Offset Technology: Never Say Die

WHAT CAN be said about the future of offset technologies? Well, plenty, and while news and views are mixed, there are many reasons to be optimistic. On the eve of the Web Offset Association’s “Offset and Beyond” 2007 55th Annual Management & Technical Conference, Printing Impressions spoke with a number of leading experts to learn where they think the offset sector is headed over the short and long term, and why.

Offset Growth: An Oxymoron?

Traditionally, the printing industry has tracked the GDP at a slightly higher rate. With the advent and growing popularity of color reproduction from the late 1980s through the early 1990s, the industry embarked on a course of significantly above-GDP growth that peaked when a hot economy kicked it into unsustainable overdrive in the late 1990s. More recently came the sobering correction of 2001-2003, followed by a slow, painful climb back to prosperity. What is the size of the offset market today?

William C. Lamparter, president of the PrintCom Consulting Group, maintains that offset lithography is not growing and is actually declining, citing the industry’s downward trends in paper and ink consumption. This leads him to conclude, “If the industry is not depositing more ink on paper, print is probably not growing. If the industry uses less ink and less paper, it means that we’re producing less traditional print.”

That’s not necessarily bad news. “In the last decade, we’ve made a round trip in nominal terms, such that the commercial offset market today is about what it was 10 years ago,” says independent consultant John Zarwan. However, “We also have 8,000-9,000 fewer printers. So while the market really isn’t growing, it appears to be thriving,” as printers reporting double-digit growth year over year continue to pick up business that other firms are losing.

Consolidation works well (or not) depending on where your bread is buttered, Lamparter confirms. “We see three printers that existed as independent entities five years ago. We look at their volumes five years ago. Today those three printers are one, and the total volume for the one is less than the combined total for the three back in the early 1990s. The surviving printer reports that his volume is up 15 percent. What he doesn’t reveal is that he replaces two other guys whose volume is now zero.

“I’m not sure that holds true for the consolidators, but Cenveo, Quebecor and Donnelley all have been closing plants,” Lamparter adds. “Why is all this going on? Because there are too many cylinders chasing too little work. Total commercial print in 2006 is down, compared with the late 1990s.”

It’s worth noting, according to Richard C. Holliday of 3P Inc., a printing/printing equipment consultancy, that since these consolidations have been going on, “many individually owned and operated companies have been growing and doing beautifully. When it comes to succeeding as a service business, it’s enterprise, pluck and spirit, and drive that can trump the logic of economics.”

On the web side, adds William McLauchlan, senior technical consultant for PIA/GATF, “We’re doing as much, if not more, printing today; there are just fewer printers doing it. That said, we talk to the web manufacturers, Goss, MAN Roland, KBA, etc., and they’re selling new iron. That tells me that, despite consolidation, people are buying new equipment. Web printers don’t buy on spec. It’s not ‘build it and they will come.’ They need to first have the work that justifies the purchase of a new press.”

Keeping the Digital Beast at Bay

Given the increasing market share represented by digital print, is it irrelevant to talk about growth on the offset side?

“Digital clearly is taking some of it,” Zarwan notes, “but you have to remember that 15 years ago, the digital opportunity was run lengths under 10,000. Ten years ago, it was under 5,000. Now, it’s under 1,500. If you look at the ability of sheetfed offset to come down in run lengths and compete effectively, nobody could have predicted it.”

To help printers improve both their productivity and their workflow, offset manufacturers are moving fast to automate, integrate and reinvent offset printing as a modern manufacturing process characterized by process control, load balancing, just-in-time inventory, lean practices, continuous improvement and feedback, while new innovations on both the web and sheetfed sides provide incremental value at relatively low cost.

Run Lengths on the Move

The term “fuzzy math” could be invoked to describe the effort to peg the current “typical” run length requirements for offset and digital. Is it possible, at least, to agree that offset run lengths are trending downward overall? Here, again, opinions vary.

“Sheetfed litho run lengths have varied little in the last 10 years,” contends Lamparter, who bases his opinion on a review of job jackets performed during plant audits. “A lot of short-run sheetfed litho has moved to digital. Digital printing has also created a new short-run market that was never printed before because it was economically impractical.

“So if you’re looking at total volume, short-run volume is growing, but it’s not growing in the sheetfed printer’s operation except, perhaps, in the DI (direct imaging) market—although whether or not that’s a sustainable phenomenon remains to be seen.”

Many offset printers have gone digital. “There are good reasons for a small- to medium-size offset printer to have a digital press,” Lamparter adds. “He can meet his customer’s short-term requirements and make money in the process.”

The run length gap between sheetfed and web is also closing rapidly, Zarwan points out. “The economic crossover point between sheetfed and web was 20,000 impressions 15 years ago. That doesn’t mean you can’t compete in run lengths more than 20,000 if you’re sheetfed; but, it does say that if you have both, a web offset printer can be cost-effective at lower run lengths.’

Adds McLauchlan, “In printing’s heyday 30 to 40 years ago, the margins were only 4 percent or 5 percent. Now they’re half of that, and anything a printer can do to automate or eliminate press downtime is a good thing. As recently as 10 to 15 years ago, we considered anything below 50,000 a sheetfed job. Now, it’s down as low as 2,000 copies for some commercial work. That’s a function of a lot of things, including quick makereadies, on-the-fly plate changing and fast changeover. Not that long ago, the makeready on a web press would be counted in hours. Changing colors used to be an all-day affair. Now, it’s accomplished in virtually no time at all.”

What, Me Worry?

In the aggregate, will developments like these be enough to preserve offset’s viability over the long term? Again, opinions vary, and to some extent, the answer depends on the process and market segment under consideration. In the long-run world of web offset catalog and magazine printing, for example, digital variable data printing (VDP) technology is the distant rumble of a storm that’s raining on somebody else’s parade.

Ultimately, Holliday predicts, “The litho guys are going to lose the battle for run lengths under their crossover point, which I place between 500-1,000 pieces. As a hedge against that, an offset printer can become a VDP provider himself and offer his customer whatever he needs.”

Holliday says he doesn’t expect VDP to get sufficiently better or faster to significantly raise the crossover point over time. “VDP is going to grow like a weed and get more popular, but the run lengths are going to stay down. Its success won’t come by getting the crossover point up, but by reaching up and pulling litho work down below the line.”

Lamparter takes a slightly different tack, insisting that the real digital growth is in the long run, based on the printing being done, primarily by marketing service companies with variable color digital printing capabilities. “These are marketing people, and the digital printing they do is all variable. Short-run digital is basically static.

“One marketing print plant we visited produces variable one-to-one color material and wouldn’t touch a run length under 50,000. Another plant wouldn’t go below 25,000. Variable digital run lengths over 1,000,000 pages are not uncommon in these plants. Interestingly, both were printing the static content portion of an otherwise variable imaging content on litho shells. So one of the drivers of digital printing growth is long run, not short. The use of litho shells, however, does add to the total offset volume.”

Run lengths aside, and with the offset sector presumably headed for a level playing field shared by digital printing, why should customers choose offset? Now and for the foreseeable future, contends McLauchlan, the reason is quality. “For the time being, the difference in quality coming off sheetfed, web and digital are dramatically different enough that it’s readily apparent the digital format still has a long way to go.”

Is the “quality argument” DOA? Lamparter is not so sure. “The so-called ‘quality argument’ is moot by now. While all processes have limitations and peculiarities, overall, digital color printing equals or exceeds that which can be achieved by lithography. Digital color printing has a larger gamut than offset, and there are more color controls on a digital press than most offset presses. Quality is in the eye of the beholder (print buyer), whose expectations must be met.”

Opportunities: Build A Better Mouse

A threat turned inside out is an opportunity, of course, and the offset industry has responded by developing technologies and strategies to support a leaner, more competitive business model. Our experts comment below:

• Automation. “Newer web presses with robotics and automation are opening up new opportunities for everybody. Who could have predicted these improvements 10 years ago, and who knows what the next 10 to 15 years will bring?” —McLauchlan

“Integrated automation and automation are not the same thing. You can’t have the former unless you already have the latter. Once you have automation, the economic advantages of integrated automation become less clear. Since anything added to a fully automated press is incremental, I have to ask whether it really pays to add it. If I were building a green field plant, I would make it as automated at possible. But if I’m working with the plant I already have, with a range of equipment of varying ages, that makes a significant difference in my planning.” —Lamparter

Keeping Up With the Joneses

• Continuous improvement. “It’s all about customer demand and what your competition is doing. A printer has to look at his own environment, and his equipment cannot be less efficient than his competition’s. If I have two 15-year-old presses in my shop, and the guy down the street who quotes on the same jobs I do, buys a brand new press with automatic plate changing, automated washup and automatic ink fountain setting, I’d better do something, and that includes offering services besides printing that will bring customers to me and keep them there.” —Lamparter

• Computer-integrated manufacturing (CIM). “It’s difficult for small- to medium-size printers to take advantage of these new technologies. If I’m Quebecor or Donnelley, and I’m building a new plant somewhere, I’m going to install the latest and the greatest. But if I’m XYZ printer in Paducah, I have to think about my ROI and seriously consider doing what I can do, and see about the rest later.” —McLauchlan

“CIM will not be ready for full widespread implementation until interoperability testing is much farther down the road.” —Lamparter

• Capital investment. “Sheetfed technology improvements are incremental at this point. There’s also a huge well of legacy equipment out there. A lot of attractively priced equipment comes on the market that’s less than three years old. Can the printer accomplish what he wants to accomplish more cost-effectively with a two-year-old press than with a new one? It’s very difficult to issue sweeping generalities, except to say that if you need a new press, you’d better do an evaluation of the best new and used equipment that fits your requirements, make a cost/time/productivity analysis, and buy what suits you.” —Lamparter

In addition to adopting lean manufacturing practices, integrated workflows and continuous improvement initiatives, commercial offset printers will continue to differentiate themselves as a hedge against the effects of shrinking demand and competition from the digital/variable side. Below are some examples, also with selected commentary:

• Direct mail. “If you’re in the variable imaging business, odds are you’re in the direct mail business already. However, there is a lot more offset printing being done in direct mail than in digital, whether it’s shells, inserts or the whole enchilada.” —Lamparter

• Specialty coatings. “There are a lot of nifty things you can do with coatings. Currently coating is a commodity, but any commercial printer presently coating can create unique effects that will provide marketplace differentiation.” —Lamparter

• Packaging. “I would ask any commercial printer thinking about getting into packaging whether he is already doing this with his current customers. If not, it’s a good place to start before attempting it in new markets with new production processes and new customers.” —Zarwan

• Large-format offset. “Folding carton and board printing have always been square-inch-centric. I understand why folding carton people do it, but how well that translates into page-oriented commercial work, I don’t yet know.” —Lamparter

“Reports of My Death Have Been Greatly Exaggerated…”

Will Drupa 2008 prefigure the death of offset? Not likely, says Lamparter, who predicts in the “2007 PIA/GATF Technology Forecast” that offset processes will still represent fully two-thirds of the market for print by 2015. This will be buoyed by the creativity of offset manufacturers and of commercial printers themselves, who will continue to diversify into non-print products and services, and seek more effective ways to drive down costs and increase productivity.

It would be facile to suggest, of course, that “enterprise and pluck and spirit”—combined with sound strategic thinking, shrewd capital investment and a habit of innovation—could guarantee the robust health of the offset market for the foreseeable future and beyond. But it couldn’t hurt, either. PI