SPECIAL REPORT -- Web Offset - Weird Windings Of the Web
by Vincent Mallardi, C.M.C.
A monstrous double-round cylinder transfixed a trio at a trade show as if it was an object from outer space. A technician turned it reverently as it revealed the gleaming and exaggerated reflections of the human forms facing it.
"That's what we need to replace the M-1000-A!"
A sales exec nearby wasn't moved. Eerie onlookers like these were serious in intention, correct in their vision, but pathetically "years late and dollars short." That's why only a cylinder, and not a press, was being exhibited; as an auto dealer might showcase a wheel-assembly instead of a car.
Web printing is no longer for the wishful or faint-hearted. A few financially fit demons are mysteriously rolling up plants and gruesomely splicing them into what will soon be printing's second and most scary oligopoly. (Remember rotogravure, the first.)
Macabre consolidations in publishing, finance, telecom and among most other demanders of web printing are forcing this uncanny transmogrification. Fewer buyers require fewer providers, by nature. No exceptions. No mercies. Oligopoly drives oligopoly, because the only alternative is superfluous supply and irrational price-cutting.
Hey, unfortunately, that's what's happening!
The combined market share of the biggest two web printers is equal to the combined web purchases of the biggest nine demanders. Assume, as is eerily happening, that these behemoths sign spooky long-term contracts with each other, effectively, if not intentionally, preempting all competitors. Every other supplier and demander is relegated to an economic form of musical chairs: A tortuous game because only six second-tier web printers are large enough to fully accommodate the requirements of some 2,000 remaining demanders. (And you thought there were many more?)
The under-capable wind up with "over-capacity." These are plants with "legacy" equipment and, most probably, legacy managements (ouch!).
A spectral analogy is in order. "Drunken Fish" is a favorite delicacy, where not illegal, in the Orient. The recipe: Wrap a frozen towel around the head of a live carp, fry it, remove the towel and serve. The fish, which has no central nervous system, wiggles around the plate, unaware it is being consumed.
Web printers are being consumed as well, if not by oppressive real-world acquirers, by otherworldly fantasy denials of their demise. An apparition a dozen years forward is a few hundred geographically distributed mega-plants spinning webs and sheets in the dark. Beyond and removed from this very closed-loop will be frightful, feeble facilities run by a shifting medley of dreamlike figures —phantasmagorias, really—turning with their cylinders as fatefully as the drunken fish. When the last of them becomes a spirit, an even greater apostasy will occur; a federal ban on web offset conventions!
A Resurrection of Sorts
Back to the present, there is ultimate irony. A web revenue resurrection of 9 percent is anticipated this year to $38 billion. More than half of this amount will be paper, as there is a diminishing amount of equipment performing anywhere near a 50 percent "value-added." In fact, many web presses can no longer print anything of value.
Invidiously, only some 50 companies (soon to be fewer) operate with state-of-the-art workflows and machinery; in other words possessing the competency to provide a return on these very investments. The rest of the web industry has only the figment of investment, with fully depreciated presses and finishing lines that make for great museum pieces and even greater paper wasters. The askewed cost ratio of paper-to-printing, like a banshee, portents doom among all but the first-tier producers.
The War on Waste, launched years ago by the Web Offset Association, has been won by the warlocks running the really big webs. Returns-on-sales at Donnelley-Moore-Wallace and Quebecor-World are identical to the percentages of paper they don't waste.
The stupefying decline in the U.S. dollar, caused by trade deficits that include past purchases of printing presses, is precluding additional installations. So, we have over 865 plants in de facto gradual liquidation resulting from non-investment. Quick fixes in prepress are false security, because the old presses can't print consistently no matter what's done in prep. JDF and CIM aside, there is a life before death elixir for independent web printers: Marketing.
Get to Know the Five Ps
Horrors! Most management are mechanics, inwardly directed at their plants. Salespeople are necessary evils—ghouls really—sent out in derelict darkness to feed the presses. Why provide them with closed-loop systems of the demand-making sort? The answer has been foretold. It is the only sensible option, and the investment is in the 5Ps instead of the CIP3/4s: Positioning, packaging, promotion, placement and product development. The R&D is determining who and where those 2,000 demanders are, and what's lacking and needed.
The effort should be entrusted to a permanent outsider; a marketing consultant who doesn't need to see your plant nor eat off the floor. This also ensures objectivity, but beware: The conclusions and imperatives may well challenge internal dogma. Variable format flexible manufacturing and other such cherished notions may be misguided. A "zero-makeready" salesforce may be preferable to extra cylinders, and a gapless press schedule and an extended cutoff into the future.
One last thing haunts web printing: Paper is no longer a price "constant." In the new global order of competition, there are three "grades," and they aren't taught in estimating school. Each is physically indistinguishable, but economically "shades" apart: Legal, suspicious and illegal.
Is your paper a name brand from North America? If so, it's surely harvested legally, like tuna labeled dolphin-friendly. The Forestry Stewardship Council makes it so.
Brightness, caliper and weight aside, however, there are rolls and rolls of suspicious and downright illegal paper making the rounds to web printers who don't know, don't ask and don't care about anything other than the price.
Try $23/CWT versus $38/CWT. Same specs, different countries of origin. In Southeast Asia (which by the way exports both paper and tuna to the U.S.A.), illegal harvests and pulping of live timber under the pretext of post-Tsunami debris-removal, are attracting spot buying among less-than-scrupulous web printers. Meanwhile, suspicious harvests and conversions, as in Brazil and the Russian Federation, are providing bargains for "don't-ask, don't-tell" converters of envelopes, cut-sheets and the like.
Customers who challenge a "high" price must be countered with the suggestion that a competitor is sourcing paper of suspicious or illegal origin.
Vincent Mallardi, C.M.C., monitors and forecasts the printing industry with his "Hot Markets" study, and serves as a sales/marketing consultant and speaker. He may be reached at email@example.com.