Strong Case for Production Inkjet Technology Adoption

The production inkjet market is entering its 12th year, with no retirements of inkjet presses in sight. The technology has lived up to its promise of upgradeability, and these heavy machines have lived up to their projected durability. With virtually no retirements, the installed base is growing at rates well beyond other similar age digital printing markets.

As the technology expands the substrates it can print on, and its owners become more adept at shifting volume from both toner and offset, the average monthly print volume per machine is also increasing. Combine both the growing installed base, plus a growing monthly print volume per machine, and one obtains a page volume growth curve rarely seen in print markets.

About one-third of the growth of inkjet pages can be attributed to a transfer from digital toner to inkjet technology. Another one-third can be attributed to replacement of offset pages (mainly in books), and one-third can be attributed to the creation of new pages — pages that couldn’t be printed before because offset wasn’t able to vary the information on the page and toner was not productive enough to print sufficient pages with variable data.

The growth of inkjet pages has been so strong that IT Strategies believe they surpassed all production toner pages printed in 2017.

As the overall demand for print declines and image quality of inkjet output continues to improve, production inkjet technology is the beneficiary of the overall decline in print as more and more short-run jobs fit ever more economically on production inkjet printers.

It is a mixed message of course, as a decline in print volume causes havoc with the legacy infrastructure that is scaled for higher volumes. As volumes (and revenues) decline, it becomes ever more important to become even more efficient and automated.

Main Applications for Inkjet Printing

Transaction printing has made great strides toward becoming more efficient and automated. The U.S. Postal Service shows average declines in transaction mail pieces (each piece averages about 3 equivalent pages) of about 5-6% between 2015 and 2017 (2018 data is not yet available).

With paper and postage costs continuing to increase, it has forced transaction service providers and in-plants to find ways to reduce their labor and running costs. Production inkjet has become a key solution in meeting that requirement.

IT Strategies estimates that in the U.S. more than 60% of all transaction pages are now printed on production inkjet technology. While the overall volume of transaction pages is now declining, production inkjet page volume for transaction print continues to grow as inkjet technology displaces less efficient and more expensive toner-based printed pages.

Direct mail applications face similar trends as transaction mail, albeit at a slower transition rate. Postal Service data shows direct marketing mail pieces declined about 1.4% from 2017 to 2018. Direct mail has been competing for resources with even more fragmenting direct marketing electronic communication modalities. Most direct mail budgets are flat, which means that rising paper and postage costs result in fewer direct mail pieces being printed. These fewer direct mail pages hence have to become more impactful in order to achieve desired response rates for marketers.

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This is good news for digital printing, which is also benefiting from being able to leverage more and more “big data,” which has become available as a result of marketers tracking consumers habits even closer. One of the benefits of direct mail is that it is not instant, and big data can be more carefully analyzed to ensure the offer doesn’t “creep out” the recipient by being too personal or too timely. For example, rather than offering a specific beauty or health care product that a recipient has been searching for online, a marketer can provide an offer for a percentage discount for a specific brand rather than a specific product, or perhaps a category.

Direct mailers are increasingly working more closely with marketers to identify what recipients respond to and, by being able to trial smaller campaigns (due to digital printing), they can keep adjusting the message and offers until they obtain the highest response.

In a way, the old is becoming new again as direct marketers start to see better return-on-investment (ROI) from print than from fragmented electronic alternatives. IT Strategies estimates about 40% of direct mail is now touched with some type of digital printing, including both imprinting and fully digital printing.

Book manufacturers, too, are adopting production inkjet technology at high rates, displacing offset pages as inkjet technology can now comfortably produce up to 2,000 books or more at lower costs than offset printing. Contrary to some expectations, printed book pages have increased for the past three consecutive years.

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In fact, many publishers were caught short during the 2018 holiday season, with the insufficient inventory of unexpected demand for select titles. Those who depended upon book manufacturers with production inkjet technology near the point of sale were able to meet demand, and those who depended upon books manufactured using offset technology overseas were caught short. This prompted the largest U.S. book manufacturers to double down on production inkjet technology investments. Unexpectedly, this also led publishers to become wary of concentrating too much power in the hands of a few large book manufacturers, and many are explicitly moving some of their book manufacturing requirements to smaller book manufacturers that operate production inkjet equipment able to meet their demand.

More than 10% of all book pages are now printed on production inkjet presses, a percentage that will continue to grow at double-digit rates for the foreseeable future.

Requirement for Automation Persists

What all of these applications have in common is the need for further automation in the print process. This requirement is driven by macro-trends — trends that are unlikely to change anytime soon. The trend toward smaller runs and faster delivery requirements is indisputable. The trend toward an increasing number of these ever-smaller runs is also indisputable. Without automation, these macro-trends will make traditional offset printing unsustainable since the amount of labor will continue to increase with shorter, more frequent runs, even as overall output volumes decline.

Perhaps the most predictable and distressing factor is that not only can print providers not afford more labor, the labor is not available. The average age of a print worker, according to the U.S. Bureau of Labor Statistics, is 48 years old. While unstated, the average age of offset press operators is likely to be in the mid-to-high 50s. The same agency projects that the third-largest job losses across any industry in the United States will be in the printing industry during the next 10 years. This means our print workforce is rapidly heading towards retirement, with few younger replacement workers in sight.

In fact, it is so bad that the Bureau of Labor Statistics recently announced it is going to stop tracking the category of print workers altogether as of this year, noting that the category has become too small to track.

There is some good news, however. A 2019 U.S. tax law benefit allows businesses to depreciate capital investments in 12 months rather than five years. For a typical production inkjet printer investment, this could mean $400,000 in savings.

The Bottom Line for the Printing Industry

These are trying times in the printing industry, but often the best decisions businesses make occur when they believe they have no choice but to move forward with investments they’ve been reluctant to make. Print providers have no choice but to further automate, to reduce their labor costs, and to respond and deliver print jobs with ever shorter turnaround times.

Production inkjet technology has a solid track record of performance and reliability. When deployed correctly, with matching software and finishing, it is transformative for those who invest in it. These may be uncertain times in the printing industry, but there is no uncertainty as to where we are headed. Production inkjet is a key to survival and prosperity for those in the transaction, direct mail and book manufacturing industries.

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Continuing technology upgrades and improvements in printheads, ink and software make an investment in production inkjet as future-proof as an investment can be. Advances in ink chemistry and coatings are enabling production inkjet presses to print on a broader range of substrates than ever before. The ability to meet client needs with rapid response and personalization can be transformative. It can shift the business model from lowest cost per print to best ROI for the customer.

In the U.S., more than 50% of the Top 50 print providers appearing on the Printing Impressions 400 list own production inkjet printing presses. Of these printers with production inkjet technology, 75% are seeing growth in their revenues in an industry where revenues from commercial printing declined an estimated 7% from 2017 to 2018. And the remaining 25% of the Top 50 print providers with production inkjet capabilities that indicated a decline in revenues tended to be heavily dependent upon offset printing.

Change is difficult; production inkjet technology offers a path forward, a path to greater efficiencies and a path toward new ways of doing business. For those who have the opportunity to further automate and transform the way of running a print provider business, it might be worth pondering this quote from U.S. Army General Eric Shinseki, who served as head of supply management during the Gulf War: “If you don’t like change, you’ll hate irrelevance.”