Mountains to Climb for Printing Inks

Economists at the U.S. Department of Commerce say that at the beginning of 2001, the American economy is not entering a recession but "a new stage of tepid growth." However, this may be a euphemism for the "R" word, and any impact on the printing industry and industries that serve it may be deferred until the latter half of the year. Traditionally, these industries come in late in a period of growth and are among the last to feel the effects of a business decline.

For ink companies, attaining greater profitability may be a much more difficult task. In recent years, ink companies—unable to effect price rises for their products to keep pace with manufacturing and material costs—have had to make internal improvements to help them run leaner. These measures included streamlining production processes for greater yields, reducing waste, developing or adopting new technologies, and finding more economical ways to package and deliver inks.

As one ink executive says, "We have been paring down wherever we can, but we may be reaching a limit beyond which we can't go, especially if our margins continue to shrink."

One area that does hold promise for cost control lies in improvements in the ways inks can be delivered to presses. Here, the emphasis (mostly with major customers) is on bulk deliveries, new press-side pumping systems, and, to a lesser degree, on-press ink dispensing cartridges.

As these systems become more efficient and sophisticated, and with computerized support systems for mixing and color matching, one future benefit to both ink makers and their customers may be the elimination or reduction of in-plant operations that are space-consuming and high in maintenance costs.

Another cost of business undergoing close scrutiny is in what the industry calls "value-added services." Ink suppliers have long provided customers with a spectrum of services that includes press-side technical support, computerized color matching, inventory and waste ink control, and assistance with environmental control regulation compliance, usually without charge.

As incentives to keep customers, they also have been overly generous with volume rebates, prebates, and the aforementioned highly expensive in-plant operations for which they assume the total cost of installation.

Some ink executives say that the problem is much their own making. As one puts it, "We have allowed the customer the perception that value-added services are included in the price of the ink they buy." Says another, "Many of the value-added services require significant capital investment, so that prices we quote do not accurately reflect our actual costs."

The apparent consensus is that ink suppliers will have to be compensated if these services are to be continued. A first step would be for an ink company to list at the time that orders or contracts are negotiated all of the value-added services it offers, thus allowing customers to choose only those they require at an agreed-upon price.

A key service that ink companies provide customers, but one that also sustains them, is new product development. This past year, American ink companies have announced a number of innovative ink products that they either have already brought to market or soon will introduce.

Prominent among these is Flint Ink's single-fluid ink (SFI) technology for sheetfed applications, which eliminates the need for water or dampening systems. SFI products should be available later this year, according to Flint Ink.

Additionally, Sun Chemical's research and development (R&D) engineers have developed a water-washable lithographic ink, now a marketable product.

Superior Ink reports that its hybrid sheetfed inks, which combine the properties of conventional and ultraviolet (UV) inks, are realizing good acceptance in the field. Says Superior Ink, printers appreciate that these offerings afford the benefits of UV inks while being compatible with the same presses, rollers, and blankets used with conventional inks.

Moreover, several ink companies are engaged in the development of digital or non-impact inks encompassing several technologies, including hot melt, oil-based, and UV-cured ink-jet inks.

These are but a few representative examples of the types of R&D pursuits going on within the ink industry to meet changing customer needs and pressroom environments. Company executives at Flint Ink say that ink companies will have to involve themselves more in gaining better control of the printing process, noting that printing equipment is continually being upgraded to provide much more sophisticated instrumentation and controls.

This evolution requires that ink companies become involved in all stages of equipment development so that they are prepared to measure performance and formulate inks that are specific to a customer's pressroom. But this type of cooperative relationship also must be extended to paper suppliers and suppliers of plates, chemicals, and other press consumables.

Crossover cooperation also is being fostered by the National Printing Ink Research Institute, founded and funded for more than half a century by the National Association of Printing Ink Manufacturers (NAPIM).

NAPIM's members provide input to two printing ink-related subcommittees of the American Society for Testing and Materials. Here, committee members coordinate with their counterparts in the U.S. printing industry and in both national and international graphic arts organizations to conduct more than two dozen studies that seek to establish standards in common areas of concern, such as ink emulsification, ink mileage, ink rheology, ink tack change on various substrates, lightfastness of printed matter, print gloss measurement, and color measurement.

This report concludes with a brief review of how specific segments of the ink industry performed in 2000. Projections for the current year have been included where appropriate.

The continued growth of radiation-cured inks, both UV and electron beam (EB), continues to set the pace for the industry. Last year, the trend continued with a reported sales gain of 18.9%. Radiation-cured inks have become the accepted alternative to conventional inks for printers whose customers seek improved productivity, quick turnaround, and an environmentally safe technology.

Although most UV ink applications are in the offset area, UV flexographic inks are gaining favor.

As more printers moved to UV flexo last year for commercial printing, folding cartons, labels, and corrugated products, this market segment racked up a solid 10% gain. Conventional flexo inks overall grew by 10%, but most of the gain was in water-based flexo, with solvent flexo only showing a 3.5% improvement.

EB inks represent just 10% to 15% of radiation-cured ink sales, but they continue to hold favor for food packaging customers because they offer low residues or extractables. Improvements in presses and curing units have lowered application costs, increased line speeds, and reduced waste. Continuing ink research has increased stability and properties such as gloss and resistance as well as chemicals and scratches.

Publication gravure inks had another year of heel dragging. None of the three ink companies that service this segment of the industry (Flint Ink, Siegwerk USA, and Sun Chemical) did well—at best, gains were in the range of 1.5% to 2%. Packaging gravure inks seemed to have shown a better year-end result, up more than 4%, but this is illusory since the gain is measured from the low base set the year before.

Buoyed by steady volumes in catalogs, magazines, and quality freestanding inserts, heatset web offset inks had a reasonably good year, up 3.7%. Doing even better were commercial sheetfed inks, which gained a healthy 6%.

Metal decorating inks had low-growth returns of only 2%. Completely dependent on the health of the beverage can industry, this segment's fortunes parallel that industry's ups and downs.

The news inks market, particularly coldset news inks, is another segment of the market reporting gains—up 4% and growing. Newspapers also are looking at water-based flexo inks as strong contenders for greater utilization, mostly by papers with circulations below 100,000. Additionally, news ink suppliers are benefiting from the many newspapers that have undergone dramatic design changes, most of which involve larger graphics and greater use of color, which in turn requires more ink coverage.

The move by some publishers to narrower webs, from 54 to 50, was expected to reduce overall news ink consumption, but suppliers say that the effect has been negligible. With only two principal national suppliers (Flint Ink and the U.S. Ink division of Sun Chemical), publishers have accepted reasonable price increases that have offset any declines.

The most dramatic area of growth has been with digital inks, a segment that had long been ignored by printing ink companies principally because the ink-jet process and formulations had been radically different than their standard product lines.

But this all has changed in recent years. Ink-jet printing technology has improved so much that it has become the one of top choices for many applications in industry and the office environ alike—so much, in fact, that ink-jet-related sales in recent years have exceeded $10 billion annually.

At this level of growth, it was probably inevitable that ink companies would seek to adapt their traditional ink processes to gain entry into this burgeoning market. The two leading companies in the ink industry, Flint Ink and Sun Chemical, both have recently introduced digital ink products, and others soon will join them.

A Flint Ink spokesperson says the company's interest in digital inks is part of its continuing program "to explore new ways to utilize our core competencies to meet our customers' changing needs."