Trends by Print Process Philippines Report to the 9th FAGAT

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Trends by Print Process PhilippinesReport to
the 9th FAGAT
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I would like to offer some broad-brush findings
an analysis of the economic, demographic, and
social factors that affect the demand for print
and that will ultimately affect the structure of
the Philippine printing industry.
The beginning of the new millennium has become
reason in itself for companies and executives to
wonder and muse about their futures.
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First, it is important to put into perspective
both the nature of forecasting and the factual
basis for our views.
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This means that forecasting is never done once
it has to be done constantly.
Forecasting is a tool it is meant to create
discussions of alternative plans of action.
In essence, data tell us the path or direction
of the industry.
This path, however, is under constant attack
the daily executive and customer decisions
which make this path come true also take
actions and initiate decisions that create a new
one.
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The seeds of change have already been planted,
and they reveal themselves in industry
demographics.
Forecasting the graphic arts industry requires a
firm grasp of industry demographics and an
understanding of the way the industry adopts
technology.
More important than ever are insights into the
creative markets, how and why they specify print
or other media.
The PPTF database, with its 40 years of industry
history, is our main data source for developing
quantitative forecasts of industry structure past
the year 2005.
This data is combined with other proprietary
economic models and inputs, including quarterly
surveys of both printing industry executives and
the creative segments of advertising agencies,
publishers, designers, and others who create the
demand for print.
These efforts are supplemented by proprietary
studies of technology issues like digital
printing and direct-to-plate.
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• Trends by Print Process

Offset Duplicator (Multilith, Ryobi, Hamada)
Single-Color Sheet-fed Offset (Heidelberg Kord,
Solna, Komori, Kobundo)

Multi-Color Sheet-fed Offset (Heidelberg, Komori,
Ryobi, Roland, Mitsubishi, KBA)
Non-Heat-set Web Offset (Goss, Man Roland,
Horizon, Heidelberg Harris, Komori)
Heat-set Web Offset (Heidelberg, Hancho,
Komori Mitsubishi)
Gravure
Flexography
Digital Black White Copiers (Canon, Riso, Fuji
Xerox, Oce, Ubix, Konica Minolta)
High-Volume Black White Laser Printers (Fuji
Xerox, IBM, HP, Oce)
High-Quality Desktop Color Printers (Epson, HP,
Canon)
High-Volume Digital Color Printers (HP, Fuji
Xerox)
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We like the heat-set market because the
fragmentation of competitive media means that
the publishing market will continue to do well
(with the best growth being in specialty
publications) as will the catalog market/direct
mail.
We believe the main growth areas will be in
heat-set offset (full color magazines in coated
paper) for the foreseeable future, and
eventually digital color printing.
Catalog marketing is still a very tiny portion
of overall retailing and is expecting to grow
at rates higher than GDP, sometimes two and
three times, for years to come.
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At the high end of this market, heat-set presses
continue to make inroads while at the very low
end, color copiers and eventually digital
presses are taking away small bites of
business, and eventually these will be chunks.
Business-to-business printing, predominantly
sheet-fed work, falls on the negative side.
(Annual reports, corporate profiles, controlled-ci
rculation publications)
When this is combined with what is occurring in
new media, like the Internet and simple things
like just viewing images on screen in
corporations, sheet-fed offset products are
seriously threatened.
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Some of the impetus for this investment will be a
declining workforce, which is already tight as
new employees look to more exciting
computer-based imaging markets.
The next decade will see a significant
replacement of the sheet-fed offset press base,
where companies will find that buying a new
press will allow them to eliminate older
presses, not on a one-for-one basis, but on a
two-for-three or two-for-four basis.
Sheet-fed press investment should remain strong
for many years, even though supplier
consolidation will continue.
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Among the largest users of the Internet and
non-print alternatives like e-mail are small
businesses, the main targets of quick printers.
The quick printing part of the market, which
uses a combination of offset duplicators and
copiers, also raises some concern.
The efforts of small printers to move their work
away from small business to more corporate work
and much less walk-in work has been evident in
the marketing thrust of many franchisers.
Some of this is defensive, seeking to secure
more profitable work because walk-in business
does not have sufficient volume to grow.
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Copiers clearly have the upper hand, and we see
vast disparities in the offset vs. copying volume
among independent and franchise firms.
The number of offset duplicators in the market
is still high, over 10,000 but their
utilization is quite low.
We expect that many independent small printers
will close and that few new firms will be
formed to replace them.
Franchise locations are a concern,but to a lesser
extent.
A franchise headquarters purpose is to spend
time on new products, market development, and
demand stimulation that individual owners would
have difficulty doing alone.
The times will demand that this be done
aggressively.
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The problem with this market has been the
erroneous assumption that the industry has no
viable or dynamic short-run production
capability.
The effect of digital presses like the HP Indigo
and the numerous incarnations of the Xeikon
engine (as sold by Agfa, IBM, Xerox, and
others) prompt frequent questions.
All of our surveys about run length, both on the
demand and production side, show a very active
market with many, many jobs in run lengths
that process color offset is not supposed to
do.
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We believe the digital color printing market
will be 5 of the commercial market by 2010, or
about Peso 200 million in todays market size.
The short-run color market already exists.
The real question is whether other technologies
will do it better.
We have trouble coming up with a total market
potential of more than Peso 600 million, about
15 or so of the market.
For at least the next five to seven years, watch
for steady but slow growth from digital printing
but no revolution.
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The process is capable of commercial-quality
work, but there are no suppliers willing to
nurture it and few printers willing to risk
broadening flexo beyond its current successes.
Flexographys place in commercial printing is to
be the new process on the industrys horizon, and
we expect that it will remain there.
Right now, graphic arts executives are concerned
about digital printing, direct-to-press, and
direct-to-plate offset.
Until these issues are resolved, flexo is not
likely to muscle in.
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• One striking difference between printers and
• the creatives who originate what the printers
  need
• to produce is the digital-ness of the
  creative.

• Our research showed that creative who used
  digital printing were more active on the
  Internet, more active with digital photography,
  and more technology intensive in their daily work
  than most printers.

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In fact, we believe the difficulty that many
graphic arts firms are having in attracting
design and prepress personnel (one that
ultimately affects the decline in the number of
trade service firms) is that the new media are
attracting many people who have skills the
printing industry desperately needs in the
future.
A serious concern, however, has been the lack of
passion for print that we are finding among
creative, and their preference for work on more
exciting things like new media.
For the near future, there may be little passion
for print, but it does still represent the bulk
of creative work and it does pay the bills.
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This is unfortunate because the investments in
direct-to-plate and digital printing require
front-end investments that most sheet-fed
printers have never made, including the employees
needed to manage the workflows and output.
We do not see printers interested in this
digital-ness.
Prepress is still an investment made grudgingly
by many printing firms, and has its best value,
according to most print executives, in bringing
in work for the press.
Investments made grudgingly are usually minimal.
Printing organizations will find in the next
years that virtually every production decision
will represent a raw peso investment in digital
technology and an employee training program.