Gareth Ward: "Printers want instant service, the lowest price and foolproof quality from their paper suppliers"
RISI: What in your opinion is the condition of the general health of the printing industry worldwide?
Gareth Ward: Printing for the first time in 500 years is facing real competition. Television and radio provided alternative information channels, but until the arrival of the internet and on screen words, reading has been unique to the printed word. This does not mean printing is about to disappear, far from it, but it does mean that companies and consumers now have an alternative to print. A prime example is the ebook, such as the Kindle, Sony eReader or iPad. These are read in much the same way as books have always been read, and may be affecting print volumes. But nobody knows for sure.
Certainly printers in the developed world are working in a market which has peaked. The problem is that they are working with increasingly efficient and sophisticated presses which is creating huge capacity problems and driving down the price of print, something that would have happened without recession and without alternative media. This is leading to something of a loss of confidence among typical printers - entrepreneurial businesses established in the last 25 years or so, employing 20-50 staff.
Digital print technology is one answer because the ability to segment, sort, customise and personalise print will increase the value of a printed piece, but this is still very much under developed because the print technology is not yet up to the task but most importantly because the data necessary to drive personalisation is not there is sufficient depth, let alone the understanding of how to best use it.
So in short, all over the developed world printers are suffering a crisis of confidence and realise that print volumes are very unlikely ever to scale the peaks of the last decade.
What about in the emerging regions?
In the developing world, the situation is different - at least where there is burgeoning middle class with money to spend on cars, vacations, furniture, food and drink and all the goods that define the leading economies. Education too is a driver of print, creating more readers eager to consume newspapers, magazines and books. The overall consumption of print in these countries may never reach the levels of the parts of the world they are trying to emulate, but this is the opportunity. Xu Jianghao, chairman of Shanghai Electric, owner of Goss, a large printing machine manufacturer put it succinctly when at the Ipex trade show this year, saying: "When we look at Asia and China and India in particular we see large populations and economies that are developing fast which require better levels of education and during this period of growth newspapers will always be needed and reading habits will develop in these markets. Consequently I believe the global market for print will remain stable at least."
He might also have mentioned Brazil as a fast developing country drawing the attention of the leading printing press manufacturers. All are starting to develop models that are suited to the demands for more straightforward and versatile presses that the printer in Europe or North America who needs a machine that allows him to make some kind of margin through either being very fast or offering sophisticated inline enhancements like varnishes, foils and other effects.
What are the major challenges the industry has to get to grips with over the next 5-10 years
Print's biggest problem is that its supremacy has now been challenged and the cycle of growth inline with GDP has been broken. This can be traced to the rise of the world wide web which has provided and alternative to print. As the current recessionary cycle eases the biggest challenge for printers will be to win back the customers that have cut back on marketing spends and have tried alternative and seemingly less expensive channels. Printers must show that print has strength, that it is appreciated by end users and that by rethinking how printed products function, that print has real clout. Printers cannot assume that the work will come back as economic growth returns.
Is electronic publishing having a marked effect on the world of print as yet?
To date digital forms of reading can only affect those that have access to the required devices. The instant reaction is to say that there is an effect on print, but that so far it is a minor effect. Newspaper circulations in the developed world have been hit more by changing commuting patterns, from public transport to private car, than by the alternative of the electronic reader. But it will have an impact where people have one and some say that once they have switched to electronic devices they will not switch them off. It's too soon to say whether the "Pad is a fad", but cleverness alone never made for a secure future.
Electronic reading seems to work best in two areas. Firstly where there is a need for instant information in changing circumstances - a sports occasion, political story, or similar, where print is too slow and cumbersome. And secondly where research information is needed, where the ability to search across a mass of information and deliver the most up to date data is markedly better electronically than from a printed document.
But reading for pleasure, a magazine or book, holiday or car brochure, remains an area where print is more immersive and provides an experience that current digital devices cannot replicate. Publishers will continue trying, but it will be a long time before ad revenues on the iPad and similar devices overtake ad revenues in magazine formats.
What about social media, are there cases where these are generating print?
The obvious area where social media is creating a demand for print is in photobooks, or "memory products" as they are more accurately described. Facebook has also created a print function to deliver photos or perhaps a real printed version of its Wall. Flickr has billions of images, some of which have found their way into printed albums, and this is without the print that may be generated in response to a click on a web site or a mobile phone triggering a catalogue or brochure through the post. Indeed one of the biggest drivers of print in the last couple of years has been websites selling clothes, sports equipment and so on that send out printed catalogues to customers to encourage them to return to the website to make new purchases. Retailers that exist only in cyberspace are some of the biggest users of print because of the need to drive consumers to make new purchases. There are even magazine spawned by eBay and Amazon of course is by far the biggest retailer of printed books in the world.
Could offset printing now be described as a "commodity business"?
Unfortunately yes. Print is caught between being a craft business, where everything is bespoke and needs skilled craftsmen to run presses and binding lines, and a manufacturing business where tasks have been automated and are repetitive and where operators require a different type of understanding. The problem is that printers would prefer to be craft people while customers want them to be manufacturers. With the evolution of high speed, highly automated presses, digital workflows and automated finishing, printers have more capacity to fill and that has helped drive prices down and made print a commodity business suffering from tightening margins. The problem is that print is not a manufacturing industry like cars where over production results in a build up of stock and assets which can be sold later, each printed product is bespoke and becomes out of date almost instantly.
Some printers have managed to escape this trap through a variety of means and can still sell their skills rather than their capacity.
Which areas do you see where papermakers could be taking advantage of added value applications?
This fragmentation in the industry (we have not even mentioned the impact of Corporate Social Responsibility (CSR) and the need to be environmentally accountable) does require a matched change from all suppliers. For paper, on the one hand it needs to cost less and be highly consistent to suit high speed printing, the manufacturing ethos and commoditisation. On the other, printers that have carved niches and are producing higher value print want papers that allow them to deliver enhanced effects. Thus papers that take well to cold foiling, that accept all manner varnishes and have the range of finishes that produce a noticeable effect in the hands of the end user.
The CSR value of paper cannot be understated. Printers are under pressure to justify the materials that they use, hence the rise in audited fiber source schemes in recent years. This is going to be followed by demands for carbon footprint data. It is probable that buyers will insist that printers opt for papers with the lowest carbon footprint. Heidelberg, one of the world leaders in press technology, estimates the carbon footprint of one of its presses to be 290 tonnes in manufacture to the factory gate. It estimates that the impact of running this machine for a year could be 280 tonnes through energy and other consumables. The paper this machine consumes in a year could have a carbon footprint of 4,300 tonnes.
Part 2 will cover enviromental stuff
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