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2011 State of the Industry

Placing Customers First

By DO Staff

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.


Technology Development

Consolidation led to fewer leaders offering financing for R&D and proven stability. “Consolidation changed the critical mass of companies that serve this market. Now, you have a lot of very strong companies to back the customers up. That brings a certain stability to the market, it broadens the appeal, and grows the total opportunity,” shares Scott Schinlever, SVP/GM, VUTEk/Rastek, EFI.


While some companies freeze R&D or remove their presence, others do the opposite. Innovation continues. “We invested in services and extended R&D dollars to ensure delivery of the best technologies to help customers grow. We introduced new products in hardware, inks, software, and solutions. More than that, we helped our customers financially, giving them credit and financing—this was incredibly important,” shares Yariv Avisar, VP/GM, Scitex large format printing solutions, imaging and printing group, Hewlett-Packard (HP).


Vendors are resilient, and their dedication to advancing large format print technology during the economic struggle brings future innovation. “At INX Digital we refocused the R&D group and hired more chemists. This allowed for phenomenal progress during a fairly short period of time,” notes Ken Kisner, president, INX Digital International Co. “The things that happen at Drupa—you never would have seen this level of advancement in a viable economy. Printhead companies created faster printheads during the recession and ink companies launched new technologies, which allow inkjet penetration into new markets,” he says.


Large format printers have room for maturation—driven by printhead and ink technology. “At some point you get beyond the feeds and speeds—and we’re not there yet. In five to seven years we will approach more maturity. At that point the workflow becomes important. People want more of a solution and a relationship with a company to support it,” adds Schinlever.


A range of advanced printers, media, software, and inks entered the market this year. A few options are considered more affordable entry points. Others address specialty applications and new revenue sources. Read a full article on new technology from 2011 on


Competitive Threats

As technology advances and new communication avenues open, the industry is getting more competitive. There are added equipment options, new advertising media, alternative vendors, and healthy rivals.


Overseas competitors are opening new U.S. facilities and distribution channels while perfecting customer service and quality. 85 percent of Fisher Textiles, Inc.’s products are made in the U.S. “One of our rivals is competition from the far East continuing to penetrate the textiles market in general,” notes James Gay, director of marketing, Fisher Textiles. “We found success predicated on our ability to develop and supply fabrics when new print technologies are introduced,” he adds. Fisher Textiles is one of the newest members of the HP Registered Latex Media Developer Program.


Alternate technologies and regulations are also challenging. “UV and latex are driving business toward direct to substrate printing. There is the potential for legislation against PVC and solvent in outdoor advertising and transit as well,” highlights Phil LaFata, VP of marketing and international sales, Arlon.


Consumer attention is pulled in many directions. It is more difficult than ever to attract a buyer’s interest. “We notice increased popularity of point of purchase displays and believe it’s related to media advancements. For example, TiVo allows people to skip commercials, so retail companies have had to rethink marketing tactics. There are now inventive ways to use vinyl like wrapping soda machines, elevator doors, walk-in convenience store coolers, and floor graphics,” states Lisa Humrich, marketing manager, Oracal USA.


There is also the threat of non-print signage and publishing forms. Electronic mediums—from iPads and eReaders to smartphones and dynamic signage—are pressing on the print world. “Printers have lost jobs because a customer chose a LED lighting application. This technology that was initially written off as garish and cost prohibitive is getting increasingly better looking and affordable,” mentions Jeff Sanders, digital sales manager, Pacific Coast Fabrics, Inc.


Digital signage is an engaging alternative to printed signage in some environments, but it is inappropriate in others, remaining largely a complement to print. Similarly, while millions of electronic reading devices and tablets are circling, a tangible, printed book continues to be relevant. Thus, the threat of print declining is slim.


New Opportunities

While there are some competitive threats, new markets simultaneously embrace digital print technology. Dynamic signage is growing at up to 25 percent per year, a segment where some print shops are expanding as a complement to their print work.


The UV market is forecast to grow in the coming years and there are three reasons why, according to Sal Sheikh, VP, marketing, wide format printing division, Océ. “There will be transfers from older to newer printing technologies, as users realize productivity gains and cost savings, without sacrificing quality. Number two, because of new applications such as packaging; variable data short runs and prototyping applications. And thirdly, traditional signage applications will also contribute to UV’s growth as more prints are made directly to a rigid substrate,” he foresees.


Sanders says now is the time to innovate, specialize, and experiment. “PSPs should become a specialist in a market by experimenting and offering at least one product and service unique to its operation,” he suggests.


Textile printing is a space for growth, with everything from soft signage to fashion and décor are new applications. “Textiles are different and offer a low cost for mounting and shipping. Look at trade show booths—drayage is dramatically reduced and booth developers have a better shot of eliminating or, at least, reducing labor on the show floor than with five- by ten-foot solid sheets,” comments Steve Bennett, VP, sign and display business, EskoArtwork.


Phipps also points to wallpaper and décor, packaging, and automotive applications as emerging opportunities. “It is beyond just graphics. There are automotive accessories that could be digitally printed as well. We’re looking at the packaging market heavily,” he continues.


Moving Forward

There is excitement among industry leaders. Suppliers and manufacturers that streamlined and made wise investments over the past 12 to 18 months are ready to move on. Some have changed hands, while others left the space, leaving a competitive field of reliable powerhouses and new innovators.


Recent technology developments make it easier for new print providers to enter the market and for seasoned shops to streamline processes and add to their portfolios. Solutions focused on attracting new PSPs feature lowered entry prices and easy upgrade paths. There are also faster, higher quality printers; sophisticated media and substrates; and efficient workflows now available to enhance existing business.


Read the four-part State of the Industry Web series for further discussion on the acquisitions and changes to the market. Also, two notable large format digital print applications are profiled—images representing these projects are shown throughout this article.

Finally, in coming print issues, several key market leaders will provide in-depth perspectives on the industry in our Industry Profile column. These contributors are frank about the obstacles manufacturers and end users face, yet confident about the strength of print. In our September issue read about EFI, Durst, and HP’s viewpoints on the industry and what direction their companies are headed in. Following these profiles, the October issue includes insight from INX Digital, Mimaki, Mutoh, and Roland.

Aug2011, Digital Output

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