Thursday 24 June 2010

The price of print


I don’t remember reading an article as many times as I read the article by Sunita Paul ‘The birth and death of a small printing press’ — Indian Printer and Publisher, May 2010. This is something that I have thought about a million times and maybe more — it brings to mind what larger printers sometimes fearfully discuss — Where is this industry heading?

I also often wonder if printers are expected to be magicians – but on second thought, they actually are — to be able to continue working at the same or lower prices — when the cost of all inputs have risen many-fold over the years. This can only be magic.

I remember the time I joined the printing industry in the early 90’s — the competition was there but it would be considered healthy, unlike the dog eat dog industry of today. There are so many times that we sit down and analyse a cost sheet of a lost project bid, only to realize the prices that some companies charge are just enough to cover the costs. I wonder then, why run a business at all? Isn’t profit the motive of any business? For any business to stay healthy it has to be able to make enough money to sustain and grow in the medium to long term, or the business will have to wind up sooner than later.

I often wonder if printers believe that the machinery that they use has an unlimited life and the machine will last forever. Wish that were true. Every asset has a limited life, after which it needs to be replaced. What will happen when the time comes to replace the machinery – would the business have made enough money to be able to invest in a new machine?

As a company we work for some large international customers and very often they ask for a breakup of major components that make up the bulk of the cost and I remember asking a customer once, why was it important for them to see the cost sheet when all that mattered was the final price? To which came the reply that they were interested in suppliers who could continue to give them service year after year and if the supplier was not making adequate money he would not be there in the long run to service them, and this was not in their interest. A lot of time and effort is spent in building a stable team of suppliers and good companies do not wish to incur the cost associated with this over and over again. This is radically different from many of our local customers – who are only interested in the final price and not how it was derived.

Minimum wages were revised recently in Delhi by perhaps one of the largest single percentage increases ever. In any printing company about 70 per cent of the work force falls into the minimum wage category which means that there would be a very significant impact on the cost but when I wrote to customers where we have scales in place to reconsider prices — prompt came the reply: No one else was asking for it, and were we not aware that paper prices were at a all time high and that it was impossible to pay the existing rates – an increase was not even a possibility. In fact one customer even went on to say that he has been asked by his management to bring the cost down of books by 15 per cent, even while paper prices have gone up significantly — which meant that he was planning to renegotiate the rates!

Many printers do not even understand their costs — which I believe is the primary problem. Without understanding the costs they make losses for themselves and also create unhealthy competition in the long run. Unless printers correct this, we might have many more printers going out of business.

— Ravi Shroff, Nutech Print Services, New Delhi

Tuesday 22 June 2010

The opportunity and the challenge

Ipex clearly showed three things: the rise of digital printing and decline of offset printing in most of the developed economies; the continuous increase in Asia, the Middle East, Africa and Latin America of both print consumption and the manufacture of printing equipment and consumables; and lastly, that trade shows in the developed markets need to change.

Ipex was hardly over before many manufacturers made a beeline for Beijing where the China International Packaging Fair from 2 to 4 June was a huge success. KBA mentions both Ipex in end-May and the Beijing event in beginning-June in the same breath, while recounting its success this year — it has sold 20 large-format presses to book and packaging printers in China alone. The PrintExpo in Sao Paulo, Brazil from 23 to 29 June 2010 also promises to be a successful event in a region with print growth and increasing equipment manufacture.

We believe that shows such as Ipex and drupa will now come under increased pressure because in these regions they can be replaced by less expensive digital printing events. The heavy metal shows will gradually move to Asia, Africa and Latin America. The Chinese government-supported industry understands this, and their show platforms have as much focus as their equipment and consumable manufacturers. For the Indian print industry too, there is a great opportunity and a challenge to upgrade our manufacture, to increase local market share with quality equipment, to export, and to cooperate in building respectable show platforms.

— Naresh Khanna

Saturday 5 June 2010

Interesting times for print

It’s been just a couple of days but it has been interesting. As the jet lag wears off and one starts to get a sense of what is on offer from the manufacturers that have mostly brought their stuff to the show it is clear that there is a huge competitiveness out there. For the big guys who have traditionally financed these shows and wined and dined printers to sell their expensive heavy metal dream machines, the day of reckoning is near – they are not likely to make it to the next drupa in their current form. Recovery or no recovery.

Gerd Finkbeiner ceo of manroland at the company press conference and 3D demo at Ipex2010 Photo: Fayez Ali

The part of the world that is still interested in print on paper and that is desperately hungry for more of it -- Asia, Africa and Latin America -- is far more rational about it than the developed world has been since after the second World War. The constant over-consumption of everything -- oil, forests, automobiles, food and even print -- has led to the current information obesity and the creation of huge disparities within these societies. It never made sense to have huge publishing industries that were based on overproduction and tax write-offs – magazines with huge overruns for distribution on a sale and return basis or paperbacks in excess quantities that ultimately needed to be pulped or thrown into the sea.

The logic was that it had to be big – you had to borrow more to buy more and to waste more and to drive up the price of the best things – if you wanted to grow and enjoy the good things in life. That logic worked for the banks who were happy to finance printers at low interest rates and even for the manufacturers who were happy to trade in your old press as long as you were willing to buy one that was twice as big and twice as fast and twice as automated. Well, that logic is being defeated and not by any upheaval but simply by the reality of the world as it is. In the developed world, taxpayers no longer want to bail out banks and printers no longer want to buy as many automated offset presses.

The emerging economies in general and taken as a whole will never want as many huge automated presses as are needed to keep the leading heavy metal companies alive in their present incarnation. If these manufacturers are not able to provide cheaper presses then printers who are still growing will simply buy the excellent used presses and businesses that are now becoming the discounted property of the banks in Europe and North America. They may even buy the Chinese B3 presses that are on show at Ipex running at 12,000 impressions an hour.

The lectures on cost of ownership, quality and standardization, and even the environment will not help to sell more expensive heavy metal presses. Printers are looking for good machines at rational prices built by workers at sustainable wages that are rational enough so that they do not have to be laid off faster and faster. No more private jets, or cigars and brandy on the top floor.

Demo of Hans Gronhi B3 press at IPEX 2010 Photo: Fayez Ali

However, digital printing is not going to be the main technology in Asia, Africa and Latin America because in these countries there remains a huge hunger and demand for the authority, credibility, accessibility and utility of conventional print on paper. Lengths of runs are increasing as text books are now being produced in full colour on web presses. In India where the education budget is increasing, the fight is not between technologies but that the education Rupee must go into classrooms and textbooks and stationary and not into the pockets of the politicians. However, in the Garden of Eden – California, the governor is busy banning textbooks in favour of eBooks. How can this happen in a state that proudly spent half of its budget on education in the 1960’s and gave rise to the Silicon Valley?

While digital printing may not be the main printing technology in Asia, it is already being used more creatively than in the so-called advanced countries. How many people know that the largest real and democratic electoral exercise in the world benefited from having digitally printed voters lists with the photograph of each voter next to his/her name in every polling booth? That’s right, fifteen copies of up-to-date lists in several languages both so that one could vote easily and so that the candidate’s agents could contest any attempt at impersonation or false voting. More than four hundred million voters, with a turnout of over 65 per cent who used electronic voting machines. In the next election, I am hoping to see my photo on the list in colour. The digital press manufacturers need to get their act together. The next milestone for digital printing is not drupa; it is the next election in India and in a parliamentary democracy this can happen as unexpectedly as your next volcanic event.

The point is that digital printing may be used by creative and rational people for democratic, interesting and useful purposes and not merely to invade privacy and sell people more stuff so that they can also ultimately have a consumptive and unprincipled “way of life” that monopolizes resources that they can fight wars for.

Asia will benefit hugely from the mix of traditional and digital print and media. It has the advantage of looking at the technology when it finally works and when there is competition between the developers to make it more relevant and cheaper. The technology is also more tractable – in its portability and flexibility. There is a field retrofit upgrade path in almost every new digital press being talked about at Ipex – it’s a question of software or more and better ink jet heads being added to or replacing the earlier array. The only issue is that of generating useful products and this is where the knowledge societies, rich in software talent, will have to come up with some entrepreneurial software. -- Naresh Khanna