New Markets — Packaging’s Profit Potential

GIVEN THE state of the economy, it’s not surprising that printers are constantly on the lookout for fresh revenue streams. Heck, even in a robust economy, printers are seeking out ancillary products and services to help offset the erosion of more mature or vulnerable markets.
The Great Recession of 2009 is to printing what the swimming competition is to the triathlon. Businesses feel like they’re moving in slow motion, despite their best efforts, and flailing to get ahead.

But once that part is over, the pace is going to pick up in a big hurry. Although the race may not be won during a recession, it can certainly be lost.

One body of water that some printers have dipped their toes into is the printing of packaging. Most observers are still muttering about the excess of 40˝ sheetfed presses clogging the commercial market, and an intriguing avenue for businesses in need of a new “out pitch” is to take on the world of folding cartons, flexible packaging, point-of-purchase, and tags/labels.

Need a bit of an education on the subject? There’s a golden opportunity to become well-versed in this area if you’re bound for PRINT 09 next month. The PackPrint pavilion for package printing will be situated within the Chicago extravaganza, offering (among other things) educational seminars.

Profit margins in packaging? It depends on who you ask, but several printers indicated that they’re not unlike that for general commercial work. Which means little, since printing margins run anywhere from 2 percent to 10 percent.

Flower City Printing, of Rochester, NY, started out as a commercial shop and migrated into packaging work about 20 years ago. It now accounts for 45 percent of Flower City sales.

All the Same to the Press

“When it comes to printing substrates, the presses don’t know the difference. Usually the biggest key to the learning curve is how broad-minded your people are,” states Bill Oliveri, a founding member of Flower City Printing.

Folding cartons are the main thrust of Flower City’s business. They represent a number of challenges, such as grain directions, scores and cutting rules. Different substrates call for various dies. Polystyrene, a popular substrate for the printer’s clientele, has the tendency to stretch and shrink due to heat sensitivity.

“Keep in mind that the normal offset press has 6,000 pounds psi,” Oliveri says. “The fanout is not consistent when you’re printing substrates of a plastic nature. Whether you’re doing it conventionally or UV, the inks are also very demanding. You need to pay attention to your load temperature.”

Oliveri is an ardent fan of the folding carton market, which he feels has stood up well during the economic downturn, even showing growth. One of the most difficult things to accomplish, he points out, is taking market share away from another firm.

“It’s really tough to get an incumbent (supplier) out,” he notes.

What is the degree of difficulty for package printing? That’s open to interpretation. Some have described the learning curve as steep, while others term it relatively simple, as printing goes.

“Quite often, it tends to be a little dirtier,” notes Dave Kornbau, vice president of operations for York, PA-based Strine Printing, one of the most prominent packaging printers on the East Coast. “If you’re a commercial printer, the transition’s not that difficult, in my opinion.”

Strine has flourished in large-format work, which opened the gate for point-of-purchase and folding carton work. An added advantage for the company, according to Kornbau, is sheeting its own materials. The company also brought die making in-house. A point of differentiation for Strine is its status as a single-source provider.

Know Your Substrates

Plastics can be a tough market, Kornbau cautions. “Most companies have been going away from plastics out of sheer price considerations,” he says.

Package printing, in general, follows the same success path as general commercial work. After all, the clients of both disciplines require high quality and prompt turnaround at a competitive price point.

“It’s not as difficult as it looks, but it takes some key ingredients to make a good recipe,” Kornbau says. “You have to do it better, cheaper and faster. There are a lot of things internally that you can do to lower your costs, like sheeting and making your own dies.”

The Garvey Group, Niles, IL, ventured into large-format printing in the 2004-2005 time frame. From the beginning, President Ed Garvey brought in experienced package printing professionals with production and sales knowledge, but it wasn’t just to provide a smoother startup.

“One of the biggest slams against us early on was that we didn’t come from that world,” Garvey recalls. “I didn’t have credibility among the buyers. Competitors were going to our customers and saying, ‘What do they know about package printing? They’re commercial printers.’ That quickly melts away, though, when you put an experienced team together.”

Maintaining Trust

That trust, however, can slip away in a hurry. Garvey points out that with large-format sheets costing in the $5 to $8 range, you need to be comfortable, and competent, in your material handling abilities. And, when multiple vendors are involved, potential headaches can transform from minor to migraine.

Garvey recalls a situation in which a third set of hands ruined the work done by his firm.

“We printed an attractive job that was going into a lot of stores. It went from us to a diecutting shop, then a laminator. Unfortunately, the laminator did something wrong and the piece essentially de-laminated.

“The customer had to go through the entire supply chain, and we went through the chain trying to figure it out. Did we use the right coatings? Did the diecutter have the right scores? Did the laminator have the right pressure and the right laminant? The liability for that is exponential...it doesn’t take many orders to go south for you to have a major problem.”

As a printer whose foray into large-format work is more recent, Garvey’s best piece of advice is to map out a plan for profit. Most often, he says, there will be a catalyst that pushes a printer toward packaging.

“We had a base of business that allowed us to step into large-format printing,” he says. “It’s still a growing market and I highly recommend it. But you have to be conservative and reasonably objective about what you can accomplish with it.” PI