Hints of a Silver Lining

Package printers' 2001 prospects look brighter than the cloudy overall economic picture.

by Regis J. Delmontagne, President, NPES

As 2001 began, our industry was concerned, for the first time in several years, with the prospect of an economic slowdown. The printing industry in general, and package printing in particular, have been doing very well recently, but some authorities fear even a modest economic setback could have disproportionate impacts.

At last December's PRINT OUTLOOK® 2001 conference in Washington, for example, National Association of Printers and Lithographers Economist Andrew Paparozzi noted if the national economy grows in 2001 and 2002 at only about a 3.5 percent rate, the result could be $1.5 billion less in print sales in 2002 than if it had maintained 2000's 5.2 percent growth rate. "Even a soft landing matters to an industry as intensely competitive as print," he said.

NPES consulting economist Michael Evans, however, told the conference the basic conditions for strong growth still exist in 2001 and beyond. "Productivity growth will remain rapid not only next year but into the future," he predicted. By the end of 2001, he said, "we'll see Gross Domestic Product rebounding to above-average rates again."

The prospects for a tax cut, which seemed to improve dramatically early in 2001, also hold out the promise of increasing consumer spending and business investment, which should be good for print.

The packaging picture

When we look specifically at package printing, we see an industry segment that should outperform the rest of the industry significantly in the near future.

The Printing Industries of America's Print Market Analysis, for example, reports package printing realized about 6.1 percent growth in 2000, following a 4.3 percent gain in 1999. Both of these numbers outstripped those achieved by the print industry as a whole, though the industry at large did grow fairly strongly in both years.

Prof. Frank Romano of Rochester Institute of Technology, who also spoke at PRINT OUTLOOK, predicted "packaging will grow significantly through 2020 and beyond."

In part, he attributed this growth to the fact that "packaging has no electronic competitor. You can't deliver a box of Wheaties on a CD-ROM." But more important, packaging designers and printers have been rapidly embracing new technologies to make their products and services more competitive than ever before.

Romano, for instance, predicts "packaging materials will be manufactured just in time and delivered to assembly lines with other components. Packaging on demand will be an evolving technology." Such other new technologies as micro-electronic chips embedded in packaging will strengthen the industry's contribution to consumer convenience and marketer profitability.

The digital printing revolution that has swept—and continues to sweep—the commercial print market will have profound impacts on package printing as well, greatly enhancing marketers' ability to execute short runs with geographically or demographically customized packaging.

Thanks to digital prepress and printing technologies, test and prototype packages will be printed more quickly and economically than ever before. Romano even predicts individual supermarkets and other stores will be able to develop their own personalized packaging. Digital processes, moreover, will be increasingly able to print on heavy stocks, plastic, metallic, and other substrates.

Romano's recently completed study noted 75 million sq. ft. of labels are printed annually today. By 2020, 30 percent or more of this volume will be printed digitally.

Who's buying what

NPES believes variable data and direct imaging presses are only now achieving complete acceptance, though some models have been on the market since as early as 1993. For one thing, adoption of these systems was long hampered by the industry's difficulty in managing the huge data flows they require in order to deliver their full capabilities.

Our industry's "front-end" competence is now fully consistent with getting the most from all-digital production systems. And manufacturers are responding by filling the market with new options. Recent NPES research further forecasts:

• The number of sites with variable data presses in the United States will grow about 350 percent between 1998 and 2002;

• The number of presses installed at these sites will rise nearly 375 percent in that time;

• The number of sites with direct imaging presses will increase more than 360 percent during the same time period; and

• The number of DI presses at these sites will increase nearly 560 percent.

One consequence of this revolution is a change in the make-up of sales realized by NPES members. The market share of equipment, compared to consumables, has grown dramatically. Equipment accounted for 56 percent of total industry revenues in 1998 and for 60 percent this year, and we forecast it will command a two-thirds share by 2002.

In addition, NPES estimates the total number of CTP platesetters installed in the United States will grow by 39 percent annually through 2005. From an installed base of 1,240 in 2000, these devices will reach about 6,500 in 2005. All size ranges will grow, including 10-fold growth in four-up platesetters and three-fold growth in the eight-up range. Sixteen-page platesetters will record an annual growth rate of 56 percent, moving from just 225 units to more than 2,000.

We've long needed a reliable, inexpensive, and accurate means of producing color proofs from digital data, and now it appears the industry is embracing this technology. NPES data predicts major growth in unit sales of desktop color printers and color inkjet printers. Revenues from digital proofing products are expected to rise by 20 percent this year, and these increases should continue, albeit at more moderate levels, for the next several years.

These technology advances mean jobs can be handled digitally throughout the production process. Package design and production, at last, can be integrated, along with every other process from product concept to final delivery, into a single comprehensive digital workflow—a workflow that transcends barriers of distance and time.

Shorter time to market and much more economical customization of high quality color packaging will be a major competitive edge for printed packaging in general. These values will grow hand in hand with the industry's expanding ability to print on more and more substrates, in more and more colors.

We believe the result is a very promising future for package printing, a future in which the industry continues to win new customers while retaining the long-standing loyalty of traditional users.

NPES The Association for Suppliers of Printing, Publishing and Converting Technologies provides informational publications; statistical, safety, marketing, and educational data and programs; governmental affairs representation; safety and technical standards; national and international development coordination; and international trade assistance to its member companies. For more information call (703) 264-7200 or visit www.npes.org.