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    Features

    The 2017 Year in Review

    The printing ink industry has had an active year, as consolidations throughout the supply chain impacted ink manufacturers.

    The 2017 Year in Review
    Tom Alden, left, president of Alden & Ott, and Derek McFarland, right, president - Americas, hubergroup USA. (Photo courtesy of hubergroup)
    The 2017 Year in Review
    From left, Jens Adrio, head of corporate development; Veronique Danois, president of Siegwerk France; CEO Herbert Forker; and Matthieu Carni, business development manager; open the new production facility for inkjet inks in Annemasse, France. (Photo courtesy of Siegwerk)
    The 2017 Year in Review
    INX International Ink Co. officials participated in a groundbreaking ceremony at the R&D facility in West Chicago, IL. From left, Takayuki Shirafuji, VP, assistant treasurer; Susan Supergan, SVP, human resources; Bryce Kristo, SVP, CFO; Kotaro Morita, chairman; Rick Clendenning, president and CEO; Rick Westrom, SVP, Strategic Sourcing and R&D; John Hrdlick, SVP and COO; and Matthew Mason, VP, general counsel. (Photo courtesy of INX)
    David Savastano, Editor11.20.17
    For the ink industry, the past year saw changes and new challenges. Consolidation continued, primarily within the printing industry although some ink companies were acquired as well. Raw materials, which had stabilized in recent years, became more unsettled due to natural disasters, fires and increasing regulations. Meanwhile, the packaging, UV and digital ink segments continued to grow, while the publication and commercial markets declined again.

    For ink companies, the past year saw plenty of challenges.

    “We did okay despite the things we faced, including stronger and fierce competitive strategies, rising raw material costs and customer consolidations in every market,” said Rick Clendenning, president and CEO of INX International Ink Co.

    Siegwerk CEO Herbert Forker said that looking at overall performance to date, 2017 has been a moderate year for Siegwerk.

    “The last 12 months were a challenging time and we’ve been confronted with significant raw material costs increases,” said Forker. “We’ve strongly continued with our portfolio transformation by focusing our efforts on the expansion of our core business of packaging printing inks. We’ve achieved solid growth in both sales and volume in the packaging segment and outperformed the overall market.  We are heading to the €1 billion milestone in packaging ink sales.”

    Forker said that the North American region has also shown positive development during the past year.

    “With organic growth further focusing on inks for packaging and label applications, Siegwerk has seen a strong performance in our core segment of Flexible Packaging,” he added. “Overall sales exceeded $190 million in 2016. In September, we began construction on a new warehouse at our US manufacturing plant in Des Moines, IA. The new facility will expand the company’s local footprint and position Siegwerk for the future, especially in our Flexible Packaging business. In general, the strongest growth potential will come from our business units Flexible Packaging and Narrow Web.
    Growth here will be generated primarily from emerging markets, mostly from Asia, where Siegwerk has invested heavily during the last year to expand local capacities and product offerings.”

    Kazuo Semba, managing director and director of the Global Business Division, Toyo Ink Co., Ltd., observed that Toyo Ink America showed solid growth in energy curable products such as HUV and LED inks.

    “We also expanded our liquid inks to the flexible packaging market by introducing eco-friendly products that can reduce residual solvent dramatically. Digital ink sales growth showed future potential for Toyo in the US together with other product lineups that Toyo introduces,” Semba reported.

    “As for the Toyo Ink Group, fiscal 2016 proved to be another growth year,” Semba added. “Sales of solvents as resale products declined in addition to the continuous decline in domestic demand for gravure inks for publication. On the other hand, domestic sales of mainstay gravure inks for packaging were strong, mainly for beverage and private brand applications. Demand for gravure inks for construction materials recovered in the latter half of the period, and profitability improved. Overseas, sales of eco-friendly inks for packaging continued to expand in Southeast Asia and India.

    “In offset inks, the export profit from Japan was squeezed by the strong yen in the first half of the fiscal 2016, in addition to the continuous decrease in demand due to the structural depression where the information-related print market shrank associated with the progress of digitalization in Japan,” Semba noted. “Meanwhile, sales of UV ink expanded not only in Japan but also on a global scale, particularly in Europe, and hard coating agents for touch panels sold well. Sales were weak in China and Southeast Asia, reflecting the slowdown of economic activity. In India and Brazil, sales expanded and profitability also improved.”

    Felipe Mellado, chief marketing officer, Sun Chemical, reported that 2017 has been a good year for Sun Chemical. “We continue to work closely with our customers everyday as a partner by continually improving our performance on the essentials of our business - quality, service and innovation,” Mellado said.

    Highlights from 2017

    It was a busy year in the consolidation field, with the most sizable moves being made in the printing market.

    International Paper sold its North America Consumer Packaging business, valued at $1.8 billion, to Graphic Packaging, forming an estimated $6 billion paper-based printing company. WestRock Company acquired Multi Packaging Solutions International Limited for a total enterprise value of $2.28 billion, and divested its Home, Health and Beauty business to Silgan Holdings for $1.025 billion. Constantia Flexibles completed the sale of its Labels division to Multi-Color Corporation for approximately $1.3 billion.

    Among suppliers, Evonik completed its $3.8 billion purchase of Air Products’ Performance Materials Division, and closed its $630 million acquisition of J.M. Huber Corporation’s silica business.

    Tronox purchased Cristal’s TiO2 business. In the largest move that didn’t happen, Clariant and Huntsman tried to conduct a merger of equals, worth an estimated $20 billion, but some major investors at Clariant did not see the wisdom of the move and it was cancelled.

    On the ink side, there were some key moves. PolyOne bought Rutland, a screen ink specialist. Sun Chemical acquired Joules Angstrom U.V. Printing Inks, a UV ink specialist.

    “This partnership will give both Sun Chemical and Joules Angstrom numerous opportunities to provide customers with expanded product lines and services,” said Charles Murray, president of North American Inks, Sun Chemical, at the time of the acquisition. “Joules Angstrom is a company built on technical excellence and customer satisfaction, and we plan to work together to provide customers with more exciting and innovative UV printing ink solutions.”

    Sun Chemical also formed a joint venture with Alliance Holding Company Ltd., the parent company of Ink Products Company, Ltd., a leading supplier of inks in the Arabian Peninsula.

    In North America, hubergroup added Alden & Ott. Robert Doerffel, head of corporate communications in Europe for hubergroup Deutschland GmbH, said that welcoming new employees, acquisitions and a number of new products were highlights at his company.

    Siegwerk acquired Van Son Liquids B.V., adding to its water-based ink business. Earlier in the year, Siegwerk also acquired the plastic packaging business from SCHEKOLIN AG and added Hi-Tech Products Ltd., a water-based ink supplier, while expanding its Technical Center in Annemasse, France, with a new production facility for inkjet inks.

    “In 2017, we’ve completed further complementary acquisitions to enhance our product and service portfolio especially for the packaging printing market,” Forker noted. “Siegwerk purchased the plastic packaging business from SCHEKOLIN AG and broadened our portfolio by adding specialty UV varnishes suitable for plastic packaging including rigid tubes. The acquisition of High-Tech Products Ltd. has enabled us to complement our water-based ink portfolio with high-quality water-based flexo inks, mainly for printing on paper and board packaging. With these exemplary product line expansions, we’ve further strengthened our company’s position as a full-range provider for packaging applications.”

    INX International expanded some of its manufacturing plants while acquiring Creative Industria e Commercio Ltda, Sao Paulo, Brazil.

    “INX International had a very busy year, and some of the decisions we made at the end of 2016 helped us with our sales growth in 2017,” Clendenning observed. “The expansions of the Charlotte, NC metal decorating ink manufacturing plant and in Edwardsville, KA, where we manufacture most of our energy curable products, enabled us to handle growth in all those markets quite well. With the additional capacities we added within our liquid solvent manufacturing facilities in Appleton, WI and Lebanon, OH, we were able to support growth in the packaging markets we serve from those two locations.

    “We were fortunate to work all year with our most recent acquisition, Creative Industria e Commercio Ltda, in Sao Paulo, Brazil,” Clendenning concluded. “We wanted to be in Brazil to offer packaging technologies to our global customers there and in other parts of South America, and Creative has allowed us to do just this. They are a great company with good technology, an excellent management team, and other strong resources that were needed to help us grow as planned in South America.

    “We continued to support and transfer more of our superior energy curable technologies to Europe, where we want new strong growth while improving service to our existing customers in many locations around Europe,” Clendenning added. “We are also finalizing digital inkjet technology transfers into our facility in Lebanon, OH. Last month, we held a ground-breaking ceremony to expand the West Chicago R&D facility, which we expect to be online in July 2018.”

    Semba noted that the Toyo Ink Group kicked off 2017 at its new home in the Kyobashi Edogrand commercial complex in Tokyo.

    “Our headquarters had been temporarily relocated to a nearby commercial building while the new building was under construction,” Semba added. “While the HQ building may be brand new, the site holds historical and sentimental value in that it has served as the location of the Group’s head office since 1907.”

    Flint Group opened its Global Innovation Centre for its Paper & Board packaging inks business in Malmö, Sweden, featuring a new 8-station SOMA printing press equipped with water-based and UV printing capabilities.

    “The centre has been specially designed to focus on the development of products that will shape the future of paper and board printing,” Kim Melander, VP sales EMEA & global strategy paper and board for Flint Group, noted.

    Changes over the Past 10 Years

    In the last decade, there have been tremendous changes within the printing and ink industries, and ink industry leaders discussed some of the major changes they have witnessed.
    “There are several ongoing significant changes and they all keep us equally busy,” said Doerffel. “A major change is of course the shift from paper to digital media.”

    “The biggest changes that have occurred in the printing and ink industries over the past decade include the fast growth and the decline of the publication business, the standardization of processes in the industry, the growth of packaging products, and the sustainability concept as core to the way things are manufactured and developed,” Mellado said.

    Toyo Ink’s Semba noted that the printing and ink industries have changed dramatically over the last decade.

    “Back in 2008, when the printing industry was hit hard by a financial crisis and followed by a global economic recession, print volumes went down significantly,” Semba said. “This accelerated the industry’s structural downsizing and challenged printers as well as ink makers to make printing more innovative, productive and effective. It also prompted the industry to find new avenues of growth, bringing about a fundamental market shift from commercial printing to package printing. While the changes to the printing industry have been profound, change also brought with it new opportunities for growth as we see today. It’s certainly an exciting time to be a part of it.”

    “Over the last 10 years, we have seen more needs for superior technology improvements and high level technical support for our customer base,” Clendenning said. “As they become leaner in their own operating facilities, they expect more help from their suppliers. Also, it is becoming very difficult to find good new resources that want to join the industry and grow within well as our company while learning all aspects of the business. I believe everyone is having the same problem within our industry.”

    “The biggest change for sure is the persisting decrease of the print media market due to a move towards a more digitalized world,” Forker said. “The demand for publication inks has been slowing down for several years, while the demand for packaging inks is significantly growing on a global scale. That’s why Siegwerk’s strategy is to focus on packaging printing and expand our market leadership in packaging and labels applications.

    “In recent years, we have seen a steady growth in the demand for flexible packaging,” Forker added. “An increasing interest in new packaging materials and new requirements in packaging applications have influenced the overall development of the ink market. Brand owners today look for new special effect inks to highlight packaging with unique designs.

    “In addition, there has been a significant global demand for food-safe ink solutions over the years, including ink technologies (solvent-based, water-based, UV) formulated with adequate raw materials that fulfill food safety standards,” he concluded. “The area of low migration ink systems is still one of the largest growing in this context. The industry has been sensitized for migration and subsequent risks for decades, but now the awareness has reached consumers. This is especially true when you look at food packaging and the potential for impairing people’s health. The market demand for sustainable solutions has increased over the years and the desire for renewable materials in ink formulation has heavily influenced the ink industry and technologies. Another of the most influencing developments over the last decade has been the rise of digital printing.”

    The Future

    Along those lines, these leading industry executives gave their thoughts on what the printing and ink industries might look like in 2027.

    “Most likely fairly different from today, with larger digital volume and less commercial offset,” Doerffel said. “But predictions are like reading in the glass bowl. In the mid-1990s, some people predicted that commercial printing will likely have vanished by 2020. It doesn’t look like that’s going to happen.”

    “Over the next decade, I believe the largest changes will include the automation and robotics of the industry, the connectivity of machines and systems, the digitalization of processes and the growth of digital printing, and that sustainability will continue to drive everything,” Mellado noted.

    “On the printing company side, I believe there will be fewer but much larger customers to support as they all continue to consolidate and get bigger,” Clendenning said. “In the ink industry, I think we will see the same; more acquisitions and consolidations. As a result, fewer but larger ink companies will exist in the future. These companies - printers and ink suppliers alike - will improve the way they manage and run their businesses with higher efficiencies, higher level technical resources, and improved business practices.”

    “One of the trending topics for the upcoming years is digital printing, which will continue to grow market share in both electrophotography and UV inkjet solutions,” Forker said. “The desire for short print runs enabling the customization of print designs, shorter lead times allowing faster reactions to market and customer requirements as well as an increasing interest in regionalization and personalization of product packaging will further drive the growth of digital printing technologies. Digital printing inks for labels will gain strong traction while digital inks for packaging will further progress going forward. We will see inkjet solutions for direct printing on packaging objects, as well as solutions that extend the product shelf life and therefore help to preserve packed food longer.

    “In general, Siegwerk expects the future of packaging to be about connecting product and consumer by adding unique features to the packaging, creating the need for innovative ink solutions,” he added. “Smart packaging, for which intelligent pigments or functional coatings are needed, or the internet of packaging, that uses integrated digital tags to interact with the consumer, are just two areas of new packaging approaches that we might see more often during the coming years. Furthermore, we will see more low migration than conventional UV inks on the market while the implementation of low energy curing will also gain further pace. LED UV curing will be in broader use with expanded application coverage that will enable printers to use the inks for all kind of products. EB offset inks will be used for more applications due to an increased existence of more presses in the market and full PUR-based ink systems for gravure printing can be expected to address expressed interest of printers during the next years. The use of renewable materials in ink formulation will also drive the development activities in all ink technologies over the next 10 years, in line with the growing demand for sustainable solutions. That’s why Siegwerk is already developing eco-friendly inks for sustainable printing and using renewable materials to further improve the ecological footprint of our inks with no loss of performance.”

    “In the next decade, we can expect to see the global printing market growth in value driven by higher value products from package printing, continued growth in emerging economies and added-value opportunities associated with digital print,” Semba noted. “Signs also point to a future where safe and more sustainable materials are the norm. We expect to see a larger number of new developments for safer materials or more sustainable solutions over the next decade that will make the printing industry a much greener place by 2027. Food-safe packaging remains a priority concern for brands and consumers alike, a trend that we believe will continue to drive the packaging world over the next decade. The analog-to-digital print transformation is expected to continue in the next 10 years as improvements in digital technology raise the quality, reliability and efficiency of systems and costs downward.” 
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