10 Things to Consider Before Buying a Printing Press

 

 

TOI_press

Pelagic Capital Corporation is no stranger to the print industry. We have helped fund or recapitalize many printing companies over our decades of experience. We think the following information from the folks at First Research and Presstek, Inc. may be helpful when buying a printing press.

Industry Overview

The commercial printing industry in the US includes around 35,000 companies generating $90 billion of annual revenue. The majority of commercial printers are small or midsized businesses that operate one production plant, employ fewer than 20 people, and have annual revenue under $5 million.  Despite continuing consolidation, the industry is highly fragmented; the largest 50 companies hold only about 30 percent of the market.

Products, Operations & Technology

Commercial printers produce magazines, phone books, labels, advertising brochures, catalogs, newspaper inserts, direct mail marketing pieces, corporate reports and other financial printing, training manuals, promotional materials, and business forms. (Book publishers and newspaper publishers are not included in this industry.) Most commercial printers offer four distinct services: design and other prepress services; actual printing; finishing (including folding, cutting, and binding); and fulfillment, which includes packing, storing, and shipping (often on a “just-in-time” basis). Other services can include packaging, database management, Web design, CD services, training, and consulting. A typical commercial printer has different presses and binding equipment available to work on various types of jobs. The main printing process used is offset lithography, using either individual sheets (sheet fed presses) or continuous rolls of paper (web presses). Sheet fed presses print up to 16 pages of letter-sized product (a 16 page “signature”) at a time, at speeds up to 15,000 impressions per hour. Web presses print 32 pages at a time at speeds over 40,000 impressions per hour, and are usually used for production runs of more than 50,000 copies. Presses usually print in one, two, four, or six colors; some presses can print eight. Digital presses are still used primarily in specialty applications. Paper is the biggest individual manufacturing cost, often amounting to 25 percent of revenues. Printing papers are often coated, and are bought in sheets or rolls from distributors. Some customers provide their own paper, but most is bought for customers, with a modest price markup. Paper prices can vary significantly from year to year. Commercial printers generally don’t keep large inventories of paper as requirements change from job to job. Instead, they rely on regional distributors to provide the many varieties and grades. Inks, films, printing plates, and cleaning solvents are other major material costs. The solvents used to clean inks off the presses can be a major air quality problem. Major press manufacturers include Heidelberg and Komori for conventional presses; and Xerox, Hewlett-Packard’s Indigo, Kodak’s Nexpress, and Punch Graphix’s Xeikon for digital presses. Large ink manufacturers include Sun Chemical and Flint Group. Printing technology is evolving rapidly. Virtually all prepress work is now done with computers. Digital presses are still expensive and used mainly for special types of work, but the movement to an all-digital printing environment is occurring rapidly. Small printers may be unable to make the investments in digital technology.

Sales & Marketing

The largest single market for printing services is advertising, for newspaper inserts, magazines, and direct mail materials. Although some work may be done regularly for large customers under long-term contracts (magazines, product catalogs, and phone books), most is on a project basis, often after a bidding process. Work may be episodic and many printers keep extra presses to meet anticipated peak demands. Marketing is usually done by a traditional sales force calling on potential customers. Commercial printing is a local business. Small printers can compete effectively with large ones because the small size and high variability of most printing jobs means that few economies are achieved by having larger presses. The high degree of personal attention that most print jobs require, such as client approvals of proofs and “press checks” during actual printing, means that customers prefer to use a local printer. Price is often a secondary consideration to quality and timeliness. Some types of printing, such as magazines and catalogs with large print runs, are more effectively handled by large printers.

1. Price versus Throughput

The first consideration in making any investment is ensuring that you will get value for your dollar. When it comes to presses—both digital and offset—there are a wide range of choices. When considering conventional offset, it is important to examine the time, expense and footprint consumed by theentire process—from plate production, to mounting and make ready, to the first sellable sheets coming off of the press. As run lengths get shorter, it can often take longer to prepare the job for the press and get the press up to color than it actually takes to run the job.

2. Hybrid Production

While there is some overlap in the work that can be cost-effectively produced via conventional offset, DI digital offset and digital toner-based printing, these technologies are complementary when assembled into a production portfolio that can take advantage of the strengths of each of the technologies basedupon specific job or project requirements. That is why many print shops today employ a combination of these technologies to meet customer needs in what is often categorized as a hybrid production process.

3. Printing “Green”

Whether or not your customers are asking about your sustainability practices today, more than likely they will be placing more focus on this issue in the near future. Thus, any press investment should take environmental sustainability into account.

4. Durability and Duty Cycle

The duty cycle of a machine refers to how long it can keep operating before it needs a rest, or what percentage of the time it is designed to be in use. Digital press manufacturers typically specify a dutycycle as an indication of the number of impressions you can expect to obtain from the press during a given period, normally a month. This generally does not equal the speed of the press times the number of hours your shop is in operation. Consistently exceeding the recommended duty cycle on a digitalpress is likely to wear the machine out more quickly and/or result in a substantially greater amount of down time and the need for technicians on site.

5. Bridging the Offset/Digital Production Gap

To be successful, printers must learn to manage their businesses in a manner that addresses today’s market conditions. One of the challenges this presents is a reconfiguration of the print production platform to efficiently and cost effectively produce the full gamut of short run (less than 250 sheets), midrange (250 to 20,000 sheets) and long run applications (20,000+ sheets) to meet the demands of today’s buyers. While longer runs are easily handled with conventional offset presses, and ultra-short-run or personalized printing is ideal for toner-based digital print engines, it is the midrange run lengths of 250 to 20,000 that can be challenging to profitably produce. Research firm InfoTrends2 pegs this volume band as the highest growth volume band, yet it represents a strategic production gap between offset and digital technologies that many printing firms are struggling to profitably bridge.

6. Unmet Customer Needs

Customers often buy printing from several sources. In many cases, they would prefer to reduce their overall number of suppliers, but need a broad enough base to meet all of their printing needs. This means that your customers are also buying from other printers. Perhaps they are not aware of your full range of capabilities.

7. Keeping Print in the Mix

As more marketers and other buyers of print turn to alternative media in lieu of print for their business communications needs, they often miss an opportunity to improve the customer experience when they leave print out of the mix. Integrated marketing uses a number of touch points to get the marketer’smessage across in the most effective manner, and print can still be effectively used as one of those touch points.

8. The Importance of Versioning

As customer and prospect databases continue to improve, marketers want to ensure that their customer and prospect communications are increasingly targeted. In an ideal world, they might wish to create communications in five, ten or more versions to meet this need, but in the past, limitations in qualityand cost prevented them from effectively producing these shorter runs.Or perhaps instead of one consolidated company brochure or catalog, buyers would prefer to produce different versions for different audiences based on regional or other differences they are able to elicit from their market research or customer databases.

9. Printing on a Wide Range of Substrates

As marketers and other buyers of printed products look to differentiate themselves, they are increasingly interested in using specialty substrates to make their printed pieces stand out.

10. Optimizing the Production Portfolio

Accommodation Work: Right Tool, Right Job. Rather than purchase a new large press, the business can often be better served by off loading work that is marginally profitable using conventional offset or digital toner-based technologies to a smaller press with the latest controls and automation. In this way, each press is being used for the work for which it is best suited from a cost, profit, and turnaround perspective.

Growth or Change in Business Mix: In this situation, a business is growing and needs to offer quality color work while minimizing its overhead burden. In order to take full advantage of the trend toward shorter runs, digital media and digital workflows, a business in this position can augment its production portfolio with a fully automated press. Especially for businesses that have previously had digital toner production only, are migrating from two-color to four-color work, or wish to bring in shorter run work that cannot be cost effectively produced on larger conventional presses.

Adapting to Market Changes: There are times when a company’s client base and client needs have changed to the extent that the capabilities on the existing shop floor no longer meet those needs. Rather than retain equipment with makeready and other costs that impair profitability, it is often a better choice to divest that aged equipment and reinvent the business with new workflows and new equipment. This can be painful and difficult, but it can be the right choice when it is clear that the market will never be what it once was, and that there’s no such thing as “business as usual.”

We hope you find the information provided about the printing press industry and the 10 things to consider before a buying a printing press informative and helpful when purchasing your next printing press.

Whether your needs include replacing equipment, upgrading equipment, or acquiring new equipment for growth, Pelagic Capital Corporation is here to help with all of your equipment financing and leasing needs. Having prior funded hundreds of millions of dollars of equipment we understand the ins and outs of getting you funded.

Call or email today (203)956-4873 or info@pelagiccapitalcorp.com

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