Article prepared by C. Clint Bolte, C. Clint Bolte & Associates, Chambersburg, Pennsylvania. For additional information please call 717-263-5768, fax 717-263-8945, or e-mail to clint@clintbolte.com.

Executive Outlook Conference 2004

Integrated Workflows Emphasize IT Expertise Needed

Nearly 180 attendees gathered at McCormick Place for the traditional day-before-Graph Expo briefing on industry technology, trends, and Must See 'ems products to highlight the largest print equipment trade show in North America. Hosted by NPES, organized and moderated by Bill Lamparter, Principal of the PrintCom Consultancy, this seventh annual fete drew the largest contingent of foreign guests yet with twenty percent of the attendees visiting from a dozen different countries.

The Conference's main sessions focused on the economy's impact on print, staffing for the new technology, a series of technology vignettes providing the latest information on the newest technologies, and an in-depth review of the DRUPA 2004 generation of sheetfed presses, ink developments, and the 21st century bindery. Afternoon breakout sessions followed up with a series of practical "How to" plan for, organize, and implement the chosen technology.

Kip Smythe, NPES' Vice President and Director of Member Services, offered a keynote presentation on how print fits in the changing economic landscape. Under Mr. Smythe's supervision, NPES conducts annually over $325,000 of original market research identifying major trends in the printing, publishing, and converting industries and their impact upon its supplier members. This research provided much of the authoritative background to Kip's presentation.

NPES' long time consulting economist, Mr. Mike Evans, forecasts US economic growth to slow to 3% in 2005 and 2% in 2006 following the more aggressive 3.25 % bounce back experienced this year. Publishing revenues as reported for PIB measured magazines are up, but page count is down and run lengths continue to slide. This trend is confirmed in the National Association of Printing Ink Manufacturers (NAPIM) statistics that show ink volumes topped out in 2000 and have been falling since. Kip commented that the NAPIM figures do not include toner usage as a reflection of the growth in digital print because toner in used in both office as well as printing plant applications. However, with digital print barely 10% of total print, this downward trend of ink tonnage would not be altered significantly.

Strategies for Management forecast the number of printing companies is to continue to diminish by about a thousand firms a year down to 23,500 through 2007. Some will come from bankruptcies and part from mergers and acquisitions, as medium sized firms will look to "tuck in" smaller regional competitors as well as the conventional lithographic print segment of corporate in-plants. Many in-plants continue to focus their resources and expertise on developing and offering digital capabilities while outsourcing the more capital-intensive conventional printing. Venture capitalists are looking for under-valued targets as well.

The difficulty in forecasting overall print sales growth, even short term, was highlighted by the difference in the 2005 forecast from the two print trade association economists who clearly follow printing most closely. NAPL expects print sales to come in between +3.2-4.1% in '04 and +4.0-5.0% in '05 while PIA is about half that rosy projection at +2.2% and +2.0% respectively.

Kip gave a specific example of how associations are using multi-media to the detriment of print. He said, "Two thousand copies of the International Color Consortium 2003-2004 Progress Report were printed while over 12,000 PDFs of that same report have been downloaded off the Association website."

Printers have been diversifying into other non-print graphic communications services for several years now. PIA says that these ancillary services amount to 7.3% of total revenues while NAPL pegs that figure at 7.8% with expectations that this number will nearly double to 14.5% by 2007. Smythe concluded that printers are redefining the businesses that they are in by reassessing their entire product/service offering, "unbundling" previous services built into their overhead costs, and actually creating new services.

Rick Littrell, Principal of MagiComm Consultancy and Moderator of the Vignettes panel, set the stage by suggesting that the industry's data-centric print production workflows have made in-house information technology (IT) expertise mission critical. These IT professionals should have computer science training, strong understanding of networks, storage technologies, and database software applications. Instead of additional duties responsibilities being assigned to the electronic prepress supervisor, this position is becoming a core competency for even medium sized printers.

Don Goldman, Senior Project Manager for MIS supplier Prism-USA, in his vignette on management information systems advocated, "For JDF and integration to full payoff, management must (1) establish a computer assisted printflow that uses the estimate/plan to direct, communicate, and manage jobs through the plant, (2) use MIS to schedule and monitor jobs and production activities, and (3) has the discipline and commitment to make their print management system the system of record."

Joerg Daehnhardt, Heidelberg's Director of Small Format Press Product Management, gave a capsulization of the direct imaging presses. From the 1991 introduction of the first GTO-DI, there are now fourteen different commercial models on the market from eight manufacturers. From a single plate cartridge source there are now several competitive plate cartridge suppliers.

In presenting the converting and packaging vignette, Mark Vanover, Esko-Graphics North American Director of Marketing remarked, "The large consumer goods packaging print buyer dictates specifications, deadlines, and cost targets." This suggests that package printing may not be the Holy Grail of print profitability that some reports imply. An example of further competitive market dynamics is the fact that Wal-Mart represents 30% of Proctor and Gamble's business and Wal-Mart's private label business is P & G's biggest competitor.

"Packaging is not just about graphics but also structure," explained Vanover. Producers catch potential structure problems by using 3D imaging and one-off sampling. For those general commercial printers, who still want to brave the wild packaging waters, Vanover suggests, "Look for regional consumer goods manufacturers (as your niche)."

Anticipating the major emphasis upon JDF and computer-integrated- manufacturing (CIM) at Graph Expo, Gareth O'Brien presented a basic JDF tutorial and lively debate on the subject was staged. CEO of Objective Advantage, Inc., a software development company, Mr. O'Brien has been a member of the CIP4 Technical Steering Committee and concentrated since 2001 on Job Definition Format (JDF). JDF is not a product and in and of itself cannot be purchased. JDF is simply a tool providing a data interchange format.

The debate was a lively discussion around the "hype" surrounding JDF. RIT Professor emeritus Frank Romano, while not opposed to JDF is tired of all the hype suggesting that JDF is some sort of "magic bullet." JDF evangelist and CIP4 organization's Executive Director, Jim Harvey distributed a two-page "JDF Talking Point" paper which included a series of Romano sound bites about JDF taken from reports or presentations that Frank has made. Harvey than countered with a more expansive, technical description of what is clinically happening.

Taking Frank literally resulted in humorous by play with still very useful conclusions from the dialogue. For example, because printers will still have islands of legacy equipment in their plants does not preclude them from developing a CIM plan that can be implemented much further than many may realize. There are increasing "work arounds" being developed to aid in this implementation until the legacy equipment is replaced with fully JDF-enabled equipment. These work arounds are basically the operator feeding the computer with the desired production information - time, count, waste numbers, etc. - from a keyboard.

Harvey reported that a sample survey of CIP4s 120 vendor members have more than 1,400 JDF installations in operation and another 1250+ pending contracts under negotiation with additional printers.

Printers looking for excuses to avoid JDF can find plenty. On the other hand the tortoise is moving ahead slowly, but surely. Most all JDF print practitioners, each with a varying degree of completed implementation, speak passionately about their commitment and positive overall results. JDF may not be as crystal clear as CTP has been, almost from its beginning, but the strategic position that a JDF-enabled workflow provides seems to be coming more into focus for more printers.

Ray Cassino, Heidelberg's Director of Prepress Product Management, gave an overview of the printer economics driving the continued implementation of computer-to-plate. Seventy-to-eighty percent of all CTP units being installed are without automation. Until a printer's plate demands exceed 50 plates per shift these non-automated units are quite adequate. Once demand exceeds that 50-plate level, the units can be upgraded in the field with automation features (if they were purchased with that future need in mind). Internal drum CTP units are less expensive than external drum as they have 40% less parts.

A major part of Executive Outlook each year is the presentation of Must See 'ems and Worth-a-looks. These are presented as encore products (MustSee 'ems during the recent three years and still worth a review), production technologies, and individual products and services. This year there were 22 Must See 'ems and 45 Worth-a-look individual products. The 46-page book describing each of these was handed out to each attendee.

Most printers come to major trade shows with a few specific vendors that they want to visit to finalize a critical equipment decision. With their limited remaining time they would like to catch an idea or two that might fit into their future plans. At the same time the opportunity to get an overview of critical trends or issues in a brief time slot would help with their future long range planning. And that's the educational niche the Executive Outlook has filled. Now in its ninth year Executive Outlook is increasingly being looked upon as a fast overview from a 30,000-foot perspective on print issues that are directly impacted by equipment and technology.

Article prepared by C. Clint Bolte, C. Clint Bolte & Associates, Chambersburg, Pennsylvania. For additional information please call 717-263-5768, fax 717-263-8945, or e-mail to clint@clintbolte.com.