by Cassandra Balentine
It’s been a challenging few years for nearly every industry. From supply chain issues to inflation, political unrest, and a labor crisis, the road to success is fraught with obstacles in every direction for print professionals.
“One of the biggest challenges this year has been fear of the economy and rising interest rates. This has led to a lot more caution when considering large investments on equipment/technology,” admits Steve Lynn, director of labels and packaging, Durst.
For those that have embraced change or are ready to, digital technologies offer increased efficiency along with automation, just-in-time production, and reduced waste.
Industry Bounce Back
While there are still challenges, the print industry is no stranger to reinvention. With that energy print providers and the vendors that serve them are not holding back.
John Henze, VP, sales and marketing, Fiery, reports a return to normalcy for print businesses after recovering from the COVID-19 pandemic and supply chain disruptions in 2023. “Printers are adapting to new market conditions and consumer expectations as well as looking for ways to expand their operations efficiently.”
In general, Lynn believes the industry has bounced back from the material supply challenges of 2022 and this led to a few big trends—print converters reducing their in-house inventory, allowing them to invest in the technology necessary to stay productive and efficient. Also, print buyers reduced print inventory and returned to normal buying patterns. “This had a negative impact immediately as they purchased less to reduce inventory, but has stabilized with print buying and production trends appearing to have normalized.”
Chen Lalzary, marketing communications manager, Landa Digital Printing, also notes a worldwide “great destocking” across all industry fields. The need to reduce stock has driven producers to seek production flexibility. The lack of demand stability leads to difficulties with forecasting.”
Ray Hillhouse, VP, sales and marketing, Plockmatic Group Offline Business Unit, points to a deep desire, firstly, to get the industry and each individual print shop back to profitability. “With that, they can look forward and begin to consider the benefit of investing in new labor-saving equipment. Automation has certainly been an important trend, and it’s coming from both suppliers and print shops.”
“We’re seeing a slow but steady recovery from the pandemic across our customer base,” echos Mark Schlimme, VP, marketing, Screen Americas. However, he admits that rising costs impact everyone and labor challenges remain.
“In 2023, the label market left the worst of last year’s supply chain problems behind. We saw a return to a more predictable supply of paper and film substrates, a great change from the anxieties of the previous year. Converters ran down some of the excess inventories they had accumulated when they switched from ‘just in time’ to ‘just in case’ and have been busy printing. Customer demand has been strong despite a noticeable shift in spending from products that require labels to services. Price increases have abated as well,” comments Victor Gomez, director, Epson America, Inc.
The welcome resumption of a measure of stability was somewhat offset by rising interest rates. “As we enter the final stretch of 2023, the real issue for many converters is predicting demand six months or a year out. No one wants to be caught with a large capital expense financed at a high interest rate. If consumers are squeezed, consumption patterns change, and per label prices come down. Because of this uncertainty, many converters have been squeezing what they can out of their existing equipment, waiting to see which way the economic winds will blow,” adds Gomez.
“I think there was a lot of uncertainly around the economy that has now for the most part subsided. The soft landing that the financial press highlighted has been accomplished and fears of a recession have abated,” shares Larry D’Amico, director of LFP and fabric, Durst.
Industry Wide Challenges
While there are many improvements, the industry faces ongoing challenges.
“Industry wide, inflation and rising interest rates continue to be major factors in the latitude companies have to invest and grow. Increasing costs, the cost of capital, employee retention, and recruitment and the supply chain are all impacted,” says Ryan Semanchik, president, Transformations, Inc.
While for many equipment manufacturers the challenges of the supply chain—although much better—are still prevalent, shares Lance Martin, VP, marketing, MBO America & Komori America. “Economic issues in Europe are affecting some specific supply chains.”
The biggest challenges for a printer is staying in business, and then turning in a profit. “From a U.K. perspective, interest rates, the cost of fuel, raw materials, and wage demands have hit all industry sectors, and I am certain that there are very few countries that have been immune from these problems. The war in Ukraine is one of the key drivers of many of these issues, and we can do little to impact that. However, the strong businesses and those that have carved out unique niches where they have been able to keep prices high, have been able to stand out,” comments Hillhouse.
Tying into labor concerns is succession planning. “Many print businesses are owned by older individuals who may be contemplating retirement. In fact, experts have not seen any type of slowdown in the Mergers and Acquisitions rate since 2021. The most successful print companies should be proactive and conduct internal audits regularly, so they’re in a perpetual state of readiness to sell,” suggests Nathan Armata, director of workflow automation, Significans Automation.
Cybersecurity is a prevalent concern as well. “The simple fact is that, in under two minutes, a hacker could steal your identity, cripple your business, and make your corporate and personal life miserable. So, building a strong cybersecurity culture into your organization is crucial to keeping sensitive information safe,” adds Armata.
In addition to overall industry trends, specific segments stand out, such as the continued adoption and advancement of inkjet.
Increasing material and labor costs are cutting into commercial printers’ profitability, while customers still expect high-quality products and services at competitive prices in 2023. Therefore, an investment by commercial printers in production inkjet remains an attractive option. “The speed, productivity, reliability, low running costs, and high levels of automation of today’s presses provide value for both high-volume and short-run jobs. In the case of commercial printers and in plants, there continues to be a growing transition from offset and toner to production inkjet,” comments Tonya Powers, director of marketing, Production Print Solutions, Canon Solutions America.
Jeff Zellmer, VP, global sales and strategy, Kodak, feels that it goes without saying the evolving economics of inkjet production printing is making a big impact on offset replacement conversions. “Productivity is key here and the most important aspect of the productivity discussion is quality.”
“The acceptance of inkjet printing and the proliferation of print and finishing systems with increased productivity were profound throughout the year,” agrees Martin.
“Advancements in inkjet technology have driven more short-run work into the market with ‘just-in-time to market,’” add Mike Wing, solutions manager, book technology and digital solutions, and Carlos Martins, solutions manager, Muller Martini.
Some are still trying to figure out how to best utilize inkjet technology. “This year we’ve seen it start to become more accessible to more types of print centers, with the introduction of newer devices that have a smaller footprint and lower costs associated with them. That’s probably one of the biggest trends carrying over from 2022,” says Anthony J. Leccese, product manager, Rochester Software Associates.
A migration of B&W jobs converting to color inkjet is one consideration. “Print buyers walk into print shops with the hope of getting material printed in color but are all too often met with exorbitant color pricing compared to B&W,” explains Andre D’Urbano, VP of sales, RISO, Inc. “The realization that their print budget will not allow for color printing is difficult. Inkjet enables print shop owners to introduce a third level of pricing where color output can be purchased at an affordable price that is well within budget. It’s a win-win.”
There is still room for improvement here. “While there have been some improvements and new entries from vendors that have made inkjet more accessible, there’s still work to be done. The price point on the output for inkjet is preferable to something like toner for many print centers, but it’s still outside the reach of most small- to mid-size print shops. In some cases the machine is just physically too big for what they’re trying to do, and in other cases it’s too expensive,” says Leccese.
Embellishment, Specialty Solutions
There is also a spotlight on embellishment, specialty medias, and expanded color gamuts—all elements help add value to printed output.
Jon Congdon, manager, Skandacor Direct, Inc., notices increased emphasis on digital print—especially inkjet—and embellishment. “With digital printers increasingly bringing print finishing in house, businesses aim to streamline and/or expand their operations, boost productivity, and meet the ever-demanding lead times.”
The need to bring these processes in house has come to the forefront as embellishment becomes more mainstream and demand for them grows.
Mark Geeves, sales and marketing director, Color-Logic, says digital cutsheet and label press suppliers expanded their offerings by improving their white ink and toners as well as adding specialty inks—e.g., neon/fluorescent and expanded color gamut for gamut expansion. “These specialized inks/toners enable printers to meet their clients’ needs for differentiating products on the shelves.”
The challenges here involve education and training of printer personnel. “Printers continue to automate production processes, but our industry has an older workforce. As we bring new individuals into our industry, the requirement for education and training only increases. Although designers need to know what is possible with digital and conventional print, most designers are not being trained to create files for printing,” shares Geeves.
Chris Van Pelt, president, Therm-O-Type, also notes a significant push to switch from A3 plus to B2 sheet size. “Printing and finishing equipment upgrades require significant investment in money and space in plants.”
Kevin O’Connor, VP, channel marketing and planning, Quadient, points to more use of color and specialty papers to increase response rates as a trend throughout 2023.
Sustainability remains top of mind as pressure mounts from all sides.
Whether it is using recycled papers, reducing energy consumption, or the impact of processing chemicals in offset, print is making an impact on the environmental future, and digital offers a cleaner and more sustainable method of printing, shares Zellmer.
Ernie Crawford, president/CEO, Crawford Technologies, notes an escalating demand for sustainability and social responsibility among stakeholders like consumers, investors, and government entities. “Recognizing and integrating these principles into business operations has become essential for attracting top talent and securing government contracts, thereby guaranteeing sustained prosperity. Prospective employees actively seek roles within purpose-driven initiatives that contribute positively to society and long-term outlook, preferring businesses and organizations that prioritize ethical conduct. This paradigm shift is of paramount importance and cannot be overlooked.”
As climate change gets more noticeable, Randy Hardy, representative North America, and Thomas Schnettler, business development, Locr, point out that customers want to make purchase decisions with a lower impact on the environment and expect companies to be transparent about business values, supply chains, and working conditions.
Julie Brannen, director, regional sales and sustainable solutions, Monadnock Paper Mills, sees a palpable demand shift towards environmental sustainability, with the market leaning heavily towards alternatives to plastics that hold their ground in performance metrics. “What became evident was not just a demand for claims of sustainability and efficacy but a growing insistance on third-party certifications to validate these assertions.”
While it remains a challenge, Powers stresses the importance of promoting the message that print is a sustainable option. “Our industry gets a bad reputation with so many “go ‘green,’ don’t print” messages. But the reality is that paper is one of the most sustainable resources we have, digital printing reduces waste and obsolescence, and printed communications have a smaller industry footprint than digital communications. People overlook the energy and hardware requirements of digital communications. For both the industry and our company specifically, we are working to combat that.”
Hardy and Schnettler agree and admit that successful communicating of business values, making efforts to support sustainability, and eliminating false assumptions about the environmental impact of paper and print products is an ongoing challenge.
“The printing industry has been involved in environmental stewardship for at least 50 years and perhaps even longer—from making engraved plates to the latest digital technology. In an industry where print shop owners are stretched to their financial limit, the pressure from governments, clients, and others to be more environmentally sustainable will continue during 2023 and well beyond,” adds Armata.
Labor Challenges, Automation, AI
Everyone is doing more with less, which increases the demand for automation technologies including artificial intelligence (AI).
“AI and print automation is here to stay,” states Zellmer. Software solutions allow printers to streamline and speed up processes, foster integration, gain efficiencies, and improve customer service as well as profitability.
“The biggest trend from customers has been to help them improve efficiency. Inflationary pressure, a tight job market, and an aging workforce continue to drive this trend for the foreseeable future,” offers Rick Salinas, president, Duplo USA.
One way print providers address the labor challenge is by investing in technology to automate processes. “This can cut down on staff requirements while also helping to remove production bottlenecks that hinder job volume output and strain profits. It can also provide a benefit of minimizing human touchpoints in print manufacturing to move jobs faster through the production process and reduce errors,” offers Powers.
The lack of employees—especially trained employees—combined with increasing pressure on wages and benefits seem to be a huge issue with domestic and international customers through 2023. “Senior and mid-level management, experienced maintenance, and set up staff are aging out without suitable replacements,” adds Van Pelt.
The rising labor cost and general difficulty in finding new employees has a direct influence on the demand for solutions that reduce labor associated with feeding and stacking, adds D’Amico.
“Overall, doing more with less continues to be a general trend. Costs have gone up, such as material and postage costs, and labor shortages have added to the challenge. Having the capability to produce more types of jobs with minimal labor and expertise on a single system is essential. For example, today’s digital inkjet envelope printers allow mailers to be more agile and efficient. The challenge is doing more jobs in a week, and producing more types of jobs for each customer, all while using fewer resources to do it,” shares O’Connor.
From a label perspective, Gomez says the segment is undergoing a long-term demographic conundrum where flexographic operators are retiring and not being replaced. “The struggle to keep and recruit a workforce has placed automation topmost in converters’ minds. They are looking for whatever equipment they add to their lineup to make as little demand on their labor force as possible,” states Gomez. “Anything that can save labor, that can save media, that conserves cash for the press owner is built into the design of our equipment.”
Henze agrees, adding that the scarcity of qualified personnel creates a significant hurdle for businesses requiring creative recruitment and retention solutions.
Mike Agness, EVP, Americas, HYBRID Software, points out that people talk about labor challenges—both the knowledge as well as availability, but do not exactly know how to address them. “Technology lets us meet these challenges, by automating significant rote tasks and leaving the very significant, unusual challenges to skilled help.”
There is also a convergence of press hardware capabilities. “As a result, value and differentiation need to come from the software/workflow side,” points out Henze. “Streamlined workflows, automation, and emerging AI technologies can save employees valuable time, making them more efficient and allowing them to focus on higher value tasks. It also helps new, less experienced workers produce high-quality print results.”
“There have been many discussions between vendors and customers about the roles to optimize printing. How do we accelerate software systems while also streamlining efficiencies to print? There are many discussions with printers about how to lay out jobs better and with vendors about how software can be built to make systems faster,” comments Agness.
Automation includes the exploration of online channels and web to print (W2P). “The pandemic accelerated the shift towards digital, and 2023 saw extensive exploration of online channels and W2P solutions. Businesses leveraged these platforms to streamline operations and provide a seamless customer experience. The adoption of new technologies, particularly in digital finishing, was another notable trend. Companies invested in advanced equipment to enhance quality, reduce turnaround times, and meet the evolving demands of their customers,” offers Dmitry Sevostyanov, CEO, Customers’ Canvas by Aurigma.
Accurate order estimating became crucial to ensure profitability on jobs, especially given the increasing competition and rising costs. “This required advanced estimation tools and processes to ensure each order’s profitability,” he adds.
AI plays a big role in the future of digital print. “Although AI has not yet fully realized its potential in the printing industry, there was a growing interest among printers to seek value from it in 2023. Companies started exploring ways to leverage AI for predictive analytics, automation, and personalization,” states Sevostyanov.
Santosh Mulay, VP, business development, InSoft Automation Pvt. Ltd., agrees, noting that workflow automation, implementation of MIS/ERP, and print estimating solutions help to simplify complexity and ease of use.
In addition to industry wide trends and challenges, each specific market segment faces unique issues and potential.
Although, Mulay points out a migration from specialist printers to versatile printers, which produces multiple print products under one roof.
Henze sees strong growth in packaging and a lot of interest and growth potential in direct-to-film printing. “Many print owners are looking at how to expand their operations into these higher growth print applications.”
Book printers continue to invest in digital printing to create agile organizations capable of better meeting publishers’ dynamic needs. “An increasingly fragmented industry continues to see book printers competing for a share of the market, with run lengths declining as publishers still grapple with the residual impact of supply chain issues. But the total number of book units sales in North America actually was higher in 2022 compared to 2019, the last pre-COVID year, and is expected to be higher when 2023 concludes,” shares Powers.
Book products typically printed offset are moving to digital inkjet across all product segments, requiring advanced finishing in areas such as perfect binding, saddle stitching, and hardcover book production. “As publishers reduce quantities with just-in-time delivery, our customers are taking advantage of growing trends in inkjet digital printing and all the advantages it offers that deliver high quality and good output speeds,” say Wing and Martins.
Salinas adds that bookletmaking has seen a resurgence in 2023. “We have experienced pre-pandemic interest in bookletmakers. “Labor costs are a large driver of this with print producers looking to do more with less. Secondly, printers continue to try and distinguish themselves from their competitors. New booklet makers are faster, can produce thicker books, and can do new things not possible before—i.e. gathering different size and weight stocks into a books with full automation.”
Packaging and Labels
Within the packaging and label space, Hardy and Schnettler say ecommerce is constantly growing. “Packaging can be personalized and is an important part of the customer journey.”
Short-run packaging is growing at double digit rates year-over-year, agrees O’Connor.
Packaging in general is on the left side of the growth curve when it comes to digital print solutions, but Schlimme feels that once it starts to accelerate there will be rapid adoption and this market has the potential to radically change the game for providers because it’s business to consumer and runs are in the millions instead of hundreds of thousands.
As customers look for print providers that offer labels and packaging at lower minimum order quantities, faster delivery, and more sustainable options, digital printing fits the bill.
Dario Urbinati, CEO, Gallus Group, adds that the ever increasing shortage of skilled labor is huge for the industry and will continue unless changes are made. “Gen A and Z often don’t consider labels and packaging to be an attractive industry. They see it as being old fashioned and undynamic analog technology in a digital age. This is why we are prioritizing automation and digitization to streamline operations but also integrate new ways to engage future generates ensuring labels and packaging increases its relevance.”
Leccese says wide format is still a growth area. “For print centers that are printing for profit, it’s probably the area that has the biggest margin associated with it. So from a profitability standpoint, print centers are seeing quite a bit of potential in wide format right now.”
One essential trend in direct mail is retargeting. “Direct mail retargeting has become more popular. You can capture anonymous website visitors’ contact information and retarget them with a mail piece to increase conversion. All printers should harness this technology to yield better results for their clients,” says Michelle Bocchino, director of marketing, DirectMail2.0.
Increased postage costs is a challenge. Postage rates have been increasing steadily in recent years. Ten percent in 2023 alone and this trend is expected to continue. “This puts a strain on businesses that print and mail as they must pass these costs on to their customers or absorb them themselves,” admits Crawford.
Bocchino points out that the U.S. Postal Service does offer discounts on postage when printers integrate mail with new technology and print techniques. Plus, digital technology integration improves the efficacy of mail, which will increase campaign results and reorder rates, helping to offset those postage costs.
The most significant trend seeing in the customer communications management (CCM) space today pertains to the use of AI. “ChatGPT continues to grow exponentially. The use of AI has the possibility of being one of the most significant developments in human history and it is predicted that AI software will grow 50 percent faster than the overall software market. AI’s impact on the CCM industry will likely be profound, bringing transformative changes to the way businesses engage with customers, handle queries, and analyze feedback,” predicts Semanchik.
In the continued move of more volume from physical print to digital, Semanchik believes that service providers and enterprises must have these options available—i.e. SMS, email, web portals, online payments—along with their print offerings to remain competitive in the future. “In the end, consumers require all available options when it comes to preference management and dictating how they want to be communicated with.”
In the past, communications with customers were print-centric. Over the last 30 years these have slowly moved to digital channels. Since the beginning of the pandemic, these movements have accelerated. “Enterprise communications processing software is the glue that organizations use to communicate with their customers, employees, and suppliers over the recipients’ preferred channel and format without rewriting all of their upstream applications,” states Crawford.
New laws and regulations are an ongoing challenge. Crawford says complications dealing with communications containing highly sensitive private information increase as laws and regulations are introduced. These laws enforce privacy, control, access, and usage of data and force compliance at every level. This adds to the costs and complexity of doing business with critical communications and correspondence.
Compliance and increasing regulations continue to take their toll in the industry as part of this digital transformation. “Data security and privacy have never been more important. The cost of audits and compliance continues to increase and the fines can be crippling. These are concerns that all service providers and enterprises should focus on to both remain competitive and, in some cases, stay in business,” shares Semanchik.
Crawford adds that customers have more choices than ever before, a louder voice, and the ability to articulate what they need. “Customers are informed and empowered to share their experiences, likes and dislikes quicker than many organizations can react. Businesses that don’t listen to their customers, that do not communicate effectively with their customers and participants effectively will become dinosaurs.”
As we close out the 2023 calendar year, it’s tough not to hang onto discussions of an uncertain economy and staffing challenges. However, digital print technologies are poised to bring the quality, speed, efficiency, and automation necessary to usher the industry into its next phase.
Our January issue will cover what experts expect in 2024. Find even more content on company-specific trends, challenges, and predictions at dpsmagazine.com.
Nov2023, DPS Magazine