Offset Hangs On

A little while back I wrote a blog asking, “What is the future of offset printing?” In it I cited the results of the latest QP survey of the franchise segment of our industry: “In the 2000 Quick Printing franchise survey, single-color offset accounted for 14.4% of sales. That dropped to 4% in this year’s survey. Multi-color offset also declined as a percent of sales, although not as drastically. It fell from 19.3% of sales to 17.8%. Meanwhile, four-color offset doubled from 4.3% of sales to 8.3% of sales.

“The driver behind those changes is digital technology. Black-and-white offset was the first major victim of the digital age when such jobs migrated to monochrome copier/printers. Two- and three-color offset managed to hang in due to run lengths, quality concerns, and color click charges. Four-color offset grew to fulfill requirements for longer run lengths and quality.

“CTP has certainly helped offset to hang in, as have advances in press automation and capabilities. The question is, what role will offset continue to play as digital technology answers quality and run length questions and new output technology such as inkjet enters the fray?”

That was my take on the situation. But I’m far from infallible, so I decided to ask some knowledgeable folks throughout our industry where they thought offset was heading. The overall response was that digital is supplanting offset in many areas, but that offset is unlikely to disappear soon. That said, the responses were much more nuanced and varied.

Where We Are

The franchise survey figures show an overall 10 year drop in sales from offset printing from 38% to 30.1%. QP columnist John Stewart, who does several in-depth surveys of the industry for NAQP, had this to say on the subject: “While I think in-house four-color offset will play a diminished role in our segment of the industry in the future, I think the role of single and multi-color will remain relatively steady.

“Granted that offset reached 40% to 45% of sales 12 to 15 years ago, it now appears stabilized, after many years of decline, at 32% to 36% of sales. I believe it will remain at that level for now and into the foreseeable future.”

While Stewart’s percentages are somewhat higher than those in the franchise survey, they reflect the same basic decline. What about his prediction that offset will continue to make a steady contribution? Only time will tell, and as he noted in his response, “Of course I will be dead before the above predictions are proven wrong.”

Apple to Apples

The franchise segment is only a small part of the quick and small commercial printing industry as a whole, but its trends are representative. Stewart’s surveys and our own QP Top 100 annual survey show the same general diminishing of offset’s role. However, since we started with franchise numbers, it’s instructive to see what the franchise people had to say about offset and how they are handling the move to digital.

“It will continue to play a decreasing role and at a faster pace, in my opinion,” according to Allegra Network CEO Carl Gerhardt. “Most new franchises we do are MatchMakers, but we are also doing some selective startups with focus more on marketing services and less on print. We are doing digital equipment with mailing, but no offset in these startups.”

Rich Lowe, COO of Franchise Services, parent company of Sir Speedy, PIP, and Signal Graphics, says: “I think the future is digital. The only things we run on one-color presses are envelopes. We don’t suggest to owners to get out of printing because they own most of their own equipment. If they are investing, we tell them to go digital because the costs are right, anyone in the shop can run it, and it runs almost any paper stock with excellent quality. If they do need to buy out for some jobs that digital isn’t suited for, these days the turnaround time is good and color jobs can be bought online inexpensively.”

“Our Digital Business Center (no offset press) became our standard new center offering three or four years ago,” says Kevin Cushing, CEO of AlphaGraphics. “Owners can request a variance to put in an offset press and many add them after they’ve built volume and want to capture the margins by bringing the work in house. We help them set up sourcing (usually other AlphaGraphics centers) prior to opening. The fixed costs associated with the equipment and skilled labor don’t make sense for a new startup. Some 13.5% of our network is now comprised of Digital Business Centers.”

Does Cushing think that offset will become obsolete any time soon? “Offset will be the number two profit center for the foreseeable future behind digital color. However, it is expected that offset as a percentage of revenue will continue to decline on an annual pace of between one and two percent. In 2009, offset sales were 20.38% of overall sales. Sublet sales, which include outsourced offset as well as finishing, etc., were 15.22% of overall sales. Four-color will always be a factor, but it will lose ground to shorter run, quicker turnaround, and ‘offset like’ technologies like digital presses. The effectiveness of personalization also moves volume away from offset.”

A View from the Field

So, that’s what the franchise leaders have to say about the future of offset. What about the franchisee view from the field? Sheri Statt Bercaw is CEO of a Sir Speedy franchise in Scottsdale, AZ. Her company is a perennial QP Top 100 company and her operation is about as sophisticated and advanced as any I have visited lately, with both digital and offset capabilities.

“Offset printing has been the core of commercial printing and most quick printing firms for a long time. Our company has seen a decline in offset over the past 10 years, and I truly believe we will continue to see the decline but at a much more rapid pace. Digital printing is now accepted by the vast majority of buyers.

“With the economic conditions of most companies, run lengths have drastically declined. Print on demand is also widely accepted, continuing the rapid decline of large quantity orders. Shorter runs are more economical as digital runs. We now see many commercial printing firms putting in digital gear to compete. Most commercial firms have not figured out how to sell it or how to deal with the quick turnaround times. This will quickly change.

“Technology is our future. The quick printing industry has to figure out how to sell services that don’t involve ink or toner on paper. Web-to-print technologies have proven this to be the future. As an example, the building of online catalogues with downloadable artwork for a variety of uses can be incorporated into these sites. Download fees can be associated to the process. Website development and marketing services are just a few other ways we can bill for services that don’t produce a single sheet of paper. Our industry must adapt.”

So, perhaps it is not a simple matter of digital taking over from offset. While PIA’s 2010 Forecast predicts a decline in conventional offset printing and an increase in digital printing, it also sees a significant growth in “ancillary services” such as those enumerated by Bercaw.

It appears that the consensus is that offset will shrink, but it will not disappear any time soon, and that digital output will continue to grow as the preferred output method. Marketing projects and other ancillary services will also play an increasingly important role. Of course, we haven’t even mentioned inkjet devices, but that’s another story.

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