NPES First-Half 2006 Data Shows Strong Growth for Equipment

The data is finally in: findings for the first half of 2006 are pointing to a strong upswing in sales of printing equipment. Shipments totaled $1.317 billion for the first half of 2006, a 28.8 percent increase over the same period in 2005. This follows a good 2005 in which equipment shipments were level with 2004, but up 23 percent over 2003, which was the low point year for equipment sales in well over a decade.

The equipment data discussed here includes prepress, press and postpress/bindery equipment sales and is collected through the NPES market data program. This is actual data reported by NPES members and it is believed to represent approximately 85 percent of total equipment market in the

U.S. If this trend continues through the balance of the year, this will be the best year our members have experienced since 1998, as the data in Figure 1 illustrates.

A quick look at some of the equipment categories shows that sheet-fed press sales have led the industry growth at a whopping 70 percent increase over first half 2005.

Product type / Growth 1st half
Platesetters +2.5%
Sheetfed presses +70.6%
Web-fed presses +6.1%
Cutters -8.1%

On the heels of an extremely well attended GRAPH EXPO in Chicago and based on many discussions with members on the show floor, we believe that the second half will be strong too; however it will be difficult to maintain a 29 percent growth pace. But even if the growth rate slows somewhat, 2006 will probably hit the books as one of the best years in the last decade for sales of equipment.

Can we expect this to last?
Regardless of what the growth rate turns out to be, this is great news for our members. But you have to ask the ques-tion, can we maintain industry sales levels of $2.5 billion per year? This may be a challenge for a few reasons. First, we believe there was significant pent-up demand from over five years of declines in printing volume. Since printing sales were down, printers were not buying. Now that printing industry sales volumes have returned to 2000 levels, coupled with the fact that the equipment offerings of NPES members are more productive than ever, printers are upgrading to take advantage of efficiency improvements this new technology provides. How long will this surge from pent-up demand last?

Secondly, consolidation continues unabated in the printing industry, which equates to fewer customers for our members. Coupled with the resultant surge in used equipment on the market, this makes it tough to sell new equipment to those printers left in a shrinking marketplace. Finally, printing equipment sales are cyclical and generally follow the rise and fall in GDP. The U.S. economy is doing well, but lower growth is forecast for the coming years.

Graphic Arts Supplies
The first six months of data on supplies show that ship-ments are about level when compared to 2005. In a market that has been experiencing technological substitution for many years, level isn’t all that bad (see Figure 2). The products that constitute the Graphic Arts Supplies data include graphic arts film, lithographic plates, conventional and digital proofing materials and the related chemistry. As readers are well aware, prepress workflow once encompassed many steps involving phototypesetting paper, graphic arts film, a plate or plates and conventional proofs. Today, that workflow has been streamlined to go from the computer to the plate or directly to the press many times without a conventional or digital proof. This has had a dramatic impact on the dollar volume of consumable materials sold in the industry, which peaked at $1.96 billion in 1998 and today stands at about $1.2 billion…a loss of nearly $800 million in yearly revenue!

Looking at the individual product groupings within the Graphic Arts Supplies data, film continues its long-term downward trend at -17.4 percent for the first half 2006. Even recording film used in imagesetters is down over 16 percent this year. This should be no surprise as non-film based workflows continue to be implemented rapidly by printers of all types and sizes. Offpress (conventional) proofing products are also down 6.1 percent for the first half. A strong indication that the move to digital proofing and even soft proofing has not abated. Of course the bright spot in the supplies market is in the plate arena where we see growth of almost 2 percent for the first half 2006. But this “aggregate” total masks the interesting dynamics going on beneath the surface between analog and digital plates. Presensitized (analog) plates were down over 25 percent while direct-to-metal (digital) plates were up 9.1 percent. The message is clear; the all-digital workflow continues to be rapidly adopted by the industry.

How can you monitor this trend yourself?
On an overall basis, the first half of 2006 has been extremely positive for our members and the industry. With a strong GRAPH EXPO behind us, we can look forward to the first half trend continuing through the year. How long this trend continues remains unclear however.

If we told you that you could get data like this for over 160 product categories every month for free, wouldyou believe it? It’s true. The NPESMarket Data Program collects and disseminates market totals for these andother products on a monthly basis toparticipating member companies. If youwould like to receive this data too, allyou need to do is commit to provideyour data through our confidential,legally monitored program. This armsyou with the information to see changesin the marketplace and make informedbusiness decisions to help your businesssucceed in a challenging marketplace.To learn more, contact RekhaRatnamat (703) 264-7231 for details.

[In the charts below, the 2006 figures contain estimates. NOTE: Includes Canadian shipments for Pressroom Equipment (except sheetfed presses). Also includes Bindery Estimates (1996-Present)]