Drupa report: The printing industry is recovering from the global recession and the impact of digital communications
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The fourth drupa global trend report aims to track the key economic and market developments in the global printing industry. The report data is based on a survey conducted globally in October 2016. The survey involved about 1200 participants from all major markets and regions in the world, as well as different industries.
Among them, a total of 839 printers participated, of which 525 came from Europe and the rest 314 came from other regions in the world. Of the 331 suppliers participating in the survey, 220 were from Europe and the rest were from various regions of the world.
Drupa Economic Confidence Barometer: The overall situation is optimistic
In the beginning, let us review with our readers the two broad questions we have mentioned and ask participants whether they are optimistic about the current economic health of their company and what they think the outlook for the next 12 months will be. Call it "rupa economic confidence barometer". Printers and suppliers are almost generally optimistic. Globally:
→42% of printers participating in the survey stated that the company’s current economic situation is “good”
→11% indicates that the economic situation is "poor" with a net difference of 31%.
As always, the second year’s expectations are somewhat more optimistic than the actual situation. If it goes deep into the global terminal market, global functional and packaging printers are more confident than commercial printers, and commercial printers are higher than publishing printers. This model has continued until 2013.
As for suppliers, the optimistic situation is the same as last year. Among them, 56% of the suppliers participating in the survey stated that the company’s single-money economy was “good”; only 6% considered the situation to be “poor” with a net difference of 50%.
Prospects for possible printers and suppliers are generally more cautious and may be more realistic. The broader economic summary behind this executive summary and the more detailed financial performance indicators below give new reasons for remaining cautious.
Financial status
It is not as if the situation of the global and regional financial markets will affect printers and suppliers as well. From the perspective of the global printer report, the financial situation of all topics this year has improved.
Looking deeper into regional and market data, the situation is even more complex. South/Central America and Africa report that prices are positive, while the Middle East reports that both prices and profits have fallen. Similarly, publishers and printers in North America reported a drop in revenue, prices, and utilization, while South/Central America and Africa reported growth in all three indicators.
Although profits are generally squeezed, the number of employees worldwide continues to increase - the net difference is +9%, ranging from +21% in North America to 0% in South/Central America and Australia/Oceania. Although the number of global production employees increased by 9%, the number of employees in management declined slightly by -2%. In more developed regions, the number of employees employed by publishing printers has dropped dramatically.
For suppliers, the global model is similar, with revenue increasing by 17%, but prices are down by -24% and profits are down by -27% (but this value is the best in three years, ie, the smallest negative net difference). The situation in the region is equally uneven, with the Middle East and South/Central America struggling.
Technology Application Trends
This is a very diverse industry in terms of the printing technology used. Of the sixteen technologies listed, 14 have a penetration rate of at least 10% in at least one market area. In terms of printing volume growth, digital technology dominates, with digital toner single-page color printing leading the overall figure by +25%; followed by digital inkjet web color by +11%. Looking deeper into the market, the situation is more complicated. Thanks to the packaging and publishing market, the overall growth rate of sheetfed offset is 8%. Due to the packaging and functional market, the overall growth rate of flexographic is 8%.
The traditional printing production combination continues the trend of the past, the length of printing operations is getting shorter and shorter, the lead time for printing production is continuously shortened, and the number of employees in the industry continues to grow. However, it is surprising to see a clear irreversible shift in digital printing because there is a small but significant decrease in the proportion of revenue from digital printing, which was the case in the first year. In-depth analysis of the market, digital printing has the largest impact on the functional market, followed by commercial printing, then publishing, and then packaging printing, which until now has been only slightly affected.
What is disappointing is that the proportion of variable digital printing (by value) has not increased as it always has. In 2013, among digital printing printers at that time, the report stated that more than 25% of digital printing was 19% of variable data, and in 2016, this figure became 18%. Since variable data is a major value-added component in digital printing, this trend is worrying.
Another worrying data for this year is the significant decrease in the proportion of printers reporting new network printing/storefront equipment. After years of steady growth, this year has seen a significant decline, with a global rate of 3%.
Capital expenditure planners remain optimistic
The supplier’s capital investment plan is still showing a strong global trend, and most regions are expected to achieve net growth. In terms of increasing capital investment levels, functional and packaging printers are more confident than publishing and commercial printers. For the first time, finishing investment became a top priority, and printing technology followed. However, as printers begin to realize the need to increase automation, investments in prepress/workflow/management information systems will increase.
As far as the printing technology investment plan is concerned, sheetfed offset printing has completely pulled down the digital toner sheet color from the first position, and the digital inkjet single-sheet paper has rapidly grown in color, and is tied for third with the flexographic version. Divided into the market, in the history of this report, that is, since 2013, various market leaders have emerged for the first time in different market segments. Among them, the digital business is a digital toner sheet, and the publishing field is sheetfed offset printing. The field is flexographic, and the functional area is digital inkjet web color.
Market trends of printing companies
1. Commercial printers: slow development in the new environment
In the face of the impact of digital communications, commercial printers have tried, but the results show that they have not made breakthroughs in finding new sources of income and new value-added services. Judging from the four years of data available, it can be said that there is no evidence of such growth, except that wide printing has increased from 37% in 2013 to 50% in 2016.
2. Publishing Printers: The Toughest Time to Adjust to Digital Media
More and more books and magazines are available in online editions, and circulation is reduced at the same time. However, the number of books lost to the online version is still very low. Other ways to create value-added services, such as personalization, versioning, and rich and varied content, are increasing but slow (North America leads again). Breakthroughs in traditional prepress, design and storage, implementation options, and increased value-added services are still relatively few.
3 packaging printers: stable forward
Packaging printers have at least been relatively less affected by digital media so far and are still generally confident in all regions. On the other hand, the adoption level of value-added SKUs is still small in most cases, of which the most frequently used is interactive features. Clearly, digital printing is beginning to have a real impact (available to 32% of companies worldwide), most commonly for labels, followed by flexible folding cartons and some signs on corrugated paper.
4. Functional printers: the outlook remains optimistic
Companies in this market segment are constantly increasing their resources to support it because most applications have good growth rates. For most applications, inkjet is the dominant printing technology (from 61% in 2014 to 74% in 2016).
to sum up
The printing industry is recovering from the double whammy of the global recession and the impact of digital communications. Printers report that the continued increase in revenue offsets the decline in pricing and profits as well as a strong capital investment plan. For suppliers, from the perspective of increasing revenues and profits as well as a strong investment plan, the prospects for the future are bright. The good situation has not yet been popularized. All printing companies must continue to adapt to and meet the current market challenges. They must firmly move toward efficiency and automation while also learning new skills and developing new value-added services. But in spite of this, in general, the printing industry has regained its charm.