2009 State of the Industry - Part Two

Last month, we took a snapshot of the wide- and grand-format industry, and looked at how business has been over the last year. In this article, I’ll focus on the future aspects of the market: what areas show the largest opportunity for growth, what technology will drive change forward, and where we see ourselves in one year’s time.

Coping Mechanisms

As discussed before, no segment of the wide-/grand-format market has been exempt from the downturns brought on by the current global recession, with some shops seeing profits decline 30 to 50 percent from the previous year. This, in turn, has forced many to make tough decisions in order to keep their businesses afloat.

“Both from a sales and operations standpoint we see people making changes to their business,” said Tim Greene, director, Wide Format & Jetting Technologies, InfoTrends. “From a sales standpoint we have companies reporting that they are taking a harder look at new vertical marketing strategies and more aggressively promoting and discounting their services. From an operations standpoint we see people doing what they have to do to drive down costs, reducing employee hours, using more third-party ink and media, and using less expensive types of media that may not be as durable, but satisfies the need for short-term promotional graphics.”

According to Joseph Mergui, president, Caldera, many shops are reacting wisely. “They invest in securing their assets, managing workflow, monitoring costs and labor time. They also invest in new equipment, not just to replace simply an old one, but to secure a better profit ratio per square foot,” he said.

Christopher Howard, senior vice president, sales & marketing, Durst Image Technology US, LLC, agrees. “I think many shops have looked at their operations and the efficiencies thereof as stated earlier, and they have also looked at this as a time to focus on market share in their key segments.”
“Every shop is different in their strategy to grow through this economy,” said Ken Van Horn, product marketing manager, EFI. “Many shops took a very aggressive approach and continued to invest in the technology and workflow management systems that would enable them to not only capture more business but also become more profitable. As customers add production they are also looking for predictable uptime and running costs. So enhanced service and support is critical.”

Cost Reductions

The primary way many businesses have coped—across all industries—has been though close control of costs. We’ve seen the reports of the increasing number of the unemployed and, unfortunately, the wide-format industry has had its share of layoffs and cuts.

“We’ve seen workforce reductions at shops, as well much greater competition for business with customers who’ve established long-standing relationships with particular fabricators,” said Joseph N. Masters, graphic display marketing manager and sustainability manager, Alcan Composites USA.

“In general, PSPs are streamlining their operations, laying off employees and consolidating production on certain printers. The challenges are likely to remain immense as long as excess capacity remains,” said Adam Florek, research analyst, Lyra Research, Inc..

“Some are cutting costs and right sizing their businesses for this ‘reset economy’,” said Rick Scrimger, vice president/general manager, Roland DGA, “while others haven’t seen the impact based on their niche and local territory. Some shops closed their doors as a result of the dramatic changes in business over the previous 12 months.”

“In most cases, downsizing and cost control have been the response. Partnering opportunities have been more prevalent, especially where synergies exist. Companies need to focus on their revitalization strategies,” said Steve Bova, executive director, International Reprographic Association (IRgA).

“Most shops have cut their resources in-line with the decline in demand for their output. A few took the decline as an opportunity to become more aggressive and capture share (by way of lower prices) from competitors,” said Marco Boer, vice president, IT Strategies.

Some have focused on improving their internal operations and their core businesses, strengthening their presence in the market. “Some shops have focused on improving their operations with efforts that not only save long-term costs but contribute to sustainability—such as switching from propane-powered forklifts to electric forklifts and installing energy-efficient lighting,” said Masters.


While some businesses hunkered down, others found that offering new services and expanding their customer-base, helped them remain afloat.

“The shops that are very specialized were hit a lot harder than the shops that cater to a variety of markets. This makes sense, considering that when one industry is down others might be in better shape,” said Ed McCarron, director of marketing, Digital Imaging, InteliCoat. “More shops are diversifying, going after as many industries and applications as possible. Shops that are able to serve multiple markets tend to do better during tough times.”

The IRGA’s Bova, agrees. “There has been a trend toward diversification, right-sizing and charging for services that may have been included for free before. However, competitors are hungrier than ever. We continue to see accelerated price erosion as companies compete for less business in the traditional marketplaces.”

“We’ve seen shops bring new services under their roof. Whether it’s design or installation, more firms are touting themselves as one-stop shops,” said Florek.

Technical Innovation

As the industry recovers, technological advances in printhead technology, print equipment, and inks will help to drive the market forward. “Digital printing is king,” said Alcan’s Masters, and the current economic situation has aided in the shift from analog to digital technologies. Digital allows PSPs to print short run jobs without incurring high costs for materials and labor. And many of the projects from marketers have moved toward much more targeted and shorter run lengths in an effort to keep their marketing costs down—which is perfect for digital.

Experts pointed to three areas where innovation has—and will continue to—push the market forward: UV technology, latex ink, and automation.

UV Technology

According to IT Strategies’ Boer, UV-curable inkjet technology continues to help print providers address a broader range of applications, allowing them to take on incremental business. “This is important because it is not displacing existing revenue, and it is growing the size of eligible revenue.”

Lyra’s Florek continued: “UV-curable hardware and inks have been the star of the industry. The Great Recession has hit the UV-curable segment as well, but we expect that segment to bounce back more quickly. The prosperity of the UV-curable segment will likely come at the expense of the relatively saturated solvent segment. Especially if price points for UV-curable printers come down, smaller PSPs will likely replace solvent devices with UV-curable ones to widen their capabilities and print on new substrates.”

“UV flatbed technology continues to dominate our ability to deliver a wide array of products quickly and efficiently,” said Catherine Monson, chief executive officer, FASTSIGNS International, Inc. “Although the acquisition rate has slowed, some of our centers have acquired new equipment this year. UV flatbed printers allow our centers to reduce their cost of goods and labor while maintaining or increasing their production capability.”

Latex Ink Technology

According to some experts, Hewlett Packard’s development of the new latex ink technology will be a key component in driving change in the coming years.

“There have been some interesting developments in the market in terms of printers—for example, the latex ink printer platform from HP is representative of the future of printing technologies,” said McCarron.

“The aqueous inkjet market has been on the decline, but with the launch of more durable aqueous options, such as latex, this trend could reverse,” said Lance Hutt, global product manager—Digital, Avery Dennison Graphics & Reflective Products Division.


During SGIA, one of the trends on the floor was a move toward more automated systems, allowing PSPs to increase shop efficiencies and productivity, while also streamlining their workloads. “Our customers have been focused on production efficiency in their print operations, everything from the physical workflow to investments in the areas of new printing platforms that are offering additional productivity. This is allowing them to compete for new jobs and still have a margin required for their businesses,” said Howard.

“Workflow technologies exist in many forms. It’s now time to understand the production process, life cycle and life cycle management of your company and automate this,” said Ken Madsen, president, GSG. “There has been a natural shift with many of our national clients (beauty, cosmetic, fashion, etc.) to focus on reducing costs. To do this we must all automate, utilize and be intimate with the production life cycle to stay healthy in this environment.”

Future Growth Opportunities

Overall, experts are cautiously optimistic about future growth in the wide-/grand-format industry, with a turnaround at the end of 2009 and growth beginning early in 2010. MACtac’s Moore agrees with industry estimates of three to eight percent growth in the coming years.

“As our economy approaches recovery, the market will see a different standard of ‘normal’,” said FASTSIGNS’s Monson. “While growth in this market may not keep pace with predictions from previous years, there is still a demand that we are in a position to meet.”

“The growth in the wide-format printer market will return as the rest of the economy returns to higher levels of expenditures. Those printers that provide the ability to either expand the application range a shop is able to target are always likely to see above market growth, but also those print providers who can add value through conversion and are able to sell the value add will do well,” said Boer.

But what applications show the best opportunities for PSPs? Experts pointed to textile printing, interior and home décor, and POP retail signage as the three main areas of future growth for the market.

“Opportunities lie in providing unique and diverse wide-format products and applications outside of the traditional banners and rigid products that we already provide,” said Monson.

“The growth is in going beyond the boundaries of printing traditional posters and banners. New applications provide new revenue streams yet still allow companies to produce traditional graphics,” said Randy Paar, Display Graphics Product Manager, Océ North America. “Products can yield greater margins than just prints. A printer and digital cutter could be used to manufacture furniture, or instrument panels, or children’s games. Shops with some entrepreneurial spirit should consider that current generation flatbed printers and digital cutters are also manufacturing tools that allow them to produce a product.”

“PSPs are increasingly successful in marketing wallpaper to prospective customers. In general, I think decorative graphics are an area of great potential, especially as media manufacturers offer more sophisticated substrates that are compatible with aqueous and even solvent and UV-curable inks,” said Florek.

“Signs Now sees direct-to-textile printing as an emerging trend,” said Lee Manevitch, technical support director, Signs Now, a division of Allegra Network. “The ability to print directly on textiles means we can offer POP, tradeshow graphics, or even outdoor banners that eclipse other technologies in terms of color range and overall visual effect.”

Neschen America’s vice president of marketing, Angie Mohni, points to the retail sector as a growth market. “Retailers are looking for any way possible to pull customers into their stores. They are using window graphics, floor graphics, portable banner stands, low cost signage, and printable textiles to draw customers in with the hope that they will spend money. Many retailers are advertising a new special every other week so signage promoting these sales must be created,” she said.

“Wide-/grand-format, especially point-of-purchase applications, will continue to be the fastest growing print sector. Consumers are making more purchase decisions closer to the product. That means more advertising dollars are being spent closer to the product, and that’s good for our community,” said Michael Robertson, president, CEO, SGIA.

Manevitch also points to dynamic digital signage as another market to look for expansion. “Dynamic digital signage is becoming more prevalent now. Go to any new Wal-Mart and you’re bound to see interior digital signage used heavily. The ability to place a computer and LCD monitor in a location (or LED outside) makes a lot of sense. The end-user receives an attention-grabbing sign for a reasonable investment, and the center owner can—if he or she wants—receive residual revenue from the sale in the form of content development and delivery.”

Future Predictions

So, where is the industry headed? “Up baby. Way, way up,” said EFI’s Van Horn. Most experts agree that while the we shouldn’t expect to see the double-digit growth of the past several years, growth is on the horizon.

“I think that in a one year time frame the market as a whole will return to its growth pattern as both the economy continues a slow recovery as well as the potential that digital printing offers in the entire market segment,” said Howard.

“We have been seeing slow but steady signs of improvement in the market from quarter two on, and expect to see continued recovery over the next 12 months. The demand for advertising, fine art, and trade show graphics is going to rebound as the economy improves and companies begin to expand their budgets again,” said InteliCoat’s McCarron.

“This is a tough time for the wide-format industry, but the future is not as bleak as it seems. Manufacturers are hard at work to make their products accessible to a wider market. There has been a flurry of software and workflow solutions that can help PSPs run better and more smoothly. The market has stabilized and there are actually a few signs of life,” said Florek. “Still, an industry-wide shake-up is occurring, and there will probably be fewer firms operating next year. The challenge for end users is to communicate why wide-format print is necessary. It is absolutely crucial for PSPs to explore and create new markets.”

“We believe there will be stabilization of the marketplace in the next year, and possibly some growth toward the end of the next 12 months. Wide-format printing and finishing technology will continue to evolve and improve, providing customers an even better product at affordable prices,” said Monson. “Large-format graphic businesses that have a solid plan, and then work that plan, will ensure their customers get the wide-format products they need to grow their businesses, and as a result, the graphic company’s business will grow.”

“The economic crisis has forced both manufacturers and PSPs to evaluate how they do business and ways that they can be more efficient. All companies seem to be doing more with less and as the economy recovers, businesses will be in a position to prosper due to the changes that are being made now,” said Mohni.

“Hopefully the overall economic environment will have improved to the point where more people are getting back to work. I always think that employment is the critical metric. But even if employment goes up we have some very significant challenges in that will not have gone away in 12 months,” said InfoTrends’ Greene. “While manufacturers are working very hard to continue to make wide-format digital printing easier, less expensive, and ‘greener’, we continue to see more printing companies enter the wide-format graphics market, this makes it a more competitive space. We also see a lot of growth in the digital signage/digital display business which presents an alternative to digitally printed graphics. In short, we are not expecting a full rebound to previous levels of business in the 12 month time frame.”

“We continue to be bullish about the industry. It has been, and will continue to be, resilient due to the fact that we are able to adapt. We will begin to see ourselves competing against a new set of competitors for new markets and applications. Firms need to do what they must to stay viable. The strongest will survive,” said IRgA’s Bova.

“As the economy picks up we will see printers investing in new equipment. With the emphasis on sustainability and eco-friendly products, printers and their customers will be looking for greener printing options as well,” said Avery’s Hutt.

“As the market recovers growth will—perhaps ironically—bring with it more manufacturers, particularly those from Eastern Europe, Korea, and Taiwan. Unlike the Chinese wide-format solvent manufacturers of five years ago who never really gained traction in the US, the new generation of wide-format manufacturers has the benefit of access to better IJ head and ink technology and is unencumbered by a prior reputation,” said Boer. “At FESPA 2009 in Amsterdam there were over 35 UV-curable inkjet manufacturers displaying new UV-curable printer technology. Interest among print providers is high in newer ink technologies—such as HP Latex inks, similar inks which are likely to be offered by other manufacturers in the future—and they will spend money to remain at the forefront of their markets. We believe the sun is rising, and the alternatives available to print providers will become even more varied than they have been before.”

According to Don Knox, US director of sales, Large Format Printing, HP Graphics Solutions Business, there are three major forces driving the future growth in this market. “The first is the conversion of high-quality, long-run applications to digital printing, such as POP advertising. Secondly, there is a substrate substitution from PVC-based materials to lighter, easy-to-handle polyester based materials. Last, digital signage will finally break the barrier of what is creatively possible in a new space, a new format, and through new communication channels,” said Knox.

“In the next 12 months we’ll see several new technologies and initiatives emerge that will shake up the sign industry significantly, and those who are capable of embracing that change will thrive. With the exception of ensuring a ‘green’ product, though, customers don’t care how their sign was produced—they just want it now and they want it done right,” said Manevitch. “Ease of use has improved. Software has improved. Cost has come down so much that there is very little investment required to enter this industry. The differentiator, then, will not be price or equipment but rather the quality of service provided. Those who are willing and able to interface with customers will flourish once the economy rebounds, and those who can’t or won’t deal with customers will be forced to rethink their business strategies.”