As bindery owners and employees, it’s easy to get caught up in the day-to-day running of the business. Keeping production orders on track, soliciting new business and watching the bottom line consume the majority of work hours. However, it’s important to keep an eye on the industry to better understand the forces and factors that will affect the future of binding and finishing. This article, reprinted with permission from NPES, provides valuable insight into the challenges facing postpress equipment manufacturers. As equipment manufacturers react to these challenges, the binderies will have to react as well.
Postpress manufacturers are highly dependent upon new press equipment sales for new business. The bad news is that fewer new presses are being purchased as print volumes continue to decline (see Figure 1); hence, fewer opportunities are arising to sell new postpress or finishing equipment. The good news is that with continuing market consolidation among print service providers, those that are purchasing are buying highly sophisticated and automated presses – along with highly sophisticated and higher-value finishing equipment.
The implication for postpress manufacturers is an urgent need to “right-size,” which involves downsizing to produce fewer units, while “up-sizing” to meet the demand for more sophisticated finishing equipment.
The printing press industry is in the classic downward slope of a life cycle. The potential customer base is consolidating and shrinking, and a used equipment market, along with a knowledgeable base of maintenance personnel, is keeping the installed base alive longer than anticipated. However, not all is lost for finishing equipment manufacturers.
As the financially weaker print shops disappear, those remaining should, in theory, become stronger. Those stronger print shops will be in a race to establish the most efficient and the highest volume businesses. To achieve this, they will need to have the lowest price, the greatest flexibility and the most highly automated equipment.
Opportunity for finishing manufacturers
The opportunity for finishing equipment manufacturers is in addressing the needs of this upcoming, financially stronger base of remaining print shops. This means more productive, more automated presses. Fewer units will be sold than previously, but the top-line revenues and profit margins will be attractive for manufacturers.
The application/market focus of those presses will need to be on marketing collateral and direct mail – applications still in a growth mode and less likely to be impacted by electronic technologies in the near term. Those applications likely require more frequent paper changes than long-run periodical and publishing applications, which continue to be more severely impacted by electronic technologies (see Figure 2).
A focus on marketing collateral and direct mail applications by press manufacturers, in combination with advanced nesting software, will open up web-to-print opportunities that until recently have been profitably accessible to only the very large print providers. Web-to-print business infrastructure will be critical in driving up print volumes for the remaining financially strong print shops; it will open business from a regional to a broader national and even international customer base. To make web-to-print a profitable business, it has to become nearly labor-free. Automated finishing is an absolute requirement of web-to-print. The goal of a highly automated web-to-print operation is for most of its labor effort to be concentrated on packaging and shipping the final print job.
Threats to finishing equipment manufacturers
As mentioned earlier, the threats to finishing equipment manufacturers from electronic technology alternatives will get stronger in years ahead as at least 25 percent of page volume disappears. Finishing equipment manufacturers must “right-size,” staying two steps ahead of the industrys print volume declines to remain profitable.
Simultaneously, with smaller R&D budgets, they must invest in creating more automated finishing equipment, in order to provide print shop customers with the types of new equipment they will need.
How do NPES postpress manufacturer members respond?
NPES postpress manufacturer members are very cognizant of the looming challenges. Demand for presses from emerging markets is somewhat mitigating the decline in demand in Western markets, but ultimately, overall demand for presses and associated finishing equipment will continue to decline.
Since we are still in the early stages of digital press market development – particularly ink jet production printing – automated finishing of digital production printing output remains under-served and is an area of opportunity. Some finishing equipment manufacturers are trying to apply their products designed for analog printing presses to production inkjet printing presses, sometimes with misguided energy. For example, some are showing their automated finishing equipment with inkjet production printers for newspaper applications. Unfortunately, for reasons too numerous to mention here, newsprint printing with inkjet technology is unlikely to become broadly popular; hence the resources that have gone into adapting newspaper finishing equipment to work with high-speed production inkjet printers are unlikely to pay large financial dividends.
Concurrently, the equipment demands for finishing digitally printed books remains in need of further investment to more effectively match the finishing equipment requirements with digital book printing production printers.
Printed page volumes are in irrevocable decline. Electronic technologies are freeing content, allowing more rapid dissemination than ever before. Print doesnt become obsolete, but the low-value pages that previously were created to attain the lowest possible cost per page, and then stored in inventory, are no longer tolerable in new business models.
Ironically, electronic technologies are enabling printing to become more efficient – allowing offset presses to print very short runs, just in time – closing the gap between digital and analog production printing. This will require a re-balancing of NPES finishing member firms’ workforces, a process that must be matched in scale just in advance of sales trends. More software and electrical engineers will be required than mechanical engineers; and on the whole, there will be fewer manufacturing staff required as the unit volumes of finishing equipment continue to decline. The value of each finishing unit sold will be higher, keeping top-line revenues relatively stable, but the transition to a new business model will be required. Those finishing equipment suppliers that transition their infrastructures to a “fewer unit, higher-value” business model will prosper. Those that lag in adapting their business models and infrastructure will fall behind.
Reprinted with permission from the October/November 2013 issue of NPES News. NPES is a trade association of over 400 companies which manufacture and distribute equipment, systems, software and supplies used in printing, publishing and converting. NPES News featured a series of special reports based on the 2011 PRIMIR “Impact of Electronic Technologies on Print” study by I.T. Strategies, Inc. For more information, visit www.npes.org.
- Responding to Print Industry Changes
Si Nguyen, vice president of sales for Duplo, addresses the questions the binding industry may have as the equipment providers shift their production models.