As we look forward to 2018, our industry will continue to roll with the changes. To do so, and to pivot correctly, it’s important that vendors, publishers, and production managers arm themselves with the proper information.
One of the biggest questions on the minds of publishers is what will happen with major raw print materials — newsprint, ink, and plates.
When it comes to the rising cost of consumables, it seems that the biggest assault on newspapers will be related to newsprint in 2018. Paper suppliers began advising customers of potential surcharges in at the end of 2017 in a bid to offset duties being charged on certain uncoated groundwood (UGW) paper products imported in to the U.S. from Canada, which may now be subjected to U.S. countervailing and anti-dumping duties.
These duties are a result of petitions made by U.S.- based pulp and paper manufacturer North Pacific Paper Co. (NORPAC), to the U.S. Department of Commerce and the U.S. International Trade Commission alleging that Canada’s UGW paper exports are unfairly priced and that Canadian federal and provincial governments subsidize domestic producers, thereby placing U.S. manufacturers of uncoated groundwood paper at an unfair disadvantage.
There are about 25 groundwood producers in Canada and the new duties will vary by producer, ranging from 4.43 percent to 9.93 percent, according to recent predictions from Forbes. The News Media Alliance, which represents some 1,100 newspapers across the country, has vowed to fight the proposed tariffs.
Printing plate demand, vendor consolidation
When it comes to newspaper printing plates, the pricing picture for newspapers hasn’t been pretty over the past two years. Aluminum prices have skyrocketed approximately 57 percent since January 2016. On the vendor side, the demand for plates has decreased sharply alongside the demand for printed newspapers.
Consolidation among plate suppliers, and more laser-focused offerings are in line with this lower demand. Kodak last year invested in a new plate manufacturing line at its Columbus, Georgia plant. And Southern Lithoplate acquired thermal and violet plate lines from Presstek last year, including Nytro, GemPlate, GemPlate HC, NuVio and HSUV. Presstek, meantime, acquired the entirety of Anocoil in 2016.
Ink prices continue to rise
As we enter 2018, newspaper ink suppliers are already preparing the industry for yet more price hikes. On January 12, Sun Chemical announced that it will increase prices on offset inks, coatings and consumables across North America in response to rising costs of raw materials including carbon black, oil and pigments. The company said it expects the price increase to be a percentage “in the single high digits.”
All of these factors will play a major role as newspapers navigate the new year. Consolidation of U.S. printing operations has been swift over the past decade-plus, with the number of commercial printing establishments declining 21.5 percent since 2007, according to recent statistics. Many in the industry believe consolidation has reached its peak. However, it’s likely we’ll see more through 2020. (Look for more coverage on the future of print consolidation in the U.S. in an upcoming issue of News & Tech.)
The impact of tax reform
Despite all of these factors plaguing newspapers, there are signs that investment in printing infrastructure may be on the rise as newspapers and printers at large strive to remain competitive. The recent tax reform could also play a role for the printing industry at large.
“We are hopeful that provisions in the tax reform will incentivize capital investment,” Thayer Long, President of NPES told News & Tech. “I hate to say the answer for the industry lies in a tax bill, but certainly a lot of people are hoping it will continue to spur growth.”
Among the provisions of the tax reform that could positively impact printing investments:
- It could eliminate most of the inflation effects on depreciation
- It “de-penalizes” small business structures like Subchapter S
- Lower tax rates could prompt printers to put future initiatives with long-term payouts back into consideration
Informative Resources for printers in ’18
It can be will It’s difficult in the print industry to get an overall picture of conditions, and of course, there are no guarantees as to whether we’ll see an uptick in the printing industry in the next several years or if continuing declines will prevail. The best thing newspapers and commercial printers can do is to use the resources available to make informed business decisions.
“There is little documentation and you have to combine lots of data sources to really get a sense of the dynamics of our industry,” said Dr. Joe Webb, President of Strategies for Management Inc.
One tool in printers’ arsenals is the NPES PrintStats report, which it launched at PRINT® 17 last year. The report, available to members, aims to paint a clearer picture by combining data sources into a suite of 38 reports grouped together by printing industry segment.
PrintStats was jointly developed for NPES member companies by Webb’s Strategies for Management in conjunction with ExpliStats, and uses baseline data from the U.S. Commerce Department combined with forecasting models specific to the U.S. print industry.
Additionally, NPES and its marketing research arm, PRIMIR, are set to release a number of important reports, white papers and other resources the printing industry will want to keep an eye on:
Service to U.S. Printers: Trends and Outlook (January 2018) – This report will take a look at monitoring bottom-line profitability and how print industry service suppliers are exploring cost competitive models that can demonstrate to customers the ways they can bring increased productivity, reduced waste, and positive returns.
Global Trends in Packaging Affecting North American Converter and Supplier Markets (February 2018) - This is an update to the 2009 study with a fresh outlook on the findings and data.
The Evolution of Print in the Dynamic World of Media (April 2018) - This study will identify how changes from print to digital have developed, and how print could evolve to collaborate with and/or complement digital media to create new, brighter opportunities for both the print and media industries.
Outlook for the Global Web-to-Print Market (June/July 2018) - This study should investigate usage rates and provide market analysis, outlook, product launch, strategic corporate developments, and market analytics by region as to the adoption of web-to-print.
These are just some of the resources to look out for in 2018. Throughout the year, News & Tech will continue to update on all of the trends and news impacting newspaper and commercial printers.