A number of forces make an early state of the industry report from Digital Output and some of the market’s leaders quite relevant and timely. Typically compiled mid-year, our report comes just a few months into 2008 to address the economy, environmental trends, and some exciting new product development.
In this second part of our four part series, more leading ink, substrate, and printer manufacturers speak to the current market.
For some, budgets are tight, across the globe and industry-wide. The bulk of the graphic arts equipment providers we speak with say the economy has yet to dramatically affect them.
"Many experts expect the economy to weaken in the first half of 2008," notes Rick Scrimger, VP and GM, Roland Color Products Division. "These economic conditions will likely impact our industry as it impacts others. At Roland, we have seen little change in our business trends so far for 2008. We finished 2007 with record revenues, and 2008 is off to a good start. While there are no guarantees for any business facing global economic difficulties, we believe we are well positioned to expand our customer base, build an even stronger distribution network, and advance our technologies this year to capitalize on the long-term growth opportunities offered by the digital printing marketplace."
"We find that the graphics and signage business is subject to some ebb and flow based on overall economic conditions," says Tom Black, marketing operations manager, 3M Graphics Market Center. "Unfortunately, when the economy slows, companies often tend to cut back on promotional activity and that certainly affects sign and graphics manufacturers and, by extension, their suppliers of media, inks, etc."
"There also can be less merger and acquisition activity," adds Black. "And that means less rebranding and the need for related graphics and signage. Having said that, however, I’m still ‘bullish’ on 2008. We’re releasing some exciting new products that should contribute to a good year for us."
Product development at a number of companies, including Roland, has yet to slow. Since this time last year, Roland has introduced new versions of its VersaCAMM, AdvancedJET, SOLJET, and sublimation models. "We have also introduced new solutions for growing niche markets such the R-Wear line of custom apparel solutions," says Scrimger. He adds, "In 2008 Roland has already introduced two new products – a new version of the XC-540 54" printer/cutter featuring new Roland Intelligent Pass Control technology, and White ECO-SOL MAX ink for the XC-540. These new products make the XC-540 our fastest and most powerful printer/cutter ever and reflect our strong commitment to advancing our technologies through 2008 and beyond."
Environmentalism creates a strong push and pull in the graphic arts market and beyond. What does green mean to some of the graphic arts leaders? "This seems like a simple question, but it is very complex," puzzles Black. "Part of the problem is—we don’t really have a definition of what constitutes green for products in our industry. And, I’m sorry to say, there’s also a lot of greenwashing going on. Greenwashing refers to making inaccurate or unfounded claims about the green-ness of products to try to gain marketing advantage."
3M already removed the lead from its screen printing inks and are very close to doing the same for the company's other inks. "We believe one needs to look at the company as much as its products because green involves a commitment to green manufacturing, green packaging, green supply chain, etc.," Black explains. "We feel very good about 3M’s environmental track record. And we will never make green claims that are not absolutely accurate."
Manufacturers agree that there is some discrepancy in the term green. "When industry experts discuss green inkjet printing technologies today, they are generally referring to printers that support new bio inks and biodegradable media options, states Scrimger. "Like many other manufacturers, our own definition of what makes a digital printer green is evolving. We believe there are two parts to the equation. First, it is important to adopt sustainable manufacturing practices designed to preserve the environment. Second, we believe it is important to help our customers achieve high environmental standards. We pioneered the development of eco-solvent inks in 2002 and continue to advance this ink formulation to meet stricter environmental standards."
Roland employs a unique Digital Yatai manufacturing system, a revolutionary cell-based model that is entirely paperless and driven in part by solar panels. "Roland has been a pioneer in the development of eco-solvent inkjet printers for the durable graphics market," says Scrimger. "Our products allow Roland customers to produce prints that reflect outstanding image quality and last durability while minimizing the environmental impact of their production operations. Every Roland printer today is designed and manufactured through sustainable processes that meet the company’s high environmental standards. These standards and practices meet ISO 14021 standards as well which require the company’s manufacturing practices to prevent global warming, use recyclable resources, increase environmental awareness, and disclose information on the environmental attributes of the product."
Within five years, Roland expects to offer varying levels of support for green inks and media throughout the inkjet line. "Biodegradable media options will be introduced for Roland eco-solvent inkjets starting in 2008. Greener ink solutions will be offered in the future as well," says Scrimger.
Scrimger also points out that the available green products are in their infancy. "It is important to note that many of today’s bio inks and media products are in the early development stages," he says. "Most options available today do not meet the industry’s high standards for image quality and durability, particularly for outdoor applications. We believe that future advancements will bring to market greener ink and media solutions with better performance characteristics. We intend to make these solutions available to our customers."
As noted in part one of this industry report, the last eight to 12 months are marked by a host of acquisitions and mergers. What is the effect on the market—Will there be less offerings on the table? Will stronger, larger companies lead to more substantial product development? Will it be more difficult for small companies to compete?
"We’re not seeing a lot of evidence [on] the impact of consolidation overall," notes Black. "While there have been several mergers of sign and graphic manufacturers recently, there are also lot of new startups to offset them. One trend we see is that, as the prices of digital printing equipment continue to fall, more and more small operators are entering the marketplace."
Scrimger notes that consolidation brings some challenges. "Consolidation is a natural process within emerging industries and we are seeing it in the digital printing marketplace. While acquisitions allow companies to expand their product lines and increase their revenues quickly, they present a number of challenges for the consolidating companies. Acquisitions often create confusion both within an organization and in the marketplace as employees and others adjust to new roles and new ways of doing business. Customer service issues can arise as well as the company absorbs an expanded, more diversified customer base."
"To date, Roland has built its business organically and has stayed focused on the durable graphics market, delivering tightly integrated business solutions for the company’s customers in this segment," says Scrimger. "We believe we are well positioned to build on our success as the competitive landscape evolves and we look forward to the opportunities ahead."
Corn and latex-based inks can soon take the place of caustic, volatile components. Perhaps more printed signage will move to non-printed digital signs. Recent and rumored technology announcements may be revolutionary or disruptive to the graphic arts market.
"Certainly dynamic digital signage is something with which traditional sign and graphics manufacturers must grapple. But we see this as more evolutionary than revolutionary," says Black. "3M, through new products and acquisitions, has made a commitment to helping its customers integrate dynamic digital into their operations."
"One trend that we are watching closely in the broader graphics market is the introduction of new page-width print heads that are offering extremely fast production speeds for smaller format graphics," says Scrimger. "Should this technology become viable in the wide format market, it will redefine the performance standards for all manufacturers currently in this space."
Factors like the green movement, the economy, and new technology are heating up the large format market. Stay tuned to our next part of our series, where more industry insiders share their take on what is influencing our market.