Dave Savastano, Editor11.30.15
The publication and commercial printing market has faced plenty of challenges in recent years, and while magazines, catalogs and newspapers will continue to be a sizable market, large-scale growth is unlikely to return. Ink manufacturers are seeing these changes first-hand.
“We see a continuation of contraction in the publication print market,” said Mike Dodd, president, US Ink (A Division of Sun Chemical). “Many publications are aggressively pursuing the digital side although the revenue is struggling to replace print. The industry was anticipating high single digit declines for 2015. The current year-to-date metric tons of newsprint decline in the United States is above 13%. Because printing volume is being consolidated via acquisitions or as printers go out of business, some printers’ volumes are up, although the overall market is declining.”
Chris Parrilli, VP, publication heatset, Sun Chemical, said that specific to heatset, there is still plenty of capacity, which puts pressure on pricing.
“The smaller and more regionally focused printer has opportunities, given the consolidation in the industry, but that comes at a lower price with higher quality expectations,” Parrilli added. “The financial viability of the small printer is still a concern, as we have seen continued mergers/sales of these printers.”
“As in previous years, the publication printing business is still declining,” said Dr. Roland Rusch, VP Print Media Division at Siegwerk. “There is no growth in this market. All printing areas are affected.”
As a result of these changes, there has been consolidation in the printing industry, and this has impacted the ink industry as well. The most obvious example is in publication gravure ink, where Quad/Graphics, one of the two remaining major US publication gravure printers (along with R.R. Donnelley), produces its own publication gravure and heatset inks at its Chemical Research/Technology subsidiary.
“The publication gravure market is still declining this year, but not as strong as in the last four to five years,” Dr. Rusch observed. “The heatset market is rather consistent, taking over printing jobs from publication gravure. In 2015 we see as well as in 2014 new installations of heatset presses in Europe, leading to additional printing capacities.”
The Newspaper Market
How people get their news is changing, and this impacts printing. For example, print readership of newspapers is down. For its State of the News Media 2015, Pew Research Center analyzed data from the Alliance for Audited Media (AAM), and determined that weekday and Sunday circulation declined approximately 3% from 2013 to 2014.
At the same time, digital readership is on the rise.
According to Pew’s State of the News Media 2015, in September 2014, the New York Times had an average weekday print circulation of less than 650,000. However, its website and associated apps reported approximately 54 million unique visitors in January 2015.
“Readership of printed newspapers is down,” said Tony Lord, GM Print Media Europe, Publication for Flint Group. “The portability and cost of online reading makes online news appealing to readers, and the cost of printing and distributing newspapers makes online publishing attractive to publishers. While the market is undoubtedly a struggle for newspapers, the industry remained important and vital in 2015. Millions of readers around the globe read printed newspapers to learn about important information that shapes their world.”
Norm Harbin, business director, news ink for Flint Group, noted that news is one of the hardest-hit markets in print. “Newspapers face challenges on all sides – reduced circulation and decreased publishing frequency, as well as smaller page sizes and fewer print ads, to name a few,” said Harbin. “The long-standing shift toward online news channels continues, with online newspaper models still under development in an attempt to match the revenue print still offers. The combination is challenging. Beyond offering online news, many newspaper printers fight back by offering print services beyond newspapers. Some printers also benefit from the mergers between publishers and media outlets, and from the trend of publishers to outsource printing to third parties.”
“National newspapers are losing in the European market significant market share, while local papers and weekly free sheets are not so strongly affected,” Dr. Rusch said.
“The slower decline in the small and medium size newspapers continues,” Dodd said. “In 2015, the industry is witnessing accelerated consolidation of independents and groups. While New Media (formerly Gatehouse), Berkshire Hathaway and others have steadily acquired, we most recently saw Gannett make sizable purchases since the separation of its broadcast and publication divisions. We will see more of this across the industry going into 2016.
“The development of regional print sites will continue as many newspapers shut pressrooms and contracted with partners that geographically make sense,” Dodd added. “South and Central America are witnessing slightly greater declines, although they had a later start in previous years than the US and Canada. Demand is down 16.8% for 2015 to date.”
Magazines and Catalogs
Magazine and catalogs are in a similar state. Michael Podd, global account VP/business director Publication Market North America for Flint Group, noted that in this sector, magazine and catalog print demand continues to decline. “These are still important print segments – catalogs drive consumers to brick & mortar and e-commerce stores, and print is the preferred medium for magazines among all demographics – but publications are thinner and smaller, with lower circulations,” said Podd. “This decline will likely continue, but Flint Group’s product portfolio, innovations and services continue to keep customers competitive.”
“Consolidation and decreased demand in the European publication printing industry continue to make this a more competitive sector than ever,” added Lord. “Flint Group’s strategy takes this shift into account, and our teams work alongside printers as they maneuver through the changes.”
“Although the decline in North America continues, it varies significantly by printer,” Parrilli said. “We continue to project an overall decline of approximately 4% across the print sector, but have experienced some regional printers showing double-digit growth. Conversely, some regional printers are experiencing double-digit declines. The effort to be a communication service, whether through print or some other mode, continues. Acquisitions continue, as do the efforts to look at alternative print markets like packaging.”
Raw Material Costs
There have been some major developments in terms of raw materials, particularly with lower crude oil costs, which has helped publication ink manufacturers.
“The lower crude prices that began in late 2014 have created a more stable and supportive cost base particularly for the publication inks market, which has been under extraordinary pressure over the last six years,” said Ed Pruitt, chief procurement officer, Sun Chemical. “While current market trends would suggest that oil prices will remain at lower than historic averages in the near term, it is important to remember that this market has shown itself to be quite volatile and may be only one major event away from a return to higher pricing levels.
“Regarding other risks for raw materials, we would highlight the negative impact the stronger US dollar has had on the Euro zone and on emerging markets nations when they have had to purchase globally denominated materials such as pigments, intermediates and resins,” Pruitt added.
“Unfortunately, the crude oil price benefit had to be passed on to the printers,” said Dr. Rusch. “At the same time, European ink producers have been suffering from the weaker euro and consequently higher raw material prices, driven by USD-based imports from Asia.”
Ultimately, the publication and commercial printing markets are going to continue to face concerns, and their ink suppliers are helping them meet these challenges.
“We see a continuation of contraction in the publication print market,” said Mike Dodd, president, US Ink (A Division of Sun Chemical). “Many publications are aggressively pursuing the digital side although the revenue is struggling to replace print. The industry was anticipating high single digit declines for 2015. The current year-to-date metric tons of newsprint decline in the United States is above 13%. Because printing volume is being consolidated via acquisitions or as printers go out of business, some printers’ volumes are up, although the overall market is declining.”
Chris Parrilli, VP, publication heatset, Sun Chemical, said that specific to heatset, there is still plenty of capacity, which puts pressure on pricing.
“The smaller and more regionally focused printer has opportunities, given the consolidation in the industry, but that comes at a lower price with higher quality expectations,” Parrilli added. “The financial viability of the small printer is still a concern, as we have seen continued mergers/sales of these printers.”
“As in previous years, the publication printing business is still declining,” said Dr. Roland Rusch, VP Print Media Division at Siegwerk. “There is no growth in this market. All printing areas are affected.”
As a result of these changes, there has been consolidation in the printing industry, and this has impacted the ink industry as well. The most obvious example is in publication gravure ink, where Quad/Graphics, one of the two remaining major US publication gravure printers (along with R.R. Donnelley), produces its own publication gravure and heatset inks at its Chemical Research/Technology subsidiary.
“The publication gravure market is still declining this year, but not as strong as in the last four to five years,” Dr. Rusch observed. “The heatset market is rather consistent, taking over printing jobs from publication gravure. In 2015 we see as well as in 2014 new installations of heatset presses in Europe, leading to additional printing capacities.”
The Newspaper Market
How people get their news is changing, and this impacts printing. For example, print readership of newspapers is down. For its State of the News Media 2015, Pew Research Center analyzed data from the Alliance for Audited Media (AAM), and determined that weekday and Sunday circulation declined approximately 3% from 2013 to 2014.
At the same time, digital readership is on the rise.
According to Pew’s State of the News Media 2015, in September 2014, the New York Times had an average weekday print circulation of less than 650,000. However, its website and associated apps reported approximately 54 million unique visitors in January 2015.
“Readership of printed newspapers is down,” said Tony Lord, GM Print Media Europe, Publication for Flint Group. “The portability and cost of online reading makes online news appealing to readers, and the cost of printing and distributing newspapers makes online publishing attractive to publishers. While the market is undoubtedly a struggle for newspapers, the industry remained important and vital in 2015. Millions of readers around the globe read printed newspapers to learn about important information that shapes their world.”
Norm Harbin, business director, news ink for Flint Group, noted that news is one of the hardest-hit markets in print. “Newspapers face challenges on all sides – reduced circulation and decreased publishing frequency, as well as smaller page sizes and fewer print ads, to name a few,” said Harbin. “The long-standing shift toward online news channels continues, with online newspaper models still under development in an attempt to match the revenue print still offers. The combination is challenging. Beyond offering online news, many newspaper printers fight back by offering print services beyond newspapers. Some printers also benefit from the mergers between publishers and media outlets, and from the trend of publishers to outsource printing to third parties.”
“National newspapers are losing in the European market significant market share, while local papers and weekly free sheets are not so strongly affected,” Dr. Rusch said.
“The slower decline in the small and medium size newspapers continues,” Dodd said. “In 2015, the industry is witnessing accelerated consolidation of independents and groups. While New Media (formerly Gatehouse), Berkshire Hathaway and others have steadily acquired, we most recently saw Gannett make sizable purchases since the separation of its broadcast and publication divisions. We will see more of this across the industry going into 2016.
“The development of regional print sites will continue as many newspapers shut pressrooms and contracted with partners that geographically make sense,” Dodd added. “South and Central America are witnessing slightly greater declines, although they had a later start in previous years than the US and Canada. Demand is down 16.8% for 2015 to date.”
Magazines and Catalogs
Magazine and catalogs are in a similar state. Michael Podd, global account VP/business director Publication Market North America for Flint Group, noted that in this sector, magazine and catalog print demand continues to decline. “These are still important print segments – catalogs drive consumers to brick & mortar and e-commerce stores, and print is the preferred medium for magazines among all demographics – but publications are thinner and smaller, with lower circulations,” said Podd. “This decline will likely continue, but Flint Group’s product portfolio, innovations and services continue to keep customers competitive.”
“Consolidation and decreased demand in the European publication printing industry continue to make this a more competitive sector than ever,” added Lord. “Flint Group’s strategy takes this shift into account, and our teams work alongside printers as they maneuver through the changes.”
“Although the decline in North America continues, it varies significantly by printer,” Parrilli said. “We continue to project an overall decline of approximately 4% across the print sector, but have experienced some regional printers showing double-digit growth. Conversely, some regional printers are experiencing double-digit declines. The effort to be a communication service, whether through print or some other mode, continues. Acquisitions continue, as do the efforts to look at alternative print markets like packaging.”
Raw Material Costs
There have been some major developments in terms of raw materials, particularly with lower crude oil costs, which has helped publication ink manufacturers.
“The lower crude prices that began in late 2014 have created a more stable and supportive cost base particularly for the publication inks market, which has been under extraordinary pressure over the last six years,” said Ed Pruitt, chief procurement officer, Sun Chemical. “While current market trends would suggest that oil prices will remain at lower than historic averages in the near term, it is important to remember that this market has shown itself to be quite volatile and may be only one major event away from a return to higher pricing levels.
“Regarding other risks for raw materials, we would highlight the negative impact the stronger US dollar has had on the Euro zone and on emerging markets nations when they have had to purchase globally denominated materials such as pigments, intermediates and resins,” Pruitt added.
“Unfortunately, the crude oil price benefit had to be passed on to the printers,” said Dr. Rusch. “At the same time, European ink producers have been suffering from the weaker euro and consequently higher raw material prices, driven by USD-based imports from Asia.”
Ultimately, the publication and commercial printing markets are going to continue to face concerns, and their ink suppliers are helping them meet these challenges.