State of the Industry

Each year, Big Picture gathers industry pundits and experts to share thoughts and ideas about the past, present, and future of large-format printing. This year, we sat down with SGIA’s Dan Marx, longtime writer and consultant Sophie Matthews-Paul, Lori Anderson of ISA, and Mark Hanley of IT Strategies to talk about changes, challenges, and budding competition in the industry.

BP: What’s your quick assessment of the state of wide-format for the coming year? Bullish, bearish, or somewhere in between?

Dan Marx: Based on the survey data we collected earlier this year, optimism is high, particularly when compared to the US economy in general. Our data showed graphics producers experiencing double-digital growth during 2013. Equipment purchases (and plans to purchase) and the strong lead-up to this year’s SGIA Expo points to a strong business environment.

Sophie Matthews-Paul: From where I sit, based in the UK but covering the industry worldwide, I see a fairly static market which continues to be shaped by the drive for lower costs. What I think might happen (and certainly should be considered more strongly) is that digital print needs to return to its roots, rather than continually trying to compete with the screen process and offset litho.

The joy of wide-format inkjet production was always its versatility and flexibility in the short-run market and for one-offs, and these are the jobs which carry a decent margin. Trying to match costs and levy realistic profit when competing in volume against analogue production can bring compromise by reducing the potential for profitability. This is particularly true when you factor in the investment cost of a high-end production printer that’s designed to target the segment for unattended, automated production of longer run lengths.

Lori Anderson: ISA has produced several research initiatives in the past year that indicate that the overall sign industry is increasing and wide-format digital along with it. For wide-format digital print specifically, the ISA Wide Format Print & Media Mix Survey also showed a positive outlook. Those surveyed expect digital print to continue to grow, representing 64 percent of business in two years, compared to 58 percent currently. In addition, they anticipate slight growth in eco-solvent, solvent, UV, and aqueous production in the coming two years, along with significant increase in the dye-sub market.

While that survey provided a pretty bright picture for wide-format digital print, another ISA research initiative, the quarterly ISA Sign Industry Market Monitor showed large-format printers will enjoy stronger-than-average growth in 2014 and into 2015. This largely will come through growth in the manufacturing sector. (Editor’s note: This research is available at www.signs.org.)

BP: In the past few years, we have finally seen significant displacement of screen-printing lines in the P-O-P and graphics facilities. At the same time, placements of wide-format lines at offset plants have increased dramatically, and we’re hearing concerns from PSPs about the new competition. Have we arrived at the long-predicted convergence of these market segments?

LA: Savvy business owners have always looked for ways to diversify their businesses. Wide-format printing offers a few interesting benefits: the major equipment expense – the printer itself – is already accounted for and employees already understand the basics. Still, there is a bit of a learning curve about the opportunities and markets.

No matter the industry, end users want to streamline their list of suppliers. So, they may be asking their sign printers if they can handle a commercial project or vice versa.

Mark Hanley: There is convergence beginning, but it is at a very early stage, and it will be played out in much larger markets than DG. Actually it is more like a transference of revenues from one type of customer to another through a new channel. The underlying markets have changed, so it is not like convergence on the old base of business at all.

DM: From here on out, companies will be harder pressed to differentiate and find niche opportunities. The good news is that those companies that have been serving the wide-format graphics sector for more than a decade have developed deep knowledge of our processes, materials, and opportunities – a real advantage.

SMP: The core element that everyone forgets is that the end customer really doesn’t much care how his job has been produced. I’ve said it before and I’ll say it again: If the job meets its criteria, is priced right, and is delivered on time, it could have been produced by children with wax crayons.
The bottom line will always be the margin and, if there are compromises to be made, these are driven by customers and agencies who continually drive the price down.

It’s important not to lose sight of the key advantages of inkjet and merely see it as an alternative to screen-printing and offset litho. Digital can also generate applications that can’t be produced using traditional methods, and wise PSPs will focus on innovative jobs where inkjet is the only viable production method.

The choice should never be either/or when debating digital versus analogue. Instead, we should be looking at the two sitting side-by-side and complementing one another.

BP: With increased pressure to work quickly, and increasingly complex post-print finishing and fulfillment demands, it has become critical for printers to become more efficient. Do you feel PSPs are embracing workflow automation and other technologies that can help them toward this goal?

MH: At an individual local printer level the inefficiencies are still glaring. The rate of automation based on consistent and system-driving software, let alone entry into data-management IT-type technology, is still shockingly low even in the US. It is a cultural as much as an economic issue.

SMP: End-to-end workflow is becoming a cult description for many manufacturers and suppliers of software products intended to simplify digital pre-production, even when the printing process might still be analogue. There are key elements which fit into this descriptor, the first being covered by that all-encompassing word “integration.”

Some print businesses have a reluctance to rely on automation because they believe it lessens the control they have on the orders passing through their books and how they are handled. But correct implementation of a digital front end (DFE) combined with automation also eliminates the margin for error and should reduce the number of redos, thanks to the right processing of the job and sensible pre-flighting that prevents waste of both time and materials.

DM: It’s also important for companies to realize that staying competitive and maintaining margins is not only about pricing strategies, but also efficiency and the reduction of waste, be it time, materials, or labor. At the top end of the equipment spectrum, we’re seeing increased automation. It affects quality, but it also affects productivity. Every second carved out of the process is a second gained for higher productivity. Companies see the logic in this, and have been moving toward automation.

BP: What other things are shops doing to counter their perception that there is too much capacity in the market and too many graphics providers with similar capabilities?

DM: I think there are three “pillars” of differentiation for wide-format companies: Specialty inks like white and metallic; materials including media, mounting boards, laminates and specialty films; and finishing technologies. Within these three pillars exist an incredible number of opportunities to differentiate product, stand out from the competition, and charge higher margins. The deeper the knowledge, the better the opportunity.

SMP: In the early days of wide-format inkjet, in particular, there was plenty of work for everyone. Being a novel technology where one-offs and short runs could be accommodated, a new raft of applications came along that didn’t rely on high production numbers to make them cost-effective.
In today’s market, however, despite the variety of ink chemistries and machine capabilities that are available, there is a tendency for a “me too” attitude from some PSPs who think that competing with the chap down the road will work for their own business models.

The key to success is by offering a differentiator to end customers, but there is also sense in providing a good, solid, and reliable service. People will only deal with companies that they like and respect. With so many aspects of job handling becoming remote, thanks to web-to-print and online payment schemes, it is easy to lose the human element along the way. Communications are as important as having the right equipment and resources to compete with other PSPs.

BP: What other critical business decisions are shop owners grappling with today?

LA: The single greatest concern – and this is throughout all aspects of the sign industry – is workforce development. We as an industry must continue to tout the great careers that are available in signs and visual communications. Finding and keeping good employees is difficult, especially as baby boomers retire. What younger workers expect out of a career is changing and we must adapt. Without significant attention to this area, all of this discussion about growth opportunities is moot.

DM: We also hear from business owners that finding, training, and keeping employees can be a particular challenge. The employment/career path for production employees has changed along with the technology. For many, printing has moved from a career/craft/skill to something closer to light manufacturing. It’s become more common from employees to leave – or even jump industries – for a slightly better wage.

BP: Many technology suppliers to inkjet OEMs consider the wide-format market to be maturing, and seem to be focusing on other sectors, such as packaging and industrial applications. Yet most forecasts show that inkjet has captured less than 40 percent of the retail and out-of-home markets. Are we reaching a point where wide-format’s long-term growth will come incrementally rather than revolutionary changes in the technology?

SMP: Numbers and percentages pushed through are never that easy to quantify because they contain hidden variables that make it nigh on impossible to establish the true nomenclature behind a given representation. My thoughts on the move into new market segments lie more around the fact that manufacturers for the most part have portfolios of equipment without a given date when obsolescence will cut in and the machine in question will become redundant.

The technology involved in the development and production of inkjet printing is ripe for moving into parallel and vertical segments because its common denominators can be used to diversify into alternative production methods. These, as we know, don’t just involve ink but also fluids used for deposition that’s used in a variety of industries and, of course, additive modeling. Evolution of an original concept is certain to take place and metamorphose into adjacent territories.

MH: There is a sense from a vendor perspective of a need to sell other types of equipment to keep revenues growing and that is the case without the demand DG market declining – it is just a function of technology competition between vendors. As a result they want to see WF as a gateway to industrial markets and some vendors have begun to make this reality. That is proper and reasonable.

DM: While I believe the amount of wide-format work will continue to grow, slowly squeezing parts of the screen and offset industries, it is now our mainstream technology. Looking into the near future, “incremental” is the name of the game for the graphics industry. The new equipment “oohs” and “aahs” of a decade ago have faded. At SGIA, we predicted digital printing’s growth into industrial and packaging to be a massive opportunity that could eclipse the graphics market. Truth be told, these are the areas where much of today’s inkjet innovation is happening.

BP: Inkjet hasn’t gained an appreciable market share in most industrial applications to date with a few notable exceptions, particularly the ceramic-tile industry. Which applications will be the next to break out?

DM: Glass, product packaging, thermoformed plastics, printed electronics. Innovation is fully underway in these areas and more. I recently saw a series of presentations addressing these areas and the possibilities are truly eye-opening.

MH: In fact there are nine specific digital production markets which are mainstream now (i.e.: commercialized in the existing channel and having perceived strategic significance): ceramic tiles, transactional documents, textiles in production fixed arrays systems, labels, rapid prototyping, DTG, ultra short run high-end graphic arts production, books, and architectural substrates. They are not very large and represent small shares of analog markets, but they are far beyond experimental, and in vendor revenues they represent about $12 billion – and in user expenditures multiples of that number – without including digital graphics.

Of course not all of these markets are necessarily organically accessible to WF channels, though some are. The next breakout market will probably be packaging, but it is unclear to date how and when, and it may not necessarily only be inkjet in play.

SMP: On the contrary, inkjet in industrial applications has been growing by stealth during the past few years and now encompasses a growing number of areas which hitherto have been limited by the restrictions imposed by pad and screen-printing. Industrial digital printing will never receive the trumpeted publicity of its display counterparts because it is not an end process in its own right; rather, it is a part of an overall manufacturing process.

Ceramics are an obvious application because they represent an end product with which everyone is familiar. But there are many other products that incorporate industrial printing and represent items in our everyday lives, such as dashboards, cans and bottles, smartphones, tablets, and even markings on household appliances. Limitations formerly imposed on the industrial sector regarding inkjet are now being overcome. A typical example is the ability to site compact LED curing units into a production line instead of trying to work around the restrictions imposed by more cumbersome and heat-generating mercury arc systems.

BP: The US has trailed Europe and Asia in digital printing onto textiles, but this is beginning to change. Do you see continued growth for the textile market, and will it include commercial print shops as well as specialists in markets like upholstery and home furnishings?

DM: I do see continued growth in this area, particularly as the wave of mass-customization that has been crashing around consumers extends into fabrics for interior applications. Think of it: Mass-customized consumer products (photo books, t-shirts, artwork) are training the public to expect to specify the look of things. It just needs the perfect application to take us over the threshold.

SMP: In my view, the digital textile printing sector falls into two distinct camps with soft signage and some interior décor representing one segment; and fashion, apparel, and major home furnishing being the other.

Particularly in some European countries, the supply channel has not been sufficiently well educated in the idiosyncrasies of printing to textiles, and this has led to a lack of confidence in end users when it comes to investing in this technology. The situation is changing, slowly, but digital textile printing has a lot of ground to make up before it starts seriously to challenge existing roll-fed ink formulations for P-O-S, retail, and other display work. This is, perhaps, surprising given some of the obvious benefits that are garnered by working with polyesters and mixes, such as lighter weights leading to easier logistics and general handling, a greener aqueous-based option and, in many cases, simpler installation.

MH: There is a global trend away from China in particular to a broader regional base for digital print, but the numbers are very small as yet. In reality, production digital textile printing is largely driven by largely Italian companies in a global market they have dominated for decades in developing countries. Europe in particular has seen more digital dye sub printing at a lower productive level and at lower hardware acquisition costs in support of sportswear markets, and this is becoming a trend as well in the US.

BP: What other applications and sectors do you feel are particularly promising in the year ahead? Any that concern you?

DM: SGIA’s 2014 Specialty Graphics Industry Survey showed that graphics producers see indoor wall graphics, window displays, vehicle graphics, and building graphics as the applications that are growing the most. In my opinion, these areas are being “pushed forward” by innovations in media and other films. The market areas they see as growing the most were corporate branding, food services and interior design. These – unlike retail, which has already “been there” – are areas currently exploring new ways and places to convey images or messages.

SMP: I’ve commented before about industrial production which, in a sideways move, also brings packaging and some labeling to the forefront. Promising applications are dependent on ink technologies and curing capabilities, probably more so than just on quality and speed plus cost per print. In the conventional display sector, it is the user with the canny design department that will score over unimaginative businesses that simply want to replicate retail and point-of-sale work that brings nothing new to the market.
Digital textile certainly should start to make serious inroads as an alternative to many display applications but whether or not this will happen in the foreseeable future is still a matter for conjecture.

BP: It’s been interesting, at a time when the feature sets of various printer brands seem to be getting increasingly similar, to watch vendors keying on different ink technologies as replacements for solvent-based inks. Any thoughts about the long-term prospects for UV, UV-LED, mild solvent/eco-solvent, and latex technology?

SMP: A printer is largely reliant on its component parts and the quality of its construction to do its job, regardless of its ink formulation. Given the limited numbers overall of printheads and their derivatives that present themselves across today’s engines, the variables are going to be relatively limited with most manufacturers competing with one another in terms of capabilities and costs. While hard solvent inks, particularly in the western world, are now slipping in popularity, sales of third-party chemistries still remain strong in countries where environmental considerations are not really considered, and where fast throughput of low-cost jobs onto cheap materials is considered paramount. These are the parts of the world where many superseded wide-format printers are sold on as their existing owners no longer want to use solvent inks but have moved over, mostly to UV-curable engines.

In terms of the discussions that endure over latex ink technologies and eco- or mild solvents, there are arguments both for and against. Ergo, it tends to be application dependence which makes a sign maker or display producer opt for one or the other or, indeed, both.
In terms of material choice and gamut, latter-day mild solvent-based formulations are still perceived as winning hands down, but, for those who believe that latex offers a greener business model and that its quality is sufficient for their needs, this ink chemistry does the job well enough. Additionally, the day of the aqueous-based printer has not passed totally, and I have noticed an increase in the numbers of PSPs wanting a good, fast, and color-accurate machine that utilizes this technology for photographic and interior display work as well as for longer term jobs that benefit from lamination.

DM: For the most part, all of these ink systems will perform fine for a majority of the work being done. It’s when the performance of the ink (durability, adhesion, unique substrates) becomes critical that they find the specific niches. Find the right tool for the job. As these inks develop even more, I think they’ll become increasingly similar, and cost of ink/cost to operate may become the deciding factor.

BP: Which technology introductions in wide-format printing and related processes have intrigued you over the past year?

MH: All of the fixed- or near-fixed array high volume UV flatbed systems from EFI, HP, Inca, and Durst where speeds upwards of 3000 square feet per hour are being seized on by higher end PSPs. We are also enthused by the pioneering of LED curing by vendors like EFI in wide-format systems. This has the potential to make large scale UV digital print systems much more scalable to purpose.

DM: I’m very interested in finishing equipment that frees us from the traditional 2D world of printing. 3D embellishment, thermo-forming, and the increasing ability to print directly onto 3D objects – with all the inherent customization advantages of digital printing – are leading a revolution in embellished things (consumer, industrial, or otherwise).

SMP: There has been little revolution in the past 12 months, but the most compelling technology is the ability to use LED curing lamps without compromise in high-speed wide-format print engines. Although it might be surprising that many manufacturers are dismissive of this technology, it is beginning to become clear that future UV-curable should certainly consider LED as an alternative to mercury arc even though this will require modifications to ink formulations to accommodate this type of drying.

BP: Any other observations about the wide-format market as our readers make their plans for 2015 and beyond?

DM: Companies serving the wide-format industry – particularly those who are new to who we are and what we do – should know that wide-format is a diverse industry whose one common point is the wide-format inkjet printer. This is a process; a way to make sellable products. There is strong opportunity for those who do the extra work it takes to innovate, differentiate, and not run head-long into commoditized areas. Find the opportunity. Grab it.

SMP: What I would stress is this is our industry and many of us have been involved with it since its inception. I’d ask PSPs to look after it and respect it – what they produce today will shape the future of the commercial wide-format segment. Today’s display producers and sign-makers are the custodians for tomorrow’s businesses.