State of the Industry
Large Format Remains Strong
By Kim Crowley
1 of a 4 Part Series
The last few years have been exciting and volatile in the large format print space with new technology, consolidation, economic shifts, and environmental demands. Despite economic news, the industry is strong and growing. So much remains to be seen from the market.
With this report, we speak with some of the people who supply the industry, tapping into their business and the market’s pulse. In this first part of our series we speak with two media experts—Fisher Textiles Inc. and KAPCO Graphic Products—as well as Océ North America, a leader in wide format scanning and printing, production print, and office systems. Look for the next three installments of the Digital Queue, which feature exclusive interviews with other industry insiders.
Dollars and Sense
While U.S. economic reports have shown struggle, the large format print industry remains resilient. New products and innovations continue to stir interest and growth.
Some manufacturers have not felt an overwhelming effect from the economy; they are preparing for it. "Currently the economy has not made a negative impact on our business," says Scott Fisher, VP, sales and marketing, Fisher Textiles Inc. "The forecast for the next three months is very good. The trade show season—which effects our business—is already in full swing." Fisher does expect a bit of a pull back in the fall.
KAPCO has not felt too strained by the economy. "The biggest thing we see—we get more interest from Europe. They buy U.S products at 35 percent cheaper," notes Mike Popovich, sales manager, digital products, KAPCO Graphic Products. Popovich says the real show of an economic downturn will be when pleasure travel decreases. "Florida will tell me when the economy slows. That will tell me more about the U.S. economy."
Where KAPCO feels the strain is due to the price of oil, which affects the production of products like vinyl, PVC, and adhesives. Another factor creating an uncontrollable pinch is freight. "It’s the one thing you can’t get your fingers on. You have no recourse," says Popovich.
Has Océ felt the economy’s effects? "Yes and no," says Sal Sheikh, VP marketing, Wide Format Printing Systems (WFPS), Océ North America. "No in the sense that our fourth quarter  results were fantastic." According to Océ’s fourth quarter 2007 report, Océ WFPS showed nine percent organic growth in revenue, and the share of color increased to 33 percent of revenues versus 24 percent in 2006. "The challenge," Sheikh notes is, "a lot of customers are very hesitant about making capital investments…when there is uncertainty looming."
For the last two to three years, there has been a surge of consolidation. We’ve seen it with manufacturers of inks, printers, color equipment, and more. EFI owns VUTEk; Hewlett-Packard (HP) acquired Nur and MacDermid ColorSpan; X-Rite owns Amazys Holdings and Pantone. These are just a few examples of corporate compilations.
As far as printer manufacturers go, "It was inevitable to some degree," says Sheikh. "There were too many competitors in the market."
"In a few years there will be a handful of major players in the industry," Sheikh predicts. "We’ll probably see three to five major companies driving the market."
Popovich doesn’t see much room for consolidation on the media side. He says that not more than six or seven companies in the U.S. are producing the leading substrates. With this small of a group, he says, "Consolidation is never gonna happen."
We almost cannot talk about the print world, or any business, without mentioning the push for "green" product and action. Quite a few vendors have posted new green standards and initiatives in the last six months alone.
There is certainly a gap when it comes to how some vendors define the term green. "We see people are unsure of what it means to be green. There are no standards or several different standards," explains Fisher. "It makes it difficult for customers that want to sell a green product."
Part of the problem, Popovich notes, is there is no controlling body for digital rules and regulations. Popovich says that if it’s biodegradable, "to me, that’s a green solution."
Who should set the standards? "You’d like to see it come from a government agency so there can be one standard for everyone to look to. However, often it takes these standards too long to come out," says Fisher. "I think trade groups –SGIA and ISA—are working to try and figure out for their printer group what it means to be green."
Some substrates are listed as green, but that is only when the product is not printed on, notes Popovich. "A pretty good amount of solvent machines are still on the market," he says. This affects recyclability and biogradability of the printed material.
A portion of the ENVIRO-Tex line of fabrics from Fisher Textiles includes recycled yarn. Fisher tells us that 30 percent of the fabric must be recycled to be considered green, according to the Federal Trade Commission. In the manufacture of textiles and yarn there are drop offs or wastes are easily recycled. After Fisher Textiles fabric is made with recycled yarn it is sent back to the recycled yarn supplier to be tested and certified for the percentage of recycled material used.
Fisher tells us the percentage of Fisher Textiles’ business from ENVIRO-Tex is very small, yet they have gotten a lot of interest. "A lot of printers are telling us they are pushing the use of green to their customers."
Although interest in green products was always there, "the willingness for people to use green fabrics has not been overwhelming." Fisher says the supply of those materials needs to be there, and there has to be a willingness to pay more for them. "There’s an assumption that if you are using recycled yarn it should be less expensive than virgin yarn," says Fisher, but that is not the case. There is a four to five-cent differentiation between virgin and recycled fabrics that Fisher Textiles puts in the market.
Down the road, Popovich knows green substrates will be even more important. "Certain customers are going to want them." Right now, he notes demand from bigger corporations like Nike and Starbucks who want to use green practices and products.
Popovich adds, "With the exception of vehicle wraps, wide format is a short term market." Right now one of the things KAPCO is looking at producing is short-term outdoor paper products which will be good for 60 days. Although, he does note, "Vinyl is never going to go away. It’s still the most cost-effective sign material—PVC."
Océ has a history as an environmental advocate. "Océ has been sustainable for much of its 125 years. We’ve always designed and developed products in a sustainable way," says Sheikh. In order to minimize the carbon footprint his customers create, Océ manufactures products so the customer can operate them a sustainable way. They look at everything from electrical consumption to emissions, VOCs, and media.
Among other environmental initiatives, Océ sponsors author Ed Avis’ soon to be released Green Reprographics Handbook, a guide to being green and using it in promoting your reprographics business. Océ is also accepting applications for its first annual Green Reprographer of the Year award.
Applicants—not necessarily Océ product users—submit achievements in green practices and the rewards to their customers.
From bioinks to HP’s new latex inks, new technology continues to change large format printing. We anticipate new technology previews at the ISA show in Orlando next week. Sheikh says to look for exciting announcements from Océ this May in Las Vegas at the IRgA show.
Look for additional perspectives on business, the market, and more on the state of the industry in our upcoming issues of the Digital Queue and online.
Click here to read Part 2 of this exclusive online series, Large Format Remains Strong.
Click here to read Part 3 of this exclusive online series, Large Format Remains Strong.
Click here to read Part 4 of this exclusive online series, Large Format Remains Strong.