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Oct 1, 1997 12:00 AM
Each year since 1983, the Web Offset Assn. (WOA) and the Non-Heatset Web Section (NWS) of Printing Industries of America (PIA) have conducted an industry survey, providing insights into the state of the web printing industry both today and into the future. The 1997-1998 Market Outlook for Web Offset Printers paints a picture of a stable industry segment, responding to the changing needs of its customers and the challenge of new technologies. Of equal importance is a portrait of the challenges faced by today's heatset and non-heatset printers.
This article presents highlights of the most recent web market outlook, an american printer exclusive in-depth report developed with WOA and NWS in conjunction with this year's vendor-sponsors--Baldwin Technologies, Day International, Heidelberg Web and Sun Chemical.
The 1997-1998 survey was sent to commercial heatset, non-heatset and combination web offset printers throughout North America. Combination printers, as defined by the study, are those with heatset and non-heatset web offset capabilities, as well as sheet-fed presses. Of the total respondents, 39 percent were heatset printers, 40.2 percent were non-heatset printers and 20.8 percent were combination printers. This represents a substantial increase in the response of non-heatset printers over the 1996-1997 survey.
Not surprisingly, heatset printers reported the largest number of employees, followed by combination firms and non-heatset printers. The average number of heatset employees, however, decreased from 311.4 in 1996 to 243 during the past year. Employees at non-heatset establishments remained approximately the same at 96, and the number of employees at combination printers dropped from 265.5 last year to 239 during 1997. Overall, among all companies, there was a slight decrease in employees from 240.1 in 1996 to 223 in this year's survey. These declines most likely indicate advances in automated technology, coupled with a "lean and mean" approach to management. All-in-all, fewer, but highly skilled, employees can boost higher productivity in web shops--all of which leads to improved bottom lines.
In a quick peek at the types of equipment web printers are adding to their line-ups, 26.7 percent of heatset printers and 25.0 percent of combination printers indicate that they plan to purchase a heatset web offset press during the next 12 months. In contrast, only 9.7 percent of non-heatset printers are interested in purchasing a non-heatset press during the coming year. Acknowledging that printers are uniformly optimistic in their forecasts and stated buying patterns, it nevertheless would seem to be a market in which printers are serious about new web press purchases.
In the process of evaluating web presses for purchase, printing execs have a checklist of features that add up to increased productivity and savings. Features designed to decrease makeready times tied for first place with print quality when printers were asked about their major considerations when purchasing a new web press. In a close second place, printers pointed to "efficiency" as another important selling point.
The remainder of the answers spread out across the board, with return on investment, quality of the press, speed and dependability all having firm adherents. Interestingly, automation was considered a "major" issue by only 3.5 percent of the respondents and price was listed as a major consideration by only one person. However, with answers spread across such a wide range of choices, it may indicate that there is no leading issue of universal appeal to all web printers when making a press-buying decision. Still, emphasis on decreasing makeready and efficiency point to a growing appreciation of the importance of productivity gains within the pressroom.
Sheet-fed offset presses also are receiving attention. Of all respondents to the survey, more than 50 percent currently own sheet-feds and 10.4 percent intend to purchase them within the next 12 months. Heatset printers in particular are looking to add sheet-fed capabilities and/or upgrades, with 15 percent stating intent-to-buy preferences for the coming year.
And what of the highly touted computer-to-plate (CTP) equipment? Combination printers lead the pack at present, with 21.9 percent currently owning CTP systems of some sort. Slightly more than 18 percent of heatset printers have already bought into these technologies, with an additional 21.7 percent stating they are "in the market" for CTP equipment within the next 12 months.
On average, almost 16 percent of web printers currently own computer-to-plate equipment, with an additional 14.3 percent planning a purchase in the near future. Non-heatset printers represent the group lagging the most noticeably with this technology. Only 9.7 percent of non-heatset printers have CTP systems and only 8.1 percent seem interested in adding the technology to their stables within the next year.
All respondents reported that their firms' total physical output increased an average of 8.1 percent in 1996, this is down from 9.9 percent during 1995. Survey participants predict that the total output will increase 9.1 percent in 1997 and, optimistically forecast an additional 10.9 percent increase during 1998. As the Web Market Study now has started to track projected figures, it will be interesting to compare in the years ahead how well this market segment forecasts actual performance.
All respondents tracked that non-heatset web offset output increased the most in 1996 (10.1 percent), followed by gravure, letterpress and flexographic print output, averaging 8.2 percent. There appears to be a mini-trend toward other processes and away from offset, with higher increases projected for flexo and flat predictions for offset.
Heatset web offset sales, according to respondents, are predicted to decrease slightly in 1997 and 1998 as a portion of total sales (42.7 and 43.1 percent, respectively). Non-heatset web offset sales in 1997 (38.2 percent projected in 1997 and 1998) also are expected to decline somewhat. Slight increases in letterpress, flexographic and digital printing are expected, however.
So what are companies producing with their high tech equipment? General commercial and advertising products continue to dominate the product mix, representing 23.0 percent of everything produced by all companies. This is an increase over 1995's 20.95 percent number.
Newspapers and inserts come in a strong second with 21.7 percent, and magazines and inserts a distant fourth at 13.0 percent.
In examining projects for future output of printed products, newspaper shoppers, hardbound books and direct mail products are expected to slightly increase as a percent of respondents' output from 1996 to 1998. Consumer catalogs, newspaper inserts, magazine inserts and paperback books, on the other hand, are expected to decrease slightly overall during this same time period.
Of particular interest is the trend away from coated paper on heatset presses. During the first quarter of 1997, coated paper usage dropped to 62.5 percent from the reported first quarter of 1996 (63.8 percent). When asked to provide an estimate of the use of coated paper on heatset presses as a portion of the total, respondents expect to use only 62.3 percent for all of 1997.
With uncoated papers on heatset presses remaining stable at 33 percent, the variances can be traced to slightly increased use of supercalender (SCA) papers. SCA papers are predicted to increase from Q1 of 1997 (when they represented 4.5 percent of the total) to the end of the year (when they are expected to represent 4.7 percent).
Although the use of coated paper is slightly declining on heatset presses, non-heatset operations are increasing the use of coated paper as a portion of the total. For all of 1997, non-heatset printers are projecting usage levels in the 10 percent range, based on first quarter 1997 usage of 8.2 percent. Uncoated paper on non-heatset presses continues as king at 89.9 percent for the first quarter of 1997. Although no respondents reported the use of supercalender (SCA) papers on their non-heatset presses, improved SCA grades and added capacities coming on-line during Q1 of 1998 could change the picture in the coming years.
With the emphasis on improved makereadies and increased productivity, the 1997-1998 Market Outlook for Web Offset Printers includes useful data addressing this arena.
On average, respondents reported average amounts of makeready waste (as a percent of total web press output) at 7.7 percent and average running waste at 5.6 percent. It would appear that non-heatset printers are better at controlling running waste, reporting only 4.9 percent, compared to heatset printers at 7.4 percent. This difference, however, partially is attributable to the more complicated heatset process and to the types of products produced in these plants. Makeready waste is consistent across all printer types, with no noticeable differences between heatset and non-heatset printers.
If printers are going to reduce makeready waste, they must fully understand the causes. To help in this education process, the WOA/NWS study asked respondents to identify the major reasons for makeready waste. Although there was no one major cause, over 65 percent of makeready waste, according to survey participants, is directly attributable to problems with registration (29.8 percent), color (24.6 percent) and ink (11.4 percent).
In fourth place was "other" at 16.7 percent, suggesting that printing operations across the board do not always have control over all aspects of the printing operation.
Then, too, in today's digital age, with files increasingly being handled in new ways, makeready waste, once thought to be the result of pressroom problems, could more accurately be traced back to various prepress operations. The WOA/NWS study did not investigate prepress considerations that could lead directly to registration and/or color problems. Although plate problems were listed by seven percent of respondents as a major reason for makeready waste, it is wise for graphic arts execs to investigate the entire process before trying to "fix" problems on-press. This is an area in which vendors and dealers can provide expert assistance in helping web printers address makeready problems.
The survey also asked printers how they planned to improve their firm's operation. As in past years, the #1 answer was to increase sales in the present market, followed by improved efficiencies. Almost 50 percent of heatset respondents indicated that the best option to improve operations was to increase sales volume in present markets, compared with 38.3 percent of non-heatset markets. Both heatset and non-heatset printers also looked to increase sales volume in new markets.
While we commend printers for wishing to sell more, it is only fair to point out that web operations already are fighting for the same piece of the pie in most cases. Perhaps a closer focus on increasing profits would be more to the point, although increasing sales volume, in conjunction with improved efficiencies, can only be good for the bottom line.
It is important for web printers to understand that they must do an effective job of marketing their services. In this day and age, marketing includes not only identifying and mastering your core competencies, but identifying and mastering value-added services. The tough part about value-added services, of course, is that they change constantly. As soon as everyone does it, that service is no longer "value-added." Printers need a strong internal marketing organization that understands this concept and proactively seeks to offer customers services they truly find important.
Finally, the survey asked web printers what they considered to be major problems facing the industry in 1997 and 1998.
Unlike 1995 and 1996, when all eyes were on paper pricing and availability, this year's survey responses were many and varied. In fact, there is no one problem dominating the industry, according to this year's survey participants.
Lack of skilled employees edged its way into first place, having been cited by 17.5 percent of the respondents as their major problem. This shows a jump for this category from fifth place into first from 1996 to 1997, but this is a bit misleading. In 1996, 18.6 percent of printers stated that finding qualified personnel was a problem, so 1997's 17.5 percent actually represents a slight decrease.
Capacity issues also ranked high in terms of problem areas, and paper prices still continue to be a concern, falling into the #3 spot. However only 15 percent of this year's respondents listed paper pricing as an issue, compared with 51.1 percent in 1996 and 73.2 percent in 1995.
Competitive pricing (read unrealistically low pricing) and environmental issues continue to top web printers' list of top 10 problems, with industry competition itself presenting problems.
A large number of printers believe that environmental and OSHA regulations are a major detriment to continuing success. And this trend is likely to continue as Congress looks to pass increasingly stringent air quality legislation. It is fair to say that many printers believe there is too much government regulation, i.e., too much interference at both the federal and state government levels. Respondents have pointed out over the years that pollution controls and regulations regarding the disposal of hazardous materials are expensive to comply with, especially within an industry whose profit margins persistently remain at about three percent on average.
For the first time in years, printers did not cite technical problems as a major concern. However, three of the respondents pointed toward digital technology as a challenge. Whether they are concerned about digital printing technology, computer-to-plate or other digital issues (such as competition from non-print media) is unclear. But printers must never take their eyes off the moving target of changing technology.
Web offset printers obviously face a huge array of challenges in moving their businesses forward into the new millenium. Business is not "as usual" and printers in this large-volume segment are vigorously taking stock of where their companies should be going during the next decade--and into the next century.
For a copy of the 1997-1998 Market Outlook for Web Offset Printers, contact the Web Offset Assn., 100 Daingerfield Rd., Alexandria, VA 22314; or call (703) 519-8142. The study is available to PIA members for $80; the price for non-members is $100.
For more information, please refer to the charts on pages 50 to 67 of the October 1997 American Printer.