David Savastano, Ink World Editor04.05.12
The commercial sheetfed printing market has been struggling in recent years, caused by a variety of factors. In particular, the growth of digital technologies has cut into offset as print buyers look to utilize shorter run lengths and personalize copy. The ability to get news through the Internet has impacted newspapers and magazines, and is driving advertising toward the Web.
The global recession also hit the commercial sheetfed market hard, and many printers have either consolidated their operations or left the market altogether.
“Despite the slowly improving economy, print buyers in 2011 were still cautious with their discretionary spending on such items as advertising displays and collateral materials,” said Brian Breidigan, vice president of product management for commercial inks, North American Inks, Sun Chemical. “The commercial sheetfed market overall continues to be flat.”
Against that backdrop, sheetfed ink manufacturers are also facing challenging times, which are being exacerbated by higher raw material costs driven by crude oil prices and many other factors.
“In our opinion, commercial printing still has not rebounded from this severe recession and a few more companies closed their doors,” said Daryl Collins, vice president of sales and regional operations at Wikoff Color. “If the recession wasn’t enough, paper, ink and delivery costs have risen as well. Hopefully, the survivors will see a modest recovery in 2012.”
“Commercial printing sales remained soft in 2011, but there are some signs of cautious optimism for a bit of improvement in 2012,” said Chris Bonk, vice president – sheetfed technical director, INX International Ink Co. “Price, quality and service, in that order, are the three driving forces influencing ink purchasing decisions today. The unprecedented raw material increases last year eroded any ink sales increases for most ink manufacturers.”
The ability to diversify their operations is helping some printers succeed in this difficult market.
“The commercial printing industry continued to decline as business has been flat,” said John Copeland, division president, printing ink division, Toyo Ink America. “We see a trend where commercials printers are focusing to diversify their business to improve growth. Some printers continue to reinvent themselves as print service providers, and no longer call themselves printers. They offer a larger portfolio of services, such as digital, printing fulfillment, marketing assistance, web and hosting while placing greater emphasis on high-value-added print capability, upscale print or special effects. Those that succeed in making this transition tend to be better off than the average.”
“There was less commercial printing in North America in 2011,” said Jim La Rocca, chief operating officer for Superior Printing Ink. “Since many sheetfed ink makers supply other markets, this reduction was felt less by companies that have a diversified and proportionate market strategy.”
Growth in the Folding Carton Market
While the commercial sheetfed segment has been hurt by a variety of factors, packaging has remained steady. For example, Mr. La Rocca noted that was modest gains in sheetfed packaging printing during 2011.
“The packaging side of sheetfed is more stable compared to commercial print,” Mr. Copeland said. “For Toyo, there is more new movement in that arena. We saw gains made in UV sheetfed on the high-end side of packaging. Commercial print on paper continues to be flat.”
“Since there is regular consumer demand for food packaging, the folding carton sheetfed packaging market continues to fare better than the commercial market with moderate growth,” Mr. Breidigan said.
“Packaging has remained steady and I think that’s because consumers still have to eat and drink,” Mr. Bonk said. “The hysteria surrounding the ink migration issues in Europe last year shifted the focus for most ink manufacturers to address it with new low migration formulations and clean manufacturing procedures. What this does is drive up ink costs with the new technology, and packaging printers are reluctant to absorb these costs because their market is very competitive.”
“Packaging has fared much better than commercial printing, but is also facing much higher input costs for substrates,” Mr. Collins noted.
Raw Materials
In addition to the changes in the marketplace, ink manufacturers are also contending with higher raw material costs and supply issues. Ed Pruitt, chief procurement officer for Sun Chemical, said that in 2011, the ink industry saw a continuation of many of the same raw materials supply issues and cost pressures that featured prominently in 2010.
“Rosin, solvents (particularly in Europe), acrylics, energy cure resins, carbon black, titanium dioxide, nitrocellulose, phthalocyanine pigments and Violet 23 pigments all faced at various times tight to short supply, during 2011,” said Mr. Pruitt. “The drivers for these supply issues and cost pressures were the same factors we wrestled with in 2010, i.e., increased demand from developing markets, feedstock issues, supply limitations and environmental and regulatory constraints in India and China.
“As we look ahead to 2012, we expect to see continuing improvement in the availability of many raw materials, but we also expect to see volatility and continuing pressure from oil and petrochemical derived products, titanium dioxide and other commodities exposed to global supply/demand swings,” Mr. Pruitt added.
“Supply has stabilized across most categories of sheetfed ink raw materials, so obtaining the materials we need is no longer a significant concern,” said Ben Price, director of purchasing, Wikoff Color. “That was not the case a year ago, when there were supply issues with rosin resin and a number of pigments, including carbazole violet and phthalo greens and blues. While we have experienced some price relief as supply has improved, our overall raw material cost is still substantially higher than it was two years ago.”
Profitability has taken a hit, as passing along all of the higher raw material prices to printers has proven to be impossible.
“Raw material costs had a negative impact, primarily by lowering already modest profits,” said Mr. La Rocca. “The frequency and size of increases were unprecedented, making it almost impossible to pass the total of these increases to the consumer.”
“The unprecedented price increases I mentioned previously, combined with some raw material manufacturers withdrawing from the market, have made it challenging to maintain formulary consistency,” Mr. Bonk said. “Unfortunately, the ink price increases were necessary to pass on in order to cover a portion of the raw material increases.”
Mr. Copeland said that raw material pricing appears to have leveled somewhat, but there is still uncertainty involving future pricing and supply. “Oil prices continue to fluctuate wildly, as much as 10% on any given day, driving the industry to search for alternative sources,” Mr. Copeland added.
Key Aspects for Customers
Even as printers worry about the cost of ink, ink industry leaders noted that service and quality is also of major importance, as these play a critical role in a printer’s success.
“Our customers, and the new ones we seek, expect high quality and consistency in the products and processes they use,” Mr. La Rocca said. “Service, as defined by on time delivery and technical expertise, are major factors when selecting an ink supplier.”
“Customers often focus on cost when making purchasing decisions, which can be shortsighted,” Mr. Copeland noted. “Smart purchasing managers are not influenced by cost consideration alone and do not sacrifice performance over cost. Lower cost does not necessarily mean better mileage or performance, such as ink fidelity, print sharpness and trap. This is the reason why we work closely with our customers to select the most appropriate product for their project needs and budget. We constantly strive to ensure that our customers find the right balance between good mileage and pricing.”
“Our customers expect Sun Chemical to provide a comprehensive and consistent offering of world-class products and services, delivering consistently on our promises with strong technical and customer service, and offering breakthroughs in ink technology that will ultimately save them money,” Mr. Breidigan said. “For example, many commercial printers demand that their inks are made with bio-based materials and still maintain strong lithographic performance. Sun Chemical’s SunLit Intense commercial sheetfed inks help to turn around a job quickly, have high renewable bio-based material content, and maintain the highest standard in print fidelity.”
“Price continues to be the number one factor with customers, followed by the overall quality of your product, service and product consistency,” Mr. Bonk said. “The reason why our customers keep working with us is because we often go beyond these issues with our R&D team and global reach.”
“Quality and consistency of the product is paramount,” Mr. Collins said. “Price is also important, but printers still must have a responsive ink company that helps them meet the print quality demands of their customers and their deadlines. A responsive ink company helps the printer solve problems, come up with innovative ideas, present new and improved products and, it goes without saying, deliver what they want, when they want it.”
Expectations for Sheetfed
Sheetfed printers have faced numerous challenges in recent years, and it is likely there are more concerns ahead. Sheetfed ink manufacturers are hoping for a turnaround for their customers.
“Near-term commercial expectations are that commercial printing is affected more by the global economy than some other print markets, such as packaging,” Mr. La Rocca said. “A swift and strong positive shift in the economy is key for stability and growth of commercial markets in the near future.”
“I think commercial printing will rebound somewhat, but I think improving profitability will be a challenge,” Mr. Collins said. “Industry leaders and trade organizations should keep promoting print as a powerful and cost-effective way to advertise.”
“We actually have seen a little bit of a pickup,” said Giovanni Medina, national sales manager for Tokyo Printing Ink Corp. USA. “We’ve picked up some new business and we’re kind of optimistic.”
Sheetfed ink executives anticipate that packaging will continue to offer the best growth for sheetfed printers, and that branching out into digital offers another area of opportunity as well.
“In 2012, we expect continued growth in the folding carton sheetfed market, and the commercial sheetfed market to remain flat,” Mr. Breidigan said.
“The outlook for 2012 and beyond remains optimistic despite the challenging environment,” Mr. Copeland said. “We believe the market has not fully recovered and will grow in 2012, an election year. As for Toyo, we expect to see steady growth and improvement in our bottom line as we focus on developing innovative commercial sheetfed products and further investment to build the packaging side of our business.”
“The commercial market will likely experience some smooth pavement along with bumps in the road,” Mr. Bonk reported. “With 2012 being an election year, it will generate sales for political literature on a level that hasn’t been seen for the last four years. Otherwise, commercial printers without a niche market may struggle unless they diversify their product offerings. Some printers who branched out and added digital printing, fulfillment and other options in the last couple of years have survived by doing so.”
The global recession also hit the commercial sheetfed market hard, and many printers have either consolidated their operations or left the market altogether.
“Despite the slowly improving economy, print buyers in 2011 were still cautious with their discretionary spending on such items as advertising displays and collateral materials,” said Brian Breidigan, vice president of product management for commercial inks, North American Inks, Sun Chemical. “The commercial sheetfed market overall continues to be flat.”
Against that backdrop, sheetfed ink manufacturers are also facing challenging times, which are being exacerbated by higher raw material costs driven by crude oil prices and many other factors.
“In our opinion, commercial printing still has not rebounded from this severe recession and a few more companies closed their doors,” said Daryl Collins, vice president of sales and regional operations at Wikoff Color. “If the recession wasn’t enough, paper, ink and delivery costs have risen as well. Hopefully, the survivors will see a modest recovery in 2012.”
“Commercial printing sales remained soft in 2011, but there are some signs of cautious optimism for a bit of improvement in 2012,” said Chris Bonk, vice president – sheetfed technical director, INX International Ink Co. “Price, quality and service, in that order, are the three driving forces influencing ink purchasing decisions today. The unprecedented raw material increases last year eroded any ink sales increases for most ink manufacturers.”
The ability to diversify their operations is helping some printers succeed in this difficult market.
“The commercial printing industry continued to decline as business has been flat,” said John Copeland, division president, printing ink division, Toyo Ink America. “We see a trend where commercials printers are focusing to diversify their business to improve growth. Some printers continue to reinvent themselves as print service providers, and no longer call themselves printers. They offer a larger portfolio of services, such as digital, printing fulfillment, marketing assistance, web and hosting while placing greater emphasis on high-value-added print capability, upscale print or special effects. Those that succeed in making this transition tend to be better off than the average.”
“There was less commercial printing in North America in 2011,” said Jim La Rocca, chief operating officer for Superior Printing Ink. “Since many sheetfed ink makers supply other markets, this reduction was felt less by companies that have a diversified and proportionate market strategy.”
Growth in the Folding Carton Market
While the commercial sheetfed segment has been hurt by a variety of factors, packaging has remained steady. For example, Mr. La Rocca noted that was modest gains in sheetfed packaging printing during 2011.
“The packaging side of sheetfed is more stable compared to commercial print,” Mr. Copeland said. “For Toyo, there is more new movement in that arena. We saw gains made in UV sheetfed on the high-end side of packaging. Commercial print on paper continues to be flat.”
“Since there is regular consumer demand for food packaging, the folding carton sheetfed packaging market continues to fare better than the commercial market with moderate growth,” Mr. Breidigan said.
“Packaging has remained steady and I think that’s because consumers still have to eat and drink,” Mr. Bonk said. “The hysteria surrounding the ink migration issues in Europe last year shifted the focus for most ink manufacturers to address it with new low migration formulations and clean manufacturing procedures. What this does is drive up ink costs with the new technology, and packaging printers are reluctant to absorb these costs because their market is very competitive.”
“Packaging has fared much better than commercial printing, but is also facing much higher input costs for substrates,” Mr. Collins noted.
Raw Materials
In addition to the changes in the marketplace, ink manufacturers are also contending with higher raw material costs and supply issues. Ed Pruitt, chief procurement officer for Sun Chemical, said that in 2011, the ink industry saw a continuation of many of the same raw materials supply issues and cost pressures that featured prominently in 2010.
“Rosin, solvents (particularly in Europe), acrylics, energy cure resins, carbon black, titanium dioxide, nitrocellulose, phthalocyanine pigments and Violet 23 pigments all faced at various times tight to short supply, during 2011,” said Mr. Pruitt. “The drivers for these supply issues and cost pressures were the same factors we wrestled with in 2010, i.e., increased demand from developing markets, feedstock issues, supply limitations and environmental and regulatory constraints in India and China.
“As we look ahead to 2012, we expect to see continuing improvement in the availability of many raw materials, but we also expect to see volatility and continuing pressure from oil and petrochemical derived products, titanium dioxide and other commodities exposed to global supply/demand swings,” Mr. Pruitt added.
“Supply has stabilized across most categories of sheetfed ink raw materials, so obtaining the materials we need is no longer a significant concern,” said Ben Price, director of purchasing, Wikoff Color. “That was not the case a year ago, when there were supply issues with rosin resin and a number of pigments, including carbazole violet and phthalo greens and blues. While we have experienced some price relief as supply has improved, our overall raw material cost is still substantially higher than it was two years ago.”
Profitability has taken a hit, as passing along all of the higher raw material prices to printers has proven to be impossible.
“Raw material costs had a negative impact, primarily by lowering already modest profits,” said Mr. La Rocca. “The frequency and size of increases were unprecedented, making it almost impossible to pass the total of these increases to the consumer.”
“The unprecedented price increases I mentioned previously, combined with some raw material manufacturers withdrawing from the market, have made it challenging to maintain formulary consistency,” Mr. Bonk said. “Unfortunately, the ink price increases were necessary to pass on in order to cover a portion of the raw material increases.”
Mr. Copeland said that raw material pricing appears to have leveled somewhat, but there is still uncertainty involving future pricing and supply. “Oil prices continue to fluctuate wildly, as much as 10% on any given day, driving the industry to search for alternative sources,” Mr. Copeland added.
Key Aspects for Customers
Even as printers worry about the cost of ink, ink industry leaders noted that service and quality is also of major importance, as these play a critical role in a printer’s success.
“Our customers, and the new ones we seek, expect high quality and consistency in the products and processes they use,” Mr. La Rocca said. “Service, as defined by on time delivery and technical expertise, are major factors when selecting an ink supplier.”
“Customers often focus on cost when making purchasing decisions, which can be shortsighted,” Mr. Copeland noted. “Smart purchasing managers are not influenced by cost consideration alone and do not sacrifice performance over cost. Lower cost does not necessarily mean better mileage or performance, such as ink fidelity, print sharpness and trap. This is the reason why we work closely with our customers to select the most appropriate product for their project needs and budget. We constantly strive to ensure that our customers find the right balance between good mileage and pricing.”
“Our customers expect Sun Chemical to provide a comprehensive and consistent offering of world-class products and services, delivering consistently on our promises with strong technical and customer service, and offering breakthroughs in ink technology that will ultimately save them money,” Mr. Breidigan said. “For example, many commercial printers demand that their inks are made with bio-based materials and still maintain strong lithographic performance. Sun Chemical’s SunLit Intense commercial sheetfed inks help to turn around a job quickly, have high renewable bio-based material content, and maintain the highest standard in print fidelity.”
“Price continues to be the number one factor with customers, followed by the overall quality of your product, service and product consistency,” Mr. Bonk said. “The reason why our customers keep working with us is because we often go beyond these issues with our R&D team and global reach.”
“Quality and consistency of the product is paramount,” Mr. Collins said. “Price is also important, but printers still must have a responsive ink company that helps them meet the print quality demands of their customers and their deadlines. A responsive ink company helps the printer solve problems, come up with innovative ideas, present new and improved products and, it goes without saying, deliver what they want, when they want it.”
Expectations for Sheetfed
Sheetfed printers have faced numerous challenges in recent years, and it is likely there are more concerns ahead. Sheetfed ink manufacturers are hoping for a turnaround for their customers.
“Near-term commercial expectations are that commercial printing is affected more by the global economy than some other print markets, such as packaging,” Mr. La Rocca said. “A swift and strong positive shift in the economy is key for stability and growth of commercial markets in the near future.”
“I think commercial printing will rebound somewhat, but I think improving profitability will be a challenge,” Mr. Collins said. “Industry leaders and trade organizations should keep promoting print as a powerful and cost-effective way to advertise.”
“We actually have seen a little bit of a pickup,” said Giovanni Medina, national sales manager for Tokyo Printing Ink Corp. USA. “We’ve picked up some new business and we’re kind of optimistic.”
Sheetfed ink executives anticipate that packaging will continue to offer the best growth for sheetfed printers, and that branching out into digital offers another area of opportunity as well.
“In 2012, we expect continued growth in the folding carton sheetfed market, and the commercial sheetfed market to remain flat,” Mr. Breidigan said.
“The outlook for 2012 and beyond remains optimistic despite the challenging environment,” Mr. Copeland said. “We believe the market has not fully recovered and will grow in 2012, an election year. As for Toyo, we expect to see steady growth and improvement in our bottom line as we focus on developing innovative commercial sheetfed products and further investment to build the packaging side of our business.”
“The commercial market will likely experience some smooth pavement along with bumps in the road,” Mr. Bonk reported. “With 2012 being an election year, it will generate sales for political literature on a level that hasn’t been seen for the last four years. Otherwise, commercial printers without a niche market may struggle unless they diversify their product offerings. Some printers who branched out and added digital printing, fulfillment and other options in the last couple of years have survived by doing so.”