David Savastano, Editor11.01.14
The publication printing market has suffered declines in recent years. The reasons are varied, beginning with the fact that more people are getting their information from the Internet, whether it is up-to-the-minute news (impacting newspapers and news magazines), purchasing information (impacting catalogs) or automotive listings (newspapers again).
This is a trend that is unlikely to be reversed in the future, as the readership of newspapers tends to skew away from younger readers.
This shift is most dramatic in the newspaper sector. In the U.S., daily newspaper readership has declined from 62.3 million in 1990 to 46.2 million in 2010, according to the Pew Research Center.
Consolidation is also continuing in the publication field. In 2013, R.R. Donnelley acquired Consolidated Graphics, which had more than $1 billion in sales. In 2014, Quad/Graphics purchased Brown Printing, a specialist in publications and catalogs. Brown Printing expected to generate $450 million in sales in 2014. These moves allow the purchasing company to increase their portfolio of services while cutting costs of production.
Publication ink manufacturers have found the market to be increasingly difficult. Only a few manufacturers remain for publication gravure ink; Quad/Graphics, one of the two remaining major publication gravure printers in the U.S., produces its own publication gravure and heatset inks in house at its Chemical Research/Technology subsidiary.
“The publication market continues to decline year over year,” said Mike Dodd, president, US Ink (A Division of Sun Chemical). “The metric tons of newsprint decline is about as the industry forecasted for 2014 to date. Although the decline against 2013 is 7.2%, August showed a decline of 12% for the month.”
“In Europe and other regions in the world the publication market continues to decline,” said Dr. Roland Rusch, vice president Print Media Division for Siegwerk. “The consolidation process in the printing industry is ongoing, and printing capacities are adapted to the reduced demand.”
Dr. Rusch noted that there are no clear growth trends to note in the segment, although he added that there appears to be a shift from publication gravure to heatset printing.
“Unfortunately, Siegwerk cannot see any growth or positive trends in the publication market,” Dr. Rusch said. “There is a shift from large volume publication gravure printing towards heatset printing. New investments in larger heatset presses (96-page machines) have been made in order to be able to compete with publication gravure printers.”
Dodd reported that some commercial printers have picked up business by adding newspaper production.
“Due to consolidation, select commercial printers have experienced growth via contracting regional newspaper production,” Dodd noted.
For publication printing ink manufacturers, higher raw material costs are adding to their concerns.
“Some of the key raw materials for publication inks have experienced sharp inflation over the last 12 months, notably rosin resins and pigment intermediates,” said Ed Pruitt, chief procurement officer, Sun Chemical. “The main driver for the increases in rosin resin costs was the efforts of Chinese producers to raise the price of gum rosin. Pigment intermediates cost increases were largely driven by environmental compliance requirements and supply availability issues. We have recently seen some retracement in prices for these products, but as with many other ink raw materials, the costs remain at a higher level than their long term average.”
Consolidation of raw material suppliers is also an ongoing concern for publication ink producers.
“The ongoing consolidation of raw material suppliers is heavily influencing the availability of raw materials used for printing inks,” Dr. Rusch noted. “This is also negatively impacting the price development.”
Magazines, Catalogs and Newspapers
The key publication segments - magazines, catalogs and newspapers – have suffered declines in readership. For example, according to the Alliance for Audited Media (AAM), total paid and verified circulation was down approximately 1.9% year-over-year for the 367 U.S. consumer magazines as of June 2014. Interestingly the two largest U.S. consumer magazines, AARP the Magazine and AARP Bulletin, each of which have more than 20 million subscribers, both showed growth.
As an example, Reader’s Digest, once the powerhouse of magazine publishers, dropped 35.3% in circulation in the past year to 3.39 million in June 2014. The magazine peaked at 17 million in the 1970s.
“The magazine/catalog market continues to struggle with a decline at a rate of about 4%,” said Chris Parrilli, vice president, publication heatset, Sun Chemical. “The overall global heatset market is in decline, with printers looking to diversify their print portfolio by concentrating on various types of communication modes outside of print and also looking at alternative print markets.”
“While the publication gravure market is strongly declining and printing capacities shut down, the heatset is market less affected,” Dr. Rusch observed. “Due to less circulation and pagination, a lot of printed jobs are moving from publication gravure to heatset, which becomes more and more competitive.”
The newspaper market has been heavily impacted in recent years. While smaller and regional papers are fairly stable, large dailies are still declining. AAM reported that daily circulation for the 593 U.S. newspapers reporting comparable averages for the March 2013 and March 2012 periods decreased 0.7%; that trend likely continued into 2014.
“The small and medium newspapers anticipate low single-digit declines in 2014 and 2015,” Dodd said. “Some larger metropolitan dailies are expecting double-digit declines in this challenging time, although several that are strategically located are evolving into regional print centers for surrounding communities. We see many acquisitions continuing in the small and medium dailies. Newspaper groups, such as Berkshire Hathaway, Gatehouse and others, remain bullish in this segment. We also see the development of regional print sites as many newspapers continue to shut pressrooms and contract with partners that geographically make sense.”
Dodd noted that the decline in newspapers is not just a U.S. phenomenon.
“Last year I reported that South and Central America were finally witnessing the decline in step with the U.S.,” Dodd added. “This is continuing overall at a slightly higher rate, but it will take some time before the Latin America declines catch up to domestic declines that have annually occurred since 2007.”
“In 2014, the newspaper market was declining more than in the previous years,” Dr. Rusch said. “The growth of the weekly newspapers and weekly free sheets has not been able to compensate the general decrease.”
This is a trend that is unlikely to be reversed in the future, as the readership of newspapers tends to skew away from younger readers.
This shift is most dramatic in the newspaper sector. In the U.S., daily newspaper readership has declined from 62.3 million in 1990 to 46.2 million in 2010, according to the Pew Research Center.
Consolidation is also continuing in the publication field. In 2013, R.R. Donnelley acquired Consolidated Graphics, which had more than $1 billion in sales. In 2014, Quad/Graphics purchased Brown Printing, a specialist in publications and catalogs. Brown Printing expected to generate $450 million in sales in 2014. These moves allow the purchasing company to increase their portfolio of services while cutting costs of production.
Publication ink manufacturers have found the market to be increasingly difficult. Only a few manufacturers remain for publication gravure ink; Quad/Graphics, one of the two remaining major publication gravure printers in the U.S., produces its own publication gravure and heatset inks in house at its Chemical Research/Technology subsidiary.
“The publication market continues to decline year over year,” said Mike Dodd, president, US Ink (A Division of Sun Chemical). “The metric tons of newsprint decline is about as the industry forecasted for 2014 to date. Although the decline against 2013 is 7.2%, August showed a decline of 12% for the month.”
“In Europe and other regions in the world the publication market continues to decline,” said Dr. Roland Rusch, vice president Print Media Division for Siegwerk. “The consolidation process in the printing industry is ongoing, and printing capacities are adapted to the reduced demand.”
Dr. Rusch noted that there are no clear growth trends to note in the segment, although he added that there appears to be a shift from publication gravure to heatset printing.
“Unfortunately, Siegwerk cannot see any growth or positive trends in the publication market,” Dr. Rusch said. “There is a shift from large volume publication gravure printing towards heatset printing. New investments in larger heatset presses (96-page machines) have been made in order to be able to compete with publication gravure printers.”
Dodd reported that some commercial printers have picked up business by adding newspaper production.
“Due to consolidation, select commercial printers have experienced growth via contracting regional newspaper production,” Dodd noted.
For publication printing ink manufacturers, higher raw material costs are adding to their concerns.
“Some of the key raw materials for publication inks have experienced sharp inflation over the last 12 months, notably rosin resins and pigment intermediates,” said Ed Pruitt, chief procurement officer, Sun Chemical. “The main driver for the increases in rosin resin costs was the efforts of Chinese producers to raise the price of gum rosin. Pigment intermediates cost increases were largely driven by environmental compliance requirements and supply availability issues. We have recently seen some retracement in prices for these products, but as with many other ink raw materials, the costs remain at a higher level than their long term average.”
Consolidation of raw material suppliers is also an ongoing concern for publication ink producers.
“The ongoing consolidation of raw material suppliers is heavily influencing the availability of raw materials used for printing inks,” Dr. Rusch noted. “This is also negatively impacting the price development.”
Magazines, Catalogs and Newspapers
The key publication segments - magazines, catalogs and newspapers – have suffered declines in readership. For example, according to the Alliance for Audited Media (AAM), total paid and verified circulation was down approximately 1.9% year-over-year for the 367 U.S. consumer magazines as of June 2014. Interestingly the two largest U.S. consumer magazines, AARP the Magazine and AARP Bulletin, each of which have more than 20 million subscribers, both showed growth.
As an example, Reader’s Digest, once the powerhouse of magazine publishers, dropped 35.3% in circulation in the past year to 3.39 million in June 2014. The magazine peaked at 17 million in the 1970s.
“The magazine/catalog market continues to struggle with a decline at a rate of about 4%,” said Chris Parrilli, vice president, publication heatset, Sun Chemical. “The overall global heatset market is in decline, with printers looking to diversify their print portfolio by concentrating on various types of communication modes outside of print and also looking at alternative print markets.”
“While the publication gravure market is strongly declining and printing capacities shut down, the heatset is market less affected,” Dr. Rusch observed. “Due to less circulation and pagination, a lot of printed jobs are moving from publication gravure to heatset, which becomes more and more competitive.”
The newspaper market has been heavily impacted in recent years. While smaller and regional papers are fairly stable, large dailies are still declining. AAM reported that daily circulation for the 593 U.S. newspapers reporting comparable averages for the March 2013 and March 2012 periods decreased 0.7%; that trend likely continued into 2014.
“The small and medium newspapers anticipate low single-digit declines in 2014 and 2015,” Dodd said. “Some larger metropolitan dailies are expecting double-digit declines in this challenging time, although several that are strategically located are evolving into regional print centers for surrounding communities. We see many acquisitions continuing in the small and medium dailies. Newspaper groups, such as Berkshire Hathaway, Gatehouse and others, remain bullish in this segment. We also see the development of regional print sites as many newspapers continue to shut pressrooms and contract with partners that geographically make sense.”
Dodd noted that the decline in newspapers is not just a U.S. phenomenon.
“Last year I reported that South and Central America were finally witnessing the decline in step with the U.S.,” Dodd added. “This is continuing overall at a slightly higher rate, but it will take some time before the Latin America declines catch up to domestic declines that have annually occurred since 2007.”
“In 2014, the newspaper market was declining more than in the previous years,” Dr. Rusch said. “The growth of the weekly newspapers and weekly free sheets has not been able to compensate the general decrease.”