Product Group Report: Printing Presses

Transcription

1 Product Group Report: Printing Presses A study of the remanufacturing of offset and digital printing equipment in the UK. Written by: Adrian Chapman Date: April 2009 Page 1 of 15

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3 Contents Contents 3 1 Overview Separation Trends Structure 6 2 Value Traditional presses Digital presses 9 3 Evolution rate Traditional presses Digital presses 10 4 Reconstructability Traditional presses Digital presses 11 5 Potential Traditional presses Digital presses 12 6 Recommendations Traditional presses Digital Presses 14 7 Conclusions 15 Page 3 of 15

4 1 Overview The UK printing industry is estimated to be worth around 13 billion annually, and forms a central, but sometimes overlooked part of the UK economy. a Print, whether words, images or a combination of the two is used extensively throughout everyday life, and it is often central to many business activities. Therefore by some observers it is seen as a good indicator of the country s overall economic health. Recently the printing industry has been experiencing a major technological shift with the development of digital printing presses. Digital presses are beginning to compete with traditional style printing presses in the industrial scale printing market, as well as developing entirely new markets. Despite the introduction of this disruptive new technology an active market for used traditional presses still exists, as they retain a high residual value due to their inherent usefulness. However, these presses are generally well-built and well-maintained so full remanufacture is rarely required, and neither is it generally economic despite the size of the market. By comparison, there is very a little market for used digital presses, and most activity is carried out by OEMs. The section used digital press market operates analogously to the photocopier industry, with OEMs operating various trade-in schemes for used presses. Digital press technology and the corresponding market are still developing and there may be opportunities in the future to improve reuse and remanufacture in this area. The printing industry produces a wide range of products for various different sectors; outputs are as broad as newspapers, magazines, banknotes, packaging, marketing material and stationary. Perhaps as a result of this product diversity the UK printing industry consists of over 12,000 companies, with the vast majority of being SMEs employing less than 250 workers. This printing industry is characterised by tight margins and intense competition due to over capacity; a recent survey found that the average printing business is only running at approximately 70% of its possible production capacity. b Further financial pressure is placed on printers by the relatively static demand for printed material, as well as customers increasingly using cheaper services abroad for non-time crucial materials such as books and catalogues. There is also a growing customer expectation for faster turnarounds and smaller volume print a British Print Industries Federation (BPIF) figures b Structural and strategic change across the print, media and graphics industry BPIF, 2007 Page 4 of 15

5 runs, again stretching businesses as long term planning becomes more difficult and investment in better equipment is required to keep pace with these requirements. At present there is a considerable amount of consolidation and rationalisation occurring within the industry and mergers and acquisitions are commonplace. 1.1 Separation The wide variety of products and sectors which characterise the printing industry means that a broad range of equipment is in use. Some of this machinery serves specialist or low volume niche markets such as screen printing; equipment used in these areas forms a small part of the UK s printing press population. The majority of printing, both in terms of revenue and volume, occurs in the industrial printing sector, typically for the production of books, newsprint, magazines and advertising material. Industrial printing presses can be broadly divided into two categories; traditional offset presses and digital presses. Traditionally industrial printing has been dominated by the use of offset printing presses which are mainly mechanical in construction. Until recently these offered unparalleled speed and quality, with offset presses accounting for 80% of all revenue generated by UK print companies in c This proportion has begun to decline as digital printing technology has advanced and become commercially viable for many types of printing. One sector survey predicts that by 2010 the share of offset printing will have fallen to 50% of total printing revenue, and digital printing value will have grown from 5% in 2000 to 20% in While not everyone within the industry predicts such a large shift, there is agreement that digital press represents the biggest long term change in the way the industry operates. However, most foresee that there will continue to be a need for both offset and digital presses in the future. Other current changes experienced within the industry include the cost of raw materials such as paper, card and ink. These costs strongly affect a printer s profitability, particularly when competition from abroad and currency fluctuations are taken into account. Another growing theme within the sector is environmental considerations as more customers demand eco-friendly printing. Many printers have sought ISO14001 accreditation to demonstrate their environmental credentials. c The Insight Report Digital Printing Directions, 2008 Page 5 of 15

6 1.2 Trends Historically the printing industry has been able to adapt to large changes; the printing industry is still seen as robust despite the growth in e-marketing which now attracts greater investment than direct mail advertising. d Printers are adjusting to these changes by offering complete marketing packages and adopting electronic practices, partially enabled by digital printing technology, as part of their core business. These market and technological changes mean that most print companies regularly obtain new equipment to meet the demands of the current market. Purchasing a new press is a substantial financial risk as it involves a large capital expenditure; the price of a new press varies from 10,000s to 1,000,000s. However, having the right technology at the right price is critical to a printer s success, particularly as customer demands become increasingly time dependant. 1.3 Structure Traditional Offset Presses Due to the specialist nature of offset press machinery and relatively low market size a few well established OEMs exist, such as Heidelberg, Man Roland and Komori. These companies operate globally but are often based in Germany or Japan. As well as supplying presses these OEMs generally provide comprehensive maintenance and service contracts along with genuine spare parts. A printing company is unlikely to have enough capital to directly purchase a new press, instead loans are obtained from financing houses to fund purchases. In general, financing agreements will last five to eight years, with the press owned by the printing company after this period. However, offset presses retain a high residual value well beyond this payment period due to their design, construction, longevity and intrinsic utility. Therefore these presses are seen as a long term investment which can be easily be sold on if no longer needed by the printer. A twenty year old used offset press can confidently be bought due the quality of the original manufacture and it will often provide an economic alternative for a printing company if cutting-edge performance is not required. For these reasons there is very active industry in the sale of used offset presses. As with the printing industry the used press sector is made up of an assortment of small companies, which commonly specialise in sales of presses originating from one or two specific OEMs. These companies are typically SMEs, employing a few people for example Whitehorse Machinery, Day Graphics Systems, PGM ltd and Atlas Machinery. The sector has a small trade body, the British Used Printing d Page 6 of 15

7 Machinery Suppliers Association (BUPMSA), which organises trade events and codes of conducts for used printing machinery. The services provided by used press sellers range from simple brokerage through to refurbishing or refitting presses before selling on, though full remanufacture is uncommon. There is also significant activity outside these companies as printers often arrange site-to-site sold-as-seen sales which external parties are rarely aware of. A further area of activity is the export of presses to developing countries. Typically this occurs to much older presses as a preference to scrapping. These older machines have generally passed through the hands of two or three companies in the UK, and depending on the market may be ten to twenty years old. Older offset presses are desirable in the developing world due to their low cost, reliability, simple maintenance procedures and because lower standards of performance and print quality are acceptable. Anecdotally presses in these countries can be up to fifty years old before they are taken out of service. At this stage presses are scrapped as a major overhaul is either uneconomic or cannot sufficiently improve performance. Digital Presses The manufacture of digital presses is also limited to a few multinational OEMs for example Xerox, Océ, HP and Kodak. These OEMs are entirely distinct from the traditional press manufacturers due to the different technologies and expertises required for press development, production and servicing. A digital press may be bought outright, but many OEMs have longstanding core business in photocopiers and have applied similar retailing models to the digital press market. Digital press OEMs have introduced leasing, trade-in for upgrade and, to a lesser extent, pay per click as acquisition options. These schemes are appealing to customers due to the rapid and considerable depreciation in value of new digital presses. A digital press is generally not seen as long term investment as advancing technology rapidly supersedes equipment, consequently diminishing their second hand value. Currently the market for used digital presses is smaller than the offset market but has potential to grow. Some remanufacture occurs, and this is generally conducted by OEMs who have the workforce with the relevant skills and a supply of the specialist electronic parts. Remanufacture by third party companies is more difficult, particularly when compared to the more mechanically based offset presses, due to the different skills and parts required. The used press market is also influenced by the OEMs which operate a return and replacement policies as part of lease agreements and part exchange for new schemes. Some companies such as Océ design digital presses specifically with remanufacture in mind, however discussions with OEMs determined that this was not generally the case, though easy disassembly and materials separation was considered to allow easier recycling or disposal. Digital presses contain large quantities of electronic components so disposal is influenced by the WEEE directive; similar end-of-life strategies to photocopiers are being adopted for digital presses. For example, Xerox units from the UK are sent to a central facility in Holland where they are disassembled and parts sorted for Page 7 of 15

8 reuse, recycling or disposal depending on their composition and condition. Xerox state that their most recent digital press, the igen4, is 97% recyclable or reusable. More detailed data for presses was not available, but Xerox s data for all products undergoing this processing indicate that 25% of reclaimed material by weight is reused or remanufactured with the remaining recycled. The OEM s confidence in this remanufacturing process is indicated by the fact that a 3-year satisfaction guarantee is offered on all equipment, whether all new or containing reused parts. Other major digital press OEMs such as Océ, HP and Kodak indicate that recycling and reuse is part of their green or sustainability agenda, though no data was available on how material was reused or recycled. However, it is clear that the reuse of individual parts carried out on a larger scale than whole presses. 2 Value As described above two main areas exist in the industrial printing press market; traditional printing machinery and digital presses. The distinct nature of the technologies used and the different OEMs involved affect how the used press markets operate. 2.1 Traditional presses Compared to digital presses traditional presses retain a high value throughout their life and are seen as an investment as resale is relatively easy. There is a very active used market for these presses, but no studies could be found which investigated the value or extent of this market, and industry representatives were not confident in estimating its size. This lack of data is probably due to the dispersed, diverse and varied nature of sales within the used market, and that many site to site sales take place without publicity; these factors make accurate analysis difficult. Currently the value of the used market is declining due to several influences, for example OEMs have begun lowering the cost of new presses which in turn has reduced the value of second hand presses. Also, it is now common for a single new press to have the capacity to replace 2 or 3 presses, if these presses are sold on the used press market becomes increasingly competitive. Despite these factors, it is likely there will continue to be a market for these presses especially the export market. Within the used market, remanufacturing is carried out on a small proportion of machines. The quality of original manufacture and the good condition of used Page 8 of 15

9 presses means that remanufacture is generally not cost effective or even necessary. In addition to this the volume of used presses on the market means that if the condition of a press is not satisfactory a more suitable used press can usually be found at a price which would make a major overhaul uneconomical. The unsuitable press would most likely be sold on to another market such as the developing world. 2.2 Digital presses In contrast, the used digital press market has, until recently, had very little or zero value. Some traditional used machinery sellers have attempted to establish a used digital press market, however none were found to have successfully integrated it as a core part of their business. A number of reasons exist for this: Technology is advancing rapidly, often making relatively new presses obsolete within a printer s purchasing cycle, therefore used is not an option for customers seeking the newest technology. The extensive electronic composition in digital presses makes them more difficult to repair and obtain parts; often the only repair route is through the OEM. Finally printers often do not consider digital presses as well-built as traditional offset presses. Therefore, printers do not view digital presses to be a long term investment. Rather than encouraging an active third party second-hand market, OEMs include returns as part of their contracts. Therefore more frequently used presses will be sent back the OEM and recycled and reused through established mechanisms. Reused and remanufactured presses are gradually becoming available from OEMs. Océ indicate that a remanufactured press can be up to 50% cheaper than a new one, and globally reported an increase in sales of refurbished presses of 3,000 to 5,000 from 2007 to T his is roughly equivalent to 330 units in the UK. These are not considered industrial printers in the context of this report as the Océ Prémia Class reuse programme does not apply to industrial scale presses. However, it does indicate that reuse and remanufacture could be incorporated into an industrial digital presses lifecycle. Page 9 of 15

10 3 Evolution rate Within the two sectors of printing press technology there are different rates of evolution, this influences the way in which the different used machinery markets operate. 3.1 Traditional presses Advances with offset presses continue to be made despite the maturity of the technology. In general OEMs look to make their presses more economical to run as the quality of printing is already high. For example, printing speed has continues to increase; a typical offset press could print 9,000 pages per hour in 1998, in 2008 this figure is around 13,000 pages. OEMs are also improving technology to make small printing jobs more economical on these presses. These developments are in direct response to digital printing which is currently more suitable for these shorter print runs. Despite these improvements, the core technology used in industrial offset presses has remained the same, and even very old presses will produce results that are suitable for a company s requirements somewhere in the sector (though not necessarily the UK). Assuming that improvements continue to be incremental, evolution in this area will remain slow but constant. 3.2 Digital presses Commercial digital presses have been available for around fifteen years; however it is only recently they have been able to compete within the industrial scale printing market. The original digital presses can more or less be considered elaborate photocopiers. However, with the rapid advances in technology they can not only compete with traditional presses in many markets but also have developed new markets such as printing on demand (POD). This progress is highlighted by Amazon s reliance on this POD technology if an ordered book will take over five days to reach you it is being printed specifically for your order. Current development trends are towards competing with offset printing by increasing the printing speed, and the use of more colours in printing to improve image quality. Technology in this field has advanced at such a rate that newly bought presses can be out-of-date within a few months. Whilst this is incremental development the high rate at which it occurs is likely to continue as OEMs seek to push customers to update equipment. Page 10 of 15

11 4 Reconstructability The different composition of presses and the nature of core components mean that they have differing levels of reconstructability. 4.1 Traditional presses Offset presses are principally mechanical devices, and though non-consumable parts wear down these can be replaced relatively easily. Offset presses are designed to print millions of pages and therefore are constructed to a very high standard and specification. With the correct skills and knowledge they can easily be maintained and major repairs are possible without the involvement of an OEM. Therefore, whilst these machines are inherently easy to disassemble and rebuild it is more economic to perform periodic maintenance too keep a press running than perform a major overhaul to place it on the used market. 4.2 Digital presses Digital presses are designed using a different philosophy and are generally built to last a much shorter lifespan. General maintenance is also more difficult as these presses contain a variety of specialist electronics which require the correct tools, skills and parts to repair or replace, normally requiring the OEM to be involved. However, OEMs have implemented a similar end of life model to digital presses as that developed for photocopiers. Digital presses are modular and are easy to disassemble and separate at end of life for recycling, reuse or disposal. Reused parts are then used as part of a newly constructed or reconditioned product which can be sold as-new, this is the most common form of reuse within this sector. As a whole unit a digital press is difficult to remanufacture, particularly as technology is moving rapidly. However, parts can be included in the construction various newer machines, this also allows the OEMs to respond to different demands for products. Recently, some OEMs are developing press designs with reuse and remanufacture in mind, allowing them to be rebuilt with features seen in newer designs. A reused digital press market is emerging from these developments. Page 11 of 15

12 5 Potential 5.1 Traditional presses Presses residual value and ongoing maintenance mean that remanufacturing is not required to keep these presses in working order. An extensive and very well established used market means that remanufacturing is not economically viable on a large scale. The philosophy of the industry is that these presses are built to last and a buyer can generally be found whatever the age or condition of a press. Some remanufacturing activity does occur, however this is likely to decline as the costs of new offset presses is falling and the number of used presses on the market increases making remanufacture uneconomical. Until these factors change remanufacture on a large scale is unlikely to be feasible. 5.2 Digital presses The digital press market is much newer and presents more potential for remanufacture. Some activity already exists in this area as digital press OEMs have traditionally been involved in the remanufacture of photocopiers. This concept could be further developed with digital presses, allowing a greater level of high quality reuse and remanufacture. Some growth in the digital press market is already being seen, however, it still forms a small part of the market. 6 Recommendations The market for industrial presses is likely to undergo substantial changes in the near future as digital presses become increasingly viable for different industrial scale printing jobs and customer demands change. The two distinct areas of present substantially different scenarios, and should be treated differently, while maintaining an overall view of the industry. Page 12 of 15

13 6.1 Traditional presses The used traditional press market is well established and understood by those involved. Presses are designed and built to last which is unlikely to change in the short or mid term. Remanufacturing occurs on a small scale, but a press can last for up to years with good rolling maintenance. An offset press is a highly valued item, so landfill or scrap is generally a last resort. For these reasons it is not believed that much can be done or is needed to be done improve the level of remanufacturing occurring. Presses are well used and not seen as disposable items, instead their design and length of use should be encouraged. Recommendations Support continued long use of used offset presses with a high level of maintenance. Offset presses are well used and well looked after. They are seen as high quality pieces of machinery and retain considerable value over their lifetime. This attitude should be encouraged and maintained to ensure that these presses remain in service for as long as possible Form a neutral forum for used press suppliers to allow a more coherent promotion of offset press reuse and remanufacture. This already exists in some from through the BUPMSA, however more can be done to raise the profile of this organisation. This would allow better promotion of the benefits of reusing presses. Expanding the operation would allow more of the used press dealers could be engaged. Standards and codes could be introduced to ensure the used press dealers were offering value for money, and increase purchaser confidence. Encourage OEMs to release details and specifications of presses. A significant amount of used press sales happens through small 3 rd party companies. These organisations would be aided in their remanufacture and refurbishment work with access to more detailed information about the presses they are selling. Survey the level of export/import of used presses. A survey of this sort would determine the condition, location and amount of materials exported, and provide some further information of the levels of use and reuse outside the UK. Page 13 of 15

14 6.2 Digital Presses The early stage of digital press manufacture and market means it is potentially an important time to influence the design and construction of these presses. This market is likely to flourish over the coming years as technologies improve, therefore influencing the industry now may have a magnified impact in the future. OEMs already design with some reuse in mind, however it appears that most material is put through recycling streams. Introducing a greater degree of remanufacturing and reuse into the lifecycle of a press is important, as it adds additional use cycles before materials are recycled, this can also bring commercial benefits. Recommendations Engage with OEMs to develop digital press designs with reuse and remanufacture in mind. Digital presses are designed with materials recycling in mind. By increasing awareness of the benefits of reuse and remanufacture over recycling OEMs could be encouraged to alter their future press designs. Support OEMs in developing business models which encourage remanufacture and reuse of presses. Increasing the level of remanufacturing and reuse of digital presses may require alteration in the way a business operates. Developing new ways of providing digital printing, and promoting them with customers is an important step to increasing remanufacturing in this area. Promote the benefits and availability of reused digital presses to the printing industry. Raising awareness of remanufacturing with press buyers of the benefits of remanufacturing would create a larger, more accepting market for the OEMs. This would then further encourage OEMs to develop their businesses in this area. Gather further data on level of reuse versus recycling, and comparison of reuse of parts versus whole units. Currently there is little data comparing different recycling and reuse streams, nor any clear information on the proportion of parts reused in presses. Gathering more detailed information would allow a better idea of the materials which are commonly reused or recycled, and provide a better idea of the benefits associated with these activities. Page 14 of 15

15 7 Conclusions The high volume industrial printing sector is experiencing significant changes with the advent of digital communication and printing technologies. These developments are strongly influencing the demands for printed materials, and will continue to do so in the future. Traditionally, offset presses have performed almost all high volume printing work and it is agreed that offset presses are still required to meet the different needs of the industry. These presses are built to last and are well maintained, and therefore retain a high value on the used press market. Remanufacture of these presses is not often needed for various reasons and is unlikely to become commonplace. However, offset presses are generally used for long periods of time, so have a high level of reuse. Digital printing presses are based on much newer technology, which is still rapidly advancing. These presses are beginning to compete with offset presses in the high volume market. However, due to their fast development their used value drops off more quickly. The early stage of this technology means that encouraging OEMs to consider reuse and remanufacturing now could have many payoffs later on as digital presses become more prevalent. Page 15 of 15