Like practically every company in the wide- and grand-format industry, digital inkjet ink manufacturers faced significant challenges in recent years. Higher raw material costs, driven by higher crude oil costs, made life difficult for ink suppliers. The global recession led to a dramatic decrease in printing, which also led to cutbacks from ink companies.
Even though printing has not recovered to pre-recession levels, there have been signs of economic improvement, and ink companies are seeing a rise in demand.
According to Tim Greene, director, InfoTrends, the wide-format inkjet ink market in total is growing at approximately 6.2 percent CAGR over the present forecast period—2009 through 2014. “The market is valued now at over $3.3 billion and expected to grow to over $4.5 billion by 2014. I’d just add that right now, more than ever, there is fluidity,” said Greene.
“The wide-format digital inkjet ink market isn’t where it was before the recession; however we have seen a recovery since September 2009 that has been sustained through the first quarter of this year. The demand for print has definitely begun to improve over the last several months,” said Jeffrey Nelson, product marketing manager – Inkjet Equipment and Software, Sericol Unit, Graphic Systems Division, FUJIFILM North America Corporation.
“Since the start of 2010, we have seen the wide-format market start to recover from the economic downturn,” said Joan Perez Pericot, marketing director, HP Scitex. “We see three major trends emerging as a result of the crisis. First, more analog print service providers are replacing their traditional equipment with digital printing technologies to shorten runs and turnaround times. Second, there has been an industry consolidation after which most commoditized applications are now concentrated in fewer and bigger PSP’s. Third, many small and medium PSP’s are looking for new profit pools and ways to differentiate their businesses and, as a result, are acquiring technologies that enable them to produce new and high-value-added applications.”
Randy Paar, Display Graphics product manager, Océ North America reports that 2010 is “much better than last year. Companies are again busy and that’s reflected in increased ink usage and machine placements.”
“The wide-format digital inkjet ink market is facing new challenges regularly. Faster printers using new technologies require matching inks that are compatible with these technologies,” said Moshe Zach, CEO, Bordeaux Digital PrintInk Ltd. “As ink manufacturer we are witnessing greater acceptance to third party inks by customers.”
“We have seen a very good rate of growth and we see continued growth in the near future. Even though North America and Europe have been slow the last 18 months or so, other parts of the world have definitely picked up the slack,” said Nitin Goswamy, president, A.T Inks.
Signs of Recovery and Opportunities
For ink manufacturers, there has been some good news on the economic front, as the global economic recovery has led to improving sales. But with increasing sale volumes, there has also been a shift in the market.
“Traditionally, we would expect to see a jump in sales after a prolonged economic downturn. However, we are also seeing a paradigm shift in the way that small business credit is issued, and that looks to be a permanent change for our market,” said Patrick Ryan, general manager, Seiko Instruments USA. “Consequently, an improved mindset by business owners to invest in new equipment will likely be tempered by a more difficult process to obtain business credit and leases.”
“We expect to see increasing demand for products that will help businesses reduce costs and maximize efficiencies,” said Reed Hecht, product manager, Epson Professional Imaging. “Anything that helps them bring more work in-house that would typically be outsourced is one of those areas.”
“Commercial printers looking to branch into new markets have already led the charge. I think that as more people learn more about digital large-format capability, we will see growth,” said Ken Kisner, president of INX Digital International.
“I think we will continue to see growth in wide-format inkjet as the demand for shorter print runs or multiple versions of jobs continues to rise. The landscape has changed with the internet and other forms of multi-channel marketing that makes the exchange of information faster and the lifespan of messaging and printed materials shorter. Printers who are incorporating new digital technologies into their portfolio of print devices will be looking for ways to meet this market demand so there is a lot of potential here. This is good news for the digital inkjet ink business,” said Nelson.
“Wide-format digital printing is being implemented in more and more applications that were traditionally attributed to screen printing. These applications are expanding to nonconventional materials such as glass, metal sheets, plastic sheets, wood and ceramics with the improvement of the digital printers,” said Zach. “The recent introduction of digital printing on textile also opens new opportunity for this market. Generally, the more applications which open to digital printing as a whole, will also define the growth in the ink market.”
Sliding from Solvent to UV
As the economy slowly recovers, we’ve seen some areas improving faster than others—depending on the specific niche market. But one of the key areas for growth has been fueled by the movement from solvent ink-based technology to UV ink technology.
According to InfoTrends’ Greene, they expect the solvent ink market to decline from “almost $900 million to less than $600 million (-9 percent CAGR) based on the move from solvent to UV and the continued penetration of 3rd-party ink suppliers in the solvent segment. We also have UV ink growing about seven percent in revenue terms—again offset by increasing 3rd-party activity—from about $360 million in 2010 to over $800 million in 2014,” said Greene.
Many industry experts agree with these forecasts and focus on the opportunities this shift from solvent to UV is providing in the way of growth opportunities for ink manufacturers and PSPs.
Stephen Emery, director sales and marketing, EFI Ink Business points to UV as one of the most promising areas of growth in the wide-format inkjet ink market. Most of the industry experts agree.
“UV ink curing technology continues to advance and LED-UV is the future of this technology. There are many advantages of LED-UV inkjet technology including long bulb life, low power consumption, and the ability to work with a range of materials beyond those supported by traditional UV curing,” said Andrew Oransky, director of product management, Roland DGA Corp.
“The new developments with UV curable inks that are specifically designed to react to the radiation of UV LEDs are remarkable. This means even more new opportunities with UV inkjet,” said Deborah Hutcheson, director of marketing, Agfa Graphics, North America. “We believe that this will lead to reduction costs associated with UV inkjet and may lead to more companies entering the market. Flexible UV inks are also very important and will provide the means to get into additional applications and offering greater latitude in finishing or post production processes.”
“While a lot attention is focused on new technologies, the greatest growth remains in solvent and UV printers. They are the workhorses of the industry, and remain the most capable and best value for graphic production,” said Ryan. “Manufacturers will continue to invest in and develop greener technologies that will be injected into the market. But instead of big, the most likely scenario is numerous, smaller improvements in inks, media, and printers.”
“We also see growth in the market for green materials including ink and substrates. Consumers and businesses are increasingly aware of the growing need to preserve the environment and this is driving product development and market demand for green products,” said Oransky. “In addition to the chemistry of materials, we see businesses looking at the environmental impact of an entire printing system through its life cycle from the research phase through implementation and operation.”
“One of the greatest growth opportunities that I see is in true BIO Inks. These would replace some of the low volatile inks that are currently on the market. They would have to be made with true non volatile solvents and the vehicle and colorants would have to be as close to 100 percent biodegradable as possible,” said Michael A. Andreottola, president & CEO, American Ink Jet Corporation.
Looking Forward: Expectations and Concerns
In discussing the coming year with ink executives, there definitely is a sense that changes in the market are ahead.
Environmental concerns, price, and the economy are top of mind for many of these executives.
“The growing interest in environmental issues and environmental regulations relating to the composition of the ink, the disposal of leftovers and the empty ink containers are among the issues which the inkjet ink industry is dealing with and will continue to deal with,” said Zach.
“I think that the biggest issues facing the wide- and grand-format market is going to be coming up with inks that are going to have to meet stricter and tighter environmental controls. Right now I believe that California has the strictest controls. It won’t be too long before the rest of the US adopts these rules,” said Andreottola.
“The balance between the demand for digital inkjet inks and pricing of these inks as opposed to conventional printing is a concern for most printers. However the printing quality presented by digital printing which is far better than conventional printing compensates for the relatively high production prices,” said Zach.
“I believe the biggest issue is going to be prices that are going down continuously. This does not help to make new investment to develop new products,” said Pedro J. Martinez, CEO at Afford Industrial S.A.
“The main issue we are hearing from our customers today and are working hard to address is the higher cost-per-copy in digital inkjet printing when compared to traditional screen or offset printing technologies,” said Pericot.
Inkjet ink costs are only one part of puzzle, though. While the economy is rebounding, there is still a lot of instability—which is worrisome to some, especially when you read about a possible “double-dip recession” in the news media. This has led to caution—both from manufacturers and PSPs.
“Sales of both equipment and consumables are trending upward currently. However, future growth may be slowed by economic uncertainty, volatility in the stock market and EU instability. We have been watching unemployment, housing and other economic indicators and are not seeing the uptick that would indicate a full recovery. So, like most businesses, we are approaching the next 12 months cautiously,” said Oransky.
“The recession is still causing financing problems for mid size companies, so users are still holding off on new purchases of big ticket items. We are seeing positive strides in the right direction but it is still a concern for the next 12 months,” said Hutcheson.
“Good finance options, especially for smaller print operations, continue to be a concern because of what has taken place economically across the globe the last two years. Many of these printers continue to have a difficult time getting loans to purchase equipment in the $25,000 to $125,000 range,” said Kisner.
“The recent economic downturn has applied extreme financial pressure to every company in our industry, especially the technology manufacturers. Many recent consolidations and mergers are proving to be bad investments, and the number of viable technology providers will likely shrink over time,” said Ryan. “Only a few companies will be able to provide both service and new technologies as we go forward. This will cause a further shakeout in the manufacturing segment of the market, and ultimately impact the pace of new technology development.”
“The greatest challenge for the digital inkjet market for the next 12 months will be keeping up with the rate at which digital technology is moving. The transition from solvent to UV printing, the ever-changing array of substrates, and the need to match color across multiple print platforms are all issues printers face today,” said Nelson. “Print buyer demands for high quality graphics, cost-effective short print runs, multiple versions and fast turnaround are also challenges. Printers will need to keep in step with print buyers to stay competitive and win business.”