet all migration level requirements for many years.”
Forker reported that Siegwerk is operating a worldwide network of product safety experts that is centrally coordinated from the headquarters in Siegburg.
“These safeguards guarantee an optimal internal exchange of information concerning worldwide specific legal requirements (such as the European REACH regulation or various food packaging legislations) and customer-/end-user specifications as well as the compliance with these demands,” said Forker. “To support this, Siegwerk is active in overarching industry associations, holding leading roles in the expert commissions of the European Printing Ink Association (EuPIA), which not only contributes actively to the elaboration of statutory regulations, some with global effects, but also sets down specifications in the form of pioneering guidelines for the entire printing ink industry. Siegwerk is also active in the U.S. NAPIM (National Association of Printing Ink Manufacturers) and the Chinese CPIA (China Printing Ink Association).”
In order to ensure highest possible legal compliance and consumer protection, Siegwerk has implemented consequent and strict internal policies and procedures.
“Our global expert team coordinates the entire process of introducing new raw materials on a worldwide basis,” Forker added. “Raw material suppliers first have to qualify. This includes proof that the raw materials supplied are not toxic, mutagenic or carcinogenic, for example, and also satisfy strict purity requirements (e. g. with respect to heavy metals or undesired trace contaminants like e.g. dioxins or primary aromatic amines) and represent no danger to humans or the environment. Indispensable here is compliance with the strict requirements of the pertinent chemicals legislation, e.g. substance inventories in the countries where Siegwerk is operating, the REACH regulation on the European level, or other relevant national legislation.
“Every single raw material must successfully complete this approval process before it receives a unique raw material code that is valid throughout Siegwerk,” Forker noted. “Only then the raw material can be used to formulate Siegwerk products. This guarantees that Siegwerk inks are safe, thereby also ensuring their sustainability. For the sensitive field of food packaging applications, this means that all respective Siegwerk inks are highly optimized with regards to their migration potential. In addition, Siegwerk experts provide customers with a wide range of guidance and support regarding the application of these products and solutions.”
Mellado said that while market awareness of the issues surrounding migration from packaging has been increasing over the past years, Sun Chemical has been promoting the use of low migration offset printing technology for use on packaging for more than 25 years.“Today, Sun Chemical offers a full range of low migration solutions that meet both the strictest and most recent compliance measures worldwide, including REACH, and help prevent inks on packaging from migrating into food, pharmaceutical, and tobacco products,” Mellado added.
“The hubergroup Product Safety team is expanding in line with the increasing REACH and regulatory work,” Doerffel said. “We cooperate closely with our raw material suppliers. With regard to inks for food packaging, the hubergroup is a pioneer, offering suitable inks for more than a decade now. Processes for raw material selection, ink formulation, and control are in place and continuously adapted and amended. Carry-over and cross-contamination is prevented by optimized and elaborated production design.”
Consolidation Among Printers
Consolidation among printers and suppliers alike have changed the landscape of the printing ink industry, and ink industry leaders say it is likely that more changes are on their way.
“We are seeing some movement in the industry where large players are divesting their non-core activities to focus instead on their core business,” said Charles Murray, president, North American Inks, Sun Chemical. “This gives them cash to work with in pursuit of acquisitions. From a supply standpoint, we are seeing specialist manufacturers of resins and intermediates give signs that they intend to leave the publication market.”
“We continue to see consolidation in both the printing industry as well as the supplier side,” Copeland said. “The number of printing establishments in the U.S. is nearly half that of 1994, which was over 54,000. On the supplier side, we often see only one or two suppliers of certain raw materials, whereas 20 years ago, there were six to eight.”
“In 2014, we did not see any major consolidation,” Forker noted. “However, especially for the publication printing market, we do expect the consolidation process to continue, with printing capacities being adapted to the reduced demand.”
“We expect more consolidations in the printing industry and our supply chain,” LaRocca noted.
“We have seen consolidation in both our supply chain and customer base,” Clendenning said. “Both types of consolidation are not particularly good for us ink makers; one reduces the material supply choices by eliminating competition and the other reduces product sales outlets, especially if you have the relationship on the wrong side of an acquisition or takeover.”
Doerffel said that hubergroup sees a continuous shift towards customers growing in size, in several markets.
“This leads e.g. to more supplies in IBCs and other larger packaging solutions,” said Doerffel. “A field which can also be considered part of the supply chain is about specific concepts in color communication. The ‘color’ is a topic that has always been seen as a technical property of the ink, which is also true but doesn’t reflect its entire potential within the supply chain. For the customers growing in size, it becomes increasingly important to align ‘color’ in their supply chain.”
Ken Klug, director of purchasing for Wikoff Color, said that Wikoff continues to see consolidation within the printing industry and does not expect that trend to slow.
“Pressure continues to increase for Asian manufacturers as pigment and intermediate suppliers have reduced capacity due to the cost to upgrade plants to meet the environmental regulations beginning Jan. 1, 2015,” Klug added. “Those suppliers, without the funding to upgrade their processes, are being forced to merge or close their operations.”
Expectations for the Coming Year
Ink manufacturers are looking ahead to new opportunities in the coming year. For example, Forker said that Siegwerk is continuing its globalization efforts.
“Globalization is not a new development, yet it is not completed. Our customers and potential partners are still becoming increasingly international,” Forker said. “We will continue to follow suit and expand in the respective regions. As of now we expect further expansion of our business in the emerging markets in Asia and LATAM. The markets in EMEA and North America will continue to stagnate and there we will further focus on efficiency. We recognize more demand in the field of food packaging safety with higher consumer demands and legal regulations.
“In this context, customers benefit from our proven practical expertise and our work in overarching associations and organizations,” Forker added. “Looking ahead at the raw materials market, lower oil prices may bring some relief to solvents. Organic pigment prices will remain adversely affected by environmental and market restrictions of lower feedstock availability. The TiO2 outlook is improving somewhat, driven by weaker demand but industry consolidation is expected to push price levels up. Gum rosin prices have also dipped a bit, but still remain on a much higher level than last year. Polyol shortages driven by force majeure may also lead to increases on polyurethanes. Some relief may be expected on styrene-based acrylates – most other pigments will not change much in USD terms. Overshadowing a mostly calm market will be the much weaker EUR vs. USD.”
Forker noted that the industrial digital printing market will gain in importance.
“Siegwerk has already been very active in this area and will soon launch UV LED curable inkjet inks plus open a dedicated inkjet center with state-of-the-art equipment,” he said. “Further educating our existing staff and training of new talent will remain crucial to keep up the high level of quality around the globe. The same holds true for establishing additional sites. We are prepared to keep investing – for the customers’ benefit but also to secure our own future.”
“We expect the industry to continue moving towards digital technologies,” Copeland said. “Energy curable inks will continue to advance and take market share from conventional print. Toyo Ink America will continue to strengthen our earnings base of existing business with a focus on liquid inks and pursue the expansion of new businesses, such as inkjet inks. With the new Carlstadt site expanding our research and production capability, we see the near future for Toyo Ink to be very promising and better than the last couple of years.”
“INX is in good position to continue growing in 2015,” Clendenning said. “We have the right combination of qualified dedicated resources and leading technologies in the market segments where we are focused. As we grow, we will continue to invest in areas where needed so we can take care of our customer needs and requirements in the future.”
“We expect to increasingly profit from our own strong abilities and our sound structure,” Doerffel said. “We strongly believe that being close to the customer is the key to success. Our new products are expanding the range of application options and the existing ones are tailored to market requirements – thus we trust, that we will continue to represent the medium-to-large, quality ink maker. We expect the industry to increase networking with their customers in order to maximize efficiency in application and earnings. Creating even stronger bonds will propel joint efforts in research and development, which can only serve the case. We also expect a further shift from certain print material to digital printing technologies. The industry will also spend more time on a growing number of not harmonized regulations causing quite some administrative challenges.”
“We see growth in the printing industry and forecast for strong growth, both organically and through possible acquisition,” said Peters. “Printers continue to make investments in their operations, and suppliers to the printing industry will take part in its growth. The ink industry will also continue to change as new print technologies evolve, with Wikoff well positioned to take advantage of emerging technologies.”
“In my opinion, the printing ink industry did not need to evolve at a rapid rate to prosper in the past because printing was done profitably and successfully using the same technology for decades,” LaRocca concluded. “Now that print technology changes occur in a blink of an eye it seems, ink companies will need to invest, must learn to prepare in advance at this accelerated pace, and respond in kind. Those that only react will not survive.”
For more information on the Year in Review, including new products released during 2014, see the online version at www.inkworldmagazine.com.