The 2011 Digital Output State of the Industry report comes at a time of cautious optimism. After several financially rough years across nearly every business segment, large format digital print suppliers witness an increasing uptick in capital investment.
While some technology manufacturers succumbed to economic conditions, others streamlined efficiencies and/or invested in research and development (R&D). A group of hearty leaders, merged companies, and new innovators weathered the storm. They are now poised to sell equipment, media, ink, and software to an evolving field of print service providers (PSPs).
Warming Climate
The global economy and the large format print industry were tested in the past few years. The overall climate of the last 12 to 18 months cannot be sugar coated. Several challenges remain for printing equipment, media, and ink manufacturers in addition to PSPs. Vendors are the first to admit these issues.
“Commodity and raw materials—fuel, silver, and aluminum, were volatile in terms of cost and this directly affects our product costs. These commodities affect the prices our customers pay for necessities such as paper, fuel, and electricity. Plus, the dollar shifted, which is relevant for international companies such as Agfa Graphics,” explains Peter Wilkens, president, Agfa, North America.
Vendors circumvented these issues by working within existing product portfolios and revamping marketing. “We made tough choices about the consolidation of product lines, elimination of specialty products, and the introduction of lower cost products to address the changing market,” remarks Angela Mohni, VP marketing, Neschen Americas.
“Being everything to everyone has been difficult. Vendors have to learn to be more productive by doing more with fewer resources. A smarter, leaner workforce has emerged and as the economy continues to revitalize itself, this workforce will capitalize,” she adds.
“When the economy changed in October 2008 we adapted quickly because sales dropped and orders stopped. We then reacted. It was a bit scary for us to actually be spending more during a worse time—but it paid off,” shares Brian Phipps, GM, Mutoh America, Inc. Mutoh opened and staffed four additional offices in the U.S. The company also participated in more trade shows to broaden its presence in the market.
The last several years challenged virtually every business, but financial confidence is rising. “We went through some challenging times the past two years, but hunkered down and are the better for it. We look to the future with great optimism,” remarks Michael Richardson, director of sales/marketing, print media, Aurora Specialty Textiles Group, Inc.
“With the resurgence of the stock market and a corresponding increase in consumer confidence, the economy is expanding. There is an increased overall demand for consumer goods, and advertising budgets are growing as well. Additionally, signage or graphics projects previously on hold are going forward,” comments Jennifer Kigin, marketing operations manager, 3M Commercial Graphics.
In some ways the negatives of a slow economy actually cause a larger, positive impact. “It is forcing many entrepreneurial companies, large and small, to depart from their comfort zones, invest in new technology, and develop new ways to make money,” says Fran Gardino, business development manager, Mimaki USA, Inc.
“Vendors adapted by being more cost and ROI conscious. Every dollar must count and every solution must provide reliable results,” he concludes.
Financing is becoming easier, allowing for increased R&D, which eventually translates to equipment purchases. “The slight improvement in the economic situation and stability of policy making has allowed business owners and managers to free up funds for capital investment and marketing programs. As the old saying goes, when times are good, you advertise; when times are bad, you better advertise. You can only hold the line for so long before you have to make an investment or inevitably be left behind,” says Rick Moore, director of marketing, MACtac Graphic Products.
The industry is ready to reinvest and others are open to leap into the space anew. “We are currently noticing a trend in the convergence of commercial/offset shops purchasing wide format,” notes Dean Derhak, marketing director, ONYX Graphics, Inc.
Changing Landscape
The print landscape is changed on all fronts. There is continued revision of market players—from manufacturers and suppliers to end users and print providers. Within the last 12 to 18 months, some succumbed to the challenging economic times; others took advantage of the situation and purchased supporting and competitive business.
Several companies decided to focus efforts in other areas and left the market in some form. In 2010, Italian media company Ferrania Technologies phased out its U.S. operations.
Xerox Corporation announced it will discontinue taking orders for wide format products in the U.S. and Canada in 2011. Shortly after, Gerber Scientific Products, Inc. exited the large format flatbed printer business.
A few vendors changed hands and names. Alcan Composites is now 3A Composites Holding AG. With the sale of the Bienfang fine art paper line, Elmer’s renamed its commercial foamboard segment EnCore Products, Inc.
The U.S. recently began to attract overseas manufacturers. Bordeaux Digital Print Ink Ltd. begins manufacturing in the U.S. this year. Teckwin International set up a demonstration and service center in Las Vegas, NV, featuring its printers and router/cutters.
Meanwhile, other product manufacturers are investing to add to their portfolio and competitive edge. Agfa recently completed acquisition of Gandi Innovations Holdings LLC North American operations then acquired supplier Pitman in August 2010.
In media, FLEXcon Company, Inc. acquired Arlon, Inc., which is renamed Arlon Graphics, LLC.
Transilwrap Company, Inc. acquired Interfilm Holdings, a distributor and converter of flexible films.
On the software side, EFI took over Streamline Development, LLC, a provider of PrintStream enterprise resource planning and management information systems software. Quark Inc. acquired Gluon and its HyperPublishing System. Screen USA merged with S. Ten Nines California, LLC, a sister company that engineers software that drives the company’s print and prepress equipment.
Sales and distribution channels were altered as well. “There are new distribution agreements where companies are trying to gain more access to customers,” points out Mitch Bode, VP, wide format inkjet and specialty ink systems, graphics systems division, Fujifilm North America Corporation.
Fujifilm acquired dealers and distributors years ago. “We now see forward integration where manufacturers are acquiring distribution channels or developing channel partners to reach more customers,” notes Bode.
In late 2010, Canon U.S.A., Inc. announced Océ North America Wide Format Printing Systems division as a dealer of its imagePROGRAF large format printers.
According to Ryan Buy, director of sales, Teckwin, inkjet equipment has been commodified by many distributors. He attributes this to distribution consolidation. “This will actually reverse, as each equipment manufacturer has less brand identification,” he predicts.
Some may ask whether recent consolidation is good or bad for the industry. If it leads to innovation and growth, then it is positive. “If the industry doesn’t move forward, that means our customers can’t move forward. They can’t grow businesses,” notes Chris Howard, SVP, sales and marketing, Durst Image Technology US LLC. “Our common pool of customers are smart people. They will find avenues for revenue and they might find those avenues outside of print, which would be bad for everyone.”
Consolidation is a natural and, many times, beneficial part of all industries. Its presence in large format print is drawing in both new end users and applications. “As the Internet flattens out access to information, markets will start to consolidate. There are blurry lines between the sign and screen markets, and there are blurry lines between traditional retail sign, packaging, and label markets as well. Those were well contained environments and now a lot of commercial print has some tie over to large format,” highlights Rick Scrimger, VP/GM, Roland DGA Corporation.
