Print Solutions December 2006
manufacturing
IN BRIEF:
Migrating forms production, digital color print, and eroding and emerging channels of distribution were at the forefront of Graph Expo 2006.
Following Forms: Manufacturing Trends Evident at Graph Expo
About 590 exhibitors displayed the latest products and services at the annual Graph Expo and Converting Expo 2006, Oct. 15-18, held in McCormick Place, Chicago. Preeti Vasishtha, editor of DMIA’s e-newsletter Print Matters, caught up with Ivars Sarkans, a leading expert on business strategies, printing technology and document production systems, to discuss trends evident at the show. Sarkans, founder of consulting firm Sarkans and Associates, has attended almost every Graph Expo since 1965.
About 275 of the 590 exhibitors are showcasing new products. What are some innovations?
At the Expo, there was an immense amount of forms printed on web and sheet-fed digital machines, inserted in envelopes, processed, inspected and formed into mailers. The Xerox iGen3s are also running forms. At one of the sessions, a speaker talked about the installation of 24 iGen3s, and all were running forms at a service bureau. We’re seeing a tremendous migration of forms and direct mail from traditional plants to other kinds of devices and producers because forms manufacturers haven’t been willing to invest or follow where the forms are migrating.
There are innovations in both digital printing and offset equipment as competition between the two printing technologies intensifies. Heidelberg has a press with a compact keyless “Gravuflow” ink train using an anilox ink metering cylinder. That’s a radical departure from traditional Heidelberg offset press ink train design. KBA has a similar ink train in their 74-Karat, Genius 52 and Rapida 74G models, but when Heidelberg adopts that kind of technology, that’s always news.
On the digital side, there were five web-fed, multicolor forms presses (some were prototypes or technology demonstration units) on the show floor and they’re all digital. You won’t find them in any traditional forms plant, but you will find some of them producing lots of forms.
How will these innovations affect our segment of the industry?
More and more volume is leaving forms plants. Although forms production isn’t declining all that significantly, not a lot of it is produced in traditional forms plants. The challenge for forms manufacturers is to follow the migration of the form, which means acquiring mailing houses and service bureau operations which now produce forms. They have to offer other products or they have to exit the industry.
Distributors face a similar challenge. The threat to distributors is the development of web-to-print systems. Web-to-print is potentially a serious competitor to distributors unless they offer it to their customers. However, even if distributors adopt web-to-print systems, the applications will drive down the margins. Right now, distributors make 30 to 40 percent profits on many products. That’s unsustainable when you’re competing against web-to-print direct sales.
What are some trends at the show this year?
The skill set in the printing industry is changing. IT is becoming a core skill set in almost all areas of printing. A printer needs to have strong IT skills to manage the plant, the workflow (as it becomes digital), to set up web sites, handle web-to-print and variable data printing. A manufacturer has to be well-versed in managing databases. For the most profitable printers, IT is going to be a key technology. Printers who don’t develop their own IT capabilities will be left behind.
We see a trend toward soft proofing and eventually the elimination of proofing in printing plants for common products. There are also interesting developments in bindery. Throughout the printing industry, servo motors (which allow very precise and small computer-controlled movements) are being adapted to automate tasks like pocket setup on inserters, binders and sheet collators, or to automate all folder setup tasks to the point where operators only have to key in job specifications on the control panel. New finishing machines with automated setup provisions are now mostly special models designed for in-line installation with digital printing systems.
At the show, there was a digital UV coater from PAT Technology that can coat any pattern. You can have a printed piece that’s UV-coated in a pattern and that provides a spectacular effect.
What challenges do manufacturers face?
Manufacturers face a difficult challenge because their customers are encroaching on their turf. As more distributors add manufacturing capabilities, that forecloses avenues of expansion or growth for manufacturers. At the same time, traditional forms volume is eroding, and there are limited products that can be sold effectively through distributors. There are still a lot of distributors who don’t sell direct mail, even digital printing. It’s a real challenge.
So the question is: How can a manufacturer diversify and still maintain his role as selling exclusively or primarily through distributors? I think industry trends will drive manufacturers to other channels of distribution, particularly if they make products that distributors do not sell. For instance, if they make prime labels, not many distributors sell prime labels. If they get into serious commercial printing or digital printing, they may be forced to sell direct. These are all strong growth opportunities, but not very successful when selling through distributors.
Another challenge for manufacturers is changing technology. How do they keep up?
They almost have to completely change their business model. One viable option for the traditional forms manufacturer would be to buy a traditional mailing house or a service bureau. They need to follow the migration of forms and at this stage this can be done only through acquisition. Twenty years ago, it could have been done with a service bureau start-up, but not anymore. Traditional forms manufacturers are too far behind the advances that have taken place.
Next year, there will be a packaging show added to Graph Expo. Is packaging a growth opportunity?
For printers, absolutely. If you looked at the sheet-fed presses on the floor, almost all of them were offered with packaging printing options or were already set up to do anything from light-weight paper to heavy packaging board. Sheet-fed press manufacturers have identified packaging as key to their survival. Almost everything they are building, they are building with packaging in mind.
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