Commentary & Analysis
Where is Digital headed for Folding Cartons?
Eighteen months is a long time in the world of politics, consumer electronics, the growth of an infant and the gain or decline of a 401K but in the development of digital printing solutions for folding cartons that time is not so long at all.
By Kevin Karstedt
Published: November 1, 2013
Eighteen months is a long time in the world of politics, consumer electronics, the growth of an infant and the gain or decline of a 401K but in the development of digital printing solutions for folding cartons that time is not so long at all. Sure, there have been some notable developments coming from HP Indigo who introduced the 30000 digital press at drupa 2012 and are now going into beta with it, but overall the digital production landscape for folding cartons has been not changed significantly in the past year and a half. That is not to say the desire by the folding carton community is not looking for a digital solution, all indications are they are.
Here are some of our thoughts on the folding carton and packaging front for digital and analog presses. At a 73% share, sheetfed offset dominates the new equipment market. Market segmentation of sheetfed offset typically groups press sizes into the following configurations: less than 24 inches, 24-36 inches, 37 to 42 inches and 43 inches and above.
We have talked with many of the OEMs in this segment in our desire to understand where they see themselves and what they feel their outlook is for the segment. From those discussions we offer the following observations:
- Press options for the under 36-inch segment are numerous with no shortage of participants. Heidelberg is the dominant player in this segment, with a 35% share in the 20 x 30 inch format size and a 48% share in the 30 x 40 inch format size. The bulk of Komori, Ryobi, Mitsubishi, Gallus, and Omet sales also come from this classification.
- Press options in the VLF (very large format) size, or above 40 inches reduce dramatically. KBA is the market leader, followed by Heidelberg, ManRoland and Goss.
- Packaging applications are beginning to become the driver for sales in the VLF format. A sales manager from a large press supplier estimated 65% of VLF presses sold are being purchased for packaging applications.
- In the folding carton sector digital solutions in the 20 x 30 inch format size are getting the greatest attention. Hot button issues at the converter level is the requirements for flexibility, derived through flexibility in format size, quick set-ups and changeovers, and solid integration of pre-press to press and press to post-press.
- Digital capabilities in the 27 x 40 inch format size are now being introduced. FujiFilm, Screen, HP Indigo, MGI and Landa all have displayed technologies targeting this format size. Having missed the boat on this format size, traditional analog suppliers have announcing strategic partnerships with digital developers.
- Entry into the 30 and 40 inch digital format size has opened the door to potential expansion into Folding Carton by Commercial Printers. Trade associations and digital vendors have promoted this expansion and while there may be some merit to the idea it brings many more challenges than just printing on cartonboard.
Authors Note: OEMs with systems that can accommodate substrate thickness over 18 point are using that as “license” to say they serve the “folding carton” and “packaging” markets.
- The introduction of off-line converting equipment specifically designed for packaging applications makes an off-line digital printing solution much more attractive.
The Evolution of Digital Printing for Packaging
Relative to digital printing for packaging, the past five and a half years have seen significant levels of development. At drupa 2008 it was clearly a time for investigation and generalized discussion regarding product concepts and market requirements. Four years later at drupa 2012 a variety of solution targeting a broad range of packaging markets attracted the attention of converters present at the show. The focus on packaging was not limited exclusively to developers of analog presses and converting equipment but also for digital offerings. Also well represented were pre-press and converting solutions to support digital presses in a packaging environment. The magnitude of the investment made at all levels of the supply chain in this time period validates the packaging market as a catalyst for future growth in digital printing. This bodes well for the packaging industry.
Analog Printing for Packaging
For the foreseeable future analog printing processes will produce the majority of packaging volume from a square foot or tonnage standpoint. Every analog press manufacturer has invested heavily and developed systems that are more efficient than those they are replacing.
What is also seen of the traditional press suppliers is that they are no longer ignoring the impact of digital printing. KBA, Heidelberg, ManRoland, Komori, Mitsubishi, Bobst and Omet have all discussed plans and options for adding digital printing to their product offerings. These suppliers see packaging is a growth opportunity with demand for packaging historically tracks to GDP. Unlike the commercial print market, demand for printed packaging will benefit from the trends in social media and global communications rather than be harmed by it.
In discussions we have had with many of the traditional press manufacturers in the folding carton sector most have stated that “nuisance” or “problem” orders for their customers or those for less than 5,000 impressions and that this type of order is becoming more and more common. They are also see that orders of 20,000 impressions are being considered a standard run length by many of their customers. One supplier estimated 65% of production jobs are now less than 20,000 impressions. Whatever the actual numbers may be, the point is, regardless of how the jobs are run, individually on a narrow width press, or ganged on a wide press, changes in the order flow are creating headaches for converters large and small.
Different marketing messages yield different results
There is a stark contrast in the marketing messages delivered between traditional and analog press suppliers. Analog suppliers speak about productivity and flexibility. Digital suppliers speak about one-to-one marketing, personalization, and customization. In terms of productivity, analog suppliers speak in terms of sheets produced per hour, using the sheet size as a reference point. Digital suppliers also speak in terms of sheets per hour, but use terminology such as B1 or B2 size configurations that are foreign to most North American Converters. The prospect for both suppliers is typically a converter, so why is there a difference in the message conveyed, and what is the impact on the converter? We spoke with several converters that attended major trade shows specifically to see new press technologies; both analog and digital, to gain their thoughts, here are a few of their comments:
“With economic uncertainty continuing, our business focus is on doing more with less. That means how we continue to grow the volume and produce it for less. Fewer people, less expense, and less material are a way of life in our business. Digital technologies can certainly play a critical role in fulfilling that need, but digital suppliers must learn how to connect their technology to my immediate need. One-to-one marketing is nice, but the supply chain from the Brand Owner to the Converter cannot manage one-to-one marketing campaigns today”.
“What constitutes a low volume run? Digital printing is not about managing to a theoretical run volume, it is about increasing the utilization of our high-volume assets.”
Folding carton producers seeking solutions now have multiple options to consider. How will the respective technologies, analog and digital, be positioned in the market? What is the marketing message and how do converters perceive it?
Impressions Coming out of the Trade Show Season
- Traditional analog suppliers are in a tough position. Their customer base will undoubtedly experience additional contraction and consolidation. A digital solution will not solve the problems faced by analog suppliers, but it may be critical to have a solution in place to preserve a relationship with key customers.
- Digital suppliers need to better articulate the digital value proposition. The need for variable data in Commercial Printing is a critical requirement. At least initially, variable data for most packaging applications is not a critical need.
- In speaking with several converters, we asked if digital printing is now the lowest cost investment option for incremental capacity. They believe it is, but need more information related to how much capacity it will deliver and what the impact is on current operations. The answer for which technology to pursue, traditional wide width presses versus narrow width sheet-fed analog or digital presses, will take some time to sort out. In an uncertain economy, converters like the security of limited investment.
Winners and Losers
With all the digital solutions coming forth over the past year, with the exception of Landa’s nanographic printing system, we see nothing on the print side of technology that was a game changer.
On the traditional analog side, most companies in the sheetfed offset have made solid improvements in productivity, sustainability and scrap reductions. The absence of a clear winner in terms of technology typically pushes the purchasing decisions to ancillary services such as parts and service. Pre-press integration will now begin to become a larger part of the decision making process. Heidelberg and KBA will retain a dominant market position due to their strength with large companies purchasing multiple presses. Companies such as these find it convenient to have commonality in equipment throughout their facilities. Smaller participants such as Goss, Ryobi, Mitsubishi and Komori will survive as long as their customer base survives. Heidelberg and KBA continue to grow share in Asia, a historical strong hold for Komori and Ryobi.
The introduction of combo presses into packaging will be intriguing to watch. Combo presses may find a niche in high value packaging applications such as beverage, cosmetics, and premium brands. The challenge these companies face is finding printers with enough volume in the target applications to justify the investment. Up to the time the 74DI Presstek technology was pulled from the market we thought the press had potential. It has been around for some time, and the traditional issues (no variable data capability and imaging errors in the plates) creating doubt around the investment have been addressed. The price point for this technology was below many comparable pure digital systems, with higher throughput and a potentially lower cost of print, but now that option is gone.
On the digital side, it is interesting how toner technology has continued to grow so strongly in the marketplace. HP Indigo and Xeikon have positioned themselves as the clear market leaders with other toner based systems coming to the market in recent months. Maintaining that leadership will require delivery of successful solutions on the promises made.
Coming out of Label Expo new offerings from Epson, FujiFilm, Konica Minolta and Screen have shown they are taking packaging more seriously. And there are rumblings from Kodak, Oce and Xerox indicating some heavy hitters in the on-deck circle. These companies have all enjoyed success in other digital arenas, but they have thus far failed to captivate a new audience with solutions suitable to garner attention from the packaging sectors. Kodak may be a wild card with either their stream or prosper technology, but for now, only two companies, Bobst and Sun Automation have acknowledged being development partners, and both are struggling. Oce also fits this category of “wild card” and may emerge to be a force over the next twelve to twenty-four months.
The bottom line is, there seems to be universal agreement that the folding carton market is the next one (after labels) to be addressed by digital printing. There is clearly a need in the marketplace and OEMs are investing heavily in understanding and pursuing that segment with digital solutions. The more both the OEMs and potential users of the technology know about each others needs the better solutions will be developed. Some of what is in this article comes from a report Karstedt Partners has written focusing on digital for folding cartons. A free overview of the report can be downloaded from their website http://www.karstedt.com/portfolio_item/digital-printing-for-folding-carton-review/.