GRAPH EXPO & CONVERTING EXPO 2002 -- Showing Signs of Recovery

BY MARK MICHELSON

What a difference a year makes. Exhibitors came to PRINT 01 in Chicago last September feeling guardedly optimistic—despite the lingering effects of a soft economy and, consequently, a reduction in most printers' capital expenditure budgets. And, of course, no one could foresee the September 11 terrorist attacks that would hamper buying activity at the show and create heightened concern over the state of the U.S. economy.

Now, fast-forward to next month's Graph Expo and Converting Expo 2002 exhibition in Chicago, scheduled for October 6 to 9 at McCormick Place South. With more than 400 exhibitors filling over 360,000 net square feet of exhibit space, attendance is anticipated to total approximately 40,000 people. And, although sales expectations among industry suppliers might not be high, economic indicators signal that the U.S. economy—and the graphic arts industry, in general—may finally be poised for some semblance of a rebound.

NPES, The Association for Suppliers of Printing, Publishing and Converting Technologies, reports that its economic forecasts show a strong upturn in equipment shipments in 2003. In fact, one forecast puts the value of machinery shipped in the first quarter of next year at more than $700 million, the highest quarterly level in two years. Those shipments would largely be the fulfillment of orders booked in Chicago in October.

For the full year 2003, DeWolf Associates, a consulting firm working with NPES, predicts printing equipment shipments will surge by more than 10 percent.

New Depreciation Rules

NPES and GASC President Regis J. Delmontagne contends that this optimistic forecast is based, in part, on a dramatically improved tax environment. "President Bush's economic stimulus package includes a number of provisions designed to encourage corporate investment in high-

productivity technology and equipment," he says. "Specifically, the new accelerated depreciation rules produce favorable conditions for investment that we haven't seen in many years."

One key provision of the stimulus package allows buyers to write off 40 percent of the value of equipment purchases in the first year and 57 percent in the first two years for equipment currently depreciated over seven years.

Delmontagne admits that accelerated depreciation opportunities alone would not motivate many buyers, were it not for the extraordinary productivity of the new equipment reaching the commercial printing and converting markets in recent years.

"Vendors are producing the tools companies need to stay competitive and to seize new opportunities," he explains. "These are the factors that really justify purchases, but now the tax code also offers an incentive to buy."

Interest rates, meanwhile, remain at strikingly low levels, so for many investment-minded shoppers at Graph Expo and Converting Expo 2002, this really may be the best of times.

Trade shows, of course, are future-oriented events, and their success is shaped by attendees' own expectations of what the future might have in store for them. "It all comes down to confidence," adds Andrew Paparozzi, vice president and chief economist at the National Association for Printing Leadership (NAPL). "You have to be confident to take on a major new debt."

NAPL has tracked printers' confidence levels since 1992, and while no strong long-term patterns are obvious, there have regularly been increases in confidence in the periods immediately around shows. "Printers have become more and more skilled in financial management," Paparozzi continues. "Graph Expo and Converting Expo provides sober, insightful information to help people run their businesses better. It plays a very valuable role in shaping the future of the industry."

Moreover, Paparozzi emphasizes, "for all the ups and downs of the business cycle, industry volume is still going up. The industry is still growing."

One potential sales growth area for commercial printers is large-

format ink-jet printing, which IT Strategies predicts may become an $11 billion industry by 2005. The consulting firm found that commercial print shops are only getting about 15 percent of this business and, as a result, are in danger of allowing the market to slip away to other channels. In response, new on the show floor this year will be a Wide-format Opportunities Pavilion. Vendors will include ENCAD, Epson America, Hewlett-Packard, MacDermid Printing Solutions (ColorSpan) and Océ, among others.

Experts Predict Trends

Aside from the economic and revenue generation issues, the annual exhibition also showcases technological developments.

According to Bill Lamparter, president of the PrintCom Consulting Group, the major technology theme will likely be process integration, i.e., the computer-integrated manufacturing or digital network production approach with many more suppliers touting their support for CIP4. "On the show floor, this trend may not be so instantly obvious but, if one examines the supplier offerings closely, it will be the underlying technology theme," he predicts.

Lamparter also believes that "computer-direct output to something" will be a prime area of emphasis at Graph Expo, with the battle between which way to go continuing. Violet computer-to-plate production will get a strong push, as well, and the show will be a good place to evaluate the status of processless plates.

The emphasis is going to be on both analog and digital process improvements rather than on any bombshell new technologies, Lamparter continues. "However, if one looks carefully, the beginnings of the next prepress (R)evolution will be visible."

He adds that adopting a 100 percent digital workflow—from the receipt of material to be printed (presumably an electronic file), to outputting film, plates or going direct-to-press—is a must do 'em. "Whether one goes direct-to-film, -plate or -press depends upon a large number of a printer's individualistic issues and circumstances," Lamparter concludes. "One answer does not fit all."

According to Thad McIlroy, president of consulting firm Arcadia House, the market impediment for digital press adoption has been the ability of corporate publishers to reimagine their workflows to take advantage of digital printing and, in particular, variable data capabilities. "But the software keeps getting more powerful and easier to use, and there are an increased number of success stories," he says. "At some point this will 'tip,' and adoption will become rapid."

McIlroy also advises printers to explore the following developments as they make their rounds at the show:

* JDF (the Job Definition Format) has matured to the point where it is being implemented by most prepress and press manufacturers.

"It may not do much for you today, but will be a key to workflow efficiency improvements in the future," he predicts.

* Tying into JDF, the continued maturation of PDF workflows is also worth investigating. McIlroy asserts that between 80 and 100 percent of all files will be submitted in a PDF format within the next few years. As a result, printers need to decide how they can best process this format, and what its impact will be on the rest of their production, including proofing, platemaking and press imaging.

* Internet-enabled workflows will also be a key theme. "Now that the gloating over the collapse of the dotcoms bubble is over," he says, "it's time for printers to make solid decisions on how they are going to implement Web-based software to improve workflows and, in particular, the flow of work between their customers and their plant(s)."

* And, finally, McIlroy advises printers to check out traditional offset presses featuring improved quality control and more productive setup and makeready features. The latest presses are routinely generating productivity improvements in the range of 25 to 50 percent. "This far exceeds the kind of increments that we've accepted in prepress automation." As such, he says all printers need to address the tough, and expensive, decision to replace their older presses.

Automation Advantages

One advocate for automation in the offset pressroom, understandably, is John Dowey, vice president of sheetfed product management at Heidelberg USA. Automation reduces operator involvement in non-productive and unpopular press functions, such as washups; potentially lowers manning requirements; and makes scheduling easier, since the makeready times and first-pull quality are more predictable and consistent, he says.

"We see integration as the next big opportunity to improve productivity," Dowey contends. "Press automation is very important, but one must realize that it is at a very high level already, so big gains with further automation are not so easy to come by."

Even so, Dowey doesn't believe our industry has reached a state where future advancements won't be economically viable from an ROI standpoint. The only way that print will stay competitive with alternative media, he believes, is if we can add more value; make the product more attractive, tactile and sensory; and still keep the costs under control. "Technology drives this type of innovation by making what used to need many steps and lots of time something that can be done quickly, with good quality and at a price that is still attractive to marketers," he believes.

As such, processes that can eliminate production steps will be a major show theme. As an example, Dowey refers to the advantages of an eight-, 10- or 12-color perfecting press. Such machines eliminate one entire makeready, one press pass, one press OK and the need to manually turn loads before backup, among other advantages.

Also expect to see various press manufacturers and auxiliary suppliers showcasing in-line coating options. The Heidelberg veteran says there is now an increased emphasis on hybrid or UV inks and coatings, which enable commercial printers to add gloss and product protection without necessarily sending jobs outside.

In the bindery arena, finishing gear that increases throughput speeds will be showcased. This is achievable, in part, through state-of-the-art equipment that incorporates computer-controlled makereadies with motorized setups and touchscreen operator interfaces. However, the mantra isn't just investing in bindery gear to enable finishing systems to keep pace with faster and more productive presses. Today's smart printers look at the bindery as a profit center in its own right and, more broadly, view postpress, mailing and fulfillment services as major avenues for growth.

The bottom line: Even if you don't come to Graph Expo and Converting Expo 2002 with intentions to buy anything, staying abreast of technology trends, the ability to compare multiple vendor offerings in a single venue and the opportunity to network with fellow printers are well worth the price of admission, a hotel room and, if necessary, plane fare.

Tribute to Excellence

Those attending Graph Expo and Converting Expo next month won't want to miss the annual Gold Ink Awards and Hall of Fame Gala. Scheduled for Monday evening, October 7, at McCormick Place, the event recognizes award-winning printing and outstanding individual achievement.

This year's Printing Impressions/RIT Hall of Fame inductees include Donald Belcher, Banta Corp., Menasha, WI; Robert Krehbiel III, The C.J. Krehbiel Co., Cincinnati; Ray Scholler, Times Printing, Random Lake, WI; and Michael Simon, Publishers Press, Shepherdsville, KY. In addition, four outstanding print production executives will be honored by our sister publication, PrintMedia.

Advance registration is necessary. For more information on attending, call Mike Cooper at (215) 238-5434 or e-mail mcooper@napco.com.