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

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

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

How many Indians will really go to Ipex next week?

Eleven hundred Indians attended the last Ipex according to the organisers, IIR. Also according to the organisers more than 2,000 Indians have registered on-line for the fair this time. However on the basis of our talks with some of the printers and manufacturer’s Association’s that are involved in the group tours, it is expected that about 600 to 700 will attend the fair this time. Several of the tour groups are as small as 25 to 30 and one is claiming 150. Our own estimate is that the total figure of Indians at Ipex including exhibitors and agents and printer visitors and the strong media contingent would be between 625 and 800 this time.

The poll Ipex poll on our website has not really attracted much traffic. Of the valid responses (we have taken out the repeats from the IP address) almost 71 per cent say they will attend while just over 15 per cent say they won’t with almost 4 per cent in the may be category. As we have been writing over the past year, exhibitions everywhere are under intense pressure and while one view is that they are a great opportunity to learn (a view that we agree with) the other view is that they are losing some of their importance. This is echoed by almost 10 per cent of the respondents to our poll.

Improved and specialised exhibitions in India and elsewhere are slowly eroding the importance of the big international exhibitions. The print industry’s precipitous decline in the developed countries has not helped either with many exhibitors scaling down their effort by not showing running machines which was the hallmark of the big print exhibitions. ‘Perfect competition’ and consolidation are in the air.

Ipex was the largest English language print show but now the largest English speaking print industry in terms of business units (not yet in turnover) is in India and thus Indian industry is presented with an opportunity to replace Ipex if they dare to get their act together. Unfortunately the likelihood of this is not too great judging from the present situation and level of discussion between the AIFMP and IPAMA the printers and manufacturer’s associations respectively. We are still in the clutches of the three-cornered blame game – quasi-government organisations, associations at loggerheads and private organisers.

Freedom of the press belongs to those who own one. – A J Leibling

As I recall from a media debate in New Delhi a few years ago, Vinod Mehta, the editor of Outlook said, “Newspaper owners often have three ambitions: fame, power and wealth. However it is almost impossible for them to achieve all three – they must choose, and in my estimation at most they may achieve two out of these three ambitions.”

There is righteousness and there is self-righteousness in every newspaper industry. While in much of the world the emperor is now naked, in the world’s largest democracy with the second-largest daily circulation in the world, we still seem to be clinging to our fig leaves. The question is how long can we owner-publisher-editors survive? If we are to grow, to communicate to a new generation, and to write and create new things, surely we need new people, the best people for the job – professionals who are passionate and engaged in the concerns of the day. Why should we expect the new generation of writers or editors to only be concerned about our own passions? And do we not need to grow fast enough to give an opportunity to those in the family who wish to grow the business? Why will they join the business if we do not grow fast enough to use their talent and their hard won qualifications? Is the Columbia School of Journalism merely a finishing school for the sons and daughters of the Indian newspaper owners or a place to train our best young journalists?


Technology versus content
From Frederic Filloux: “Le Figaro’s new facilities are able to address several of its competitors’ printing needs. The most obvious is Le Monde whose printing plant is obsolete and costly to operate (too many people). The two papers now use the same page size (a ‘Berliner’ format), and are produced at a different time of the day. A perfect fit in theory. Mr. Morel [Francis Morel CEO of Le Figaro] denies vehemently having any intentions of harming Le Monde. But there is no need to be a Wharton scholar to see the two torpedoes Le Figaro is firing at its competitor: one is the better looking and cheaper ads, the other a more commercially potent printing plant. At least, ‘Le Fig’ might print the business paper Les Echos and perhaps one of the three free papers.

“But the real potential for Le Figaro’s online revenue lies in the readership duplication rate between print and web. Today, only 20% of the print readers also visit the website, this is quite low when compared to the 30% to 45% its competitors experience. This points to the paper’s generation problem: 42% of Le Figaro’s readers are 60 years-old and above, compared to 27% for the rest of the French press; naturally, the web is expected to rejuvenate its audience. Today, LeFigaro.fr is the #1 newspaper site in France with more than 5 million unique visitors a month (OK, thanks to some questionable measurement tricks). Still, each time 10 web users are gained, this translates into 2 more print readers (along with 10-15 times more revenue per reader on paper side).”1

Marie Benilde writing recently in Le Monde Diplomatique quotes the assessment of a banker at the French National Conference in Strasbourg in 2006: “Journalists are now in the same situation as steel workers in 1970’s : they are destined to disappear, but they don’t know it.” Benilde cites the loss of 2,300 jobs in the French press last year, and about the financial performance of the press last year she adds, “Every national daily in France, apart from the sports daily, L’Equipe, has lost money.”2

The owners of the Indian news dailies are by and large not gamblers. Those who have made large investments in new technology are looking at a sure thing although it could take time. Nevertheless, to use their new and modern capabilities, they will need a huge growth in product and unfortunately they are thus far focussing mostly on their own product which will rarely if ever drive their presses 24/7. The new technology allows for better colour and more diverse offerings in the newspaper package and an integrated approach to new and cross media. The issue for the Indian news or media organisations is one of vision and content. Print is still growing as the most impactful part of the news package in this society but since the demographic is changing, for the news or media organisation of the future, the key issues are vision and imagination. Machinery and new plants can be bought – where will the content and engagement come from?

--Naresh Khanna


1. From A Case Study: Le Figaro’s Advertising Gamble
September 20, 2009 - 11:08 am | Edited by Frédéric Filloux
2. The end of newspapers Le Monde Diplomatique Marie Benilde, English in Hard News, April 2010, New Delhi

A comment on the budget from the packaging industry

A few months ago we met Sanjay Bhatia the MD of Hindustan Tin Works and today we have received his comments about the recent budget presented to the Indian parliament by the Finance Minister, Pranab Mukherjee.

Sanjay Bhatia, MD, Hindustan Tin Works and Rexam HTW is also the Chairman of the Indian Institute of Packaging (IIP) and President of the Metal Can Manufacturers Association (MCMA). Mr. Bhatia was also on the Kelkar Committee and is on the current GST task force as well.

The post budget reaction of Mr Sanjay Bhatia:
"Overall it is a good budget because the government has reiterated its commitment towards reduction in fiscal deficit, [its} focus on food sector, [and its] thrust on food processing and reduction of post harvest food wastage. The setting up of five more food parks is indeed welcome and will benefit agro industries in a big way.

"The government has announced a number of social schemes on education, health, infrastructure, clean energy which is appreciated but the important thing in this is to ensure the right delivery system so that the money reaches the target population.

"On Direct Taxes: The reduction in surcharge from 10 – 7.5% will leave more money in the hands of corporates for further investment and growth.

"On Indirect Taxes: Increase in excise duty from 8 % to 10%, increase in duties on petroleum products and overall increase in excise duty having an impact of INR 43,500 crore would have inflationary impact across the board on all goods including consumer goods.

"On one hand, government has announced concessions for infrastructure however increases in the peak rate of excise duty in steel and cement goes against the infrastructure projects. The metal packaging industry would particularly like to express its deep appreciation for accepting its recommendation of increase in excise duty on OTSC Cans which would result into correcting inverted duty structure and help the industry to correct the huge balance lying in Cenvat a/c.

"Overall, it is a most predictable budget with virtually no surprises."

Print Vs Digital media

Great piece of advertisement used by Sun termed as "UK's best handheld in 40 years ".
The video shows the value proposition of print in contrast to digital media, e-book readers and other gadgets.