Business Management - Industry Trends

Decision Points 2006 is the theme for this 54th edition of the Web Offset Association (WOA) Annual Management and Technical Conference. To a large extent, if any recent year were plugged into that phrase, the hot issues, industry trends and challenges would be the same. In a promotional piece for the conference, Ralph Pontillo, 2005-2006 chairman of the WOA board of directors and vice president/division director at Transcontinental Printing, observes that: “Critical decisions must be made daily—strategy and tactics, operational challenges, investment decisions and procedures. A quick glance at the myriad of (2006 session) topics yields volumes of opportunities: world and industry viewpoints and

BY MARK SMITH Technology Editor Can it ever be reasonable to have a wholly positive outlook for printing paper? The answer would seem to be "no," at least from the buyer's perspective. Paper is so essential to print that one feels compelled to look for any potential sign of trouble. The cost of being caught short is too high and memories of the bad times (shortages and soaring prices) too lasting not to err on the side of caution. Plant strikes are just the latest additions to the list of reasons for paper buyers to adopt a cautious outlook. Other concerns have been

BY MARK SMITH Technology Editor Experience has taught printers to error on the side of caution when it comes to managing paper. Any tendency toward overreacting is understandable, given how essential this raw material is to the process. It's easy to imagine the sense of helplessness from having a press sit idle or turning away business for want of paper. The critical role of paper helps explain much of the past volatility in the marketplace. In recent years, paper buyers and suppliers have both taken steps to instill more stability and rationality in the market, and there were some indications of this

“It’s not rocket science.” That same reply was given by two players in the market when asked about the challenges facing a printer looking to diversify into digital wide-format printing services. Adding this service seems like a natural extension of the printing industry’s digital evolution. Large-format ink-jet print engines have all but become the norm for some level of proofing, ranging from digital bluelines up to contract color. Putting aside the finishing requirements, digital color printing presents much the same proposition whether the output be an 8.5x11˝ sheet or large banner. Why, then, have so relatively few commercial printers gotten into the business? “Less

BY MARK SMITH Technology Editor The end had to come sooner or later. Everyone knew the buyer's market for printing stocks simply couldn't last forever. Eventually, the adjustments made in papermaking capacity by suppliers and increasing demand fueled by the economic recovery had to bring price increases that stick. Paper companies have announced or already implemented price hikes for most grades, and another round of increases may be in the offing before the end of the year. There's little reason to hope for a repeat of 2003, when increases were floated, but never fully implemented or were subsequently rolled back. Perhaps the clearest

BY MARK SMITH Technology Editor Paper costs can account for as much as 60 percent or more of a typical commercial printing job. For that reason, the fortunes of both industries are inextricably linked. But it is not a one-to-one relationship. Paper pricing and availability can swing in cycles that don't mirror printing business activity, either in timing or degree. Printers are insulated from the impact of rising paper prices, at least to some extent, because the material is more or less a pass-through cost. In recent years, both industry segments have been enduring a dramatic drop in pricing power. Paper companies have

BY MARK SMITH Moving in fits and starts is about the best that can be said for the paper industry's attempts to rebound from its recent market woes. Across most grades, prices have been seen to be on the rise, but also continuing to decline. In both cases, the change has been relatively minor. The quarterly financial reports from major manufacturers again tell the story. Common themes include a continuation of competitive market conditions and rising costs. "This has been a particularly difficult quarter for the company," reports Sappi CEO Jonathan Leslie. "Our third quarter results were achieved against a background of lower pulp

BY MARK SMITH On paper, the interplay of supply and demand looks like a straightforward model for the forces that shape a market. When it comes to predicting the outlook for paper, though, lately it seems as if one might be better off reading tea leaves. Paper makers have gone to great lengths in a collective attempt to rationalize the supply. Unfortunately, the demand side of the equation hasn't performed in the way that was hoped. The industry also has been buffeted by developments beyond any company's control. Quarterly financial reports from major manufacturers have included a mixed bag of earning declines, losses

BY MARK SMITH Uncertainty and Iraq. In the first quarter of 2003, that's basically all that was needed to be said about the short-term outlook for the U.S. economy and all of its industry segments. In many cases, though, this extraordinary (in economic terms) concern masked underlying weakness in demand. That was true for paper and printing, alike. The new year had been expected to mark a rebound in the paper market. Chiefly because of the aggressive moves made by manufacturers to bring capacity more in line with demand. The problem is, the demand side of the equation hasn't shown clear signs of

BY MARK SMITH Predictions of the paperless office may have lost their edge, but not the threat of a paperless printing plant. One only has to go as far back as 1995 to find the last time some printers were faced with shutting down their presses for a lack of paper to run through them. The buyer's market of recent times saw printers, and their clients, being doubly blessed with a ready supply of paper at historically low prices. Everyone knew it was just a matter of time before the market swing came, though. In the case of paper, the more apropos saying would