Competitiveness of Indian Printing Industry
Content
A Study into the Competitiveness of
The Indian Printing Industry
Under Strategic Management and Business Policy
BITS ZG629T: Dissertation
by
N. KRISHNASWAMY
Id No.: 2007HZ79592
Dissertation work carried out at
Bharatiya Reserve Bank Note Mudran (P) Ltd.,
Note Mudran Nagar, Salboni- 721132
BIRLA INSTITUTE OF TECHNOLOGY & SCIENCE
PILANI (RAJASTHAN)
October 2009
A Study into the Competitiveness of
The Indian Printing Industry
Under Strategic Management and Business Policy
BITS ZG629T: Dissertation
by
N. KRISHNASWAMY
Id No.: 2007HZ79592
Dissertation work carried out at
Bharatiya Reserve Bank Note Mudran (P) Ltd.,
Note Mudran Nagar, Salboni- 721132
Submitted in partial fulfillment of
M.S. Manufacturing Management degree programme
Under the Supervision of
Shri. S. Sivananda Reddy, Manager,
Bharatiya Reserve Bank Note Mudran (P) Ltd., Salboni- 721132
BIRLA INSTITUTE OF TECHNOLOGY & SCIENCE
PILANI (RAJASTHAN)
October 2009
II
CERTIFICATE
This is to certify that the Dissertation entitled A Study into the
Competitiveness of the Indian Printing Industry and submitted by N.
Krishnaswamy, having ID-No. 2007hz79592 for the partial fulfillment of
the requirements of M.S. Manufacturing Management degree of BITS,
embodies the bonafide work done by him under my supervision.
Signature of the Supervisor
Place: Salboni
Date: October 15, 2009
S. Sivananda Reddy,
Manager,
Bharatiya Reserve Bank
Note Mudran (P) Ltd.,
Salboni – 721132,
West Bengal
III
ABSTRACT
Printing is a mature industry. It is the India’s twelfth largest manufacturing industry in terms of output
and a major contributor to the Indian economy. The industry in India has moved from the traditional
‘ink on paper’ industry to embrace ever-increasing range of technologies and fields of expertise.
Printing related industries in India comprise of some 3007 printing factories and 106993
unregistered printing presses. These printing factories with greater than 200 employees employ about
112974 people. Overwhelming majority of firms are small and medium enterprises employing some
493007 people.
The industry has changed greatly over the last decade. Workflows are becoming fully digital
rather than impression based printing. These changes mean that the industry needs less unskilled
labour. The industry faces powerful buyers and suppliers. Labour productivity rose considerably in the
past few years.
This study will describe the current market, employment, technology and other characteristics
of the industry and assess performance over the past decade, provide foresight about potential tr4ends
in markets, technologies and other variables and discuss the strengths and weaknesses and provide
conclusions. This will strive to formulate intended actions for the industry under the following chapters.
1. Introduction
This will explain the coverage of the sector studied and sources and nature of data.
2. Industry Characteristics
This will study the demand for print, technologies available, industry suppliers, industry organizations,
industry structure, the labour market and industrial relations, management, finance and environment
3. Performance
The performance of the industry will be assessed under the headings of output, foreign trade, costs,
profitability, capital investment, productivity and obstacles.
4. Foresight
This chapter will cover print markets, technical trends, other trends and scenarios.
5. SWOT analysis
Fourth chapter will study the industry strengths, weaknesses, opportunities, threats and e-business
6. Conclusions
While many consider printing as an industry, which is doomed to decline, this report will find out
truthfulness of the perception.
7. Recommendations
This will identify how the industry should achieve the key aims for relevance and success.
Key words
: Technical keywords of the Project
Capital investment
Costs
Demand for print
E-business
Environment
Finance
Foreign trade
Industrial relations
Industry Characteristics
Industry organizations
industry structure
Industry suppliers
Labour market
Management
Obstacles
Opportunities
Other trends
Output
Performance of the industry
Print markets
Productivity
Profitability
Scenarios
Strengths
SWOT analysis
Technical trends
Technologies
Threats
Weaknesses
IV
ACKNOWLEDGMENT
I take this opportunity to express my deep sense of thanks to my mentor Shri. S.
Sivananda Reddy, Manager, Bharatiya Reserve Bank Note Mudran (P) Limited, Midnapore West
District, Salboni - 721132 for accepting me as his student. His guidance and immense
encouragement throughout the tenure of the course and preparation of this dissertation is highly
acknowleged. I am thankful to Shri. Biswanath Chakraborty, Deputy General Manager, Bharatiya
Reserve Bank Note Mudran (P) Limited, Salboni – 721132 for extending all the possible help in
bringing out this dissertation and extending support all through this course.
I acknowledge thankfully the cooperation received from the teaching and non-teaching
staff of Birla Institute of Technology, Pilani during the course of this study.
I thank Captain. S. Madhav Rao, General Manager, Shri. Avinash Chandra Jolly, Deputy
General Manager and Manas Ranjan Mohanty, Deputy General Manager, Bharatiya Reserve
Bank Note Mudran Private Limited, Salboni for all the encouragement I received from them in
this work.
I acknowledge the permission given to pursue this course and ‘study reimbursement’
given by the Bharatiya Reserve Bank Note Mudran Private Limited, Salboni and its management
gratefully.
I express my sincere thanks to the All India Federation of Master Printers and Madras
Printers and Lithographers Association and their office bearers and the administrative staff for
helping me with the needful information and data.
I am thankful to all my friends and colleagues in BRBNMPL, printing fraternity, well
wishers and friends from the Printing Industry for giving the required information for this
dissertation.
I am overwhelmed with sincere feelings of indebtedness to all the members of my family
particularly Amma, Appa, Jayashree and Medha Vanaja who all enabled me achieve what I
wanted. I owe this dissertation to them.
N. Krishnaswamy
V
CONTENTS
Executive summary
3
Introduction
Coverage of the sector
Industry statistics
10
Structure of the report
1
Industry characteristics
12
1.1
Demand
12
1.2
Technology
13
1.3
Industry suppliers
16
1.4
Industry organizations
16
1.5
Industry structure
17
1.6
The labour market and industrial relations
18
1.7
Management
22
1.8
Finance
23
1.9
Environment
23
2
Performance
24
2.1
Output
24
2.2
Foreign trade
24
2.3
Costs
25
2.4
Profitability
26
2.5
Capital investment
27
2.6
Productivity
27
2.7
Obstacles to achieving business goals
29
3
Foresight
30
3.1
Print markets
30
3.2
Technical trends
33
3.3
Other trends
36
3.4
Scenarios
36
VI
4
SWOT analysis
39
4.1
Strengths
39
4.2
Weaknesses
40
4.3
Opportunities
44
4.4
Threats
45
4.5
E-business
47
5
Conclusions
48
6
Intended actions
50
Appendix 1– Steering Group membership
54
Appendix 2 – Tables
55
Footnotes
64
VII
LIST OF FIGURES
Figure
Title of the Figure
Page
Number
Introduction
Coverage of the sector
Industry statistics
10
Structure of the report
1
Industry characteristics
12
1.1
Demand
12
1.2
Technology
13
1.3
Industry suppliers
16
1.4
Industry organizations
16
1.5
Industry structure
17
1.6
The labour market and industrial relations
18
1.7
Management
22
1.8
Finance
23
1.9
Environment
23
VIII
LIST OF TABLES
Table
Title of the able
Page
Number
Number
Introduction
Coverage of the sector
Industry statistics
10
Structure of the report
1
Industry characteristics
12
1.1
Demand
12
1.2
Technology
13
1.3
Industry suppliers
16
1.4
Industry organizations
16
1.5
Industry structure
17
1.6
The labour market and industrial relations
18
1.7
Management
22
1.8
Finance
23
1.9
Environment
23
IX
INTRODUCTION
1
INTRODUCTION
This study on the printing industry in India aims to inform policy-makers and others about the
printing industry’s current position and future development and to recommend actions to improve
its competitiveness. A good number of individuals in all sections of the industry – and its
customers – were consulted and/or were asked to comment on issues discussed to ensure that the
publication is representative of a wide range of opinion.
Coverage of the sector
As the following pages demonstrate, printing is a complex industry. It has many discrete
segments, which use unique technologies and have a distinctive customer base. The heart of the
industry is the activities classified under Division 22 of National Informatics Centre 2004
classification using data from Central Statistical organization (CSO). This Three Digit NIC 22
series includes Publishing, Printing and Reproduction of Recorded media. This has major
subdivisions namely printing and publishing of books, printing and publishing newspapers,
printing and publishing of periodicals, printing of banknotes, service activities relate to printing,
reproduction and publishing of recorded media. In this paper, the definition of the industry used
to describe what the industry has been and is now, is that of traditional boundaries based on
product and process.
The sub-category of ‘printing’ can be further divided into:
– ‘Industrial’ printing of products such as magazines, catalogues, weekly newspapers and
newspaper supplements. These are usually in colour and are produced in large volume, generally
on web-fed gravure or litho presses, in plants and by companies, which are much larger than the
industry norm (and if in a trade association, are typically members of the All India Federation of
Master Printers).
– ‘General’ printing of other products which are generally printed in low-medium volumes on
sheet-fed litho presses, although some printers in this category are starting to acquire digital
printers (and again are also represented by the All India Federation of Master Printers).
– ‘Quick’ printing of short runs, usually with very fast turnarounds, usually done on copiers in
high street premises.
2
– The specialist area of screen printing, whose companies are represented by the Screen Printing
Association of India.
To add to the complexity, most industrial and general printing companies, and a few
screen printers and quick printers, also have in-house facilities to undertake some of the tasks
which fall under the NIC headings of ‘bookbinding and finishing’, ‘composition and plate
making’, and ‘other activities related to printing’. Printing also occurs in the packaging industry,
either in the form of:
– Labels to attach to glass, metal, rigid plastic and other containers.
– Direct printing onto sheets of carton-board, paper, plastics and composite materials (such as the
layered paper/metal/plastic material used for liquid packaging), which are subsequently converted
into the final package (usually on the user’s production line).
Printed packaging can be further subdivided into:
– Corrugated packaging – layers of straight cardboard reinforced by a middle layer of corrugated
board, typically converted into cardboard boxes for shipping goods in. Because the product is
bulky and relatively low value it is usually printed as part of an integrated production process at a
board manufacturing plant. Producers therefore tend to be larger than in other segments and are
usually members of the Corrugated Packaging Association.
– Folding cartons – smaller cardboard or composite containers used to package individual items,
which typically use higher quality print on higher quality materials than corrugated. The sector
has companies of all sizes and is represented by the Indian Carton Association (a section of the
AIFMP).
– Flexible packaging – sealed plastic bags and other non-rigid containers. The sector has
distinctive raw materials, conversion processes and customers.
– Sheet fed packaging – a residual category of independent, non-integrated companies who
convert cardboard and paper into what are generally low-value products such as cardboard and
rigid boxes and paper sacks. The sector is represented by the Indian Printing Packaging and
Allied Machinery Manufacturers Association, an umbrella body for several smaller trade
associations. These almost go unrepresented at national level, but each town or city has its own
group of printers forming a small trade association.
3
Industry statistics
Understanding competitiveness requires accurate statistics. Despite some amendments in
response to industry requests, there is a widespread feeling that Indian government data about the
industry remains incomplete because of:
– The large number of small companies in the industry, some of whom are not registered for
VAT and others of whom may be wrongly classified in tax returns.
– Inappropriate definitions of industry segments.
– The integration of printing with other business activities – for example, provision of printing as
part of an overall facilities management contract or in-house printing by commercial and
educational bodies – which creates inconsistency in how they are classified by companies making
returns.
The market and production data collected by industry associations and consultancies tends
to be more accurate, because it is collected in a less impersonal way and is often subject to
verification. But it is often gathered from members and collaborators, and so may be
unrepresentative and is usually based on organisation-specific definitions and therefore not
comparable. The difficulty of making an all Indian comparisons is further exacerbate by the
differences in
– The data, which is required – and is actually provided – from very small companies (which
dominate the printing industry).
– The level of ‘black’ activities, which are not accounted for in tax or regulatory returns.
There are even fewer reliable statistics available for printed packaging than is the case
with printing. As a result the report has been unable to conduct as detailed an analysis. Data has
been used wherever it is available and areas where printed packaging differs from printing have
been noted in the text.
It is important that the statistical and information deficiencies with regard to printed
packaging are filled as the sector is of considerable economic importance. Given that it also has
distinctive suppliers and technologies (for example, increasing use of flexo-presses rather than
gravure or litho), concentrated customers – primarily large retailers and fast moving consumer
goods (FMCG) manufacturers for carton and flexible packaging – and has been particularly badly
hit by the strength of sterling, it should be the subject of an independent competitiveness report.
4
More generally, these statistical problems not only make it difficult to assess the true
competitiveness of Indian printing but, also harm the industry. Poor data distorts perceptions of
its scale and performance and makes it difficult for financial stakeholders to make well-informed
investment decisions. In the interim, the best available statistics has been used to support the
analysis but those from non-official sources need to be interpreted with caution.
Structure of the report
The study broadly follows the following format:
Section 1 describes the current market, employment, technology and other characteristics of the
sector.
Section 2 assesses its performance over the last decade, particularly vis-à-vis other sectors in the
India.
Section 3 provides foresight about potential trends in markets, technologies and other variables.
Section 4 discusses the strengths and weaknesses, which have been identified during the
consultation process.
Section 5 provides conclusions.
Section 6 formulates intended actions for the industry.
5
ONE
INDUSTRY CHARACTERISTICS
6
1 INDUSTRY CHARACTERISTICS
India’s printing industry is at the crossroads. The pace of technological change in the industry is
nothing short of phenomenal. Long gone are the images of plastic sleeved printers stooped over
typesetting cases. The industry in India has moved from the ‘traditional ink on paper’ industry to
embrace an ever-increasing range of technologies and fields of expertise.
Printing is one of the largest manufacturing industries in the India. It comprises of some
3007 printing factories and 1,06,993 unregistered printing presses. These printing factories
(greater than 200 employees) employ 1,12,974 people. The overwhelming majority of firms are
small and medium enterprises employing some 4,93,007 people. The industry plays an important
role in regional India. Approximately 35% of graphic arts establishments are located outside
capital cities.
Table 1.1
Comparison of Performance of NIC 22 with GDP and Manufacturing Industry
Year
GDP
Manufacturing
NIC 22
Rs. Crore
Year on Rs. In lakhs
Year %
Year on Rs. In
Year % lakhs
Year on
Year %
AS % of
GDP
1999-00
1792292
6.10
89793835
14.57
239584
2000-01
1870387
4.36
92690185
3.23
228041
-4.82
0.1219
2001-02
1978055
6.00
96245663
3.84
216821
-4.92
0.1096
2002-03
2052586
4.00
113056111
17.47
274459
26.58
0.1337
2003-04
2226041
8.00
128740055
13.87
300878
9.63
0.1352
0.1337
Source: Annual Survey of Industries, Reserve Bank of India Annual Report 2004-05
The turnover of printing and publishing industry cluster is Rs. 3,00,878 lakhs representing
1.352% of GDP. There is also a significant presence of small printers in the district and taluk
levels. Overall the printing and printed packaging industries:
– Are a vital supplier to publishing, one of India’s most successful industries
7
– Purchase most of the output of the Indian paper and board and ink industries
– Are a major purchaser of computer hardware, peripherals and software
– Are a leading user of high bandwidth telecommunications
– Provide a substantial market for specialty chemicals and coatings.
The printing and publishing industry has outperformed the general manufacturing industry index
all through the nineties and first five years of this century.
Table 1.2:
Index of industrial production
Printing,
General
% Year Paper &
% Year
Year
Base Year
Index
on Year paper
on Year
products
109.3
108.3
1981-82
1980-81 =100)
212.6
94.5
198.0
82.8
1990-91
108.4
108.6
1994-95
122.3
12.8
125.5
15.6
1995-96
130.8
7.0
136.9
9.1
1996-97
139.5
6.7
146.4
6.9
1997-98
145.2
4.1
169.8
16.0
1998-99
1993-94 =100)
154.9
6.7
180.5
6.3
1999-00
162.6
5.0
164.0
9.1
2000-01
167.0
2.7
169.0
3.0
2001-02
176.6
5.7
180.5
6.8
2003-03
2003-04
189.0
7.0
208.7
15.6
Source: Annual Survey of Industries 2003-04, Central Statistical Organisation
Printing and Publishing industry stands at eighth position for the period between 1980-81
to 1990-91 at 198.0 whereas the General Index stands at 212.6 and percentage of change from the
base is 82.8 and 94.5 respectively. The Indian printing industry has outperformed the general
manufacturing industry index all through the nineties. This performance in the nineties though
fluctuating is due to several factors, one of which is easy access to cheap international raw
materials due to liberalization. The growth during the previous decade has fluctuated from 3.0 to
16.0 and except for 1999-00, where the year on year index was less than the General Index; it was
growing at 22% more than the General index. The industry has grown exceptionally well during
1998 -99 and 2003-04 at more than double than the General Index at by 290% and 193%
respectively. The growth has come down to 3% due to General industry slow down in 2001-02.
Performance for the year 2000-01 which has seen a negative growth rate of -21 % in volume for
the paper and paperboard industry.
8
Table 1.3:
Principal Characteristics by Industry Group for Publishing, Printing and Related Activities
(Value figures in Rs. Lakh, Others in Number)
2002-03
NIC-22
Factories
2003-04
All
%
NIC-22
All
%
3046
127957
2.38
3007
129074
2.33
Fixed Capital
383132
44475938
0.86
402260
47333140
0.85
Productive Capital
574753
54488048
1.05
573092
59256189
0.97
Invested Capital
489965
63747308
0.77
531049
67959786
0.78
76954
6161493
1.25
70634
6086908
1.16
120592
7935948
1.52
112974
7870081
1.44
Wages to Workers
45130
2968905
1.52
44291
3047777
1.45
Total Emoluments
114255
5515801
2.07
115299
5833675
1.98
Total input
740894
91618549
0.81
752581
103962329
0.72
Gross Output
106544
4203558
2.53
1104433
128740055
0.86
Depreciation
50094
4203558
1.19
50975
4482349
1.14
274459
17234002
1.59
300878
20295377
1.48
Rent Paid
10769
379355
2.84
10332
416084
2.48
Interest Paid
28054
3835182
0.73
30591
3397229
0.90
Workers
Total Persons Engaged
Net Value Added
Rank
18
18
Source: Annual Survey of Industries 2003-04
The industry comprises of about 3,007 factories, which is 2.33 % of the total number of factories
in India in 2003-04. It employs 70,634 workers or 1.16 % of total workforce. It engages 1,12,974
people, which is 1.44% of the total persons engaged in industrial activities. With Rs. 4,02,260
lakhs of invested capital this industry accounts 0.85% of the total capital invested. This industry
pays 1.98% of the total emoluments paid by the industry. While it accounts for 0.76% of the total
industrial inputs, it accounts for the 0.86% of total industrial output giving a higher value
9
addition. Its Net Value Addition is Rs. 3,00,878 lakhs which is 1.48% of the total Net Value
Addition ranking 18 in a list of 26 industries.
Table 1.4:
Principal Characteristics by Industry Group for Publishing, Printing and Related Activities
(Value figures in Rs. Lakh, Others in Number)
2002-03
22
2003-04
All
%
3046
127957
2.38
3007
129074
2.33
Fixed Capital
383132
44475938
0.86
402260
47333140
0.85
Productive Capital
574753
54488048
1.05
573092
59256189
0.97
Invested Capital
489965
63747308
0.77
531049
67959786
0.78
76954
6161493
1.25
70634
6086908
1.16
120592
7935948
1.52
112974
7870081
1.44
Wages to Workers
45130
2968905
1.52
44291
3047777
1.45
Total Emoluments
114255
5515801
2.07
115299
5833675
1.98
Total input
740894
91618549
0.81
752581
103962329
0.72
Gross Output
106544
4203558
2.53
1104433
128740055
0.86
Depreciation
50094
4203558
1.19
50975
4482349
1.14
274459
17234002
1.59
300878
20295377
1.48
Rent Paid
10769
379355
2.84
10332
416084
2.48
Interest Paid
28054
3835182
0.73
30591
3397229
0.90
Factories
Workers
Total Persons Engaged
Net Value Added
Rank
18
22
All
%
18
Source: Annual Survey of Industries 2003-04
The industry comprises of about 3,007 factories, which is 2.33 % of the total number of
factories in India in 2003-04. It employs 70,634 workers or 1.16 % of total workforce. It engages
1,12,974 people, which is 1.44% of the total persons engaged in industrial activities. With Rs.
4,02,260 lakhs of invested capital this industry accounts 0.85% of the total capital invested. This
10
industry pays 1.98 of the total emoluments paid by the industry. While it accounts for 0.76% of
the total industrial inputs, it accounts for the 0.86% of total industrial output giving a higher value
addition. Its Net Value Addition is 3,00,878, which is 1.48% of the total Net Value Addition
ranking 18 in a list of 26 industries.
1.1
Demand
Even in an electronic age, printed media have many distinctive and highly valued properties.
Print has a long historical tradition, which continues – through widely accepted principles of
graphic design, typography and other parameters – to influence perceptions of how information is
best communicated. It has a physicality that is lacking in electronic media and which, in the eyes
of many people, makes it more appealing. It also has an emotional association with many of life’s
pleasures – as when people curl up with a good book, eagerly await the next issue of a magazine,
or leaf through a brochure or catalogue when making a spending decision. And, through its link
with literacy, print is the foundation of a civilised society. More prosaically, print continues to
have a great psychological impact on buyers and other users, especially when it makes use of
high quality colour and innovative substrates. Printed documents are also portable, in a way
which electronic equivalents have not yet achieved, and do not require complex technologies and
the existence of a power supply to read them. Indeed, with careful storage, they can be more
permanent than electronic files which are prone to corruption and whose format can quickly
become obsolete.
The primary purpose of packaging is to contain, store and easily transport goods.
However, most packaging has print on it – either printed directly onto the packaging substrate or
onto a label – because there is a need to convey information about the contents and, for consumer
and some other kinds of packaging, to persuade people to buy it. The paper/board packaging
market – which is almost entirely directly printed, rose from 41% in 1996 to 46% of the total
packaging market during the previous decade.
Some generic trends, which are occurring in almost, all markets for print and printed
packaging are:
– Concentration – and therefore increased buying power – in customer industries, such as
publishing or retailing.
11
–Closer integration of supply chains to improve customer response and reduce inventory. This
requires printers – especially those producing printed packaging – to co-ordinate more closely
with buyers and/or customers.
– Less use of professional print buyers (who usually had some experience in the printing
industry) and greater integration of print with other procurement activities.
– Demands for price reduction, due to cost pressures in customer industries and the high visibility
of printing as an overhead item.
– Demands for faster turnaround times in order to meet the needs of customer’s own rapidly
changing markets, and because of the general time urgency of modern culture.
– Demands for higher performance from printed products, through high quality colour, new
substrates, personalisation or other means.
– Shorter runs, resulting from reduced stockpiling, tailoring of outputs to specific individuals or
groups of customers and other drivers.
The trend towards shorter runs is particularly significant because it increases the
throughput of print jobs. This requires printers to be much quicker at preparing presses for new
work, and to be more efficient at production management and administration. Print is a means to
an end, that of communicating information. This is also an important function of packaging. The
actual cost of a printed item typically forms only 5-10% of the total cost of achieving this
communication. The costs of preparing the material to be printed, of holding stock and disposing
of that which is waste (for example, 30-40% of books and magazines produced are unsold and
returned for pulping), and of administering the entire chain are much greater. Printers have
considerable opportunities to develop new services to capture more of the value added (or
destroyed) within the process, and many are doing so. Customers are receptive to this because:
–They may wish to outsource non-core activities, such as running in-house printing activities or
storing printing material for distribution on request.
– They want complete solutions to their needs rather than simply a product – leading direct mail
printers, for example, often collate and mail customer packs and maintain customer databases.
– Printers may have technical expertise in non-printing areas, for example, image archiving and
retrieval or database development and management.
1.2
Technology
12
Historically, printing has been a very distinctive craft-based manufacturing industry, whose
technologies make it qualitatively different from other sectors. Although it is now moving
towards computer integrated manufacturing in some respects, it remains an unusually complex
production process. Printing presses operate to very fine tolerances which require either very high
levels of skill or advanced automatic control. Reproducing complex graphic designs can also be
difficult, especially when customers may not appreciate some of the difficulties of doing so. And,
whilst modern colour management software and instruments can ensure objective consistency of
outputs and inputs (which has many benefits), colour perception is subjective so that customers
and staff will not always accept that this is the case. Printing therefore requires a great deal of
checking (through printing proofs of work in progress) and communication across the supply
chain. This chain has four main stages:
– Content creation – usually done by customers such as advertising agencies, editorial
departments etc. but printers may be involved in specialised areas or for inexperienced customers.
– Pre-press – processing the component elements of the final job (primarily images and text) so
that they suitable for outputting and then assembling them into a composite version for
outputting.
– Outputs – creation and finishing of printed or electronic products for distribution.
– Distribution – delivery of products to final customers.
The falling cost of pre-press equipment and its increasing automation – which is expected
to continue – has allowed many medium-sized printers to establish pre-press departments, with
adverse effects on the ‘repro houses’ who have specialised in this area. This increases the skill
requirements of smaller printers and means that repro houses must diversify into other areas, such
as digital asset management or specialist digital printing.
Fundamental change has been occurring in all of these four areas, driven by a move from
analogue to digital processes. Most content is now created on computers and transferred and
processed as electronic files. It only takes physical form when it is imaged onto a plate or screen
for impression-based printing (which transfers an inked image onto paper or other substrates
through physical pressure). New digital technologies (which transfer the image by non-contact
processes such as electrostatic attraction or inkjets) even eradicate the need to make plates or
screens. Digital printing creates completely new possibilities for print such as:
13
– Fully-personalised brochures and information packs, containing a selection of material of direct
interest to the recipient.
– The end of ‘out of print’ books as it becomes economic to print in small batches or even single
copies.
– Individual or small versions of products such as greeting cards, labels and carton packaging.
– Frequent reprinting – and therefore opportunities to amend – small quantities of promotional
materials, business cards etc., rather than having to place a substantial single order.
Digital printing only accounts for a minor share of output at present. Impression-based
technologies are likely to remain the dominant technology for the foreseeable future, and may
grow in absolute usage even while their relative share declines. In the very long-term, however,
digital printing is expected to become as or more important than impression-based methods. The
move to ‘digital workflows’ is independent of these changes in output technologies and has
numerous consequences, notably:
– Rapid technological obsolescence of pre-press and other equipment, with a consequent need to
depreciate it over much shorter periods (typically three years) than the industry has been used to.
– Continuous expenditure on software upgrading.
– Making file errors and problems a major source of cost, which can only be eliminated by
detailed checking, IT expertise and customer education.
– A need for better process understanding and management amongst staff, as mistakes in early
stages can be hidden until output, when they are very expensive to correct.
– High investment in networks and data storage in order to move data around quickly and archive
it until required.
– A need for colour management and other software to ensure that all items of equipment are
calibrated to each other.
– Closer electronic integration of processes within printers, and between them and other players
in the supply chain, so that inputs can be transferred and work can be sent backwards and
forwards for proofing.
– A reduction in environmental impacts because it avoids the need for film processing chemicals
and wastes.
Some other important technical trends within the industry are:
14
– Faster make ready times and/or running speeds of presses, which means that the capacity of a
new machine is much greater – sometimes double – that of older ones of similar size.
– Increased automation of press functions such as ink settings and plate changing.
– Increased costs and substitution of inputs due to environmental regulations on the emissions of
volatile organic compounds (VOCs) which arise from inks, and also the alcohol solutions and
solvents which are used to treat and clean printing presses.
– Use of higher performance substrates which can achieve better results e.g. better colour
reproduction, higher gloss and/or reduce their weight and thereby reduce costs.
– A growing emphasis on finishing – binding, collating and other procedures – as a means of
adding value to printed products.
– Concentration in suppliers, which are increasingly offering a wider range of equipment and
software on a global scale. This means that it is increasingly hard to gain competitive advantage
from technology alone, as this is available anywhere in the world.
The traditional, and still probably the most widely used, method of distribution is ‘print
and distribute’ in which finished print is delivered on a van or lorry. The industry is therefore
highly dependent on a good road system; especially as paper is ordered on a ‘just in time’ basis
and customers are demanding quicker turnarounds of their orders. However, alternative methods
of distribution are growing especially:
– Fulfillment services, in which printers stock products such as brochures and mail them to an
individual order (in some cases from customers and in others internal staff).
– ‘Distribute and print’, which replaces the shipping of printed products to multiple locations
with transmission of an electronic file for local outputting in smaller quantities.
– Electronic distribution, in which content is published on electronic media with no assumption
that it will be printed.
One implication of this growing complexity of distribution is that printers have be to be
adept at repurposing files into different formats so that they can be outputted and distributed in
different ways. Modern printing is heavily dependent on information technology (IT) and
becoming more so. The large size of image files means that even a relatively small printer will
often handle more data, and process it more quickly, than a medium sized building society. As a
result printing is a key market for several major IT vendors such as Adobe or Apple. The
corollary is that much of the industry’s capital expenditure is devoted to IT hardware and
15
software, and to IT components embedded within other equipment. Much pre-press equipment,
for example, is now essentially specialised computers. Printing is also a major, and growing,
employer of staff with IT skills, particularly in networking and graphics software.
Good telecommunications links are also essential, with even the smallest commercial
printers usually having ISDN connections. The industry is also seeing a growing interest in
Internet usage and of e-commerce. Indeed, printing has had more ‘dot coms’ – albeit mainly US
based – than almost any other manufacturing sector. Section 3 discusses the potential impact of ebusiness on printing in more detail. One important aspect of this growing reliance on IT and
telecommunications is the extension of the potential market for individual printers. It makes it
easier for local printers to seek regional or national markets, for Indian printers to seek
international markets and for overseas printers to target Indian work. Technical complexity also
results in substantial capital expenditure. It is not unknown, for example, for even a small printer
with Rs. 1-2 crore of turnover to make a single item equipment purchase with a value of Rs.
40,00,000 or more.
1.3
Industry Suppliers
The Indian printing industry is very dependent on external inputs. For high end works 59% of
national paper consumption is provided by imports while it 20% for lower end jobs. Most prepress, production printing and finishing equipment is also imported, primarily from Germany and
Japan and graphics software is provided by American suppliers. The only areas of printing inputs
with a substantial Indian production base are inks and coatings and some specialised areas of
web-press equipment. There is a substantial Indian development base for web-press machines,
and some areas of prepress hardware.
There is also increasing consolidation amongst print suppliers, especially with regard to
paper and board. Supplier R&D in India is relatively on a lesser scale than other leading
economies. India does have some research organizations namely Research Institute for Newpaper
Development, IRFA and Print Management Institute by Heidleberg which undertakes primary
and secondary research in printing technologies, especially newspaper printing and publishing
and commercial printing. It also provides technical consultancy, market intelligence, training and
other services to a sub-continental customer base.
16
There is also some R&D conducted in the India by the paper and inks and coating
industry, and in some specialist areas of pre-press equipment and software. Only a small number
of universities – notably the Department of Printing Engineering at the Anna University, Chennai
and the Department of Printing, Manipal Institute of Technology are known to specialise in
research on the printing.
1.4
Industry Organisations
The largest Indian trade association is the All India Federation of Master Printers -AIFMP which
has representation of the industry from all the states of India with state level associations of
Master printers in membership. It has major membership bodies from all the metropolitan cities
of India namely, New Delhi, Mumbai, Kolkata, Chennai and Bangalore. There are also major
members from Chandigarh, Sivakasi, Coimbatore and Jalandhar. There are also more specialised
associations – Indian Printing Packaging and Allied Machinery Manufacturers Asociation and All
India Screen Printing Association. Printed packaging has independent trade associations,
representing the different market segments.
Two professional associations, the Research Institute for Newspaper Development and the
Indian Institute of Packaging provide personal development support and training for individual
members of their industries.
Both printing and printed packaging do not have any major trade union except for the
ones, which are found in newspapers.
1.5
Industry Structure
Printing in every country is dominated by small-medium sized enterprises, with most printers
serving local markets. Newspaper, magazine and carton and corrugated printers tend to be much
larger than others.
India has an even higher percentage of output produced by small companies and a smaller
average size of firm, than other developed countries. Nonetheless, the industry has been
consolidating. This is most advanced in printed packaging. Printing is less consolidated but
several recent mergers and takeovers means that there are now 100 Indian printers with more than
500 employees. Consolidation has also been driven by the entry to, and growth within the India,
17
of foreign companies. This reflects a general trend towards more internationalisation of printing,
which has traditionally been organised on a national basis. The main reasons for this appear to be:
– Providing a global service to multinational customers.
– Expanding product opportunities by tailoring them to local markets.
– Taking advantage of lower cost production locations.
Todate, the national and specialised nature of most printing markets means that achieving
economies of scale does not appear to be an important driver, but this may change with the
development of a more integrated European market. Foreign investment by Indian printers has
started growing but is on a extremely smaller scale to inward investment. Until recently, this was
focused on printing machine manufacturing namely by Manugraph Industries. There is also more
foreign investment by niche printers, either in autonomous operations, magazines or as in
academic journal printing and related services, outsourcing of some back office operations.
1.6
The Labour Market and Industrial Relations
Indian printing employment has been increasing marginally during the early 2000s. This mirrors
the situation in many developed countries and China but contrasts with the rising levels of GDP
of the country. The main cause of falling printing employment in India is automation of printing
processes, which has reduced the need for semi-skilled and unskilled labour.
Employment in carton packaging has fallen at a similar rate as printing. However, there
had not been considerable job losses during 2000 due to of export markets. One unusual aspect of
Indian printing employment is its relatively even national distribution across the country. It is a
substantial employer in all areas of the India and is one of the most important industries in several
regions Sivakasi, Mumbai and Amritsar, for example, have some of India’s largest concentrations
of web offset printing. Some regions have also increased their printing employment during the
1990s.
The industry’s workforce is mainly involved in production, although the percentage of
office-based jobs is rising with time. Around a third of the total jobs in the industry are in
finishing. This also has the highest proportion of women, in part because it is the area with most
part-time work. The number of new entrants to the industry has been relatively low in recent
years. One reason for this is a surplus of older workers. A second is a decline in traditional entry
18
methods such as apprenticeships (which are generally over-subscribed when they are offered). A
third reason is difficulties in recruiting the non-traditional skills such as IT which are increasingly
required by the industry. As a result, the workforce has a high average age – 42 in the case of
AIFMP owned press employee members.
The industry has traditionally recruited from people leaving school at the minimum age. It
has been seen as one of the most skilled, well paid and respected occupations for such leavers and
attracted many of the most able candidates. The increase in the numbers of young people staying
on for further and higher education has now reduced this pool. Although the industry has partially
compensated by employing more staff with SSC levels and HSC and a small but growing number
of graduates (especially in larger companies), the change has caused difficulties. There are now
fewer people with the ability and commitment to develop advanced skill levels amongst early
school leavers. Although it remains easy to recruit unskilled staff, there is also greater
competition both for school leavers with SSC level and higher qualifications and for qualified
staff, especially those with the IT and customer service/marketing skills for which the industry
has a growing need.
A 1999 survey found that 40% of responding companies had experienced labour shortages
at the time of the interview and/or during the previous six months. Another study of companies in
the Amritsar area found that vacancies were mainly related to the introduction of new technology
and machinery, changes in production processes and the needs of new clients. The main reason
for the difficulty in filling these was lack of skills or relevant work experience amongst
applicants.
The industry has a number of countrywide or more geographically limited national
agreements for specific segments of printing and printed packaging, which are negotiated
between the AIFMP and the various trade associations. These vary in their degree of coverage of
the segment, and in their terms and conditions. The largest agreement in terms of numbers
covered is that between the AIFMP and trade unions. A number of larger companies individual
agreements. Many people’s perceptions of printing industrial relations is that they are smooth and
cordial and not strike prone. However, the level of disputes has been very low during the 1990s
and is well below the national average.
19
Table 1.5:
Skill Requirements for Modern Printing
Size
Size Current – leading edge Future
Future
1-9
Multi-tasking in pre-press:
employees Scanning
Typesetting
Pagemaking
Image setting/platemaking/screenmaking
Convergence of pre-press skills
Imagesetting/platemaking/screenmaking
Operating computerized conventional litho
and direct digital colour presses and screen
presses
Finishing skills -in-house and increasingly
digitized
10-49
Multi-tasking in pre-press:
employees scanning
typesetting
pagemaking
Imagesetting/ platemaking/ CTP/
screenmaking skills
Operating computerised conventional
litho and direct digital colour presses and
screen presses
Finishing skills – in-house and
increasingly digitised Direct to screen
projection
Convergence of pre-press skills
Operating computerized conventional litho
and direct digital colour presses and screen
presses
Finishing skills (in-house and increasingly
digitised) Direct to screen projection
Finishing – in-house/increasingly digitised
Data anagement/archiving
Greater knowledge of alternative media
Increased customer relations –
training/advising customers
Knowledge of JIT rinting/distribute to print
50 and
Internet/ISDN/Intranet
Convergence of pre-press skills
above
Convergence of pre-press skills
Operating computerised conventional litho
employees Operating computerised conventional
and direct digital colour presses and screen
litho and direct digital colour presses and presses
screen presses
Finishing – in-house/increasingly digitised
Finishing – in-house/increasingly
Data management/archiving
digitised Data management/archiving
Knowledge of alternative media
Knowledge of alternative media
Dedicated customer service’ relations
Customer relations – training /advising
Training/advising customers
customers
Knowledge of JIT printing/distribute to
Press staff with clients
print
Direct to screen projection
Press staff with clients
Adapted from D. Smallbone, R. Baldock and S. Supri, New Technology and Related Skills Needs
in the Printing and Publishing Industries, London: Centre for Enterprise and Economic
Development Research, Middlesex University, 1999.
1.6.1 Education and training
The lead body for the sector’s education and training is the Print and Graphic Communication is
Industrial Training Institutes awarding National Trade Certificates functioning under Ministry of
20
Labour. This awards certificate level vocational training to incumbents producing skilled
workers. State Boards of Technical Education conduct diploma level courses and produce
technologists and technicians to man the supervisory level and highly technical skilled
manpower. Degree level courses are conducted by some seven universities in printing
engineering producing engineers and technocrats to man entry level managers for production,
research and marketing jobs. This is governed by All India Council of Technical Education –
AICTE who provides recognition and accredition. It also acts the monitoring and controlling
authority for educational quality and performance. This is funded by the Ministry of Education,
Government of India.
There have been several sub-regional skills initiatives involving collaboration between the
AIFMP and the state level associations. The amount, and nature, of skills required in printing is
changing. The industry has traditionally employed large numbers of skilled and semi-skilled staff
to man printing presses and undertake pre-press activities. Increased press automation and
productivity is reducing the requirement for unskilled and, to some degree, semi-skilled staff.
Those who remain generally require less skill in manual press adjustments and more in computerbased process control. Shopfloor staffs are also being given greater responsibility for managing
print processes.
The demand for skilled staff in the press, pre-press and finishing areas is more stable and
may even be increasing. However, in pre-press the balance has shifted from manual techniques to
detailed understanding of graphics software, design skills and knowledge of the overall print
process (so that files can be prepared without errors). The rapid pace of technical change also
requires regular retraining with a consequent need for staff with mental flexibility and a good
grounding in the basic principles of print production processes. The following table provides a
detailed breakdown of the new skill requirements for printing, from a study conducted by All
Federation of Master Printers.
Table 1.6:
Qualifications of Staff in Indian Printing Companies
Level of Education
Required Percentage
School Certificate
16.90%
Higher Secondary
07.00%
21
National Trade Certificate
41.60%
Diploma
37.00%
Bachelor of Technology
04.00%
Vocational Education
15.00%
Other Qualifications
02.70%
Post Diploma
09.10%
Postgraduate Certificate
02.30%
Postgraduate Diploma
02.30%
Engineering Degree
01.80%
Post Graduate
02.30%
Source: AIFMP, Workforce Survey 2001
One difficulty for all areas of production education and training is the rapid obsolescence of
equipment. Educational bodies find it difficult to fund the costs of regular replacement, especially
when other subject areas may be faster growing and cheaper to provide. Many employers are then
reluctant to devote time and money if staff are not training on the latest equipment. A minority of
colleges have managed to overcome this difficulty by winning support from manufacturers, as
with Anna University, Chennai, Jadavpur University, Kolkata and --------------------Engineering
College, Pune.
The industry also has a growing need for non-production skills such as customer service,
sales and marketing, IT support (e.g. for networks and file transfer) and database preparation and
management. Some of these skills – which often cross the border between technical and
management roles – are industry specific but many are generic in nature and can be provided by
non-print specific courses, for example, in management. Only a small proportion of industry
staffs have higher-level qualifications such as diploma levels or degrees.
As noted, there has also been a sharp fall in the traditional route into the industry that of
school leavers taking up apprenticeships and/or attending full- or part-time courses in further
education. It has been estimated that only 5000 people take up printing and graphic arts related
courses. These numbers may not be comparing like with like, as Chinese courses tend to be
broadly based – with, for example, a large multi-media component – so that many people go into
publishing and other industries once qualified. Nonetheless, most experts believe that there is a
substantial difference in the numbers of young people receiving print industry education. As a
22
result of falling recruitment, the number of Indian colleges offering printing courses has remained
at only six which is abysmally a low figure.
The 2001 Workforce Survey of printing workplaces found that only a minority of
companies were undertaking training. Of those which were, machine printers were the category
of staff most likely to be receiving training (in 37% of responding companies) and sales staff the
least likely (in only 17% of respondent companies). Companies which were relatively
sophisticated in terms of IT were more likely to be training staff than others.
Table1.7:
Levels of Training in Printing and Printed Packaging
Level
Training percentage
Directors / Managers
22%
Supervisor
24%
Printing administrators
26%
Machine printers
37%
Finishers
26%
Prepress staff
26%
Clerical staff
28%
Transport
18%
Maintenance
25%
Sales
17%
Note: Percentage who have received training in responding companies, which employ this
category of staff
Source: AIFMP, Workforce Survey 2001
Much of the training which was provided was ‘on-the-job’. Whilst this is essential and
invaluable in printing, and will always remain important, it has many limitations – such as lack of
contact with outside ideas or poor training methods – when not supplemented by ‘off-the-job’
approaches. The main reason given for companies not training was ‘lack of need’. A fifth of
respondents also felt that accredited training made little difference to staff performance.
23
The 2001 Workforce Survey also revealed a patchy take-up of qualification-based training
schemes and related initiatives. It found that only:
– 38% of sites were employing modern apprentices, national trainees or other young people on a
structured training scheme, with medium-large companies being much more likely to do so than
smaller ones (60% in sites with over 100 staff, and 46% amongst those employing 25-99).
– 31% of sites were using Diplomas or Degrees, but in these a mean proportion of 10% of staff
were utilising them.
– 13% of sites were using Investors in People.
However, almost all the sites which were involved in such schemes found them to be useful.
When asked where they would go to get advice on training and staff development, 49%
cited a trade association and only 23% an official business advice or training organization.
Shorter-term technical training in the industry is provided by:
– Colleges – particularly those which have alliances with manufacturers, as with the IRFA,
Research Institute of Newspaper Development, Heidelberg Print Media Academy.
– Suppliers – increasingly significant as they are able to offer access to the latest equipment.
– Professional bodies – notably the Anna University, Jadavpur University and Indian Institute of
Packaging.
– Trade associations – training is an important activity for all associations and accounts for the
bulk of the expenditure for several. It is delivered both through courses and other means, such as
the interactive CD-ROM based package Sinapse developed by the AIFMP.
– The NTC-ITI– this has a number of training centres and has played a leading role in several
local skill development initiatives. Its work parallels successful union-employer training
collaborations in Scandinavia.
– IRFA International – the main consultancy and research centre for the industry.
– Private training providers – particularly significant for software training.
There are a number of undergraduate courses in graphic design but very few which focus
on printing or printed packaging. This is also the case at postgraduate level. Indian Institute of
Packaging, which is partially targeted at the printing, packaging and printing supply industries.
The Anna University, Chennai, jadavpur University, Kolkata and Guru Jambeshwar Univarsity,
Hissar offer MS in printing and packaging engineering and technology. Many print educators
believe that e-learning can overcome some of the problems of cost, distance and inflexibility
associated with attending college, and provide access for people in remote locations. However,
24
the 2001 Workforce Survey found that printing staff have a preference for more traditional forms
of training.
1.7
Management
The recent consolidation of the industry has created a number of large printing companies, which
approximate to similar sized peers in other industries in their approach to management. In
general, however, printing has always been a very entrepreneurial sector, with most companies
being founded and run by people who have risen within its ranks. Managers and supervisors too
have tended to follow the same route. An informal survey of Indian and American print managers
found that far fewer Indian print managers had received further education and only 18 per cent
had a degree, compared to 46 per cent of the US respondents. This partially reflects the higher
percentage of people undertaking higher education in America. The survey also found that over
40 per cent of Indian managers had worked in the industry for more than 25 years and very few
for less than 10 years. Author’s informal survey found little change in the situation, with only
28% of responding directors/managers having higher academic qualifications. No comparable
Chinese statistics are available.
Entrepreneurialism and movement ‘up the ranks’ remains an important, and in many
respects positive, aspect of printing management. Industry-specific opportunities for development
are also provided by management and supervisory courses offered by trade associations, as well
as the AIFMP. This organises events, company visits and other activities to assist the
development of potential and junior managers. There are also some local initiatives in each region
by regional bodies in association with state agencies such as Micro, Small and Medium Industries
Service Institute. This identified leadership development for team leaders as a priority
requirement for companies.
There has been little management-level recruitment into the industry until recently. This is
now increasing in larger companies, and for specialist posts such as finance, IT and marketing
where there is a shortage of expertise within the sector. There is also a small but potentially
significant trend of individuals with external management experience taking full control, or
equity stakes, in printing companies which they then manage.
25
This lack of qualifications may explain the industry’s relative disinterest in business
planning. A 2001 Workforce Survey found that only 63% of respondents had formal business
plan – and under half of companies with less than 10 employees – and less than half had any kind
of human resources plan. The previous 2000 Work force Survey also found that only 52% of sites
surveyed were operating to recognised or customer-devised management standards. Of the sites
where standards were in use 72% operated to the ISO 9000 series and 13% to Investors in People.
Larger sites were more likely to operate to quality standards than smaller ones (80% of
companies with over 100 employees were doing so compared to 40% of those with under 10
employees). Probably a majority of commercial printers have a computerised management
information system (MIS) to track jobs and provide decision support information such as time
spent and actions performed. However, many of these are relatively old and, in the view of
suppliers and consultants, few are being used to their full potential.
1.8
Finance
Some 95% of printers have debt which, on average, finances 33% of their assets.1 5 46% of the
2000 printers who filed accounts increased their debt during the year 2000. About 15% of those
increasing debt were making losses, suggesting that they were in serious financial difficulty.
Although no statistics are available, it is likely that, as with Indian industry generally,
Indian printers rely more on short-term overdrafts than continental equivalents, which make
greater use of longer-term bank loans. There has also been a trend from purchasing printing
presses to using asset-based finance such as leasing or secured loans. The traditional longevity
and correspondingly high resale value of printing presses has meant that lenders have lower risks
than in some other areas of asset-based financing and so lend on relatively generous terms. Some
believe that the ready availability of asset-based finance has contributed to the industry’s overcapacity. However, the situation has changed in recent years because of a fall in the value of
second-hand presses.
Very few printing companies are quoted on the Bombay Stock Exchange or National
Stock Exchange and those which are have low price/earnings ratios. The main reason for this is a
perception that they are in a low growth sector. This makes them vulnerable to takeover. Low
valuations and perceived insecurity often mean that private companies are reluctant to consider
26
listing – and are therefore unattractive for commercial equity providers which require this as an
exit strategy. Low valuations also mean that few such providers take an interest in the sector.
1.9
Environment
The main environmental impacts of printing are:
– Consumption of resources in the form of paper, cardboard and plastic substrates, energy, water
and consumables such as inks.
– Disposal of paper wasted in production or surplus to requirements, which often amount to 510% of the volume purchased for printing and up to 20% for carton packaging.
– Emissions of volatile organic compounds (VOCs) from solvent-based inks, cleaning fluids and
other consumables.
– Waste water resulting from processing film and cleaning machines.
Printed products are also a major component of national waste streams. This includes
products which are wasted within the supply chain – as with the 30-40% of printed books and
magazines which are pulped – and those which are disposed of by customers.
These impacts mean that the industry is directly subject to an increasing amount of
environmental regulations, notably:
– The Packaging Waste Regulations which make all printers of more than 50 tons per annum
output responsible for recovering a proportion of their output at the end of its life.
– The Levies by State Pollution Control Boards.
– Emissions controls on volatile organic compounds (VOCs) which are driving a move to waterbased inks.
Printing and printed packaging are also indirectly affected by environmental regulations
on the paper industry, especially those encouraging greater use of recovered fibre and on
downstream customers. Finally, there are voluntary or semi-voluntary (i.e. undertaken to avoid
regulation) initiatives to reduce wastage within supply chains by industry customers such as
direct mail users and magazine and newspaper publishers.
27
As yet very few printers have adopted ISO 14001, the standard for environmental
management systems. The main reason appears to be a concern that the standard is bureaucratic
and expensive to implement and therefore beyond the reach of smaller printers.
28
TWO
LITERATURE REVIEW
29
2 LITERATURE REVIEW
In this chapter an attempt is made to present the literature pertaining to the research work relate to
the present study. Since, not much work has been one on the printing industry in India, this study
is undertaken. Studies conducted on the printing and allied industries in general and Indian
printing industry in particular, have been reviewed under the following sections.
2.1 Printing industry in Indian manufacturing
2.2 Industry economics
2.3 Customer, technology and future
2.1
Printing Industry in Indian Manufacturing
Indian printing industry has formed part of the study on manufacturing industry since 1951.
However it is considered in combination with paper, paper products and printing as the group had
been classified. In this classification paper manufacturing industry formed the core and paper
products manufacturing and printing industry took the shape of associate industry. This
classification is used to collect data with regard to production and utilization of paper for forming
part of the manufacturing industry statistics. Not much of an organized study had taken place or
books are published on printing industry. However, government had constituted committees
towards setting up of text book presses, which had prepared reports for that purpose.
The industry groupings in the form of associations of clusters had been in existence since
about half a century in different parts of India. These associations had conducted workshops,
meetings and other endeavours like exhibitions, conferences etc., towards protecting the
sustenance of the industry. However all these had focused mainly on the technological
component of the industry. The economical and business components were restricted towards
making occasional representations to government on taxes and duties. Also printers had most of
the time focused themselves as traders who quote, wait for the response and execute, rather than
30
viewing themselves as industrialists. This also has to do with the fact that printing is considered
mainly as need based process for reproduction by any available means than an industrial effort.
However, newspaper industry a segment of the printing industry has always been ahead in
organizing itself for their protection and benefits. Still, there had not been an organized study
done in this area. Since the printing industry is divided into various segments catering to a
principal industries or as in house printing units specializing in an obscure product almost no
systematic study has so for not been initiated for the industry as whole. However, certain states
where printing industry has its major clusters in India had conducted studies focusing on solving
a particular problem or studied this industry as an associate of other major industry.
There are books on printing industry in India, focusing mainly on historical aspects of the
industry and its development or not so many books on printing as technology. It is a matter for
concern that only a few numbers of text on printing technology catering to the lower end of the
trade.
The printing Industry was classified alongwith Paper and paper products industry in 1962
Standard Industrial Classification, wit a revision in 1968. In 1970 it was made into a three digit
classification printing still clubbed with paper industry. The National Industrial Classification
1987 grouped Publishing, Printing and Related activities. The 1998 classification made printing
as a separate entity in the Industrial Classification. This had further been classified in 2004 fully
covering all the old and new printing and related activities.
As for the reasons explained above studies on printing industry as an economic activity is
not available. Also the first scientific study on this industry had been done in 1985 by Hira Kant
Jha, under the title ‘Empirical study of printing presses in Patna, Bihar’, as dissertation for his Ph.
D. in Patna University, 1985). There was another study in Punjab focusing on the employment
and wages of the printing press employees of Amritsar in 1955. However none of the above
known studies had approached the printing industry economics as a whole or as its major
component parts, so as to use for reference or review. Also the author could not come across any
other scientific study on this subject topic.
2.2
Industry Economics
31
Australian Printing Industry Report, 1998, has studied the printing Industry of Australia in 1998
and published a comprehensive report covering all areas of the industry from raw material,
business processes to future prospects and foreign competition. It also had outlined the industry
specific initiatives by the government.
Encyclopaedia of American Industry, Standard & Poor’s NetAdvantage (2002), gives a crisp
outlook of the American Publishing industry in the form of overview.
Naresh Khanna (2002) in his article in India Printer and Publisher writes about the globalization
of printing technology.
The Occupational Outlook Handbook 2002-03, published by the Graphic Communications
Council, USA, explains in detail the employment and different occupations available in the
industry.
Ramu Ramanathan’s, (2003) article titled ‘An Overview of the Small Offset sector’, published in
the Indian Printer & Publisher has provided details on the small offset sector of the printing
industry in India.
The United States Census Bureau’s Economic Census Series Reports 2002 gives statistical
analysis of different segments of it printing industry.
A Unique Printing Industry Resource Printing Industries Association of Australia, 2005 details
the Australia’s fourth largest manufacturing industry employer and a major contributor to the its
economy - its printing industry – its current status. It also outlines an ambitious plan for its future
sustenance, growth and globalisation.
An Overview of the Printing and Publishing Industry in the US, Including Future Predictions to
2009, (2005) explains in detail the state of printing industry in United States in all its details. It
also makes forecast of its future to ensure its dominance in creative printing and leader of print
production innovation.
32
Colin Thompson (2006) in his article titled The Chinese Printing Industry explains about the
dynamics of the emerging Chinese Printing Industry and its effect on the global printing industry.
The KBA Report (2006), published by Koening & Baur AG, (2006) Germany and Polygraph
International Quarterly, Germany have detailed their current status of technology and operational
outputs.
In addition reports generated by Indian Pulp and Paper Technical Association, National
Association of Printers & Lithographers, USA, North American Graphic Arts Suppliers
Association, Paperboard Packaging Council, USA, Printing Industries of America,
Screen
printing & Graphic Imaging Association International, USA, Technical Association of the
Graphic Arts, USA, The All India Printing Ink Manufacturers Association, Waterless Printing
Association, USA, on different topics on the printing industry economics and technology and
forecast for the future sourced as published literature and made available online in the world wide
web have been reviewed in preparing this dissertation.
2.3
Customer, Technology and Future
Birkenshaw, John, (1992) in his lecture published in Ink & Print, 1993 issue talks about the
Future trends in printing, which explain in detail the convergence of information technology,
knowledge management and printing industry in providing customer a new composite service.
Printing for Profit 2000 published by the British Printing Industries Federation in 1990s had
outlined the future prospects for the industry in United Kingdom.
Colin Thompson (2006) in his articles titled Graphical Challenges for the Printing Industry
outlines what the future has in store for the printing industry in United Kingdom by taking the
worldview.
Colin Thompson (2006) in his three part article titled Challenges for the Printing Industry makes
an in depth study of the future of the printing industry and makes his forecasts.
33
CHAPTER THREE
PERFORMANCE
34
3 PERFORMANCE
The performance of the printing and printed packaging sectors can be assessed against three
criteria:
– Its potential performance (if that can be ascertained).
– The performance of other comparable Indian industries.
– The performance of other national printing industries.
Although the information needed to make these comparisons is patchy, the following sections
consider recent trends in turnover, foreign trade, prices and costs, profitability, investment,
capacity utilisation and productivity.
3.1
Output
Printing is a mature industry. Indeed, the sector is seen as the archetypal ‘bellweather sector’
which tracks – and to some degree anticipates – changes in macro economic trends. Value added
in printing (code 222) has historically grown broadly in line with GDP, although being
disproportionately hit by recession and recovering strongly afterwards. The value of printed
output is closely linked with advertising expenditure – which directly or indirectly funds around
50-60% of printed material – but that the link is weakening as print’s relative share falls. This has
declined from 52% of total spend in 1990 to 47% in 2000.
Other areas have been less buoyant with value added in carton packaging having fallen
annually since 1995. Consumption of the printing industry’s main raw material – writing papers,
most of which are printed on – rose by 26% between 1993 and 1999, or double the rate of
printing industry turnover. This occurred despite a reduction in the weight of papers used for
most print jobs. Much of this increase is attributable to increased desktop printing in offices and
homes but it also reflects declining prices for many printed outputs.
Within these generic categories there are several segments whose sales have been growing
by at least 10% per annum over much of the last decade, notably:
– Direct mail products and related services such as mailing to customers.
35
– Self-adhesive labels (although recently hit by the high valuation of sterling).
– Specialised labels, packaging and leaflets for pharmaceuticals and personal care products
(which has also grown less quickly in the late 1990s).
Conversely, some segments have been in absolute decline, including:
– Areas of carton packaging which have been displaced by other materials and/or overseas
suppliers.
– Some specialised business forms which have been superceded by electronic documents.
– Colour book printing which has largely moved to overseas suppliers.
3.2
Foreign Trade
Printing and services related to printing makes a positive contribution to the balance of payments
in India and exports have been steadily increasing and imports also increasing in recent years.
Several large printers estimate that they have been facing stiff competition from the increase in
movement of value added printed products from China during the late 1990s.
Table below shows the composition of exports and exports. The areas with the most
positive trade balance are books and brochures (the main category of both imports and exports)
and newspapers and periodicals. Two notable segments with a negative trade balance are folding
cartons and catalogues, which have been especially badly hit by sterling strength.
Table 3.1:
Composition of India’s Printing and Services to Printing Trade
1
Cartons, boxes etc
2
Registers, notebooks etc
3
Diaries
4
Exercise books
5
Manufactured forms
6
Albums
7
Printed labels
8
Stationery not specified elsewhere
9
Single sheets
36
10
Dictionaries and encyclopedias
11
Books, booklets and brochures
12
Newspapers and periodicals
13
Children’s books
14
Music
15
Maps and charts
16
Transfers
17
Postcards and greeting cards
18
Calendars
19
Trade advertising
20
Playing cards
21
Security printing
22
Other
Source: AIFMP Report 2004
3.3
Costs
Printer’s costs have risen more quickly than the both the price indices in most years over the last
decade. Printing and printed packaging has three main cost categories:
– Paper, board and other substrates
– Labour
– Depreciation on equipment.
Other significant cost categories are:
– Purchased services (e.g. pre-press for smaller printers)
– Inks, solvents, plates and other consumables
– Energy
– Transport.
3.3.1 Paper and other substrates
Paper typically accounts for around 30% of the costs of a printed document. Board can be an
even higher percentage of packaging. Paper and board production is a highly cyclical industry,
which moves from periods of substantial over-supply – and downward price movements – to
acute shortages, with the opposite effect. Price fluctuations are further increased for many
customers because wood pulp is priced in dollars.
37
There is volatility in the prices of paper and paper products. Although prices in 1999 were
similar – and in some cases below – those of 1992 there was a major price hike in 1994-95. The
softer prices of the late 1990s have been related to over-capacity. A combination of reduced
investment, consolidation and managed temporary closures of mills has now reduced this and
there was a marked rise in prices in 1999-2000 in the region of 20%.
There is also a feeling in the industry that Indian customers are subjected to extraordinary
price increases, and the last to receive the benefit of price falls. Much pulp is produced from
integrated mills making both this and paper. The paper is usually priced in local currencies and is
sometimes sold relatively cheaply because pulp is the main output. Rising oil prices have also led
to increases in the price of plastics, with consequent margin pressures on flexible packaging
companies.
3.3.2 Labour
Average earnings in printing have risen by slightly more than the national average over the
decade from 1990-99. However, they have slightly lagged the national average between 1995 and
1999. A study of average earnings in AIFMP member companies and demonstrates the
importance of overtime in those earnings. This is an important difference between the India and
China, where overtime levels tend to be much lower and working hours higher. This situation is
not expected to change in the coming years. In general, Indian print earnings are thought to be in
higher than China but much lower than developed countries. However, higher social security
costs in compared to China mean that employer’s total labour costs per individual are higher in
India.
Print earnings differ between regions, different sizes of company and different
occupations. Origination has been the best paid occupation within the industry and finishing the
least although experts believe that this situation has changed over the years. No data is available
for average management earnings in general but enquiries by the author indicate both average
salaries for particular posts and, inter alia, the wide variety of posts which are to be found in
contemporary printing.
Table 3.2:
38
Earnings Differential (Compared to National Average)
Product sector
Differential
General printing
1.00
Origination
1.18
Book printing and binding
0.94
Periodicals
1.09
Newspapers
1.19
Business forms
0.81
Manufactured stationery
0.73
Security
1.00
Digital printing
1.01
Cartons
1.04
Flexible packaging
1.23
Labels
0.92
Trade finishing
0.86
Source: AIFMP Manpower Survey 2001
3.3.4 Energy
Although energy prices are only a small proportion of total print costs, they are a variable cost,
which can have a significant impact on margins. The main energy source for printing is
electricity, whose price tends to be higher than in many competitor countries. The industry’s
dependence on road transport also means that it is adversely influenced by the high cost of diesel
fuel in India.
The energy-intensity of paper and board making – energy costs are around 10% of
turnover in India – also means that energy prices have a significant influence on paper and board
prices. The competitiveness study of the paper industry has demonstrated that the industry faces
higher costs for electricity than China.
3.4
Profitability
The industry faces powerful buyers and suppliers, has a product, which can often be easily
substituted, and has intense competition between printers, which is exacerbated by over capacity.
Hence, there has been continuous downward pressure on prices. For example, when gravure
39
printers lose business they will target large-format web offset markets. The losers in that battle
then go for medium-format work and so on. In this way the effect spreads out to the entire
industry.
Price and cost pressures mean that average printing profitability is low, and declining. The
median return on capital employed for respondents to the AIFMP’s business survey fell from
14.67% in 1999 to 8.63% in 2000, with a considerable variation between individual sectors. This
compares with a net rate of return for Indian manufacturing as a whole. As printing has elements
of both manufacturing and services, this suggests that it is relatively unprofitable. This is
especially true when the abnormally high level of risk created by a constant need for large, lumpy
investments even in relatively small printers is considered.
Table 3.3
Printing Industry Profitability (Percentage Return on Capital Employed)
1999
2000
India – Printing Median
14.67
8.63
General printing
16.07
12.61
Book production
9.88
12.84
Periodicals and newspapers
17.00
19.63
Cartons and flexible packaging
12.45
11.65
Manufactured stationery / Business forms
14.45
8.74
Labels
12.77
9.63
Origination
22.70
8.87
Trade finishing
23.37
10.60
Source: AIFMP Productivity Survey 2001
Packaging has been particularly badly hit. In carton packaging, for example, return on
sales fell from 6.0% in 1995 to only 2.8% in 1999. A study by AIFMP examined the 1997-2000
report and accounts of 1181 printers and divided them into four roughly equal categories of:
– Winners – which have low borrowings as a percentage of sales, and relatively high margins and
sales growth
– Chancers – which have high sales growth but also high borrowings and average margins
– Sleepers – which have low borrowings but average margins and negative sales growth
40
– Losers – which have high borrowings, negative sales growth and are barely profitable.AIFMP
study concludes that time is running out for losers, which are almost a quarter of all the
companies examined.
3.5
Capital Investment
Despite falling margins and flat profitability, the industry has continued to invest in new
technology throughout the 1990s (although anecdotal evidence suggests that there may now be a
delayed response). Investment was around 6.5% of turnover in the mid 1990s, which was around
the global average. One reason for this relatively high investment is the speed of technical and
market change, which renders most pre-press and some production equipment obsolete within a
few years. The industry culture is also very equipment-focused.
3.6
Productivity
There are a number of different ways of measuring productivity and no single measure captures
all aspects. Measures come in several broad classes: output per head (or labour productivity);
output per unit of investment (capital productivity); and total factor productivity. Table below
includes a range of such different measures from AIFMP surveys. This shows that labour
productivity (value added per head) rose by almost 33% between 1994-2000 – over 5% a year.
Table: 3.4:
Productivity Indices for Printing Industry in India
1994 1995 1996 1997 1998
1.72
1.56
1.57
1.54
1.49
Sales over operating assets (ratio)
103.9 117.4 123.4 130.6 138.9
Sales per head
106.4 119.9 119.9 125.9
130
Value added per head
103.4 114.9 116.4 120.8 125.7
Value of output per head
100.2
98.4
97.9 101.6 102.1
Value added as a % of sales
99.3
99.7 102.3
101
99.3
Sales per Re of wages
98.9 101.1
99.5 102.2 101.6
Value added per £ of wages
115
110.1
104.6
119.4 113.4
Profit as a % of operating assets
114.2 122.3 109.7 127.4 125.3
Profit as a % of sales
114.9 129.1
124 127.9 126.7
Profit as a % of value added
Note: 1993=100
Source: AIFMP Printing for Profit 2000
1999
1.57
135
133.9
129.4
103.1
98.4
100.5
114.1
125.9
136.8
2000
1.88
142.35
141.07
128.38
101.02
101.32
103.23
136.82
112.29
91.62
The statistical problems identified in the introduction are illustrated by the fact that the
AIFMP figures show sales per head in printing increasing by 27.6% between 1992 and 1998.
41
However, Government statistics for printing, publishing and paper suggest that output per head
rose by only 0.9% per head over the same period, well below the manufacturing average of
11.3%. One explanation of the difference is that the government statistics include very small copy
shops and printers, which would not be included in the AIFMP figures.
Sales and added value per head have risen less markedly in carton printing. The main
reason for this is probably downward pressure on prices, as is demonstrated by the fact that
volume of output per head rose by 11% between 1995 and 1999. The few experts with crossnational experience agree that Indian printing productivity is almost certainly lower than in China
but there is less agreement as to by how much. A large printing company with international
operations, for example, estimates a 10% productivity gap between comparable sites.
Packaging experts also believe that the acute pressures for lower prices from retailers and
other customers in India have resulted in comparable productivity to that of China. One problem
is that there are considerable differences between sectors and types of companies so that
aggregate comparisons are potentially misleading. The Government’s, and indeed all industry,
statistics therefore need to be interpreted with caution. There are a number of theoretical
explanations for any productivity differences, which do exist, including:
– Investment
– Labour inflexibility
– Skill levels
– Management
– Logistics
– Low capacity utilisation
– Lower prices in the India as a result of intense competition (this reduces the turnover and value
added component of productivity ratios).
There is no evidence that Indian printers have invested less than China or other countries.
However, it may be that investment decisions have been poor so that productivity is less. Hence,
this does not appear to be a major explanation of productivity differences. Comparative studies of
activities such as kitchen manufacture have found that skill differences can be a major
explanation of differences in productivity. Well-trained shopfloor staff can help to improve
capacity utilisation, maintain high product quality, reduce wastage and extend the life of
42
equipment through good process knowledge and appropriate actions.Many of those consulted felt
that poor management is a major cause of productivity differences. This can mean that the full
potential of equipment and staff is not achieved.
The move to just in time deliveries to printers, and of printed products to customers,
means that transport delays can also be a significant source of down time in printers. India has
one of the lower printing capacity utilisation rates than of any developed economy. This may be
exaggerated by variations in measurement methods and reliability but most experts believe it to
be a real difference. Over-capacity has also increased in periodicals, where relatively stable longterm orders had previously given some protection. Web offset capacity has increased by around
10% per annum in recent years, compared to a 3-4% increase in sales.
There are strong downward pressures on utilisation in all countries because modern
presses have much higher capacities than the equivalents that they replace. The explanations as to
why over-capacity is especially prevalent in the India appear to be:
– Over-investment in new equipment by some companies, which is related to unsophisticated
investment decision-making.
– Greater seasonal fluctuations in print orders, which means that capacity must be maintained
without use for much of the year.
– A common tendency amongst Indian printers to retain old equipment even after new
investments have been made in order to meet possible peaks in demand and/or specialist
customer requirements – probably aided by the flexibility to use such equipment which is
provided by the acceptance of overtime.
The large amount of surplus production capacity in India creates a very competitive
marketplace and a consequent downward pressure on prices and value added. This has
undoubtedly been very beneficial for customers in recent years and there is no evidence that it has
affected quality or the industry’s technical competence. However, it is a major reason for the
industry’s low margins.
3.7
Obstacles to Achieving Business Goals
Printers’ own views on barriers to good performance were collected in the AIFMP’s 2001
Workforce Survey. This asked them about the main obstacle, and others, to achieving their
43
business goals. The answers demonstrate the industry’s vicious circle of fierce competition and
an uncompetitive exchange rate driving down margins and profits, which make it difficult to
justify the costs of investment in human resources and technology, so that in aggregate there is a
limited pool of skills to draw upon.
Table: 3.5:
Anticipated Obstacles to Achievement of Goals by Printing and Printed Packaging
Companies
An Obstacle
Main Obstacle
Increasing competition
63%
29%
Costs of new technology
53%
17%
Lack of people with necessary skills in market
43%
20%
Cost of employing new staff
40%
8%
Cost of necessary training
35%
2%
Strong Rupee
30%
10%
Lack of availability of suitable training
30%
5%
Difficulties in offering e-commerce
1%
None of these
9%
Source: AIFMP Workforce Survey 2001
44
CHAPTER FOUR
FORESIGHTS
45
4 FORESIGHTS
4.1
Print Markets
Print turnover has traditionally been closely linked to GDP in most developed countries. In the
short term it responds to fluctuations in GDP – being a leading indicator for downturns and
recovering strongly when growth resumes. In the long-term it tends to rise in line with GDP
growth. Current forecasts are that this will average 6 to 8 % per annum over the period 20002010. It may be that other factors are becoming relatively more important in determining total
demand. The composition of GDP also influences print demand. On balance, the shift to services
has been beneficial for the industry because many service sectors – particularly financial services
and retailing – tend to be large purchasers of promotional print.
4.1.1 Demographics
The domestic demographic influences on print demand include:
– The total size of the Indian population – which is forecast to grow from 59.4 million in 2000 to
60.1 million in 2005.
– The number of households, which is the target audience for much promotional material – these
are forecast to grow in the India from 24.2 million in 2000 to 25.9-26.8 million in 2010.
– The percentage of young people, who tend to have high disposable incomes which attracts
advertisers. The number of those aged 20-35 is forecast to decline from 12.4 million in 2000 to
11.4 million in 2010.
– The percentage of retired people, who tend to consume less but read more – their numbers are
forecast to increase markedly over coming decades.
– The extent to which people adopt ‘e-lifestyles’, for example, with high use of the Internet or
digital television for shopping or information gathering.20
The Indian printing industry will also be increasingly influenced by demographic trends in
other countries, which shapes export markets and the degree of import competition. Indian and
China will have a stable or increasing population and a faster rise in the percentage of young
people.
46
4.1.2 Substitution
Over recent decades print’s share of the overall media market has been slowly declining as media
customers have preferred to use television or radio. Many forecasts suggest that this will
continue. There is also a widespread perception that printing will be badly hit by growing use of
the Internet. This could potentially reduce demand by:
– Providing on-line content via computer screens or other devices such as e-books and thereby
reducing sales of newspapers, magazines and books.
– Replacing business forms, catalogues and promotional material with on-line ordering and data
gathering facilities.
Plans for e-Government could have a particularly serious effect on the business forms sector.
Printing census documentation, for example, is one of the largest and most valuable contracts in
the industry.
On the other hand, there are many examples of the Internet creating demand for print.
These include publication of many new magazine titles dealing with the topic or getting potential
customers to fill in on-line forms which are then used to generate a personalised, printed,
marketing pack for mailing to them. Many forecasts suggest that these positive impacts may well
be greater than any negative ones.
Another form of substitution is print produced outside India replacing that which is
domestically produced (either through greater imports or loss of export markets), or vice versa.
As noted, the high valuation of sterling has meant that there has been a substantial loss of export
business and some increase in imports in recent years. This trend could continue if valuations
remain high. Companies which have sacrificed margin in order to retain contracts will become
unable or unwilling to do so, and improved communications make it easier to source a wider
range of print internationally. Conversely, substantial export opportunities could be opened up if
the value of sterling drops against the euro and, to a lesser extent, the dollar.
There may also be more printing on desktop printers and copiers at the expense of
commercial print. This is partially driven by electronic distribution of documents, but also
because the falling cost, greater ease of use and rising quality of both office printers and copiers,
and graphics and publishing software, is making this option more feasible. Pira International
47
forecasts that this area of printing will grow from 5 to 10% of total printing paper consumption
over the next decade. Carton packaging is also threatened by packaging made of alternative
materials, particularly aluminium and plastic (which may be more easily formable in future).
The scale of substitution will be partly determined by the performance and cost of print
and board-based packaging. More printers will be offering facilities such as ultra-high quality
colour and personalisation, which will increase its impact on readers. Most experts also believe
that automation, e-business and other new technology will reduce the costs of production in many
areas. However, some of those consulted fear that this could be offset by rising salaries and
wages in response to shortages of skilled staff and/or a repeat of the mid 1990s hike in paper and
board prices.
4.1.3 Regulation
Until recently regulation has primarily influenced print demand through requiring the production
of particular kinds of print products. Health and safety regulation has supported growing markets
in information materials and labels. And financial regulation, for example, has been important in
shaping demand for report and accounts and business forms. The acceptance of electronic media
– such as e-tax returns or on-line report and accounts – as legally valid substitutes for traditional
printed products could therefore have a serious impact on some print markets.
The area of public policy with the greatest current impact on demand for print and
packaging is environmental regulation. Anecdotal evidence suggests that activities such as
landfill tax, wastewater disposal requirements and VOC emission controls are all influencing
printing costs, and therefore prices. An even more direct influence on printing demand is
measures to reduce the volume of printed products as a means of reducing waste. This is now
occurring for packaging. A concern expressed by many consulted for this study is that similar
measures might be enacted to reduce the amount of direct mail because so much is currently
thrown away by recipients who do not wish to receive it.
Regulation can also influence the relative size of market segments. This could work to the
advantage of paper and board packaging. Because it is made from potentially renewable
resources and can have high levels of recycling, it could be seen as having significant
environmental – and therefore competitive – advantages over other forms of packaging.
48
Of course, regulation does not exist in a vacuum but is ultimately dependent on public
opinion to drive its introduction and implementation. Current packaging regulations, for example,
have been driven by a widespread public perception that goods are over-packaged (even though
many experts would argue that they are paying insufficient regard to the positive aspects of
packaging such as protection from damage and security). Given the generally disparaging
perceptions of the public and politicians today towards direct mail there is a danger that public
opinion might drive further measures if there is no response from the industry itself.
4.1.4 Innovation
A final influence on print demand is that of innovation. As noted, the development of alternative
media through products such as e-books will tend to diminish markets for print. But there is also
scope for increasing demand through innovation. New printing techniques such as lenticular
printing and/or innovative substrates such as new forms of plastic can be used to increase the
impact of print and to create new markets, such as printing on ‘ambient media’, i.e. objects used
in everyday life. ‘Intelligent’ paper or board can also contain a URL which can be detected by a
special scanner and connect immediately to a web site. In printed packaging opportunities for
innovation include:
– Use and formulation of materials/coatings
– Creative and engineering design
– Information digitisation (e.g. electronic design facilities, digital printing)
– Design, supply and distribution chains (e.g. single source packaging solutions)
– Production control and automation (e.g. web control).
4.1.5 Current forecasts
Two recent forecasts have suggested that the resultant of all these variables will be continued
growth of print markets roughly in line with GDP overall, but with significant changes within
particular print sectors. The most relevant printing forecasts to the India are the worldwide ones
for 2000-2010 in The Future of Print, produced by Pira International. Pira International’s most
likely scenario for printing volumes anticipates that:
– Overall printing demand will grow at a similar or slightly higher rate than GDP.
49
– Promotional print such as direct mail will grow at 11% per annum for much of the decade,
although there will be some slowing towards its end as simple brochures and other materials are
increasingly outputted on office printers.
– Magazine printing will grow at 5% per annum, with shorter run lengths and some migration of
advertising to other media being compensated by an increase in titles.
– Books will also grow at 5% per annum, with any loss to electronic media offset by more titles
in print because of the ability to produce single or small numbers of copies on digital printers.
– Newspapers will be static during the early years of the decade and then decline slowly.
– Business stationery and transactional print will decline by 1-2% per annum, primarily because
of a move to electronic media and/or outputting on home or office printers.
This view of the future is reinforced by Vision 21, published in late 2000, which gives 5year forecasts for American print markets. Although these are less directly relevant than the Pira
International forecasts US trends often cross the Atlantic and may therefore give some guide to
India’s futures. Vision 21 forecasts that the total value of printing will increase in line with GDP
and has broadly similar forecasts to Pira International for the main print categories. It also
believes that the Internet will have a neutral or positive impact on printing because any migration
to electronic media will be offset by its stimulation of new kinds of demand. The main difference
between the Vision 21 and Pira International forecasts is that the former anticipates low rates of
growth in direct mail printing, which is a substantial component of Pira International’s
promotional printing category and has been the fastest growing area of Indian printing in recent
years. This partly reflects saturation in the US, where direct mail per capita is much higher than in
the China, but also ring some warning bells about the segment’s long-term future in the India.
There are no forecasts for paper and board packaging in the public domain but most of
those consulted also believe that this will increase at or above the rate of GDP. One issue is
whether a move to Internet-based shopping would result in plainer packaging because it no longer
has to have ‘shelf impact’. In fact, the US consultancy arm of a Finnish paper producer has
predicted that the Internet will raise the growth rates of containerboard by a quarter. This is
because of new product requirements, notably:
– Increased demand for higher performance containerboard in order to provide greater protection
of goods in outward shipping, which are currently experiencing rates of return due to damage,
and to facilitate re-use for any returns.
50
– Use of smoother, brighter substrates in order to allow higher quality printing – the package will
play a greater role in communicating with customers as there is no opportunity for using point of
sale material.
– A need to minimise volume, which is a key constraint in e-commerce delivery vehicles – this
will require durable and foldable corrugated packaging and new solutions such as small flute
board.
Current forecasts therefore suggest that the printing industry can look forward to growing
markets, and that these will be stimulated rather than depressed by the Internet. However, these
forecasts make assumptions about trends in cost and technical capability, which bear further
examination.
4.2
Technical Trends
The key changes which are predicted by studies such as The Future of Print and Vision 21 for the
next 5-10 years are:
– A greater proportion of printed output being sourced from digital and flexo presses
– Automation of production processes
– Development of e-business
– More customised and diverse outputs
– More sophisticated workflow management.
4.2.1 Changing Production Technologies
India differs from China in having a lower proportion of its output from gravure presses and so
litho is proportionately more important. Litho is also likely to remain the dominant Indian
technology for non-packaging printing over the next decade, although it will gradually lose
ground to digital. Many experts expect that this trend will continue for several decades as digital
print costs fall and quality increases. Some expect a step change to occur in the next few years as
more robust presses are introduced and/or ink jet technologies are adopted. Digital print’s
growing market share will be based on its cost-effectiveness for short runs, and the ability to
change the content of individual pages printed and thereby customise them to user needs.
Some experts also expect the ‘other’ category to be more buoyant than forecast in because
of growing uses of flexo presses. These have lower capital and operating costs than litho and, as
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the quality of output improves, may move from its present focus on packaging to take low-end
litho applications such as simple labels. However, flexo’s domination in most areas of printed
packaging (with the exception of folding cartons) may itself be eroded by the use of digital
printing. This is impeded at present by problems of speed, quality, limited colours and an
inability to print on certain substrates, but many experts believe that these will be overcome.
4.2.2 Automation of Production Processes
Printing and associated activities such as finishing have traditionally required high levels of skill
in making mechanical adjustments to processes and having a good ‘eye’ for print details and
quality. These human skills are now being automated. Modern presses can make automatic
adjustments to ink and other parameters to maintain colour quality during runs. New standards
are also enabling the entire production process to be integrated through the electronic transfer of
production specifications to machinery as jobs move through the system.
Some manufacturers and experts see this trend as continuing to the point where print
processes will become almost completely automated and analogous to other computer integrated
manufacturing processes. However, most printers believe that there will always be a need for
some degree of human intervention to take account of the vagaries of colour perception and
equipment functioning. In either case, there will be a growing demand for shopfloor staff with the
IT skills and process understanding to monitor production and d e a l with any problems which
occur (which will increasingly be as much software as hardware based). But a move to fuller
automation would mean a considerable reduction in demand for many of the print skills, which
are currently taught on training courses. Automation is also likely to be accompanied by the
development of fully digital workflows, with greater use of computer-to-plate (CTP)
technologies.
4.2.3 E-business
Despite the current shake-out amongst all ‘dot com’ companies many experts continue to believe
that printing will be one of the sectors most affected by this because:
– It has a good IT infrastructure and high levels of IT literacy.
– Printing usually involves a large number of small and recurring transactions, which could
potentially be automated through e-business.
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– It has a complex production and administration chain which could potentially be simplified by
e-business.
As with other sectors, many printers have been suspicious. E-business has been closely identified
with open on-line auctions, which are seen as a means of increasing competition and further
destroying margins. Concerns about the quality and reliability and supply have also deterred
buyers and it seems that only a small percentage of industry turnover will actually migrate to
open auctions. The dot coms, which look best fitted, to survive are those, which are becoming
applications service providers (ASP). The services provided will include:
– Automated, and closed, procurement systems for print buyers, who will use it to solicit tenders
from, and act as an order processing and tracking platform for, an established circle of suppliers
(with occasional benchmarking of prices by placing tenders on the open market).
– On-line ordering systems for printers to use with their clients.
– Workflow management services which act as a central portal and tracking facility for all
information and files associated with specific jobs.
There are no India specific forecasts for e-commerce but the forecasting company CAP
Ventures has found that 17% of US print is currently procured via processes that are at least
partly Internet-enabled – a figure which it expects to triple within two years, and grow to 80% by
the year 2005.26 Most of the 200 print providers it interviewed for the study believed that
Internet-based workflow and process automation tools will improve their margins in excess of
20%. The US study Vision 21 also concluded that one-fourth to one-third of American printers’
sales and supply purchases will be facilitated online by 2003 and approximately two-thirds to
three-fourths by 2006.
4.2.4 More Customised and Diverse Outputs
Most print is used for promotional purposes. The more relevant the printed materials are to the
needs of customers, the more likely they are to respond to the promotion. Hence, materials are
increasingly being tailored to the needs of groups of customers, or even individuals. This leads to
shorter runs and a consequent need for printers to be more adept in producing and managing large
numbers of relatively small jobs. Tailoring print to customer needs also needs skills in databases,
which hold the relevant information about them. In fact, printed promotional materials are also
increasingly likely to be integrated with other forms of marketing communication, such as web
53
pages. This requires greater skill in understanding and converting file formats so that images and
text can be easily repurposed for a variety of outputs.
4.2.5 New and Improved Materials and Substrates
These can have an important influence on the efficiency and technologies of print production and
the nature – and therefore the size and value of markets for – printed material.
In production some key trends include:
– Development of lower cost and/or more quickly imaged heat- or light-sensitive materials for
plates.
– Development of ink-jet digital printers, which can be used for production printing and/or
production of high quality proofs.
For the printed output itself some key trends include:
– High performance coated substrates, which can support ultra-high quality colour print
– Smart paper or packaging, which provides additional functions, for example, use of
thermochromic ink dots to indicate that a product is at the correct temperature for serving or
storage.
4.2.6 More Sophisticated Workflow Management
The need to monitor digital file preparation and processing, to handle a large number of smaller
jobs, and to have better materials planning so that jobs can be dealt with quickly all place a
premium on good management of the flow of work through print companies. Increased adoption
of more sophisticated management information systems (MIS) is therefore likely. The new
generations of MIS provide sophisticated systems for collecting (often with direct electronic
interfaces with equipment) and analysing workflow information. They also have Internet
functionality to allow customers to track the progress of jobs via web browsers and to integrate
with on-line ordering systems.
4.3
Other trends
A number of developments are driving further internationalisation of competition, customers,
suppliers, printers and unions:
– Global competition is being increased by factors such as cheaper telecommunications, new
transport links, the international single markets, creation of print e-commerce platforms and more
centralised buying by multinationals.
54
– Customers – especially for printed packaging – are increasingly seeking to reduce costs and
protect brands through single or limited source supply deals within continents or even globally.
– Suppliers are already very international but this is increasing further as the increasing costs of
product development and support requires a bigger customer base.
– Larger printers are responding to the globalisation of competition and customer requirements by
either becoming multinationals themselves, or developing partnerships with printers in other
countries.
– A few printers are also selling specialised products and services internationally and/or
undertaking some activities in countries with low cost labour.
– Unions are increasingly sharing experience with each other, and also co-ordinating on the
Works Councils, which are required in the larger printers with operations in several European
countries.
Another important trend for printed packaging is that of efficient consumer response
(ECR) and category management strategies within supply chains. The aim of ECR is to reduce or
eliminate stocks – and the associated costs of financing them and risks of wastage through
obsolescence and other causes – by operating on the basis of ‘demand pull’. In an ECR chain,
production and distribution is triggered not by orders and forecasts but by electronic point of sale
(EPOS) data in retail outlets, which is shared with all chain members over an Extranet. This also
means that out of stock situations can be reduced. One implication of this for packaging printers
is that they will have to make faster deliveries in smaller quantities. ECR chains may also result
in the packaging and finishing of goods occurring nearer to the market – for example, adjacent to
supermarket’s regional distribution centres rather than in a central factory. Both these trends will
shorten run lengths and may therefore increase opportunities for in-line digital printing. This
could reduce markets for conventional packaging printers or, alternatively, it could create
opportunities for them to diversify into packing and filling.
Digitally printed packaging will also be encouraged by a related trend, that of category
management. This aims to stimulate demand and raise margins by creating products, which are
tailored to specific market segments and/or respond very quickly to changes in consumer
requirements. The packaging for these kinds of products will be produced only in small
quantities, which is well suited to digital printing.
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4.4
Scenarios
All forecasts are beguiling, so it is important to remember that many things could change in
coming years. Hence, a scenario-based approach is perhaps a better way of peering into tomorrow
than portraying a single future. In very broad terms, the following table distinguishes three
scenarios – decline, maturity and rejuvenation – based on different trends in markets, financial
health, employment and skills and technology. Historical trends and most industry opinion
suggests that the maturity scenario is the most likely to develop. However, a minority of those
consulted believes that the others are credible futures. It is important to understand their features
in order to reduce complacency about the industry’s potential downside risks, and to ensure that
maturity does not become a self-fulfilling prophecy, which makes it easy to decry new ideas.
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Table 4.1:
Print Scenarios
Markets
Financial
health
Decline
More electronic
information distribution –
print increasingly seen as
old-fashioned medium,
with additional problem
of variable product
quality. Insular
management limits
international
opportunities.
Maturity
Some traditional print
markets hit by internet, ebooks and digital TV but
balance by new
opportunities. The larger
players create by
consolidation build their
international operations.
Many smaller printers
develop service-based
specifications and /or
more personalize work.
High levels of
overcapacity and online
procurement intensify
competition and margin
pressures and create
consolidation and many
closures. The industry
remains unattractive to
investors and underinvests in skills and
technology, gradually
undermining morale and
quality.
Continuing over capacity
and online procurement
maintains margin
pressures but many
printers compensate by
cutting costs through
automation and
consolidation. Growing
gap between International
scale players and service
oriented specialists,
which can easily raise
finance, and the rest of
the industry.
Considerable investment
in new technology but
smaller players
handicapped by lack of
skills and standardization.
E-business partly fulfills
expectations but confined
to medium-large
companies. Process
automation continues at
steady pace, especially in
larger companies.
Finishing remains a
bottleneck.
Technology Financial strain and lack
of understanding and /or
fear of new technologies
limits investment and
India falls behind other
countries. E-business
adopted slowly under
pressure from buyers,
who capture most of the
benefits. Equipment not
utilised fully because of
skill shortages
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Rejuvenation
Printers increasingly offer
a communications
service, spanning printed
and electronic formats.
Innovative products e.g.
smart paper and
packaging create new
markets for printed
output. Competitive costs,
English language
capability and
competitive currency
support strong
internationalization.
Over capacity declines
towards the international
average due to
consolidation and more
specialization. This slight
reduction in competition,
together with continuing
cost reductions from
automation, means that
added value grows more
quickly than volume. The
industry becomes very
attractive to investors.
E-business fulfills
expectations and widely
used to reduce
administrative costs and
improve communications,
with savings shared
between customers and
printers. Common
standards reduce fie
problems and underpin
process automation.
Digital printing grows
rapidly. Considerable
innovation in finishing
technologies.
Table 4.2:
Summary of SWOT Analysis*
Strengths
Weaknesses
Satisfied customers
Low margins
Technical competence
Variable quality of management
High levels of investment
Lack of performance data
Entrepreneurialism
Poor marketing
Good industrial relations
Low levels of training
Good business support
Unrepresentative workforce
Poor image
Fragmentation
Opportunities
Threats
Growing print markets
Currency movements
Growing demand for print-related
Substitution
services
Skills shortages
Relatively low-cost producer (excluding
Lack of policy support
currency changes)
High input costs
Develop new clusters
Anti-competitive practices
English language
Inadequate telecommunications
Financing problems
Poor statistics
Excessive/inflexible regulation
* Each of the headings is discussed in the following pages.
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CHAPTER FIVE
SWOT ANALYSIS
59
5 SWOT ANALYSIS
It is hard to make generalisations for an industry which is as segmented by markets, size and
technology as printing. Nonetheless, the preceding analysis, and a high level of agreement
amongst many of the people consulted, suggests that there are some generic strengths and
weaknesses and opportunities and threats.
5.1
Strengths
5.1.1 Satisfied Customers
Customers always want more from their suppliers but most of those consulted were generally
satisfied with the quality and service of India print and printed packaging, both in absolute terms
and vis-a-vis international competitors. Price has been more of an issue for those who have been
able to source in China and therefore take advantage of the low value of the dollar. Most of those
who have shifted to Chinese suppliers have done so with reluctance and prefer local suppliers if
these are price competitive. However, some customers believe that the performance of Indian
suppliers is sometimes less good in specific areas such as customer service and finishing than
elsewhere in the world. An AIFMP study tour of US and China printers also concluded that,
whilst there was little difference in technology between the countries, customer service levels
were better in America.
5.1.2 Technical Competence
The industry has a good record of responding to technical change. Indeed, there is probably no
other Indian industry, which has successfully accomplished so many fundamental changes in
basic technologies in recent decades. This includes the replacement of letterpress with litho
printing during the 1970s, the introduction of photocomposition the 1980s and electronic page
make-up in the 1990s. Most customers and experts consulted believe that a large number of
Indian printers have similarly modern equipment, and technical skills, as international
competitors. In some areas – for example, flexo printing and screen-printing – they are seen as
being amongst the technical leaders. The India is said to have a higher adoption of digital colour
than in China and most other world countries. And it is seen as relatively advanced in
60
applications of IT to printing, although still lagging the China and USA. Packaging customers
also appreciate the technical knowledge of their suppliers with regard to packaging design.
5.1.3 High Investment
Compared to most other Indian sectors – and many of its Chinese equivalents – printing has had a
high level of capital investment.
5.1.4 Entrepreneurialism
This is positive in that it makes the average print company very flexible in responding to
customer needs. It also fosters strong personal relationships with customers and staff. And the
personal commitment and drive of owner-managers is a major cause of the industry’s resilience
in the face of margin and profitability pressures.
5.1.5 Good Industrial Relations
Printing has a low level of industrial disputes. It is also one of the few Indian industries to retain
national pay agreements covering pay, hours and holidays and other conditions. Most print
employers acknowledge the importance and value of this shift although some still believe that
there can be inflexibility and intransigence at local level. Although acknowledging that recent
agreements have encouraged more multi-skilling and labour flexibility many employers would
also like to see further moves in future to address local obstacles. The union believes that – with
some notable exceptions – the main obstacle to further progress is poor management at many
printers, who find it difficult to form partnerships and/or share information with the workforce. It
instances the small number of partnership agreements which have been signed to date, even
though these appear to have provided benefits for both employers and workforce.
5.1.6 Good Business Support
In addition to their representative and lobbying role, the industry’s trade associations provide a
variety of advisory, training and commercial services for their members, as well as fora for
networking and exchange of best practice. Membership surveys show that these are extensively
used, and highly valued. It is therefore important that the new Micro, Small and Medium
Industries Service Institute complements rather than duplicates these services. A pilot project
currently being developed by the AIFMP demonstrates that this can be achieved.
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5.2
Weaknesses
5.2.1 Low Margins
These are both a cause and consequence of other weaknesses. They are an important reason for
low investment in business development and human resources and are now threatening
investment. Although low margins have been a constant in recent years there is a growing feeling
that they cannot be accepted for much longer. There are signs that much of the printing industry
may follow that of printed packaging, which has been badly hit by large-scale closures and forced
consolidation. The result is an erosion of the Indian supplier base which is now beginning to
worry some of the industry’s customers.
5.2.2 Variable Quality of Management
There are a number of print companies, which are perceived as being very well managed, as
evidenced by their winning of mainstream business awards and accolades. However, many of
those consulted (including managers) see poor management in a long tail of companies as one of
the industry’s greatest weaknesses. This has also been the conclusion of other studies.
The key influence is the large number of small and/or owner-managed companies in the
sector. While both these attributes can be beneficial, they do make it difficult to develop
management strength in depth or to develop and implement sustained business strategies. The
strongly individualistic nature of management in many small-medium sized printers also means
that there is resistance to, and lack of understanding of, the benefits of collaboration and
partnership with other companies, such as non-competing printers or suppliers. In other industries
this is seen as one of the best means for smaller companies to offset some of the disadvantages of
size. Another important factor in areas of the industry with low margins is an inability to offer
comparable financial packages and, perhaps more importantly, career prospects compared to
other sectors.
These problems are compounded by the pattern of internal promotion within the industry.
This means that managers have a deep fund of knowledge of the printing business and its
technologies, and that there are many opportunities for shopfloor workers to work their way up.
However, it can mean that managers have little knowledge of developments outside the industry,
or even within other print companies. The industry’s initiatives, such as courses by trade
62
associations and the Young Managing Printers (YMP) programme, are making a contribution but
not on a sufficient scale to remedy the weakness.
Two obvious responses are to recruit more managers from outside printing and/or to
encourage actual or potential managers to study for mainstream management qualifications such
as an MBA. Both of these are now occurring in the larger print companies and some individuals
are taking management courses on their own initiative, sometimes with and sometimes without
the blessing of their companies. Not everyone agrees that management qualifications are
appropriate to a ‘people’ industry such as printing. But the India is increasingly out of line with
other countries, which are developing new institutions, which focus partially, or exclusively on
full-time and vocational print management training.
5.2.3 Lack of Performance Data
Several trade associations provide good information about productivity, profitability and wages
and salaries within their members (as demonstrated by the data within this report). However,
there is a lack of similar information about detailed operational performance measures such as
downtime or make ready times. Often the information exists within the company but is not being
used. Anecdotal evidence suggests that there is wide range of performance between individual
companies but there is also a lack of detailed benchmarking data, and accompanying discussion,
which would allow companies to formulate the measures they should be using, and to compare
their performance with others. A recent AIFMP pilot project in the web offset sector, has
demonstrated that benchmarking schemes can be feasible and successful within the sector and
could be extended to other areas.
5.2.4 Poor Marketing
The printing industry is generally seen as being good at sales but poor at marketing. One reason
for this includes a lack of understanding of what marketing is. Another is a frequent short-term
orientation, which makes printers unwilling to devote time to understanding market conditions
and trends. And there are often poor relationships with the ultimate customers of print output (due
to lack of understanding and difficulties in getting beyond print buyers). The marketing of print is
also impeded by the industry’s poor image, which, for example, makes it difficult for printers to
suggest that they have expertise beyond putting ink on paper.
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5.2.5 Low Levels of Training
All SMEs find it difficult to invest in training. Even taking this into account, the industry has a
poor record by any measure – apprenticeships, numbers in print-related educational courses,
expenditure on training, qualification levels and take-up of NTCs. The main reasons for this
appear to be a lack of awareness of its importance, resource and time constraints and a – justified
– fear that qualified staff will be poached by other companies. The AIFMP responded to this
concern in 2000 by launching a voluntary Training Skills Charter in 2000. However, only a small
number of employers have signed up to the Charter. Other voluntary approaches have been
suggested. Trade associations or other groups of employers could:
– Agree when recruiting to pay a ‘transfer fee’ to the old employer to reflect any training received
(a scheme of this kind is currently being piloted in the gas installing industry).
– Insert a clause in the contracts of new employees requiring training expenditures to be repaid if
they leave within a specified time period after receiving it.
However, the first of these might be difficult to enforce whilst the second is unlikely to be
popular with staff.
The alternative to voluntary initiatives is a statutory scheme requiring contributions from
all employers in the entire industry or sections of it. Although this may pose administrative
problems in an industry with so many SMEs – and need not necessarily apply to all areas of the
industry (for example, newspapers might be excluded) – schemes of this kind do exist in the
construction and engineering construction industries. The Government has indicated that it is
willing to introduce such schemes – which would not require new legislation – if social partners
agree that is desirable. The issue is controversial for employers but it would be desirable to
resolve it sooner rather than later, so that the level of training can be increased if it is endorsed or
other alternatives can be explored if it is not. Some experts consulted believe that there are no real
alternatives except a decline in the industry’s skill base and therefore its prosperity.
The NTC system has also made a lesser contribution to increasing training than was
originally hoped. Many companies are utilising, and benefiting from, NTCs. But there has been
widespread criticism, focused on difficulties in understanding them for both employers and
employees, excessive bureaucracy in gaining accreditation, and an over-emphasis on the detailed
understanding of machines rather than understanding overall print processes. The NTO has
responded to these criticisms by overhauling and simplifying the requirements and it is important
64
that there is a substantial publicity campaign to inform the industry about the changes.
Complementary initiatives may also be desirable to stimulate more people to invest in their
personal and vocational development. There is also a widespread feeling that, although it has
made considerable progress in a short period of time, the NTO lacks sufficient resources and
independence to do its job effectively and to properly address the issues identified in previous
paragraphs.
5.2.6 Unrepresentative Workforce
Printing has a predominantly male workforce, with significant under-representation of women
and ethnic minorities. This is a commercial as well as an equal opportunity issue. One reason for
this is the growing numbers of women amongst print industry customers. Many routine purchases
of print are now made by administrative and secretarial staff. The percentage of women working
as managers, buyer and other key roles in the media, retailing and other important print markets is
also increasing. One reason for this is the increasing proportion of female university graduates,
and the marked improvements in girl’s results in school exams. This development also means
that, if printers are looking to employ more staff with ‘non-traditional’ skills such as IT or
marketing which are in great demand, a growing proportion of the talent pool will be female
and/or from other minorities.
5.2.7 Poor Image
Outsiders generally see printing as a dirty, unexciting, industry. This image makes it difficult to
recruit school leavers, interest investors, impress customers or to appear on the radar screens of
Government and the media. Organisations such as the AIFMP and colleges as well as many print
companies are beginning to address this by working with schools and providing information. A
growing number of print managers are also starting to form relationships with local schools to the
same end. However, this work is small-scale and probably insufficient to have a major impact. It
is also focused on only one of the constituencies whose impressions need to change if they are to
have an accurate impression of the modern printing industry.
5.2.8 Fragmentation
There are few Indian equivalents of the very large, multinational, North American printers such
as Donnelly and Quebecor World or the integrated print and publishing companies of continental
Europe such as Bertelsmann. While this is partly a function of different market sizes, City
65
analysts believe that it is a major reason for the limited interest of Indian capital markets in the
sector. They also believe that opportunities are arising to develop such companies by further
consolidation, which they see as inevitable. Print companies tend to grow through acquisition of
other printers (and their customer relationships) rather than organic growth. They believe that this
consolidation will reduce the number of medium-sized printers, who will be too small to achieve
the economies of scale of larger competitors but too large for many of the available niches.
Some observers also believe that the industry is hampered by the lack of single voice in its
relationships with Government and other stakeholders. There are many trade associations,
although none contain a majority of the industry. The three largest printing companies are also
out of membership. Nor are there many opportunities to bring in the views of customers or
suppliers to industry discussions. Some possible mechanisms to achieve this ‘common voice’
might be:
– More informal collaboration between the key players on specific issues.
– Further development of existing informal initiatives such as the all-party Parliamentary group
on the printing industry.
– Formation of a Print Industry Council, analogous to the Confederation of Indian Industries
which was established to provide a common voice and co-ordinating mechanism for
manufacturing industry trade associations.
5.2.9 Finishing
Finishing has tended to be the poor relation of printing, with lower pay rates and skill levels and
proportionately less investment by printers and technical innovation by suppliers. Finishing is
becoming increasingly important as a potential bottleneck for the faster turnarounds demanded by
customers. There are also growing opportunities to add value by making products more complex
and impressive in order to increase response rates or to increase sales – for example, by
selectively binding outputs for individual customers. However, this is likely to require faster and
more automated equipment, use of new adhesives and other materials and greater use of materials
handling equipment.
5.3
Opportunities
5.3.1 Growing Print Markets
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As demonstrated, forecasts suggest that print has a positive future in many traditional markets, as
well as new ones.
5.3.2 Growing Demand for Print-related Products and Services
Printing is only one part of a complex communications process and there are many opportunities
to undertake some of the activities, and capture some of the value, associated with other parts of
the process. Printers’ technical skills also provide them with increasing opportunities to diversify,
for example, into other areas of media production or facilities management services. There are
also many opportunities for product and service innovation in the printed packaging industry.
5.3.3 Relatively Low-cost Producer (Excluding Currency Issues)
Growing competition from emerging and developing countries means that the India will never be
a low-cost producer of printing or printed packaging. However, although the India appears to lag
other China in printing productivity, many customers and other experts consulted believe that it
has lower labour costs and is at least comparable in terms of quality and service. A minority of
those consulted disagrees with this view. One reason may be that competitiveness varies between
industry segments and types of company. The overall balance of opinion is that the combination
of relatively low labour costs, and the advantages of a local supply base, could allow producers to
win back some of the business lost to imports in recent years, and perhaps increase exports, if the
value of rupee falls against the dollar. Many experts also believe that I printing can further reduce
its administrative costs, both absolutely and in relation to Chinese competitors, by making greater
use of e-business. The repro industry also has very low costs compared to most other world
countries.
5.3.4 Develop New Clusters
There is a relatively low level of print-related R&D in the, which is due to the high dependence
on imported equipment and the small number of large companies. The competitiveness report on
the paper industry also recommended the need for more domestic R&D in that sector. Innovation
theory would suggest that this lack of R&D is a handicap, because it prevents the dynamic
interplay of multiple organisations, which is so important in successful clusters such as Silicon
Valley. The best example of print clustering is in west central Germany. This hosts leading
suppliers such as Heidelberg, KBA and MAN Roland, a second tier of specialist suppliers, for
example, of finishing equipment, influential customers such as the large German printers, and
67
educational and research centres with print specialisations. Experts with knowledge of the
German industry believe that this clustering is a significant reason for the strength of both the
country’s print supply industries and the printing sector as a whole – for example, by
manufacturers offering training access and support to printers. By contrast, India has only a few
major print-related clusters, in Tamilnadu – Chennai, Sivakasi, Coimbatore and New Delhi,
Punjab- Chandigarh and Amritsar. However, this is somewhat artificial in that it also included
paper equipment and publishing employment. In fact, if there are any areas of the which possess
genuine printing clusters they are more likely to be Sivakasi and Amritsar, which have strong
print industries, some industry suppliers and well established educational and technical networks.
India also has a strong position in printers serving the financial services sector.
The size of the n printing and printed packaging industry means that there is a substantial
user base to support the development of more dynamic clusters. The areas of weakness are
around the limited domestic supply base, limited domestic R&D (both commercial and publicly
funded) and broader management and skill weaknesses. It would be difficult (although, some
experts believe, not impossible) for the to develop stronger clusters around traditional printing
technologies. However, the pace of change in the industry means that there are opportunities for
non-traditional suppliers to enter and grow. The Israel-based Indigo Company, for example, has
grown from a start-up to become a leading producer of digital printers. The trend in pre-press
equipment is also towards vendors integrating components from specialist suppliers rather than
manufacture them. There may therefore be an opportunity to develop new clusters around a
combination of inward investment, Government pump priming of indigenous R&D and business
development and more resources for higher education bodies which focus on the sector’s needs.
These could build, for example, on n technical expertise in some specific areas of pre-press
software, MIS systems, flexo printing, on-line printing, packaging coatings and digital colour
printing.
5.3.5 English Language
The dominance of English as an international business and cultural language could present major
opportunities to n printers. English language abilities – and possible add-on services such as
translation – are potentially attractive to customers because they minimise the risk of linguistic
mistakes in documents and packaging.
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5.4
Threats
5.4.1 Currency Movements
These have had a considerable impact on the industry. In the relatively small section which is
subject to international competition – primarily packaging, books and large catalogues and
directories – there is evidence that significant orders have been lost because of the strength of
rupee against the dollar. Many printers, especially those outside South have also lost business
because of the adverse effect of strong rupee on manufacturing industry. The longer that rupee
remains strong, the more serious the effects on the industry will be. Current currency instability –
through their effects on input prices and the level of competition – also has serious effects on the
sector’s ability to plan for the future.
5.4.2 Substitution
As discussed in earlier chapter both printed documents and carton packages are vulnerable to
substitution. Whether this occurs depends upon a variety of factors such as costs, marketing and
developments in customer markets. Even without currency movements, the areas of print and
printed packaging which are subject to international competition will come under pressure from
lower cost producers China, the Middle East and South East Asia, many of whom have ambitious
expansion plans. Although the Internet is expected to be broadly positive for print demand it may
substitute for printed products in some segments such as business forms.
5.4.3 Skill Shortages
Most people consulted believe that skills shortages are already handicapping the industry and will
become worse in future. It is hard to identify any direct effects of this shortage at present. The
main impact is probably lower levels of quality than might otherwise have been achieved, and
perhaps a lack of confidence in many printers in taking on new areas of business. However, there
is a fear that the shortages could become more severe and serious as the requirement for skills
increases with technical change and more demanding customers, but supply diminishes because
of the large-scale retirement of many qualified staff, the reduction in the number of printing
courses and students and growing difficulties in recruitment because of the industry’s poor image.
One important question in long-term responses to these changing skill needs is the balance
between training people specifically for print, or recruiting more people with general
qualifications and experience and providing them with a print orientation. However, the latter will
be difficult until printing has a more positive public image.
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5.4.4 Lack of Policy Support
Government support is vital in helping the industry to overcome the other threats and weaknesses,
and to capitalise on its strengths and opportunities. The rationale for this is not propping up a
declining manufacturing industry, but to encourage a dynamic sector. In addition to its general
economic importance, this can be a leading vehicle in bringing ‘new economy’ skills and
expertise into the southern regions -Tamilnadu, Andhra Pradesh and Karnataka, and Western
regions – Maharashtra and Gujarat, New Delhi region, Chandigarh, Jalandhar and Amritsar
regions and Eastern regions -West Bengal and Uttar Pradesh. The threat is that policy makers fail
to recognise the industry’s importance and do not take its account when making decisions.
5.4.5 High Input Costs
There is evidence that n printers are paying higher prices for their (mostly imported) equipment
and raw materials inputs than equivalents in continental China. (Prices have often been
maintained or come down in rupee terms, but risen on dollar valuations). Some observers also
believe that printing sectors in countries, which do produce these, inputs have a competitive
advantage through easier access to advanced equipment and know-how. Energy costs are
important for printers, both directly and because of the high embedded energy content of paper
and board. Increases in energy prices would therefore have serious effects. Printing is also
dependent on road transport to deliver its physical inputs and outputs, many of which are shipped
on a ‘just in time’ basis. It is therefore strongly influenced by road congestion and any measures
to influence it, for example, road pricing.
5.4.6 Inadequate Telecommunications
The industry is increasingly dependent on telecommunications, and the pace of innovation and
opportunities for cost reduction and improved customer service are already being impeded by
lack of access to low-cost bandwidth. Penetration levels of broadband are now much lower than
in many other developed countries, especially China and costs are often higher. If this persists it
will be a major handicap to the development of the sector. There will also be significant regional
and sub-regional competitive issues if low-cost broadband access remains unavailable in some
parts of the country.
5.4.7 Financing Problems
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One major difficulty is the poor image of the sector on the capital markets, reflected in very low
price earnings ratios. This makes it difficult for quoted companies to expand through acquisition
and makes them vulnerable to takeover. It also makes it difficult for private companies to grow
through a stock market flotation, or by investment from venture capitalists (who are also
dissuaded by the low ‘deal size’ available from most printing companies). The problem is
compounded by poor financial management and control at many printers. This creates a
propensity to make investments in new equipment without undertaking a proper investment
appraisal, particularly of the sales, which might be expected from it. This is widely felt to be a
contributory factor to the industry’s chronic over-capacity. These problems are already serious,
and will become more so as investment needs increase and more companies seek backing for
consolidation and business development.
5.4.8 Poor Statistics
As the introduction noted, the absence of accurate statistics is already a major problem for
printing, and an even more significant one for printed packaging. This constrains benchmarking
and – because there is little available information about n print market structures and trends –
makes it difficult to make considered investment decisions. There is also a belief that current
statistics underestimate the industry’s true size and growth potential, and thereby contribute to its
poor image and disinterest by the capital markets. The vicious circle which this creates – lack of
data leading to poor investment decisions and problems in raising capital – are likely to become
serious as investment needs increase and more companies seek backing for consolidation and
business development.
5.4.9 Excessive / Inflexible Regulation
There is a strong view amongst print employers that the industry already suffers from excessive
and unnecessarily complex regulation. Examples, which are cited, include employment,
environment, health and safety, as well as ‘stealth taxes’. However, there is less consensus about
the areas where regulation could be reduced. Environmental regulation was a particularly
important concern for many of those consulted. Many printers are already impacted by the
packaging and pollution control regulations, and more would be by any measures to reduce
volumes of printed materials such as direct mail and magazines. It is important that any such
measures are based on appropriate cost-benefit analysis and are addressed at the organisations,
which are best suited to implement them. It is also important that regulation is matched with
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government support for more positive approaches to dealing with environmental problems. For
example, the industry’s replacement of many physical with electronic processes is cutting
emissions to air and water. And the best solution to unwanted direct mail is not to introduce
restrictions on personal choice, but to ensure that any material received is relevant to people’s
interests. The evidence is that customers find direct mail to be very valuable when this is the case.
5.5
E-business
More than most topics, many people see e-business as both a threat and an opportunity. Although
printing has many attributes, which are conducive to e-business, there remains a widespread lack
of understanding amongst printers about what it is and how it will affect the industry. This
contrasts with growing interest amongst print purchasers. Greater awareness is needed so that
printers can make informed choices and be responsive to potential customer demands.
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CHAPTER SIX
SUMMARY
73
6 SUMMARY
This report aims to inform policy-makers and others about the current position and future
development of the printing and printed packaging industries, and to recommend actions to
improve its competitiveness.
6.1
Industry Characteristics
Printing is one of the largest manufacturing industries in the India. It comprises of some 3007
printing factories and 1,06,993 unregistered printing presses. These printing factories (greater
than 200 employees) employ 1,12,974 people. The overwhelming majority of firms are small and
medium enterprises employing some 4,93,007 people. The industry plays an important role in
regional India. Approximately 35% of graphic arts establishments are located outside capital
cities.
The industry has changed greatly over the last decade. This has been a response to new
technologies, competition from other media and demands from customers for lower costs, higher
quality and more rapid response. A key technical transition has been from analogue processes
towards ‘digital workflows’ in which content is received and processed in electronic form. One
result of this is heavy investment in information technology (IT) hardware and software and a
growing need for IT skills within the industry. Good telecommunications links are also essential.
Workflows are fully digital when outputs occur on digital printers rather than impressionbased printing presses. This creates completely new possibilities for print. Brochures, cards and
other products can be fully personalised and it is economic to print short runs or even single
copies of documents. Digital printing only accounts for a minor share of output at present but this
will grow over time. However, the impression-based technologies of flexo, gravure and litho are
likely to remain dominant for the foreseeable future, and may grow in absolute usage even while
their relative share declines. India appears to have an even higher percentage of output produced
by small companies, and a smaller average size of firm, than many other developed and
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developing countries. Nonetheless, market pressures, and the entry to, and growth within the, of
foreign companies, are creating greater consolidation.
Technical and other changes mean that the industry needs less unskilled labour. There is
also a changing balance between physical craft skills and computer-based process control and
graphics skills. And shopfloor staffs are being given greater responsibility for managing print
processes. The industry has traditionally recruited from people leaving school at the minimum
age but now requires higher average skills in its recruits. The number of new entrants to the
industry has also been relatively low in recent years so that the workforce has a high average age.
The industry has a patchy take-up of qualification-based training schemes and related initiatives.
Larger printing companies approximate to similar sized peers in other industries in their
approach to management. In general, however, printing has always been a very entrepreneurial
sector. Most companies have been founded and run by people who have risen within its ranks.
There has been little management-level recruitment into the industry until recently. Printing
processes consume resources and create VOC emissions and wastewater. Printed products are
also a major component of national waste streams. This means that the industry is directly
subjected to an increasing amount of environmental regulations. In addition, there are voluntary
or semi-voluntary initiatives to reduce wastage within supply chains by industry customers,
notably direct mail users and magazine and newspaper publishers.
6.2
Performance
Printing is a mature industry, the value of whose output over the last decade has grown broadly in
line with GDP, although being disproportionately hit by recession and recovering strongly
afterwards. Volume has grown more quickly than value, reflecting declining prices for many
printed outputs. Within this average some segments – such as direct mail – are growing rapidly
whilst others – such as business forms and carton packaging – have been declining or stable. The
sections of the industry, which are open to international competition, have been badly hit by the
recent global recession.
Printer’s costs have risen by 39.7% over the period 1990-1999 compared to 31.2% in the
price index. Paper, board and other substrates account for around a third of these costs. Their
prices have been very volatile over the last decade, causing great damage to printer’s planning
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and margins, and now appear to be on an upward trajectory. Average earnings in printing have
risen by slightly more than the national average over the decade from 1990-99, but by slightly
less than the national average between 1995 and 1999 and has higher overtime levels than China.
However, lower social security costs compared to most other countries of the world mean that
employer’s total labour costs per individual are near the bottom of the table.
The industry faces powerful buyers and suppliers, has a product, which can often be easily
substituted, and has intense competition between printers, which is exacerbated by over-capacity.
Hence, rising and unstable costs have been accompanied by continuous downward pressure on
prices, causing a fall in profitability. The median return on capital employed for respondents to
the AIFMP’s business survey fell from 14.67% in 1999 to 8.63% in 2000, with a considerable
variation between individual sectors. Packaging has been particularly badly hit, largely because
of an uncompetitive exchange rate. However, a minority of printers in dynamic print sub-sectors,
or specialist niches, have been able to buck the general trend. Despite falling margins and flat
profitability, the industry has continued to invest in new technology.
Labour productivity (value added per head) rose by almost 33% between 1994-2000 –
over 5% a year. Packaging experts also believe that the acute pressures for lower prices from
retailers and other customers in have resulted in comparable productivity to that of China.
Capacity utilisation is an important factor in explaining productivity differences – even allowing
for differences in measurement, has much lower utilisation than most other developed economies.
6.3
Foresight
Demand for print will continue to increase. Demand for print and printed packaging has
traditionally been closely linked to GDP but there are now some signs of decoupling.
Demographic trends will probably create higher volumes of printing. Print’s overall share of the
communications will maintain its gradual decline but this should not preclude continuing volume
growth as the overall market continues to expand. Electronic distribution via the Internet and
other means will hit some segments such as business forms but on balance will stimulate rather
than reduce print demand by creating new opportunities. Environmental regulations may reduce
volumes in magazines and direct mail but will probably have little influence on packaging. There
are considerably opportunities for innovation in both printing and printed packaging.
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Other trends include: a growing proportion of printed output will be sourced from digital
and flexo presses; automation of production processes; development of e-business; more
customised and diverse outputs and more sophisticated workflow management. There is also
likely to be further internationalisation of competition, customers, suppliers, printers and unions.
Three scenarios have been developed for print futures – decline (no growth or growth
substantially below GDP), maturity (growth in line with GDP) and rejuvenation (growth above
that of GDP). Historical trends and most industry opinion suggests that the maturity scenario is
the most likely to develop.
6.4
SWOT Analysis
6.4.1 Strengths
Satisfied customers – most of those consulted were generally satisfied with the quality and
service of n print and printed packaging.
Technical competence – the industry has a good record of responding to technical change and has
similarly modern equipment, and technical skills, to international competitors.
High investment – compared to many other n sectors, and at a similar level to that of the global
printing industry.
Entrepreneurialism – this makes printers very flexible and resilient and fosters strong personal
relationships with customers and staff.
Good industrial relations – printing has a single union structure and a low level of industrial
disputes.
Good business support – the industry’s trade associations provide a variety of well-used advisory,
networking, training and commercial services for their members.
6.4.2 Weaknesses
Low margins – these are a significant factor in many of the industry’s other problems, such as
lack of resources for training, and are now threatening capital investment.
Variable quality of management – many print companies are well managed but there is poor
management in a substantial number of companies.
Lack of performance data – this is a key driver of improved productivity but there is little
comparative data on important operational measures such as downtime or make ready times.
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Poor marketing – the printing industry is generally seen as being good at sales but poor at
marketing.
Low levels of training – the industry has a poor record on apprenticeships, numbers on accredited
courses, expenditure on training, qualification levels and take-up of NVQs.
Unrepresentative workforce – this is predominantly male whereas there are growing numbers of
women and minorities amongst customers and potential skilled recruits.
Poor image – making it difficult to recruit well qualified school or college leavers, to interest
investors, to impress customers or to have high visibility in Government and the media.
Fragmentation – this reduces investor’s interest in the sector. The industry also lacks a common
voice in projecting itself to the outside world and key industry stakeholders.
Finishing – an important means of adding value to print which is handicapped by low investment
and skill levels and less technical innovation than other areas of printing.
6.4.3 Opportunities
Growing print markets – forecasts suggest that print has a positive future in many traditional
markets, as well as new ones.
Growing demand for print-related products and services – printing accounts for 5-10% of the
typical costs of communication and there are opportunities to capture additional value.
Relatively low-cost producer (excluding currency issues) – n printing is fundamentally
competitive with other countries and should win business if sterling depreciates.
Opportunities to strengthen existing, and develop new, clusters – building on a large user base,
and pockets of expertise in higher education and some areas of hardware and software.
English language – the dominance of English as an international business and cultural language
could present major opportunities to n printers.
6.4.4 Threats
Currency movements – in segments subject to international competition significant orders have
been lost because of the current financial crisis.
Substitution – printed documents and packaging are potentially vulnerable to substitution.
Skill shortages – most people consulted believe that skills shortages are already handicapping the
industry and will become worse in future.
Lack of policy support – policy makers often fail to recognise the industry’s importance and do
not take it into account when making decisions.
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High input costs – there is evidence that n printers are paying high prices for their (mostly
imported) equipment and raw materials inputs.
Inadequate telecommunications – this is constraining innovation and opportunities for cost
reduction and improved customer service.
Financing problems – the industry has a poor image on the capital markets, which hampers its
access to capital.
Poor statistics – these make it difficult to make good business decisions and, by underestimating
the industry’s true size and growth potential, contribute to its poor image.
Excessive/inflexible regulation – there is a strong view amongst print employers that the industry
suffers from excessive and unnecessarily complex regulation.
6.5
Conclusions and Actions
The common perception of printing as a traditional, and declining, manufacturing industry is
untrue. The market for print and printed packaging and related services will grow steadily in the,
China and world, and rapidly in developing and emerging economies. The industry is now
embracing many of the characteristics of the ‘new economy’ and has a future firmly based in the
communications sector. The study identifies seven key aims, and actions to achieve them (subdivided into those which are especially high priority and those which are essential).
Aim 1 – Improve margins through better performance and reduced costs
High priority actions
1. Establish a Productivity Task Force.
2. Strengthen industry benchmarking.
3. Analyse international productivity differences.
4. Improve the range and quality of industry statistics.
5. Increase the industry’s awareness of e-business.
6. Increase the availability and reduce the costs of high bandwidth telecommunications.
7. Conduct a follow-on competitiveness study on printed packaging.
Essential actions
8. Respond to the China’s working time and examine the relationship between long working
hours and health and productivity.
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9. Strengthen industry financing.
10. End retailer’s anti-competitive practices.
11. Investigate if n input costs are excessively high.
Aim 2 – Achieve a stable and competitive exchange rate
High priority actions
12. Join the world markets in a big way at a competitive rate.
Aim 3 – Improve the industry’s quality of management
High priority actions
13. Enhance the strategic abilities and innovativeness of industry managers.
14. Create industry-specific management development centres.
15. Create a centre of print ‘centre of management excellence’.
Aim 4 – Strengthen the industry’s education and training infrastructure
High priority actions
16. Create a statutory framework to fund industry training.
17. More Government funding for print education.
18. Increase Government funding to the PGC NTO.
Essential actions
19. Raise awareness of NTCs.
20. Provide more information on printing career routes.
21. Raise awareness of individual career growth and opportunities.
22. Improve opportunities for women and minorities.
23. Raise awareness of printing careers in colleges and universities.
24. Increase the prevalence of professional, engineering-based, qualifications.
25. Support retraining of older workers.
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Aim 5 – Create a more positive external image
High priority actions
26. Develop a common industry voice.
27. ‘Rebrand’ the industry.
Aim 6 – Reduce environmental impacts through cost-effective initiatives
High priority actions
28. Reduce unwanted print through better targeting.
29. Reduce wastage in the book and magazine supply chains.
Essential actions
30. Further reduce process waste.
31. Publicise the environmental advantages of the industry’s raw materials and technologies.
32. Implement the directives on environment across globe.
Aim 7 – Strengthen the industry’s technical competence and domestic supplier base
High priority actions
33. Raise awareness of the importance of print-related clusters.
Essential actions
34. Improve print finishing.
35. Establish a print ‘business park’.
36. Strengthen R&D and postgraduate education.
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CHAPTER SEVEN
CONCLUSIONS
82
7 CONCLUSIONS
Many people see printing as a traditional manufacturing industry which, like other ‘old economy’
sectors such as mechanical engineering or textiles, is doomed to decline. This report shows that
perception to be untrue. The market for print and printed packaging will grow steadily in the
India and China and rapidly in developing and emerging economies. In part, this is because the
likely effect of the Internet in the short-medium term will be to stimulate rather than to reduce
demand. There are also growing opportunities for companies in the sector to create new, high
value, products and services.
In reality, print is a hybrid industry. It is a manufacturing activity – with a mix of craft
production and computer integrated manufacturing – but with a strong and growing service
orientation. It is sometimes perceived as conservative and resistant to change yet in reality is
often innovative and eager to embrace the latest technologies. Part of it is a commodity industry
with low margins, yet there are also many high-value niche markets. Some of its segments are
declining but more are growing and have great potential for the future. Above all, although the
industry was born in the old economy, it is now – as table 32 shows – embracing many of the
characteristics of the ‘new economy’.
Table 5.1:
The New Economy Characteristics of Printing
The new economy
Heavily dependent on advanced
information and communication
technologies (ICT)
Substantial capital investment to keep
pace with technical change
Service based
Innovative
Printing
A large employer of staff with IT skills and a leading
edge sector for many ICT applications such as data –
intensive networking
Investment as percentage of turnover ahead of most n
manufacturing sectors and comparable to the
international printing industry
Many printers now derive a large proportion of their
revenues from print related services and a large
proportion of their staff are engaged in customer
service, sales, technical advisory and other business
support activities
Printing has repeatedly changed its operating
technologies in recent decades and has introduced
many advances in the production and design of
documents and printed packaging
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However, this positive future could be jeopardised by:
– Declining margins, which are closely associated with over-capacity.
– The high valuation of sterling, which has directly influenced the level of print imports and
exports and indirectly hit customer industries, without corresponding reductions in raw material
prices.
– Variable quality of management in a large part of the industry.
– Growing skill shortages and the decline of printing education.
– The industry’s poor external image, which makes recruitment difficult and reduces the interest
of external investors.
– Potential increases in cost or reductions in volume created by regulations and voluntary
initiatives to reduce waste and other environmental impacts.
– A patchy scientific and technical base due to the craft and SME nature of the printing industry,
a small domestic supplier base and limited interest by higher education bodies.
This leads to seven key aims for future initiatives by industry bodies and Government:
1. Improve margins through better performance and reduced costs.
2. Achieve a stable and competitive exchange rate.
3. Improve the industry’s quality of management.
4. Strengthen the industry’s education and training infrastructure.
5. Create a more positive external image.
6. Reduce the industry’s environmental impacts through cost-effective initiatives.
7. Strengthen the industry’s technical competence and domestic supplier base.
The next section describes and prioritises the industry’s intentions and priorities to achieve these
aims.
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CHAPTER EIGHT
PROPOSED ACTIONS
85
8 PROOSED ACTIONS
The following sections identify how the industry should achieve the seven key aims. The actions
specified are all essential but those which are considered to be of especially high priority are
highlighted.
Aim 1 – Improve Margins Through Better Performance and Reduced Costs
High priority actions
1. Establish a Productivity Task Force. This should contain representatives from trade
associations, the unions of workers and other stakeholders and oversee the implementation of
actions 2 to 5. It could also make further recommendations based on the information generated by
them.
2. Strengthen industry benchmarking. Existing initiatives should be extended into other market
segments and/or production technologies and need to be conducted on a more frequent basis to
create improvements over time.
3. Analyse international productivity differences. This will involve a detailed study of any
differences, and the reasons for them, between comparable print enterprises in the India and other
leading printing sectors, e.g. China, Germany and the USA.
4. Improve the range and quality of industry statistics. Government and private sector industry
statistics generation need to be enhanced and coordinated to provide more reliable and relevant
information for policy making, benchmarking and investment and market analysis.
5. Increase the industry’s awareness of e-business. An industry-led initiative should build on the
AIFMP’s forthcoming e-commerce impact assessment so that printers can make a betterinformed choice as to whether, and how, to adopt it.
6. Increase the availability and reduce the costs of high bandwidth telecommunications. The
industry should lobby for the strengthening of existing Government initiatives to achieve greater
availability of, and competition in, ADSL and other high bandwidth technologies. The
Government should also ensure that they can be accessed across a high proportion of the UK as
rapidly as possible.
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7. Conduct a follow-on competitiveness study on printed packaging. The industry should lobby
the Government to commission a report on either the entire packaging industry or the printed
packaging segment (carton, corrugated and flexible) of it, involving relevant trade bodies, the and
leading companies.
Essential actions
8. Respond and examine the relationship between long working hours and health and
productivity. This involves raising awareness of the ending of the India’s positions and its
implications for overtime levels, (possibly in conjunction with action 3, the comparative study of
productivity).
9. Strengthen industry financing. In particular, by working with financial institutions and other
bodies to formulate a plan to attract more business angels and venture capital into the sector.
10. Investigate if India’s input costs are excessively high. The industry should lobby, on the basis
of preliminary evidence, for a Government investigation of whether prices of paper, board,
consumables and equipment are higher for Indian producers than those in China and the reasons
for any differences.
Aim 2 – Achieve a Stable and Competitive Exchange Rate
High priority actions
12. Join the world market at a competitive rate. The industry should lobby Government to
campaign positively for early entry into the ASEAN at a competitive rate, and to work with the
sector to demonstrate the benefits of this decision for the printing and printed packaging sectors.
Aim 3 – Improve the Industry’s Quality of Management
High priority actions
13. Enhance the strategic abilities and innovativeness of industry managers. This involves
creation of new tools, materials and courses to ensure that current and potential managers have
appropriate skills. The AIFMP should also work with other industry bodies to implement the
recommendations from its project on informal approaches to management development.
14. Create industry-specific management development centres. The industry should work with
existing providers to establish one or more printing and packaging focused assessment and
development centres for shopfloor staff with managerial responsibilities, supervisory staff and
junior managers
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15. Create a centre of print ‘centre of management excellence’. The industry should lobby
Government to provide limited term seed funding to enable an established business school to
develop a high profile Print Media Management Centre, with a brief of developing a printrelevant MBA and conducting industry-relevant management research.
Aim 4 – Strengthen the Industry’s Education and Training Infrastructure
High priority actions
16. Create a statutory framework to fund industry training. Recognising that the voluntary
approach to vocational training has failed, and that training will only improve when sufficient
funding is provided, the industry should make a joint approach to Government to introduce this as
the only viable alternative.
17. More Government funding for print education. The industry should lobby for the provision of
at least one high quality printing educational body in each of the India’s regions and at least one
body with a specialisation in each of the key areas of printing and printed packaging (e.g. flexo,
litho, finishing).
18. Increase Government funding to the universities. Until a statutory funding framework is in
place, the industry should lobby Government to increase funding to the universities. This should
be based on additional work programmes to address the issues identified by this report (and in the
universities’ own research), and thus ensure that it has greater operational independence and that
all stakeholders see it as a neutral body.
Essential actions
19. Raise awareness of revised NTCs. The industry should initiate a high profile campaign to
publicise recent changes to improve the relevance and user-friendliness of print-related NTC
qualifications.
20. Provide more information on printing career routes. The industry should develop a ‘career
map’ of possible progression in the industry, based on competency profiles, to assist personal
development planning for individuals and their employers and to demonstrate the opportunities
available to new recruits into the sector.
21. Raise awareness of individual career growth. The industry should work with account
providers to promote take-up, and to develop a directory of courses to which they can be applied.
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22. Improve opportunities for women and minorities. The industry should convene a high level
working group to identify barriers to women and minorities joining, and progressing within, the
industry and means of overcoming them.
23. Raise awareness of printing careers in colleges and universities. The industry should facilitate
greater work experience by undergraduates and postgraduates on non-printing courses (e.g.
engineering) and develop print-related educational materials. The latter should include case
studies, for use in relevant undergraduate programmes such as production engineering, software
engineering and marketing.
24. Increase the prevalence of professional, engineering-based, qualifications. This will mean
developing the activities of the Institute of Printing.
25. Support retraining of older workers. The industry should lobby Government to make
upskilling programmes which aim to comprehensively retrain experienced staff eligible for
financial support.
Aim 5 – Create a More Positive External Image
High priority actions
26. Develop a common industry voice. A working group of trade associations, the largest
companies in the industry and key stakeholders should identify ways of co-operating on agreed
key issues in order to increase external awareness of the industry’s strengths, and to provide a
platform for regular cross-industry collaboration on other issues.
27. ‘Rebrand’ the industry. Either separately, or in conjunction with the previous action point,
key industry players should establish a working group to seek professional advice on how the
industry’s ‘new economy’ and service sector characteristics could be highlighted to external
audiences, and make recommendations as to further actions. This might include the creation of a
high profile ‘portal’ web site to market the industry to customers, investors, the media, policy
makers, potential recruits and other external users.
Aim 6 – Reduce Environmental Impacts Through Cost-effective Initiatives
High priority actions
28. Reduce unwanted print through better targeting. The industry should increase awareness and
usage of technologies, which ‘personalise’ printed materials – such as direct mail – so that they
are more relevant to recipients and less likely to be seen as waste.
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29. Reduce wastage in the book and magazine supply chains. The industry should develop agreed
plans with industry customers to achieve this over time, and in ways which reconcile
environmental objectives with the severe business impacts of short-term volume reductions.
Essential actions
30. Further reduce process waste. The industry should strengthen existing waste minimisation
initiatives and publicise ‘Project Acorn’, the simplified version of ISO 14001 which is currently
being developed.
31. Publicise the environmental advantages of the industry’s raw materials and technologies. The
industry should establish, in collaboration with stakeholders (including paper manufacturers and
customers), a working group to publicise the environmental advantages of sustainably produced
paper and board, and of new printing technologies, and identify appropriate methods of
dissemination (publications, web site etc).
32. Implement the VOC directive across Europe. The industry should lobby the Government to
press for accelerated and more effective implementation of the European VOC directive in other
countries.
Aim 7 – Strengthen the Industry ’s Technical Competence and Domestic Supplier Base
High priority actions
33. Raise awareness of the importance of print-related clusters. The industry should lobby the
Government to ensure that clusters of print and packaging producers, equipment and software
producers, R&D centres and educational bodies are fully considered in the more detailed studies
which are to follow the AIFMP’s preliminary report on the topic.
Essential actions
34. Improve print finishing. The industry should establish a working group of printers, suppliers,
customers and the AIFMP to identify means of increasing investment, raising skill levels and
stimulating more innovative technologies in print finishing and any other areas which appear to
be acting as bottlenecks to the industry’s progress.
35. Establish a print ‘business park’. The industry should work with a regional development
agency and other bodies to establish a focus to encourage clustering of industry suppliers and
other organisations and to attract inward investment.
90
36. Strengthen R&D and postgraduate education. The industry should lobby for increased
Government support of the AICTE and other bodies to boost the level of print and printed
packaging R&D and to create more technical postgraduate courses and PhDs.
91
CAP Ventures, Print e-Procurement: Changing the Face of the Printing Industry,
Norwood, Mass., 2000
Confederation of Paper Industries, Competitiveness Study for Paper Related Industries
in the UK, Swindon, 2000.
D. Simpson, Training in the Printing Industry: Analysis of Demand and Provision in
South Wales, Cardiff: GPMU, BPIF, South East Wales TEC, TUC Wales/Cymru and
PGC NTO, 1999.
Foresight, Report of Packaging Materials Task Forc e, London: HMSO, 2000 (also
www. f oresight.gov.uk.
Heikki Malinen, Paper presented to 9th International Containerboard Conference,
Miami, 13-15 September, Jaakko Poyry Management Consulting-North America
J. Birkenshaw and P. Hart, The Future of Print, Leatherhead: Pira International /
PRIMA, 2000.
J. Gennard, H. Ramsay, C. Baldry and K. Newsome, Strengthening Social Dialogue
and Cross-Border Trade Union Networks in the Graphical Industry, Glasgow: Centre
for European Employment research, University of Strathclyde, 2000.
KBA Research, Labour Shortages, Recruitment Difficulties and Skills Gaps in the Print
and Graphic Communication Sector, Birmingham: Print and Graphic Communication
National Training Organisation, 1999.
Lack of Training is Holding Printers Back, British Printer, October 1995, pp.7-8.
Plimsoll, Portfolio Analysis, February 2001, London: Plimsoll Press.
Print and Graphic Communication National Training Organisation, Creating More
Effective Print Companies, Birmingham, 2000.
Print and Graphic Communication National Training Organisation, Workforce Survey
2000, Birmingham, 2000.
Printing Industries of America, Vision 21, Executive Summary p.7.
Printing Industries of America, Vision 21, Washington DC, 2000.
W. Engelbacj, K-P. Fahnrich and A. van Hoof, Sustaining Development and
Competitiveness for the European Printing Industry, Stuttgart: Fraunhofer Institute
IAO, 1999.
92
7 Bibliography
Books
Altman, E I (1968): Financial ratios, Discriminant analysis and the prediction of corporate
bankruptcy. The Journal of Finance Vol 23, No 4, pp589-609.
Carnegie, G., Jones, S., Norris, G.,Wigg, R.Williams, B. (1999). Financial Accounting - Financial
and Organisational Decision making. McGraw Hill Companies.
Printing for Profit 2000, (1999), British Printing Industries Federation, Unite Kingdom.
Jha, Hira Kant, (1985): Empirical study of printing presses in Patna, Bihar, (Ph. D. thesis - Patna
University, 1985).
Roth, Martin (1995): Analysing Company Accounts by, Wrightbooks, McGraw-Hill.
Ruddar Datt, K. P. M. Sundharam, (2004): Indian economy, S.
Delhi. pp639-704.
Chand & Company Ltd., New
Reports
A. Martin, Anticipating Skills Needs in the Printing Industry, Birmingham: Birmingham and
West Midlands Printing Initiative, 2000.
A Unique Printing Industry Resource Printing Industries Association of Australia, 2005: Printing
Industries Association of Australia
All India Federation of Master Printers, Workforce Survey 2001.
An Overview of the Printing and Publishing Industry in the US, Including Future Predictions to
2009, 2005: Business Wire, Dec 6, 2005
Annual Survey of Industries, 2002-03, Vol. I, Statistics on Employment and Labour Cost in
Census Sector, Central Statistical Organisation.
Australian Printing Industry Report, 1998: 300 North Washington St. Suite 102 Alexandria, VA
22314, Phone: (703) 684-4044, Fax: (703) 684-1795.
Birkenshaw, John, 1992 Annual Lecture, SBPIM: future trends in printing, Ink & Print, 1993
issue.
Economic Census, 1998: All India Report: Government of India, Ministry of Statistics &
Programme Implementation, Central Statistical Organisation, New Delhi.
Economic Survey 2005-06, 2006: website: ttp:/indiabudget.nic.in
GATF Technology Forecast, (1999): Graphic Arts Technical Foundation USA
93
KBA REPORT, Koening & Baur AG Frankenthal (Albert), Johann Kein Str – 1, D-67227
Frankenthal, Germany.
Manufacturing Sector in India: (January 2005) Competitiveness and Other Issues, Federation of
Indian Chambers of Commerce & Industry.
National Accounts Statistics, (1989) Chapter 1, Development of National Accounts Statistics,
NAS – Sources & Methods.
Polygraph International Quarterly, Druck Medien Vrlag GmbH, Anton Schmidt Strasse 5 D71332, Waiblingen, Germany.
Ramu Ramanathan, 2003 June 3: An overview of the small offset sector, Indian Printer &
Publisher.
Trends in India’s Foreign Trade, 2004: http://commerce.nic.in/annual20045/englishhtml/content.htm.
U.S. Bureau of Labor Statistics: Office of Occupational Statistics and Employment Projections,
Suite 2135, 2 Massachusetts Avenue, NE Washington, DC 20212-0001, URL:
http://www.bls.gov/oco/cg/home.htm.
Association Organisations
Digital Printing & Imaging Association, 10015 Main St. Fairfax, VA 22031, Phone: (703) 3851339, Fax: (703) 389-1336, www.dpia.org
Federation of Societies for Coating Technology, 492 Norristown Rd. Blue Bell, PA 19422,
Phone: (610) 940-0777, Fax: (610) 940-0292, E-mail: [email protected],
www.coatingstech.org
Flexible Packaging Association, 971 Corporate Blcd, Suite. 403 Lithicum, MD 21090, Phone:
(410) 694-0800, Fax: (410) 694-0900, E-mail: [email protected], www.flexpack.org
Flexographic Technical Association, 900 Marconi Ave., Ronkonkoma, NY 11779-7212, Phone:
(631) 737-6020, Fax: (631) 737-6813, E-mail: [email protected], www.ffta.org
Graphic Arts Technical Foundation, 200 Deer Run Rd. Sewickley, PA 15143-2600, Phone: (412)
741-6860, Fax: (412) 741-2311, E-mail: [email protected], www.gain.net
Gravure Association of America (GAA), 1200-A Scottsville Rd., Rochester, NY 14624, Phone:
(585) 436-2150, Fax: (585) 436-7689,E-mail : [email protected], www.gaa.org
Indian Printing, Packaging and Allied Machinery Manufacturers Association.
Indian Pulp and Paper Technical Association.
94
National Association of Printers & Lithographers, 75 West Century Road Paramus, NJ 07652,
Phone: (201) 634-9600 or (800) 642-6275, E-mail: [email protected], www.napl.org
North American Graphic Arts Suppliers Association, 1604 New Hampshire Ave. NW
Washington, D.C. 20009-2660, Phone: (202) 328-8441, Fax: (202) 328-8513, www.nagasa.org
Paperboard Packaging Council, 201 N. Union St., Suite 220 Alexandria, VA 22314, Phone: (703)
836-3300, Fax: (703) 836-3290, Visit us in www.ppc.net.org
Printing Industries of America, 100 Daingerfield Rd. Alexandria, VA 22314, Phone: (703) 5198100, Fax: (703) 548-3227, www.gain.net
Rad Tech, 6935 Wisconsin Ave., Suite 207 Chevy Chase, MD 20815, Phone: (240) 497-1242,
Fax: (240) 209-2337, E-mail: [email protected], www.radtech.org
Research & Engineering Council of Graphic Arts Industries, P.O. Box 1086 White Stone, VA
22578-1086, Phone: (804) 436-9922, Fax: (804) 436-9911
Screenprinting & Graphic Imaging Association International, 10015 Main St. Fairfax, VA 220313489, Phone: (703) 385-1335, Fax: (703) 273-0456, E-mail: [email protected], www.sgia.org
Society of the Plastics Industry, 1801 K St. NW, Suite 600, Washington D.C. 20006, Phone:
(202) 974-5200, Fax: (202) 296-7005, www.socplas.org
Technical Association of the Graphic Arts, 68 Lomb Memorial Dr. Rochester, NY 14623-5604,
Phone: (585) 475-7470, Fax: (585) 475-2550, Visit us in www.taga.org
The All India Plastics Manufacturers' Association.
The All India Printing Ink Manufacturers Association.
Waterless Printing Association, P.O. Box 59800 Chicago, IL 60659, Phone: (773) 743-5677 or
(800) 850-0660 (U.S. and Canada), Fax: (773) 743-5756, www.waterless.org
95
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97
The Indian Printing Industry
Under Strategic Management and Business Policy
BITS ZG629T: Dissertation
by
N. KRISHNASWAMY
Id No.: 2007HZ79592
Dissertation work carried out at
Bharatiya Reserve Bank Note Mudran (P) Ltd.,
Note Mudran Nagar, Salboni- 721132
BIRLA INSTITUTE OF TECHNOLOGY & SCIENCE
PILANI (RAJASTHAN)
October 2009
A Study into the Competitiveness of
The Indian Printing Industry
Under Strategic Management and Business Policy
BITS ZG629T: Dissertation
by
N. KRISHNASWAMY
Id No.: 2007HZ79592
Dissertation work carried out at
Bharatiya Reserve Bank Note Mudran (P) Ltd.,
Note Mudran Nagar, Salboni- 721132
Submitted in partial fulfillment of
M.S. Manufacturing Management degree programme
Under the Supervision of
Shri. S. Sivananda Reddy, Manager,
Bharatiya Reserve Bank Note Mudran (P) Ltd., Salboni- 721132
BIRLA INSTITUTE OF TECHNOLOGY & SCIENCE
PILANI (RAJASTHAN)
October 2009
II
CERTIFICATE
This is to certify that the Dissertation entitled A Study into the
Competitiveness of the Indian Printing Industry and submitted by N.
Krishnaswamy, having ID-No. 2007hz79592 for the partial fulfillment of
the requirements of M.S. Manufacturing Management degree of BITS,
embodies the bonafide work done by him under my supervision.
Signature of the Supervisor
Place: Salboni
Date: October 15, 2009
S. Sivananda Reddy,
Manager,
Bharatiya Reserve Bank
Note Mudran (P) Ltd.,
Salboni – 721132,
West Bengal
III
ABSTRACT
Printing is a mature industry. It is the India’s twelfth largest manufacturing industry in terms of output
and a major contributor to the Indian economy. The industry in India has moved from the traditional
‘ink on paper’ industry to embrace ever-increasing range of technologies and fields of expertise.
Printing related industries in India comprise of some 3007 printing factories and 106993
unregistered printing presses. These printing factories with greater than 200 employees employ about
112974 people. Overwhelming majority of firms are small and medium enterprises employing some
493007 people.
The industry has changed greatly over the last decade. Workflows are becoming fully digital
rather than impression based printing. These changes mean that the industry needs less unskilled
labour. The industry faces powerful buyers and suppliers. Labour productivity rose considerably in the
past few years.
This study will describe the current market, employment, technology and other characteristics
of the industry and assess performance over the past decade, provide foresight about potential tr4ends
in markets, technologies and other variables and discuss the strengths and weaknesses and provide
conclusions. This will strive to formulate intended actions for the industry under the following chapters.
1. Introduction
This will explain the coverage of the sector studied and sources and nature of data.
2. Industry Characteristics
This will study the demand for print, technologies available, industry suppliers, industry organizations,
industry structure, the labour market and industrial relations, management, finance and environment
3. Performance
The performance of the industry will be assessed under the headings of output, foreign trade, costs,
profitability, capital investment, productivity and obstacles.
4. Foresight
This chapter will cover print markets, technical trends, other trends and scenarios.
5. SWOT analysis
Fourth chapter will study the industry strengths, weaknesses, opportunities, threats and e-business
6. Conclusions
While many consider printing as an industry, which is doomed to decline, this report will find out
truthfulness of the perception.
7. Recommendations
This will identify how the industry should achieve the key aims for relevance and success.
Key words
: Technical keywords of the Project
Capital investment
Costs
Demand for print
E-business
Environment
Finance
Foreign trade
Industrial relations
Industry Characteristics
Industry organizations
industry structure
Industry suppliers
Labour market
Management
Obstacles
Opportunities
Other trends
Output
Performance of the industry
Print markets
Productivity
Profitability
Scenarios
Strengths
SWOT analysis
Technical trends
Technologies
Threats
Weaknesses
IV
ACKNOWLEDGMENT
I take this opportunity to express my deep sense of thanks to my mentor Shri. S.
Sivananda Reddy, Manager, Bharatiya Reserve Bank Note Mudran (P) Limited, Midnapore West
District, Salboni - 721132 for accepting me as his student. His guidance and immense
encouragement throughout the tenure of the course and preparation of this dissertation is highly
acknowleged. I am thankful to Shri. Biswanath Chakraborty, Deputy General Manager, Bharatiya
Reserve Bank Note Mudran (P) Limited, Salboni – 721132 for extending all the possible help in
bringing out this dissertation and extending support all through this course.
I acknowledge thankfully the cooperation received from the teaching and non-teaching
staff of Birla Institute of Technology, Pilani during the course of this study.
I thank Captain. S. Madhav Rao, General Manager, Shri. Avinash Chandra Jolly, Deputy
General Manager and Manas Ranjan Mohanty, Deputy General Manager, Bharatiya Reserve
Bank Note Mudran Private Limited, Salboni for all the encouragement I received from them in
this work.
I acknowledge the permission given to pursue this course and ‘study reimbursement’
given by the Bharatiya Reserve Bank Note Mudran Private Limited, Salboni and its management
gratefully.
I express my sincere thanks to the All India Federation of Master Printers and Madras
Printers and Lithographers Association and their office bearers and the administrative staff for
helping me with the needful information and data.
I am thankful to all my friends and colleagues in BRBNMPL, printing fraternity, well
wishers and friends from the Printing Industry for giving the required information for this
dissertation.
I am overwhelmed with sincere feelings of indebtedness to all the members of my family
particularly Amma, Appa, Jayashree and Medha Vanaja who all enabled me achieve what I
wanted. I owe this dissertation to them.
N. Krishnaswamy
V
CONTENTS
Executive summary
3
Introduction
Coverage of the sector
Industry statistics
10
Structure of the report
1
Industry characteristics
12
1.1
Demand
12
1.2
Technology
13
1.3
Industry suppliers
16
1.4
Industry organizations
16
1.5
Industry structure
17
1.6
The labour market and industrial relations
18
1.7
Management
22
1.8
Finance
23
1.9
Environment
23
2
Performance
24
2.1
Output
24
2.2
Foreign trade
24
2.3
Costs
25
2.4
Profitability
26
2.5
Capital investment
27
2.6
Productivity
27
2.7
Obstacles to achieving business goals
29
3
Foresight
30
3.1
Print markets
30
3.2
Technical trends
33
3.3
Other trends
36
3.4
Scenarios
36
VI
4
SWOT analysis
39
4.1
Strengths
39
4.2
Weaknesses
40
4.3
Opportunities
44
4.4
Threats
45
4.5
E-business
47
5
Conclusions
48
6
Intended actions
50
Appendix 1– Steering Group membership
54
Appendix 2 – Tables
55
Footnotes
64
VII
LIST OF FIGURES
Figure
Title of the Figure
Page
Number
Introduction
Coverage of the sector
Industry statistics
10
Structure of the report
1
Industry characteristics
12
1.1
Demand
12
1.2
Technology
13
1.3
Industry suppliers
16
1.4
Industry organizations
16
1.5
Industry structure
17
1.6
The labour market and industrial relations
18
1.7
Management
22
1.8
Finance
23
1.9
Environment
23
VIII
LIST OF TABLES
Table
Title of the able
Page
Number
Number
Introduction
Coverage of the sector
Industry statistics
10
Structure of the report
1
Industry characteristics
12
1.1
Demand
12
1.2
Technology
13
1.3
Industry suppliers
16
1.4
Industry organizations
16
1.5
Industry structure
17
1.6
The labour market and industrial relations
18
1.7
Management
22
1.8
Finance
23
1.9
Environment
23
IX
INTRODUCTION
1
INTRODUCTION
This study on the printing industry in India aims to inform policy-makers and others about the
printing industry’s current position and future development and to recommend actions to improve
its competitiveness. A good number of individuals in all sections of the industry – and its
customers – were consulted and/or were asked to comment on issues discussed to ensure that the
publication is representative of a wide range of opinion.
Coverage of the sector
As the following pages demonstrate, printing is a complex industry. It has many discrete
segments, which use unique technologies and have a distinctive customer base. The heart of the
industry is the activities classified under Division 22 of National Informatics Centre 2004
classification using data from Central Statistical organization (CSO). This Three Digit NIC 22
series includes Publishing, Printing and Reproduction of Recorded media. This has major
subdivisions namely printing and publishing of books, printing and publishing newspapers,
printing and publishing of periodicals, printing of banknotes, service activities relate to printing,
reproduction and publishing of recorded media. In this paper, the definition of the industry used
to describe what the industry has been and is now, is that of traditional boundaries based on
product and process.
The sub-category of ‘printing’ can be further divided into:
– ‘Industrial’ printing of products such as magazines, catalogues, weekly newspapers and
newspaper supplements. These are usually in colour and are produced in large volume, generally
on web-fed gravure or litho presses, in plants and by companies, which are much larger than the
industry norm (and if in a trade association, are typically members of the All India Federation of
Master Printers).
– ‘General’ printing of other products which are generally printed in low-medium volumes on
sheet-fed litho presses, although some printers in this category are starting to acquire digital
printers (and again are also represented by the All India Federation of Master Printers).
– ‘Quick’ printing of short runs, usually with very fast turnarounds, usually done on copiers in
high street premises.
2
– The specialist area of screen printing, whose companies are represented by the Screen Printing
Association of India.
To add to the complexity, most industrial and general printing companies, and a few
screen printers and quick printers, also have in-house facilities to undertake some of the tasks
which fall under the NIC headings of ‘bookbinding and finishing’, ‘composition and plate
making’, and ‘other activities related to printing’. Printing also occurs in the packaging industry,
either in the form of:
– Labels to attach to glass, metal, rigid plastic and other containers.
– Direct printing onto sheets of carton-board, paper, plastics and composite materials (such as the
layered paper/metal/plastic material used for liquid packaging), which are subsequently converted
into the final package (usually on the user’s production line).
Printed packaging can be further subdivided into:
– Corrugated packaging – layers of straight cardboard reinforced by a middle layer of corrugated
board, typically converted into cardboard boxes for shipping goods in. Because the product is
bulky and relatively low value it is usually printed as part of an integrated production process at a
board manufacturing plant. Producers therefore tend to be larger than in other segments and are
usually members of the Corrugated Packaging Association.
– Folding cartons – smaller cardboard or composite containers used to package individual items,
which typically use higher quality print on higher quality materials than corrugated. The sector
has companies of all sizes and is represented by the Indian Carton Association (a section of the
AIFMP).
– Flexible packaging – sealed plastic bags and other non-rigid containers. The sector has
distinctive raw materials, conversion processes and customers.
– Sheet fed packaging – a residual category of independent, non-integrated companies who
convert cardboard and paper into what are generally low-value products such as cardboard and
rigid boxes and paper sacks. The sector is represented by the Indian Printing Packaging and
Allied Machinery Manufacturers Association, an umbrella body for several smaller trade
associations. These almost go unrepresented at national level, but each town or city has its own
group of printers forming a small trade association.
3
Industry statistics
Understanding competitiveness requires accurate statistics. Despite some amendments in
response to industry requests, there is a widespread feeling that Indian government data about the
industry remains incomplete because of:
– The large number of small companies in the industry, some of whom are not registered for
VAT and others of whom may be wrongly classified in tax returns.
– Inappropriate definitions of industry segments.
– The integration of printing with other business activities – for example, provision of printing as
part of an overall facilities management contract or in-house printing by commercial and
educational bodies – which creates inconsistency in how they are classified by companies making
returns.
The market and production data collected by industry associations and consultancies tends
to be more accurate, because it is collected in a less impersonal way and is often subject to
verification. But it is often gathered from members and collaborators, and so may be
unrepresentative and is usually based on organisation-specific definitions and therefore not
comparable. The difficulty of making an all Indian comparisons is further exacerbate by the
differences in
– The data, which is required – and is actually provided – from very small companies (which
dominate the printing industry).
– The level of ‘black’ activities, which are not accounted for in tax or regulatory returns.
There are even fewer reliable statistics available for printed packaging than is the case
with printing. As a result the report has been unable to conduct as detailed an analysis. Data has
been used wherever it is available and areas where printed packaging differs from printing have
been noted in the text.
It is important that the statistical and information deficiencies with regard to printed
packaging are filled as the sector is of considerable economic importance. Given that it also has
distinctive suppliers and technologies (for example, increasing use of flexo-presses rather than
gravure or litho), concentrated customers – primarily large retailers and fast moving consumer
goods (FMCG) manufacturers for carton and flexible packaging – and has been particularly badly
hit by the strength of sterling, it should be the subject of an independent competitiveness report.
4
More generally, these statistical problems not only make it difficult to assess the true
competitiveness of Indian printing but, also harm the industry. Poor data distorts perceptions of
its scale and performance and makes it difficult for financial stakeholders to make well-informed
investment decisions. In the interim, the best available statistics has been used to support the
analysis but those from non-official sources need to be interpreted with caution.
Structure of the report
The study broadly follows the following format:
Section 1 describes the current market, employment, technology and other characteristics of the
sector.
Section 2 assesses its performance over the last decade, particularly vis-à-vis other sectors in the
India.
Section 3 provides foresight about potential trends in markets, technologies and other variables.
Section 4 discusses the strengths and weaknesses, which have been identified during the
consultation process.
Section 5 provides conclusions.
Section 6 formulates intended actions for the industry.
5
ONE
INDUSTRY CHARACTERISTICS
6
1 INDUSTRY CHARACTERISTICS
India’s printing industry is at the crossroads. The pace of technological change in the industry is
nothing short of phenomenal. Long gone are the images of plastic sleeved printers stooped over
typesetting cases. The industry in India has moved from the ‘traditional ink on paper’ industry to
embrace an ever-increasing range of technologies and fields of expertise.
Printing is one of the largest manufacturing industries in the India. It comprises of some
3007 printing factories and 1,06,993 unregistered printing presses. These printing factories
(greater than 200 employees) employ 1,12,974 people. The overwhelming majority of firms are
small and medium enterprises employing some 4,93,007 people. The industry plays an important
role in regional India. Approximately 35% of graphic arts establishments are located outside
capital cities.
Table 1.1
Comparison of Performance of NIC 22 with GDP and Manufacturing Industry
Year
GDP
Manufacturing
NIC 22
Rs. Crore
Year on Rs. In lakhs
Year %
Year on Rs. In
Year % lakhs
Year on
Year %
AS % of
GDP
1999-00
1792292
6.10
89793835
14.57
239584
2000-01
1870387
4.36
92690185
3.23
228041
-4.82
0.1219
2001-02
1978055
6.00
96245663
3.84
216821
-4.92
0.1096
2002-03
2052586
4.00
113056111
17.47
274459
26.58
0.1337
2003-04
2226041
8.00
128740055
13.87
300878
9.63
0.1352
0.1337
Source: Annual Survey of Industries, Reserve Bank of India Annual Report 2004-05
The turnover of printing and publishing industry cluster is Rs. 3,00,878 lakhs representing
1.352% of GDP. There is also a significant presence of small printers in the district and taluk
levels. Overall the printing and printed packaging industries:
– Are a vital supplier to publishing, one of India’s most successful industries
7
– Purchase most of the output of the Indian paper and board and ink industries
– Are a major purchaser of computer hardware, peripherals and software
– Are a leading user of high bandwidth telecommunications
– Provide a substantial market for specialty chemicals and coatings.
The printing and publishing industry has outperformed the general manufacturing industry index
all through the nineties and first five years of this century.
Table 1.2:
Index of industrial production
Printing,
General
% Year Paper &
% Year
Year
Base Year
Index
on Year paper
on Year
products
109.3
108.3
1981-82
1980-81 =100)
212.6
94.5
198.0
82.8
1990-91
108.4
108.6
1994-95
122.3
12.8
125.5
15.6
1995-96
130.8
7.0
136.9
9.1
1996-97
139.5
6.7
146.4
6.9
1997-98
145.2
4.1
169.8
16.0
1998-99
1993-94 =100)
154.9
6.7
180.5
6.3
1999-00
162.6
5.0
164.0
9.1
2000-01
167.0
2.7
169.0
3.0
2001-02
176.6
5.7
180.5
6.8
2003-03
2003-04
189.0
7.0
208.7
15.6
Source: Annual Survey of Industries 2003-04, Central Statistical Organisation
Printing and Publishing industry stands at eighth position for the period between 1980-81
to 1990-91 at 198.0 whereas the General Index stands at 212.6 and percentage of change from the
base is 82.8 and 94.5 respectively. The Indian printing industry has outperformed the general
manufacturing industry index all through the nineties. This performance in the nineties though
fluctuating is due to several factors, one of which is easy access to cheap international raw
materials due to liberalization. The growth during the previous decade has fluctuated from 3.0 to
16.0 and except for 1999-00, where the year on year index was less than the General Index; it was
growing at 22% more than the General index. The industry has grown exceptionally well during
1998 -99 and 2003-04 at more than double than the General Index at by 290% and 193%
respectively. The growth has come down to 3% due to General industry slow down in 2001-02.
Performance for the year 2000-01 which has seen a negative growth rate of -21 % in volume for
the paper and paperboard industry.
8
Table 1.3:
Principal Characteristics by Industry Group for Publishing, Printing and Related Activities
(Value figures in Rs. Lakh, Others in Number)
2002-03
NIC-22
Factories
2003-04
All
%
NIC-22
All
%
3046
127957
2.38
3007
129074
2.33
Fixed Capital
383132
44475938
0.86
402260
47333140
0.85
Productive Capital
574753
54488048
1.05
573092
59256189
0.97
Invested Capital
489965
63747308
0.77
531049
67959786
0.78
76954
6161493
1.25
70634
6086908
1.16
120592
7935948
1.52
112974
7870081
1.44
Wages to Workers
45130
2968905
1.52
44291
3047777
1.45
Total Emoluments
114255
5515801
2.07
115299
5833675
1.98
Total input
740894
91618549
0.81
752581
103962329
0.72
Gross Output
106544
4203558
2.53
1104433
128740055
0.86
Depreciation
50094
4203558
1.19
50975
4482349
1.14
274459
17234002
1.59
300878
20295377
1.48
Rent Paid
10769
379355
2.84
10332
416084
2.48
Interest Paid
28054
3835182
0.73
30591
3397229
0.90
Workers
Total Persons Engaged
Net Value Added
Rank
18
18
Source: Annual Survey of Industries 2003-04
The industry comprises of about 3,007 factories, which is 2.33 % of the total number of factories
in India in 2003-04. It employs 70,634 workers or 1.16 % of total workforce. It engages 1,12,974
people, which is 1.44% of the total persons engaged in industrial activities. With Rs. 4,02,260
lakhs of invested capital this industry accounts 0.85% of the total capital invested. This industry
pays 1.98% of the total emoluments paid by the industry. While it accounts for 0.76% of the total
industrial inputs, it accounts for the 0.86% of total industrial output giving a higher value
9
addition. Its Net Value Addition is Rs. 3,00,878 lakhs which is 1.48% of the total Net Value
Addition ranking 18 in a list of 26 industries.
Table 1.4:
Principal Characteristics by Industry Group for Publishing, Printing and Related Activities
(Value figures in Rs. Lakh, Others in Number)
2002-03
22
2003-04
All
%
3046
127957
2.38
3007
129074
2.33
Fixed Capital
383132
44475938
0.86
402260
47333140
0.85
Productive Capital
574753
54488048
1.05
573092
59256189
0.97
Invested Capital
489965
63747308
0.77
531049
67959786
0.78
76954
6161493
1.25
70634
6086908
1.16
120592
7935948
1.52
112974
7870081
1.44
Wages to Workers
45130
2968905
1.52
44291
3047777
1.45
Total Emoluments
114255
5515801
2.07
115299
5833675
1.98
Total input
740894
91618549
0.81
752581
103962329
0.72
Gross Output
106544
4203558
2.53
1104433
128740055
0.86
Depreciation
50094
4203558
1.19
50975
4482349
1.14
274459
17234002
1.59
300878
20295377
1.48
Rent Paid
10769
379355
2.84
10332
416084
2.48
Interest Paid
28054
3835182
0.73
30591
3397229
0.90
Factories
Workers
Total Persons Engaged
Net Value Added
Rank
18
22
All
%
18
Source: Annual Survey of Industries 2003-04
The industry comprises of about 3,007 factories, which is 2.33 % of the total number of
factories in India in 2003-04. It employs 70,634 workers or 1.16 % of total workforce. It engages
1,12,974 people, which is 1.44% of the total persons engaged in industrial activities. With Rs.
4,02,260 lakhs of invested capital this industry accounts 0.85% of the total capital invested. This
10
industry pays 1.98 of the total emoluments paid by the industry. While it accounts for 0.76% of
the total industrial inputs, it accounts for the 0.86% of total industrial output giving a higher value
addition. Its Net Value Addition is 3,00,878, which is 1.48% of the total Net Value Addition
ranking 18 in a list of 26 industries.
1.1
Demand
Even in an electronic age, printed media have many distinctive and highly valued properties.
Print has a long historical tradition, which continues – through widely accepted principles of
graphic design, typography and other parameters – to influence perceptions of how information is
best communicated. It has a physicality that is lacking in electronic media and which, in the eyes
of many people, makes it more appealing. It also has an emotional association with many of life’s
pleasures – as when people curl up with a good book, eagerly await the next issue of a magazine,
or leaf through a brochure or catalogue when making a spending decision. And, through its link
with literacy, print is the foundation of a civilised society. More prosaically, print continues to
have a great psychological impact on buyers and other users, especially when it makes use of
high quality colour and innovative substrates. Printed documents are also portable, in a way
which electronic equivalents have not yet achieved, and do not require complex technologies and
the existence of a power supply to read them. Indeed, with careful storage, they can be more
permanent than electronic files which are prone to corruption and whose format can quickly
become obsolete.
The primary purpose of packaging is to contain, store and easily transport goods.
However, most packaging has print on it – either printed directly onto the packaging substrate or
onto a label – because there is a need to convey information about the contents and, for consumer
and some other kinds of packaging, to persuade people to buy it. The paper/board packaging
market – which is almost entirely directly printed, rose from 41% in 1996 to 46% of the total
packaging market during the previous decade.
Some generic trends, which are occurring in almost, all markets for print and printed
packaging are:
– Concentration – and therefore increased buying power – in customer industries, such as
publishing or retailing.
11
–Closer integration of supply chains to improve customer response and reduce inventory. This
requires printers – especially those producing printed packaging – to co-ordinate more closely
with buyers and/or customers.
– Less use of professional print buyers (who usually had some experience in the printing
industry) and greater integration of print with other procurement activities.
– Demands for price reduction, due to cost pressures in customer industries and the high visibility
of printing as an overhead item.
– Demands for faster turnaround times in order to meet the needs of customer’s own rapidly
changing markets, and because of the general time urgency of modern culture.
– Demands for higher performance from printed products, through high quality colour, new
substrates, personalisation or other means.
– Shorter runs, resulting from reduced stockpiling, tailoring of outputs to specific individuals or
groups of customers and other drivers.
The trend towards shorter runs is particularly significant because it increases the
throughput of print jobs. This requires printers to be much quicker at preparing presses for new
work, and to be more efficient at production management and administration. Print is a means to
an end, that of communicating information. This is also an important function of packaging. The
actual cost of a printed item typically forms only 5-10% of the total cost of achieving this
communication. The costs of preparing the material to be printed, of holding stock and disposing
of that which is waste (for example, 30-40% of books and magazines produced are unsold and
returned for pulping), and of administering the entire chain are much greater. Printers have
considerable opportunities to develop new services to capture more of the value added (or
destroyed) within the process, and many are doing so. Customers are receptive to this because:
–They may wish to outsource non-core activities, such as running in-house printing activities or
storing printing material for distribution on request.
– They want complete solutions to their needs rather than simply a product – leading direct mail
printers, for example, often collate and mail customer packs and maintain customer databases.
– Printers may have technical expertise in non-printing areas, for example, image archiving and
retrieval or database development and management.
1.2
Technology
12
Historically, printing has been a very distinctive craft-based manufacturing industry, whose
technologies make it qualitatively different from other sectors. Although it is now moving
towards computer integrated manufacturing in some respects, it remains an unusually complex
production process. Printing presses operate to very fine tolerances which require either very high
levels of skill or advanced automatic control. Reproducing complex graphic designs can also be
difficult, especially when customers may not appreciate some of the difficulties of doing so. And,
whilst modern colour management software and instruments can ensure objective consistency of
outputs and inputs (which has many benefits), colour perception is subjective so that customers
and staff will not always accept that this is the case. Printing therefore requires a great deal of
checking (through printing proofs of work in progress) and communication across the supply
chain. This chain has four main stages:
– Content creation – usually done by customers such as advertising agencies, editorial
departments etc. but printers may be involved in specialised areas or for inexperienced customers.
– Pre-press – processing the component elements of the final job (primarily images and text) so
that they suitable for outputting and then assembling them into a composite version for
outputting.
– Outputs – creation and finishing of printed or electronic products for distribution.
– Distribution – delivery of products to final customers.
The falling cost of pre-press equipment and its increasing automation – which is expected
to continue – has allowed many medium-sized printers to establish pre-press departments, with
adverse effects on the ‘repro houses’ who have specialised in this area. This increases the skill
requirements of smaller printers and means that repro houses must diversify into other areas, such
as digital asset management or specialist digital printing.
Fundamental change has been occurring in all of these four areas, driven by a move from
analogue to digital processes. Most content is now created on computers and transferred and
processed as electronic files. It only takes physical form when it is imaged onto a plate or screen
for impression-based printing (which transfers an inked image onto paper or other substrates
through physical pressure). New digital technologies (which transfer the image by non-contact
processes such as electrostatic attraction or inkjets) even eradicate the need to make plates or
screens. Digital printing creates completely new possibilities for print such as:
13
– Fully-personalised brochures and information packs, containing a selection of material of direct
interest to the recipient.
– The end of ‘out of print’ books as it becomes economic to print in small batches or even single
copies.
– Individual or small versions of products such as greeting cards, labels and carton packaging.
– Frequent reprinting – and therefore opportunities to amend – small quantities of promotional
materials, business cards etc., rather than having to place a substantial single order.
Digital printing only accounts for a minor share of output at present. Impression-based
technologies are likely to remain the dominant technology for the foreseeable future, and may
grow in absolute usage even while their relative share declines. In the very long-term, however,
digital printing is expected to become as or more important than impression-based methods. The
move to ‘digital workflows’ is independent of these changes in output technologies and has
numerous consequences, notably:
– Rapid technological obsolescence of pre-press and other equipment, with a consequent need to
depreciate it over much shorter periods (typically three years) than the industry has been used to.
– Continuous expenditure on software upgrading.
– Making file errors and problems a major source of cost, which can only be eliminated by
detailed checking, IT expertise and customer education.
– A need for better process understanding and management amongst staff, as mistakes in early
stages can be hidden until output, when they are very expensive to correct.
– High investment in networks and data storage in order to move data around quickly and archive
it until required.
– A need for colour management and other software to ensure that all items of equipment are
calibrated to each other.
– Closer electronic integration of processes within printers, and between them and other players
in the supply chain, so that inputs can be transferred and work can be sent backwards and
forwards for proofing.
– A reduction in environmental impacts because it avoids the need for film processing chemicals
and wastes.
Some other important technical trends within the industry are:
14
– Faster make ready times and/or running speeds of presses, which means that the capacity of a
new machine is much greater – sometimes double – that of older ones of similar size.
– Increased automation of press functions such as ink settings and plate changing.
– Increased costs and substitution of inputs due to environmental regulations on the emissions of
volatile organic compounds (VOCs) which arise from inks, and also the alcohol solutions and
solvents which are used to treat and clean printing presses.
– Use of higher performance substrates which can achieve better results e.g. better colour
reproduction, higher gloss and/or reduce their weight and thereby reduce costs.
– A growing emphasis on finishing – binding, collating and other procedures – as a means of
adding value to printed products.
– Concentration in suppliers, which are increasingly offering a wider range of equipment and
software on a global scale. This means that it is increasingly hard to gain competitive advantage
from technology alone, as this is available anywhere in the world.
The traditional, and still probably the most widely used, method of distribution is ‘print
and distribute’ in which finished print is delivered on a van or lorry. The industry is therefore
highly dependent on a good road system; especially as paper is ordered on a ‘just in time’ basis
and customers are demanding quicker turnarounds of their orders. However, alternative methods
of distribution are growing especially:
– Fulfillment services, in which printers stock products such as brochures and mail them to an
individual order (in some cases from customers and in others internal staff).
– ‘Distribute and print’, which replaces the shipping of printed products to multiple locations
with transmission of an electronic file for local outputting in smaller quantities.
– Electronic distribution, in which content is published on electronic media with no assumption
that it will be printed.
One implication of this growing complexity of distribution is that printers have be to be
adept at repurposing files into different formats so that they can be outputted and distributed in
different ways. Modern printing is heavily dependent on information technology (IT) and
becoming more so. The large size of image files means that even a relatively small printer will
often handle more data, and process it more quickly, than a medium sized building society. As a
result printing is a key market for several major IT vendors such as Adobe or Apple. The
corollary is that much of the industry’s capital expenditure is devoted to IT hardware and
15
software, and to IT components embedded within other equipment. Much pre-press equipment,
for example, is now essentially specialised computers. Printing is also a major, and growing,
employer of staff with IT skills, particularly in networking and graphics software.
Good telecommunications links are also essential, with even the smallest commercial
printers usually having ISDN connections. The industry is also seeing a growing interest in
Internet usage and of e-commerce. Indeed, printing has had more ‘dot coms’ – albeit mainly US
based – than almost any other manufacturing sector. Section 3 discusses the potential impact of ebusiness on printing in more detail. One important aspect of this growing reliance on IT and
telecommunications is the extension of the potential market for individual printers. It makes it
easier for local printers to seek regional or national markets, for Indian printers to seek
international markets and for overseas printers to target Indian work. Technical complexity also
results in substantial capital expenditure. It is not unknown, for example, for even a small printer
with Rs. 1-2 crore of turnover to make a single item equipment purchase with a value of Rs.
40,00,000 or more.
1.3
Industry Suppliers
The Indian printing industry is very dependent on external inputs. For high end works 59% of
national paper consumption is provided by imports while it 20% for lower end jobs. Most prepress, production printing and finishing equipment is also imported, primarily from Germany and
Japan and graphics software is provided by American suppliers. The only areas of printing inputs
with a substantial Indian production base are inks and coatings and some specialised areas of
web-press equipment. There is a substantial Indian development base for web-press machines,
and some areas of prepress hardware.
There is also increasing consolidation amongst print suppliers, especially with regard to
paper and board. Supplier R&D in India is relatively on a lesser scale than other leading
economies. India does have some research organizations namely Research Institute for Newpaper
Development, IRFA and Print Management Institute by Heidleberg which undertakes primary
and secondary research in printing technologies, especially newspaper printing and publishing
and commercial printing. It also provides technical consultancy, market intelligence, training and
other services to a sub-continental customer base.
16
There is also some R&D conducted in the India by the paper and inks and coating
industry, and in some specialist areas of pre-press equipment and software. Only a small number
of universities – notably the Department of Printing Engineering at the Anna University, Chennai
and the Department of Printing, Manipal Institute of Technology are known to specialise in
research on the printing.
1.4
Industry Organisations
The largest Indian trade association is the All India Federation of Master Printers -AIFMP which
has representation of the industry from all the states of India with state level associations of
Master printers in membership. It has major membership bodies from all the metropolitan cities
of India namely, New Delhi, Mumbai, Kolkata, Chennai and Bangalore. There are also major
members from Chandigarh, Sivakasi, Coimbatore and Jalandhar. There are also more specialised
associations – Indian Printing Packaging and Allied Machinery Manufacturers Asociation and All
India Screen Printing Association. Printed packaging has independent trade associations,
representing the different market segments.
Two professional associations, the Research Institute for Newspaper Development and the
Indian Institute of Packaging provide personal development support and training for individual
members of their industries.
Both printing and printed packaging do not have any major trade union except for the
ones, which are found in newspapers.
1.5
Industry Structure
Printing in every country is dominated by small-medium sized enterprises, with most printers
serving local markets. Newspaper, magazine and carton and corrugated printers tend to be much
larger than others.
India has an even higher percentage of output produced by small companies and a smaller
average size of firm, than other developed countries. Nonetheless, the industry has been
consolidating. This is most advanced in printed packaging. Printing is less consolidated but
several recent mergers and takeovers means that there are now 100 Indian printers with more than
500 employees. Consolidation has also been driven by the entry to, and growth within the India,
17
of foreign companies. This reflects a general trend towards more internationalisation of printing,
which has traditionally been organised on a national basis. The main reasons for this appear to be:
– Providing a global service to multinational customers.
– Expanding product opportunities by tailoring them to local markets.
– Taking advantage of lower cost production locations.
Todate, the national and specialised nature of most printing markets means that achieving
economies of scale does not appear to be an important driver, but this may change with the
development of a more integrated European market. Foreign investment by Indian printers has
started growing but is on a extremely smaller scale to inward investment. Until recently, this was
focused on printing machine manufacturing namely by Manugraph Industries. There is also more
foreign investment by niche printers, either in autonomous operations, magazines or as in
academic journal printing and related services, outsourcing of some back office operations.
1.6
The Labour Market and Industrial Relations
Indian printing employment has been increasing marginally during the early 2000s. This mirrors
the situation in many developed countries and China but contrasts with the rising levels of GDP
of the country. The main cause of falling printing employment in India is automation of printing
processes, which has reduced the need for semi-skilled and unskilled labour.
Employment in carton packaging has fallen at a similar rate as printing. However, there
had not been considerable job losses during 2000 due to of export markets. One unusual aspect of
Indian printing employment is its relatively even national distribution across the country. It is a
substantial employer in all areas of the India and is one of the most important industries in several
regions Sivakasi, Mumbai and Amritsar, for example, have some of India’s largest concentrations
of web offset printing. Some regions have also increased their printing employment during the
1990s.
The industry’s workforce is mainly involved in production, although the percentage of
office-based jobs is rising with time. Around a third of the total jobs in the industry are in
finishing. This also has the highest proportion of women, in part because it is the area with most
part-time work. The number of new entrants to the industry has been relatively low in recent
years. One reason for this is a surplus of older workers. A second is a decline in traditional entry
18
methods such as apprenticeships (which are generally over-subscribed when they are offered). A
third reason is difficulties in recruiting the non-traditional skills such as IT which are increasingly
required by the industry. As a result, the workforce has a high average age – 42 in the case of
AIFMP owned press employee members.
The industry has traditionally recruited from people leaving school at the minimum age. It
has been seen as one of the most skilled, well paid and respected occupations for such leavers and
attracted many of the most able candidates. The increase in the numbers of young people staying
on for further and higher education has now reduced this pool. Although the industry has partially
compensated by employing more staff with SSC levels and HSC and a small but growing number
of graduates (especially in larger companies), the change has caused difficulties. There are now
fewer people with the ability and commitment to develop advanced skill levels amongst early
school leavers. Although it remains easy to recruit unskilled staff, there is also greater
competition both for school leavers with SSC level and higher qualifications and for qualified
staff, especially those with the IT and customer service/marketing skills for which the industry
has a growing need.
A 1999 survey found that 40% of responding companies had experienced labour shortages
at the time of the interview and/or during the previous six months. Another study of companies in
the Amritsar area found that vacancies were mainly related to the introduction of new technology
and machinery, changes in production processes and the needs of new clients. The main reason
for the difficulty in filling these was lack of skills or relevant work experience amongst
applicants.
The industry has a number of countrywide or more geographically limited national
agreements for specific segments of printing and printed packaging, which are negotiated
between the AIFMP and the various trade associations. These vary in their degree of coverage of
the segment, and in their terms and conditions. The largest agreement in terms of numbers
covered is that between the AIFMP and trade unions. A number of larger companies individual
agreements. Many people’s perceptions of printing industrial relations is that they are smooth and
cordial and not strike prone. However, the level of disputes has been very low during the 1990s
and is well below the national average.
19
Table 1.5:
Skill Requirements for Modern Printing
Size
Size Current – leading edge Future
Future
1-9
Multi-tasking in pre-press:
employees Scanning
Typesetting
Pagemaking
Image setting/platemaking/screenmaking
Convergence of pre-press skills
Imagesetting/platemaking/screenmaking
Operating computerized conventional litho
and direct digital colour presses and screen
presses
Finishing skills -in-house and increasingly
digitized
10-49
Multi-tasking in pre-press:
employees scanning
typesetting
pagemaking
Imagesetting/ platemaking/ CTP/
screenmaking skills
Operating computerised conventional
litho and direct digital colour presses and
screen presses
Finishing skills – in-house and
increasingly digitised Direct to screen
projection
Convergence of pre-press skills
Operating computerized conventional litho
and direct digital colour presses and screen
presses
Finishing skills (in-house and increasingly
digitised) Direct to screen projection
Finishing – in-house/increasingly digitised
Data anagement/archiving
Greater knowledge of alternative media
Increased customer relations –
training/advising customers
Knowledge of JIT rinting/distribute to print
50 and
Internet/ISDN/Intranet
Convergence of pre-press skills
above
Convergence of pre-press skills
Operating computerised conventional litho
employees Operating computerised conventional
and direct digital colour presses and screen
litho and direct digital colour presses and presses
screen presses
Finishing – in-house/increasingly digitised
Finishing – in-house/increasingly
Data management/archiving
digitised Data management/archiving
Knowledge of alternative media
Knowledge of alternative media
Dedicated customer service’ relations
Customer relations – training /advising
Training/advising customers
customers
Knowledge of JIT printing/distribute to
Press staff with clients
Direct to screen projection
Press staff with clients
Adapted from D. Smallbone, R. Baldock and S. Supri, New Technology and Related Skills Needs
in the Printing and Publishing Industries, London: Centre for Enterprise and Economic
Development Research, Middlesex University, 1999.
1.6.1 Education and training
The lead body for the sector’s education and training is the Print and Graphic Communication is
Industrial Training Institutes awarding National Trade Certificates functioning under Ministry of
20
Labour. This awards certificate level vocational training to incumbents producing skilled
workers. State Boards of Technical Education conduct diploma level courses and produce
technologists and technicians to man the supervisory level and highly technical skilled
manpower. Degree level courses are conducted by some seven universities in printing
engineering producing engineers and technocrats to man entry level managers for production,
research and marketing jobs. This is governed by All India Council of Technical Education –
AICTE who provides recognition and accredition. It also acts the monitoring and controlling
authority for educational quality and performance. This is funded by the Ministry of Education,
Government of India.
There have been several sub-regional skills initiatives involving collaboration between the
AIFMP and the state level associations. The amount, and nature, of skills required in printing is
changing. The industry has traditionally employed large numbers of skilled and semi-skilled staff
to man printing presses and undertake pre-press activities. Increased press automation and
productivity is reducing the requirement for unskilled and, to some degree, semi-skilled staff.
Those who remain generally require less skill in manual press adjustments and more in computerbased process control. Shopfloor staffs are also being given greater responsibility for managing
print processes.
The demand for skilled staff in the press, pre-press and finishing areas is more stable and
may even be increasing. However, in pre-press the balance has shifted from manual techniques to
detailed understanding of graphics software, design skills and knowledge of the overall print
process (so that files can be prepared without errors). The rapid pace of technical change also
requires regular retraining with a consequent need for staff with mental flexibility and a good
grounding in the basic principles of print production processes. The following table provides a
detailed breakdown of the new skill requirements for printing, from a study conducted by All
Federation of Master Printers.
Table 1.6:
Qualifications of Staff in Indian Printing Companies
Level of Education
Required Percentage
School Certificate
16.90%
Higher Secondary
07.00%
21
National Trade Certificate
41.60%
Diploma
37.00%
Bachelor of Technology
04.00%
Vocational Education
15.00%
Other Qualifications
02.70%
Post Diploma
09.10%
Postgraduate Certificate
02.30%
Postgraduate Diploma
02.30%
Engineering Degree
01.80%
Post Graduate
02.30%
Source: AIFMP, Workforce Survey 2001
One difficulty for all areas of production education and training is the rapid obsolescence of
equipment. Educational bodies find it difficult to fund the costs of regular replacement, especially
when other subject areas may be faster growing and cheaper to provide. Many employers are then
reluctant to devote time and money if staff are not training on the latest equipment. A minority of
colleges have managed to overcome this difficulty by winning support from manufacturers, as
with Anna University, Chennai, Jadavpur University, Kolkata and --------------------Engineering
College, Pune.
The industry also has a growing need for non-production skills such as customer service,
sales and marketing, IT support (e.g. for networks and file transfer) and database preparation and
management. Some of these skills – which often cross the border between technical and
management roles – are industry specific but many are generic in nature and can be provided by
non-print specific courses, for example, in management. Only a small proportion of industry
staffs have higher-level qualifications such as diploma levels or degrees.
As noted, there has also been a sharp fall in the traditional route into the industry that of
school leavers taking up apprenticeships and/or attending full- or part-time courses in further
education. It has been estimated that only 5000 people take up printing and graphic arts related
courses. These numbers may not be comparing like with like, as Chinese courses tend to be
broadly based – with, for example, a large multi-media component – so that many people go into
publishing and other industries once qualified. Nonetheless, most experts believe that there is a
substantial difference in the numbers of young people receiving print industry education. As a
22
result of falling recruitment, the number of Indian colleges offering printing courses has remained
at only six which is abysmally a low figure.
The 2001 Workforce Survey of printing workplaces found that only a minority of
companies were undertaking training. Of those which were, machine printers were the category
of staff most likely to be receiving training (in 37% of responding companies) and sales staff the
least likely (in only 17% of respondent companies). Companies which were relatively
sophisticated in terms of IT were more likely to be training staff than others.
Table1.7:
Levels of Training in Printing and Printed Packaging
Level
Training percentage
Directors / Managers
22%
Supervisor
24%
Printing administrators
26%
Machine printers
37%
Finishers
26%
Prepress staff
26%
Clerical staff
28%
Transport
18%
Maintenance
25%
Sales
17%
Note: Percentage who have received training in responding companies, which employ this
category of staff
Source: AIFMP, Workforce Survey 2001
Much of the training which was provided was ‘on-the-job’. Whilst this is essential and
invaluable in printing, and will always remain important, it has many limitations – such as lack of
contact with outside ideas or poor training methods – when not supplemented by ‘off-the-job’
approaches. The main reason given for companies not training was ‘lack of need’. A fifth of
respondents also felt that accredited training made little difference to staff performance.
23
The 2001 Workforce Survey also revealed a patchy take-up of qualification-based training
schemes and related initiatives. It found that only:
– 38% of sites were employing modern apprentices, national trainees or other young people on a
structured training scheme, with medium-large companies being much more likely to do so than
smaller ones (60% in sites with over 100 staff, and 46% amongst those employing 25-99).
– 31% of sites were using Diplomas or Degrees, but in these a mean proportion of 10% of staff
were utilising them.
– 13% of sites were using Investors in People.
However, almost all the sites which were involved in such schemes found them to be useful.
When asked where they would go to get advice on training and staff development, 49%
cited a trade association and only 23% an official business advice or training organization.
Shorter-term technical training in the industry is provided by:
– Colleges – particularly those which have alliances with manufacturers, as with the IRFA,
Research Institute of Newspaper Development, Heidelberg Print Media Academy.
– Suppliers – increasingly significant as they are able to offer access to the latest equipment.
– Professional bodies – notably the Anna University, Jadavpur University and Indian Institute of
Packaging.
– Trade associations – training is an important activity for all associations and accounts for the
bulk of the expenditure for several. It is delivered both through courses and other means, such as
the interactive CD-ROM based package Sinapse developed by the AIFMP.
– The NTC-ITI– this has a number of training centres and has played a leading role in several
local skill development initiatives. Its work parallels successful union-employer training
collaborations in Scandinavia.
– IRFA International – the main consultancy and research centre for the industry.
– Private training providers – particularly significant for software training.
There are a number of undergraduate courses in graphic design but very few which focus
on printing or printed packaging. This is also the case at postgraduate level. Indian Institute of
Packaging, which is partially targeted at the printing, packaging and printing supply industries.
The Anna University, Chennai, jadavpur University, Kolkata and Guru Jambeshwar Univarsity,
Hissar offer MS in printing and packaging engineering and technology. Many print educators
believe that e-learning can overcome some of the problems of cost, distance and inflexibility
associated with attending college, and provide access for people in remote locations. However,
24
the 2001 Workforce Survey found that printing staff have a preference for more traditional forms
of training.
1.7
Management
The recent consolidation of the industry has created a number of large printing companies, which
approximate to similar sized peers in other industries in their approach to management. In
general, however, printing has always been a very entrepreneurial sector, with most companies
being founded and run by people who have risen within its ranks. Managers and supervisors too
have tended to follow the same route. An informal survey of Indian and American print managers
found that far fewer Indian print managers had received further education and only 18 per cent
had a degree, compared to 46 per cent of the US respondents. This partially reflects the higher
percentage of people undertaking higher education in America. The survey also found that over
40 per cent of Indian managers had worked in the industry for more than 25 years and very few
for less than 10 years. Author’s informal survey found little change in the situation, with only
28% of responding directors/managers having higher academic qualifications. No comparable
Chinese statistics are available.
Entrepreneurialism and movement ‘up the ranks’ remains an important, and in many
respects positive, aspect of printing management. Industry-specific opportunities for development
are also provided by management and supervisory courses offered by trade associations, as well
as the AIFMP. This organises events, company visits and other activities to assist the
development of potential and junior managers. There are also some local initiatives in each region
by regional bodies in association with state agencies such as Micro, Small and Medium Industries
Service Institute. This identified leadership development for team leaders as a priority
requirement for companies.
There has been little management-level recruitment into the industry until recently. This is
now increasing in larger companies, and for specialist posts such as finance, IT and marketing
where there is a shortage of expertise within the sector. There is also a small but potentially
significant trend of individuals with external management experience taking full control, or
equity stakes, in printing companies which they then manage.
25
This lack of qualifications may explain the industry’s relative disinterest in business
planning. A 2001 Workforce Survey found that only 63% of respondents had formal business
plan – and under half of companies with less than 10 employees – and less than half had any kind
of human resources plan. The previous 2000 Work force Survey also found that only 52% of sites
surveyed were operating to recognised or customer-devised management standards. Of the sites
where standards were in use 72% operated to the ISO 9000 series and 13% to Investors in People.
Larger sites were more likely to operate to quality standards than smaller ones (80% of
companies with over 100 employees were doing so compared to 40% of those with under 10
employees). Probably a majority of commercial printers have a computerised management
information system (MIS) to track jobs and provide decision support information such as time
spent and actions performed. However, many of these are relatively old and, in the view of
suppliers and consultants, few are being used to their full potential.
1.8
Finance
Some 95% of printers have debt which, on average, finances 33% of their assets.1 5 46% of the
2000 printers who filed accounts increased their debt during the year 2000. About 15% of those
increasing debt were making losses, suggesting that they were in serious financial difficulty.
Although no statistics are available, it is likely that, as with Indian industry generally,
Indian printers rely more on short-term overdrafts than continental equivalents, which make
greater use of longer-term bank loans. There has also been a trend from purchasing printing
presses to using asset-based finance such as leasing or secured loans. The traditional longevity
and correspondingly high resale value of printing presses has meant that lenders have lower risks
than in some other areas of asset-based financing and so lend on relatively generous terms. Some
believe that the ready availability of asset-based finance has contributed to the industry’s overcapacity. However, the situation has changed in recent years because of a fall in the value of
second-hand presses.
Very few printing companies are quoted on the Bombay Stock Exchange or National
Stock Exchange and those which are have low price/earnings ratios. The main reason for this is a
perception that they are in a low growth sector. This makes them vulnerable to takeover. Low
valuations and perceived insecurity often mean that private companies are reluctant to consider
26
listing – and are therefore unattractive for commercial equity providers which require this as an
exit strategy. Low valuations also mean that few such providers take an interest in the sector.
1.9
Environment
The main environmental impacts of printing are:
– Consumption of resources in the form of paper, cardboard and plastic substrates, energy, water
and consumables such as inks.
– Disposal of paper wasted in production or surplus to requirements, which often amount to 510% of the volume purchased for printing and up to 20% for carton packaging.
– Emissions of volatile organic compounds (VOCs) from solvent-based inks, cleaning fluids and
other consumables.
– Waste water resulting from processing film and cleaning machines.
Printed products are also a major component of national waste streams. This includes
products which are wasted within the supply chain – as with the 30-40% of printed books and
magazines which are pulped – and those which are disposed of by customers.
These impacts mean that the industry is directly subject to an increasing amount of
environmental regulations, notably:
– The Packaging Waste Regulations which make all printers of more than 50 tons per annum
output responsible for recovering a proportion of their output at the end of its life.
– The Levies by State Pollution Control Boards.
– Emissions controls on volatile organic compounds (VOCs) which are driving a move to waterbased inks.
Printing and printed packaging are also indirectly affected by environmental regulations
on the paper industry, especially those encouraging greater use of recovered fibre and on
downstream customers. Finally, there are voluntary or semi-voluntary (i.e. undertaken to avoid
regulation) initiatives to reduce wastage within supply chains by industry customers such as
direct mail users and magazine and newspaper publishers.
27
As yet very few printers have adopted ISO 14001, the standard for environmental
management systems. The main reason appears to be a concern that the standard is bureaucratic
and expensive to implement and therefore beyond the reach of smaller printers.
28
TWO
LITERATURE REVIEW
29
2 LITERATURE REVIEW
In this chapter an attempt is made to present the literature pertaining to the research work relate to
the present study. Since, not much work has been one on the printing industry in India, this study
is undertaken. Studies conducted on the printing and allied industries in general and Indian
printing industry in particular, have been reviewed under the following sections.
2.1 Printing industry in Indian manufacturing
2.2 Industry economics
2.3 Customer, technology and future
2.1
Printing Industry in Indian Manufacturing
Indian printing industry has formed part of the study on manufacturing industry since 1951.
However it is considered in combination with paper, paper products and printing as the group had
been classified. In this classification paper manufacturing industry formed the core and paper
products manufacturing and printing industry took the shape of associate industry. This
classification is used to collect data with regard to production and utilization of paper for forming
part of the manufacturing industry statistics. Not much of an organized study had taken place or
books are published on printing industry. However, government had constituted committees
towards setting up of text book presses, which had prepared reports for that purpose.
The industry groupings in the form of associations of clusters had been in existence since
about half a century in different parts of India. These associations had conducted workshops,
meetings and other endeavours like exhibitions, conferences etc., towards protecting the
sustenance of the industry. However all these had focused mainly on the technological
component of the industry. The economical and business components were restricted towards
making occasional representations to government on taxes and duties. Also printers had most of
the time focused themselves as traders who quote, wait for the response and execute, rather than
30
viewing themselves as industrialists. This also has to do with the fact that printing is considered
mainly as need based process for reproduction by any available means than an industrial effort.
However, newspaper industry a segment of the printing industry has always been ahead in
organizing itself for their protection and benefits. Still, there had not been an organized study
done in this area. Since the printing industry is divided into various segments catering to a
principal industries or as in house printing units specializing in an obscure product almost no
systematic study has so for not been initiated for the industry as whole. However, certain states
where printing industry has its major clusters in India had conducted studies focusing on solving
a particular problem or studied this industry as an associate of other major industry.
There are books on printing industry in India, focusing mainly on historical aspects of the
industry and its development or not so many books on printing as technology. It is a matter for
concern that only a few numbers of text on printing technology catering to the lower end of the
trade.
The printing Industry was classified alongwith Paper and paper products industry in 1962
Standard Industrial Classification, wit a revision in 1968. In 1970 it was made into a three digit
classification printing still clubbed with paper industry. The National Industrial Classification
1987 grouped Publishing, Printing and Related activities. The 1998 classification made printing
as a separate entity in the Industrial Classification. This had further been classified in 2004 fully
covering all the old and new printing and related activities.
As for the reasons explained above studies on printing industry as an economic activity is
not available. Also the first scientific study on this industry had been done in 1985 by Hira Kant
Jha, under the title ‘Empirical study of printing presses in Patna, Bihar’, as dissertation for his Ph.
D. in Patna University, 1985). There was another study in Punjab focusing on the employment
and wages of the printing press employees of Amritsar in 1955. However none of the above
known studies had approached the printing industry economics as a whole or as its major
component parts, so as to use for reference or review. Also the author could not come across any
other scientific study on this subject topic.
2.2
Industry Economics
31
Australian Printing Industry Report, 1998, has studied the printing Industry of Australia in 1998
and published a comprehensive report covering all areas of the industry from raw material,
business processes to future prospects and foreign competition. It also had outlined the industry
specific initiatives by the government.
Encyclopaedia of American Industry, Standard & Poor’s NetAdvantage (2002), gives a crisp
outlook of the American Publishing industry in the form of overview.
Naresh Khanna (2002) in his article in India Printer and Publisher writes about the globalization
of printing technology.
The Occupational Outlook Handbook 2002-03, published by the Graphic Communications
Council, USA, explains in detail the employment and different occupations available in the
industry.
Ramu Ramanathan’s, (2003) article titled ‘An Overview of the Small Offset sector’, published in
the Indian Printer & Publisher has provided details on the small offset sector of the printing
industry in India.
The United States Census Bureau’s Economic Census Series Reports 2002 gives statistical
analysis of different segments of it printing industry.
A Unique Printing Industry Resource Printing Industries Association of Australia, 2005 details
the Australia’s fourth largest manufacturing industry employer and a major contributor to the its
economy - its printing industry – its current status. It also outlines an ambitious plan for its future
sustenance, growth and globalisation.
An Overview of the Printing and Publishing Industry in the US, Including Future Predictions to
2009, (2005) explains in detail the state of printing industry in United States in all its details. It
also makes forecast of its future to ensure its dominance in creative printing and leader of print
production innovation.
32
Colin Thompson (2006) in his article titled The Chinese Printing Industry explains about the
dynamics of the emerging Chinese Printing Industry and its effect on the global printing industry.
The KBA Report (2006), published by Koening & Baur AG, (2006) Germany and Polygraph
International Quarterly, Germany have detailed their current status of technology and operational
outputs.
In addition reports generated by Indian Pulp and Paper Technical Association, National
Association of Printers & Lithographers, USA, North American Graphic Arts Suppliers
Association, Paperboard Packaging Council, USA, Printing Industries of America,
Screen
printing & Graphic Imaging Association International, USA, Technical Association of the
Graphic Arts, USA, The All India Printing Ink Manufacturers Association, Waterless Printing
Association, USA, on different topics on the printing industry economics and technology and
forecast for the future sourced as published literature and made available online in the world wide
web have been reviewed in preparing this dissertation.
2.3
Customer, Technology and Future
Birkenshaw, John, (1992) in his lecture published in Ink & Print, 1993 issue talks about the
Future trends in printing, which explain in detail the convergence of information technology,
knowledge management and printing industry in providing customer a new composite service.
Printing for Profit 2000 published by the British Printing Industries Federation in 1990s had
outlined the future prospects for the industry in United Kingdom.
Colin Thompson (2006) in his articles titled Graphical Challenges for the Printing Industry
outlines what the future has in store for the printing industry in United Kingdom by taking the
worldview.
Colin Thompson (2006) in his three part article titled Challenges for the Printing Industry makes
an in depth study of the future of the printing industry and makes his forecasts.
33
CHAPTER THREE
PERFORMANCE
34
3 PERFORMANCE
The performance of the printing and printed packaging sectors can be assessed against three
criteria:
– Its potential performance (if that can be ascertained).
– The performance of other comparable Indian industries.
– The performance of other national printing industries.
Although the information needed to make these comparisons is patchy, the following sections
consider recent trends in turnover, foreign trade, prices and costs, profitability, investment,
capacity utilisation and productivity.
3.1
Output
Printing is a mature industry. Indeed, the sector is seen as the archetypal ‘bellweather sector’
which tracks – and to some degree anticipates – changes in macro economic trends. Value added
in printing (code 222) has historically grown broadly in line with GDP, although being
disproportionately hit by recession and recovering strongly afterwards. The value of printed
output is closely linked with advertising expenditure – which directly or indirectly funds around
50-60% of printed material – but that the link is weakening as print’s relative share falls. This has
declined from 52% of total spend in 1990 to 47% in 2000.
Other areas have been less buoyant with value added in carton packaging having fallen
annually since 1995. Consumption of the printing industry’s main raw material – writing papers,
most of which are printed on – rose by 26% between 1993 and 1999, or double the rate of
printing industry turnover. This occurred despite a reduction in the weight of papers used for
most print jobs. Much of this increase is attributable to increased desktop printing in offices and
homes but it also reflects declining prices for many printed outputs.
Within these generic categories there are several segments whose sales have been growing
by at least 10% per annum over much of the last decade, notably:
– Direct mail products and related services such as mailing to customers.
35
– Self-adhesive labels (although recently hit by the high valuation of sterling).
– Specialised labels, packaging and leaflets for pharmaceuticals and personal care products
(which has also grown less quickly in the late 1990s).
Conversely, some segments have been in absolute decline, including:
– Areas of carton packaging which have been displaced by other materials and/or overseas
suppliers.
– Some specialised business forms which have been superceded by electronic documents.
– Colour book printing which has largely moved to overseas suppliers.
3.2
Foreign Trade
Printing and services related to printing makes a positive contribution to the balance of payments
in India and exports have been steadily increasing and imports also increasing in recent years.
Several large printers estimate that they have been facing stiff competition from the increase in
movement of value added printed products from China during the late 1990s.
Table below shows the composition of exports and exports. The areas with the most
positive trade balance are books and brochures (the main category of both imports and exports)
and newspapers and periodicals. Two notable segments with a negative trade balance are folding
cartons and catalogues, which have been especially badly hit by sterling strength.
Table 3.1:
Composition of India’s Printing and Services to Printing Trade
1
Cartons, boxes etc
2
Registers, notebooks etc
3
Diaries
4
Exercise books
5
Manufactured forms
6
Albums
7
Printed labels
8
Stationery not specified elsewhere
9
Single sheets
36
10
Dictionaries and encyclopedias
11
Books, booklets and brochures
12
Newspapers and periodicals
13
Children’s books
14
Music
15
Maps and charts
16
Transfers
17
Postcards and greeting cards
18
Calendars
19
Trade advertising
20
Playing cards
21
Security printing
22
Other
Source: AIFMP Report 2004
3.3
Costs
Printer’s costs have risen more quickly than the both the price indices in most years over the last
decade. Printing and printed packaging has three main cost categories:
– Paper, board and other substrates
– Labour
– Depreciation on equipment.
Other significant cost categories are:
– Purchased services (e.g. pre-press for smaller printers)
– Inks, solvents, plates and other consumables
– Energy
– Transport.
3.3.1 Paper and other substrates
Paper typically accounts for around 30% of the costs of a printed document. Board can be an
even higher percentage of packaging. Paper and board production is a highly cyclical industry,
which moves from periods of substantial over-supply – and downward price movements – to
acute shortages, with the opposite effect. Price fluctuations are further increased for many
customers because wood pulp is priced in dollars.
37
There is volatility in the prices of paper and paper products. Although prices in 1999 were
similar – and in some cases below – those of 1992 there was a major price hike in 1994-95. The
softer prices of the late 1990s have been related to over-capacity. A combination of reduced
investment, consolidation and managed temporary closures of mills has now reduced this and
there was a marked rise in prices in 1999-2000 in the region of 20%.
There is also a feeling in the industry that Indian customers are subjected to extraordinary
price increases, and the last to receive the benefit of price falls. Much pulp is produced from
integrated mills making both this and paper. The paper is usually priced in local currencies and is
sometimes sold relatively cheaply because pulp is the main output. Rising oil prices have also led
to increases in the price of plastics, with consequent margin pressures on flexible packaging
companies.
3.3.2 Labour
Average earnings in printing have risen by slightly more than the national average over the
decade from 1990-99. However, they have slightly lagged the national average between 1995 and
1999. A study of average earnings in AIFMP member companies and demonstrates the
importance of overtime in those earnings. This is an important difference between the India and
China, where overtime levels tend to be much lower and working hours higher. This situation is
not expected to change in the coming years. In general, Indian print earnings are thought to be in
higher than China but much lower than developed countries. However, higher social security
costs in compared to China mean that employer’s total labour costs per individual are higher in
India.
Print earnings differ between regions, different sizes of company and different
occupations. Origination has been the best paid occupation within the industry and finishing the
least although experts believe that this situation has changed over the years. No data is available
for average management earnings in general but enquiries by the author indicate both average
salaries for particular posts and, inter alia, the wide variety of posts which are to be found in
contemporary printing.
Table 3.2:
38
Earnings Differential (Compared to National Average)
Product sector
Differential
General printing
1.00
Origination
1.18
Book printing and binding
0.94
Periodicals
1.09
Newspapers
1.19
Business forms
0.81
Manufactured stationery
0.73
Security
1.00
Digital printing
1.01
Cartons
1.04
Flexible packaging
1.23
Labels
0.92
Trade finishing
0.86
Source: AIFMP Manpower Survey 2001
3.3.4 Energy
Although energy prices are only a small proportion of total print costs, they are a variable cost,
which can have a significant impact on margins. The main energy source for printing is
electricity, whose price tends to be higher than in many competitor countries. The industry’s
dependence on road transport also means that it is adversely influenced by the high cost of diesel
fuel in India.
The energy-intensity of paper and board making – energy costs are around 10% of
turnover in India – also means that energy prices have a significant influence on paper and board
prices. The competitiveness study of the paper industry has demonstrated that the industry faces
higher costs for electricity than China.
3.4
Profitability
The industry faces powerful buyers and suppliers, has a product, which can often be easily
substituted, and has intense competition between printers, which is exacerbated by over capacity.
Hence, there has been continuous downward pressure on prices. For example, when gravure
39
printers lose business they will target large-format web offset markets. The losers in that battle
then go for medium-format work and so on. In this way the effect spreads out to the entire
industry.
Price and cost pressures mean that average printing profitability is low, and declining. The
median return on capital employed for respondents to the AIFMP’s business survey fell from
14.67% in 1999 to 8.63% in 2000, with a considerable variation between individual sectors. This
compares with a net rate of return for Indian manufacturing as a whole. As printing has elements
of both manufacturing and services, this suggests that it is relatively unprofitable. This is
especially true when the abnormally high level of risk created by a constant need for large, lumpy
investments even in relatively small printers is considered.
Table 3.3
Printing Industry Profitability (Percentage Return on Capital Employed)
1999
2000
India – Printing Median
14.67
8.63
General printing
16.07
12.61
Book production
9.88
12.84
Periodicals and newspapers
17.00
19.63
Cartons and flexible packaging
12.45
11.65
Manufactured stationery / Business forms
14.45
8.74
Labels
12.77
9.63
Origination
22.70
8.87
Trade finishing
23.37
10.60
Source: AIFMP Productivity Survey 2001
Packaging has been particularly badly hit. In carton packaging, for example, return on
sales fell from 6.0% in 1995 to only 2.8% in 1999. A study by AIFMP examined the 1997-2000
report and accounts of 1181 printers and divided them into four roughly equal categories of:
– Winners – which have low borrowings as a percentage of sales, and relatively high margins and
sales growth
– Chancers – which have high sales growth but also high borrowings and average margins
– Sleepers – which have low borrowings but average margins and negative sales growth
40
– Losers – which have high borrowings, negative sales growth and are barely profitable.AIFMP
study concludes that time is running out for losers, which are almost a quarter of all the
companies examined.
3.5
Capital Investment
Despite falling margins and flat profitability, the industry has continued to invest in new
technology throughout the 1990s (although anecdotal evidence suggests that there may now be a
delayed response). Investment was around 6.5% of turnover in the mid 1990s, which was around
the global average. One reason for this relatively high investment is the speed of technical and
market change, which renders most pre-press and some production equipment obsolete within a
few years. The industry culture is also very equipment-focused.
3.6
Productivity
There are a number of different ways of measuring productivity and no single measure captures
all aspects. Measures come in several broad classes: output per head (or labour productivity);
output per unit of investment (capital productivity); and total factor productivity. Table below
includes a range of such different measures from AIFMP surveys. This shows that labour
productivity (value added per head) rose by almost 33% between 1994-2000 – over 5% a year.
Table: 3.4:
Productivity Indices for Printing Industry in India
1994 1995 1996 1997 1998
1.72
1.56
1.57
1.54
1.49
Sales over operating assets (ratio)
103.9 117.4 123.4 130.6 138.9
Sales per head
106.4 119.9 119.9 125.9
130
Value added per head
103.4 114.9 116.4 120.8 125.7
Value of output per head
100.2
98.4
97.9 101.6 102.1
Value added as a % of sales
99.3
99.7 102.3
101
99.3
Sales per Re of wages
98.9 101.1
99.5 102.2 101.6
Value added per £ of wages
115
110.1
104.6
119.4 113.4
Profit as a % of operating assets
114.2 122.3 109.7 127.4 125.3
Profit as a % of sales
114.9 129.1
124 127.9 126.7
Profit as a % of value added
Note: 1993=100
Source: AIFMP Printing for Profit 2000
1999
1.57
135
133.9
129.4
103.1
98.4
100.5
114.1
125.9
136.8
2000
1.88
142.35
141.07
128.38
101.02
101.32
103.23
136.82
112.29
91.62
The statistical problems identified in the introduction are illustrated by the fact that the
AIFMP figures show sales per head in printing increasing by 27.6% between 1992 and 1998.
41
However, Government statistics for printing, publishing and paper suggest that output per head
rose by only 0.9% per head over the same period, well below the manufacturing average of
11.3%. One explanation of the difference is that the government statistics include very small copy
shops and printers, which would not be included in the AIFMP figures.
Sales and added value per head have risen less markedly in carton printing. The main
reason for this is probably downward pressure on prices, as is demonstrated by the fact that
volume of output per head rose by 11% between 1995 and 1999. The few experts with crossnational experience agree that Indian printing productivity is almost certainly lower than in China
but there is less agreement as to by how much. A large printing company with international
operations, for example, estimates a 10% productivity gap between comparable sites.
Packaging experts also believe that the acute pressures for lower prices from retailers and
other customers in India have resulted in comparable productivity to that of China. One problem
is that there are considerable differences between sectors and types of companies so that
aggregate comparisons are potentially misleading. The Government’s, and indeed all industry,
statistics therefore need to be interpreted with caution. There are a number of theoretical
explanations for any productivity differences, which do exist, including:
– Investment
– Labour inflexibility
– Skill levels
– Management
– Logistics
– Low capacity utilisation
– Lower prices in the India as a result of intense competition (this reduces the turnover and value
added component of productivity ratios).
There is no evidence that Indian printers have invested less than China or other countries.
However, it may be that investment decisions have been poor so that productivity is less. Hence,
this does not appear to be a major explanation of productivity differences. Comparative studies of
activities such as kitchen manufacture have found that skill differences can be a major
explanation of differences in productivity. Well-trained shopfloor staff can help to improve
capacity utilisation, maintain high product quality, reduce wastage and extend the life of
42
equipment through good process knowledge and appropriate actions.Many of those consulted felt
that poor management is a major cause of productivity differences. This can mean that the full
potential of equipment and staff is not achieved.
The move to just in time deliveries to printers, and of printed products to customers,
means that transport delays can also be a significant source of down time in printers. India has
one of the lower printing capacity utilisation rates than of any developed economy. This may be
exaggerated by variations in measurement methods and reliability but most experts believe it to
be a real difference. Over-capacity has also increased in periodicals, where relatively stable longterm orders had previously given some protection. Web offset capacity has increased by around
10% per annum in recent years, compared to a 3-4% increase in sales.
There are strong downward pressures on utilisation in all countries because modern
presses have much higher capacities than the equivalents that they replace. The explanations as to
why over-capacity is especially prevalent in the India appear to be:
– Over-investment in new equipment by some companies, which is related to unsophisticated
investment decision-making.
– Greater seasonal fluctuations in print orders, which means that capacity must be maintained
without use for much of the year.
– A common tendency amongst Indian printers to retain old equipment even after new
investments have been made in order to meet possible peaks in demand and/or specialist
customer requirements – probably aided by the flexibility to use such equipment which is
provided by the acceptance of overtime.
The large amount of surplus production capacity in India creates a very competitive
marketplace and a consequent downward pressure on prices and value added. This has
undoubtedly been very beneficial for customers in recent years and there is no evidence that it has
affected quality or the industry’s technical competence. However, it is a major reason for the
industry’s low margins.
3.7
Obstacles to Achieving Business Goals
Printers’ own views on barriers to good performance were collected in the AIFMP’s 2001
Workforce Survey. This asked them about the main obstacle, and others, to achieving their
43
business goals. The answers demonstrate the industry’s vicious circle of fierce competition and
an uncompetitive exchange rate driving down margins and profits, which make it difficult to
justify the costs of investment in human resources and technology, so that in aggregate there is a
limited pool of skills to draw upon.
Table: 3.5:
Anticipated Obstacles to Achievement of Goals by Printing and Printed Packaging
Companies
An Obstacle
Main Obstacle
Increasing competition
63%
29%
Costs of new technology
53%
17%
Lack of people with necessary skills in market
43%
20%
Cost of employing new staff
40%
8%
Cost of necessary training
35%
2%
Strong Rupee
30%
10%
Lack of availability of suitable training
30%
5%
Difficulties in offering e-commerce
1%
None of these
9%
Source: AIFMP Workforce Survey 2001
44
CHAPTER FOUR
FORESIGHTS
45
4 FORESIGHTS
4.1
Print Markets
Print turnover has traditionally been closely linked to GDP in most developed countries. In the
short term it responds to fluctuations in GDP – being a leading indicator for downturns and
recovering strongly when growth resumes. In the long-term it tends to rise in line with GDP
growth. Current forecasts are that this will average 6 to 8 % per annum over the period 20002010. It may be that other factors are becoming relatively more important in determining total
demand. The composition of GDP also influences print demand. On balance, the shift to services
has been beneficial for the industry because many service sectors – particularly financial services
and retailing – tend to be large purchasers of promotional print.
4.1.1 Demographics
The domestic demographic influences on print demand include:
– The total size of the Indian population – which is forecast to grow from 59.4 million in 2000 to
60.1 million in 2005.
– The number of households, which is the target audience for much promotional material – these
are forecast to grow in the India from 24.2 million in 2000 to 25.9-26.8 million in 2010.
– The percentage of young people, who tend to have high disposable incomes which attracts
advertisers. The number of those aged 20-35 is forecast to decline from 12.4 million in 2000 to
11.4 million in 2010.
– The percentage of retired people, who tend to consume less but read more – their numbers are
forecast to increase markedly over coming decades.
– The extent to which people adopt ‘e-lifestyles’, for example, with high use of the Internet or
digital television for shopping or information gathering.20
The Indian printing industry will also be increasingly influenced by demographic trends in
other countries, which shapes export markets and the degree of import competition. Indian and
China will have a stable or increasing population and a faster rise in the percentage of young
people.
46
4.1.2 Substitution
Over recent decades print’s share of the overall media market has been slowly declining as media
customers have preferred to use television or radio. Many forecasts suggest that this will
continue. There is also a widespread perception that printing will be badly hit by growing use of
the Internet. This could potentially reduce demand by:
– Providing on-line content via computer screens or other devices such as e-books and thereby
reducing sales of newspapers, magazines and books.
– Replacing business forms, catalogues and promotional material with on-line ordering and data
gathering facilities.
Plans for e-Government could have a particularly serious effect on the business forms sector.
Printing census documentation, for example, is one of the largest and most valuable contracts in
the industry.
On the other hand, there are many examples of the Internet creating demand for print.
These include publication of many new magazine titles dealing with the topic or getting potential
customers to fill in on-line forms which are then used to generate a personalised, printed,
marketing pack for mailing to them. Many forecasts suggest that these positive impacts may well
be greater than any negative ones.
Another form of substitution is print produced outside India replacing that which is
domestically produced (either through greater imports or loss of export markets), or vice versa.
As noted, the high valuation of sterling has meant that there has been a substantial loss of export
business and some increase in imports in recent years. This trend could continue if valuations
remain high. Companies which have sacrificed margin in order to retain contracts will become
unable or unwilling to do so, and improved communications make it easier to source a wider
range of print internationally. Conversely, substantial export opportunities could be opened up if
the value of sterling drops against the euro and, to a lesser extent, the dollar.
There may also be more printing on desktop printers and copiers at the expense of
commercial print. This is partially driven by electronic distribution of documents, but also
because the falling cost, greater ease of use and rising quality of both office printers and copiers,
and graphics and publishing software, is making this option more feasible. Pira International
47
forecasts that this area of printing will grow from 5 to 10% of total printing paper consumption
over the next decade. Carton packaging is also threatened by packaging made of alternative
materials, particularly aluminium and plastic (which may be more easily formable in future).
The scale of substitution will be partly determined by the performance and cost of print
and board-based packaging. More printers will be offering facilities such as ultra-high quality
colour and personalisation, which will increase its impact on readers. Most experts also believe
that automation, e-business and other new technology will reduce the costs of production in many
areas. However, some of those consulted fear that this could be offset by rising salaries and
wages in response to shortages of skilled staff and/or a repeat of the mid 1990s hike in paper and
board prices.
4.1.3 Regulation
Until recently regulation has primarily influenced print demand through requiring the production
of particular kinds of print products. Health and safety regulation has supported growing markets
in information materials and labels. And financial regulation, for example, has been important in
shaping demand for report and accounts and business forms. The acceptance of electronic media
– such as e-tax returns or on-line report and accounts – as legally valid substitutes for traditional
printed products could therefore have a serious impact on some print markets.
The area of public policy with the greatest current impact on demand for print and
packaging is environmental regulation. Anecdotal evidence suggests that activities such as
landfill tax, wastewater disposal requirements and VOC emission controls are all influencing
printing costs, and therefore prices. An even more direct influence on printing demand is
measures to reduce the volume of printed products as a means of reducing waste. This is now
occurring for packaging. A concern expressed by many consulted for this study is that similar
measures might be enacted to reduce the amount of direct mail because so much is currently
thrown away by recipients who do not wish to receive it.
Regulation can also influence the relative size of market segments. This could work to the
advantage of paper and board packaging. Because it is made from potentially renewable
resources and can have high levels of recycling, it could be seen as having significant
environmental – and therefore competitive – advantages over other forms of packaging.
48
Of course, regulation does not exist in a vacuum but is ultimately dependent on public
opinion to drive its introduction and implementation. Current packaging regulations, for example,
have been driven by a widespread public perception that goods are over-packaged (even though
many experts would argue that they are paying insufficient regard to the positive aspects of
packaging such as protection from damage and security). Given the generally disparaging
perceptions of the public and politicians today towards direct mail there is a danger that public
opinion might drive further measures if there is no response from the industry itself.
4.1.4 Innovation
A final influence on print demand is that of innovation. As noted, the development of alternative
media through products such as e-books will tend to diminish markets for print. But there is also
scope for increasing demand through innovation. New printing techniques such as lenticular
printing and/or innovative substrates such as new forms of plastic can be used to increase the
impact of print and to create new markets, such as printing on ‘ambient media’, i.e. objects used
in everyday life. ‘Intelligent’ paper or board can also contain a URL which can be detected by a
special scanner and connect immediately to a web site. In printed packaging opportunities for
innovation include:
– Use and formulation of materials/coatings
– Creative and engineering design
– Information digitisation (e.g. electronic design facilities, digital printing)
– Design, supply and distribution chains (e.g. single source packaging solutions)
– Production control and automation (e.g. web control).
4.1.5 Current forecasts
Two recent forecasts have suggested that the resultant of all these variables will be continued
growth of print markets roughly in line with GDP overall, but with significant changes within
particular print sectors. The most relevant printing forecasts to the India are the worldwide ones
for 2000-2010 in The Future of Print, produced by Pira International. Pira International’s most
likely scenario for printing volumes anticipates that:
– Overall printing demand will grow at a similar or slightly higher rate than GDP.
49
– Promotional print such as direct mail will grow at 11% per annum for much of the decade,
although there will be some slowing towards its end as simple brochures and other materials are
increasingly outputted on office printers.
– Magazine printing will grow at 5% per annum, with shorter run lengths and some migration of
advertising to other media being compensated by an increase in titles.
– Books will also grow at 5% per annum, with any loss to electronic media offset by more titles
in print because of the ability to produce single or small numbers of copies on digital printers.
– Newspapers will be static during the early years of the decade and then decline slowly.
– Business stationery and transactional print will decline by 1-2% per annum, primarily because
of a move to electronic media and/or outputting on home or office printers.
This view of the future is reinforced by Vision 21, published in late 2000, which gives 5year forecasts for American print markets. Although these are less directly relevant than the Pira
International forecasts US trends often cross the Atlantic and may therefore give some guide to
India’s futures. Vision 21 forecasts that the total value of printing will increase in line with GDP
and has broadly similar forecasts to Pira International for the main print categories. It also
believes that the Internet will have a neutral or positive impact on printing because any migration
to electronic media will be offset by its stimulation of new kinds of demand. The main difference
between the Vision 21 and Pira International forecasts is that the former anticipates low rates of
growth in direct mail printing, which is a substantial component of Pira International’s
promotional printing category and has been the fastest growing area of Indian printing in recent
years. This partly reflects saturation in the US, where direct mail per capita is much higher than in
the China, but also ring some warning bells about the segment’s long-term future in the India.
There are no forecasts for paper and board packaging in the public domain but most of
those consulted also believe that this will increase at or above the rate of GDP. One issue is
whether a move to Internet-based shopping would result in plainer packaging because it no longer
has to have ‘shelf impact’. In fact, the US consultancy arm of a Finnish paper producer has
predicted that the Internet will raise the growth rates of containerboard by a quarter. This is
because of new product requirements, notably:
– Increased demand for higher performance containerboard in order to provide greater protection
of goods in outward shipping, which are currently experiencing rates of return due to damage,
and to facilitate re-use for any returns.
50
– Use of smoother, brighter substrates in order to allow higher quality printing – the package will
play a greater role in communicating with customers as there is no opportunity for using point of
sale material.
– A need to minimise volume, which is a key constraint in e-commerce delivery vehicles – this
will require durable and foldable corrugated packaging and new solutions such as small flute
board.
Current forecasts therefore suggest that the printing industry can look forward to growing
markets, and that these will be stimulated rather than depressed by the Internet. However, these
forecasts make assumptions about trends in cost and technical capability, which bear further
examination.
4.2
Technical Trends
The key changes which are predicted by studies such as The Future of Print and Vision 21 for the
next 5-10 years are:
– A greater proportion of printed output being sourced from digital and flexo presses
– Automation of production processes
– Development of e-business
– More customised and diverse outputs
– More sophisticated workflow management.
4.2.1 Changing Production Technologies
India differs from China in having a lower proportion of its output from gravure presses and so
litho is proportionately more important. Litho is also likely to remain the dominant Indian
technology for non-packaging printing over the next decade, although it will gradually lose
ground to digital. Many experts expect that this trend will continue for several decades as digital
print costs fall and quality increases. Some expect a step change to occur in the next few years as
more robust presses are introduced and/or ink jet technologies are adopted. Digital print’s
growing market share will be based on its cost-effectiveness for short runs, and the ability to
change the content of individual pages printed and thereby customise them to user needs.
Some experts also expect the ‘other’ category to be more buoyant than forecast in because
of growing uses of flexo presses. These have lower capital and operating costs than litho and, as
51
the quality of output improves, may move from its present focus on packaging to take low-end
litho applications such as simple labels. However, flexo’s domination in most areas of printed
packaging (with the exception of folding cartons) may itself be eroded by the use of digital
printing. This is impeded at present by problems of speed, quality, limited colours and an
inability to print on certain substrates, but many experts believe that these will be overcome.
4.2.2 Automation of Production Processes
Printing and associated activities such as finishing have traditionally required high levels of skill
in making mechanical adjustments to processes and having a good ‘eye’ for print details and
quality. These human skills are now being automated. Modern presses can make automatic
adjustments to ink and other parameters to maintain colour quality during runs. New standards
are also enabling the entire production process to be integrated through the electronic transfer of
production specifications to machinery as jobs move through the system.
Some manufacturers and experts see this trend as continuing to the point where print
processes will become almost completely automated and analogous to other computer integrated
manufacturing processes. However, most printers believe that there will always be a need for
some degree of human intervention to take account of the vagaries of colour perception and
equipment functioning. In either case, there will be a growing demand for shopfloor staff with the
IT skills and process understanding to monitor production and d e a l with any problems which
occur (which will increasingly be as much software as hardware based). But a move to fuller
automation would mean a considerable reduction in demand for many of the print skills, which
are currently taught on training courses. Automation is also likely to be accompanied by the
development of fully digital workflows, with greater use of computer-to-plate (CTP)
technologies.
4.2.3 E-business
Despite the current shake-out amongst all ‘dot com’ companies many experts continue to believe
that printing will be one of the sectors most affected by this because:
– It has a good IT infrastructure and high levels of IT literacy.
– Printing usually involves a large number of small and recurring transactions, which could
potentially be automated through e-business.
52
– It has a complex production and administration chain which could potentially be simplified by
e-business.
As with other sectors, many printers have been suspicious. E-business has been closely identified
with open on-line auctions, which are seen as a means of increasing competition and further
destroying margins. Concerns about the quality and reliability and supply have also deterred
buyers and it seems that only a small percentage of industry turnover will actually migrate to
open auctions. The dot coms, which look best fitted, to survive are those, which are becoming
applications service providers (ASP). The services provided will include:
– Automated, and closed, procurement systems for print buyers, who will use it to solicit tenders
from, and act as an order processing and tracking platform for, an established circle of suppliers
(with occasional benchmarking of prices by placing tenders on the open market).
– On-line ordering systems for printers to use with their clients.
– Workflow management services which act as a central portal and tracking facility for all
information and files associated with specific jobs.
There are no India specific forecasts for e-commerce but the forecasting company CAP
Ventures has found that 17% of US print is currently procured via processes that are at least
partly Internet-enabled – a figure which it expects to triple within two years, and grow to 80% by
the year 2005.26 Most of the 200 print providers it interviewed for the study believed that
Internet-based workflow and process automation tools will improve their margins in excess of
20%. The US study Vision 21 also concluded that one-fourth to one-third of American printers’
sales and supply purchases will be facilitated online by 2003 and approximately two-thirds to
three-fourths by 2006.
4.2.4 More Customised and Diverse Outputs
Most print is used for promotional purposes. The more relevant the printed materials are to the
needs of customers, the more likely they are to respond to the promotion. Hence, materials are
increasingly being tailored to the needs of groups of customers, or even individuals. This leads to
shorter runs and a consequent need for printers to be more adept in producing and managing large
numbers of relatively small jobs. Tailoring print to customer needs also needs skills in databases,
which hold the relevant information about them. In fact, printed promotional materials are also
increasingly likely to be integrated with other forms of marketing communication, such as web
53
pages. This requires greater skill in understanding and converting file formats so that images and
text can be easily repurposed for a variety of outputs.
4.2.5 New and Improved Materials and Substrates
These can have an important influence on the efficiency and technologies of print production and
the nature – and therefore the size and value of markets for – printed material.
In production some key trends include:
– Development of lower cost and/or more quickly imaged heat- or light-sensitive materials for
plates.
– Development of ink-jet digital printers, which can be used for production printing and/or
production of high quality proofs.
For the printed output itself some key trends include:
– High performance coated substrates, which can support ultra-high quality colour print
– Smart paper or packaging, which provides additional functions, for example, use of
thermochromic ink dots to indicate that a product is at the correct temperature for serving or
storage.
4.2.6 More Sophisticated Workflow Management
The need to monitor digital file preparation and processing, to handle a large number of smaller
jobs, and to have better materials planning so that jobs can be dealt with quickly all place a
premium on good management of the flow of work through print companies. Increased adoption
of more sophisticated management information systems (MIS) is therefore likely. The new
generations of MIS provide sophisticated systems for collecting (often with direct electronic
interfaces with equipment) and analysing workflow information. They also have Internet
functionality to allow customers to track the progress of jobs via web browsers and to integrate
with on-line ordering systems.
4.3
Other trends
A number of developments are driving further internationalisation of competition, customers,
suppliers, printers and unions:
– Global competition is being increased by factors such as cheaper telecommunications, new
transport links, the international single markets, creation of print e-commerce platforms and more
centralised buying by multinationals.
54
– Customers – especially for printed packaging – are increasingly seeking to reduce costs and
protect brands through single or limited source supply deals within continents or even globally.
– Suppliers are already very international but this is increasing further as the increasing costs of
product development and support requires a bigger customer base.
– Larger printers are responding to the globalisation of competition and customer requirements by
either becoming multinationals themselves, or developing partnerships with printers in other
countries.
– A few printers are also selling specialised products and services internationally and/or
undertaking some activities in countries with low cost labour.
– Unions are increasingly sharing experience with each other, and also co-ordinating on the
Works Councils, which are required in the larger printers with operations in several European
countries.
Another important trend for printed packaging is that of efficient consumer response
(ECR) and category management strategies within supply chains. The aim of ECR is to reduce or
eliminate stocks – and the associated costs of financing them and risks of wastage through
obsolescence and other causes – by operating on the basis of ‘demand pull’. In an ECR chain,
production and distribution is triggered not by orders and forecasts but by electronic point of sale
(EPOS) data in retail outlets, which is shared with all chain members over an Extranet. This also
means that out of stock situations can be reduced. One implication of this for packaging printers
is that they will have to make faster deliveries in smaller quantities. ECR chains may also result
in the packaging and finishing of goods occurring nearer to the market – for example, adjacent to
supermarket’s regional distribution centres rather than in a central factory. Both these trends will
shorten run lengths and may therefore increase opportunities for in-line digital printing. This
could reduce markets for conventional packaging printers or, alternatively, it could create
opportunities for them to diversify into packing and filling.
Digitally printed packaging will also be encouraged by a related trend, that of category
management. This aims to stimulate demand and raise margins by creating products, which are
tailored to specific market segments and/or respond very quickly to changes in consumer
requirements. The packaging for these kinds of products will be produced only in small
quantities, which is well suited to digital printing.
55
4.4
Scenarios
All forecasts are beguiling, so it is important to remember that many things could change in
coming years. Hence, a scenario-based approach is perhaps a better way of peering into tomorrow
than portraying a single future. In very broad terms, the following table distinguishes three
scenarios – decline, maturity and rejuvenation – based on different trends in markets, financial
health, employment and skills and technology. Historical trends and most industry opinion
suggests that the maturity scenario is the most likely to develop. However, a minority of those
consulted believes that the others are credible futures. It is important to understand their features
in order to reduce complacency about the industry’s potential downside risks, and to ensure that
maturity does not become a self-fulfilling prophecy, which makes it easy to decry new ideas.
56
Table 4.1:
Print Scenarios
Markets
Financial
health
Decline
More electronic
information distribution –
print increasingly seen as
old-fashioned medium,
with additional problem
of variable product
quality. Insular
management limits
international
opportunities.
Maturity
Some traditional print
markets hit by internet, ebooks and digital TV but
balance by new
opportunities. The larger
players create by
consolidation build their
international operations.
Many smaller printers
develop service-based
specifications and /or
more personalize work.
High levels of
overcapacity and online
procurement intensify
competition and margin
pressures and create
consolidation and many
closures. The industry
remains unattractive to
investors and underinvests in skills and
technology, gradually
undermining morale and
quality.
Continuing over capacity
and online procurement
maintains margin
pressures but many
printers compensate by
cutting costs through
automation and
consolidation. Growing
gap between International
scale players and service
oriented specialists,
which can easily raise
finance, and the rest of
the industry.
Considerable investment
in new technology but
smaller players
handicapped by lack of
skills and standardization.
E-business partly fulfills
expectations but confined
to medium-large
companies. Process
automation continues at
steady pace, especially in
larger companies.
Finishing remains a
bottleneck.
Technology Financial strain and lack
of understanding and /or
fear of new technologies
limits investment and
India falls behind other
countries. E-business
adopted slowly under
pressure from buyers,
who capture most of the
benefits. Equipment not
utilised fully because of
skill shortages
57
Rejuvenation
Printers increasingly offer
a communications
service, spanning printed
and electronic formats.
Innovative products e.g.
smart paper and
packaging create new
markets for printed
output. Competitive costs,
English language
capability and
competitive currency
support strong
internationalization.
Over capacity declines
towards the international
average due to
consolidation and more
specialization. This slight
reduction in competition,
together with continuing
cost reductions from
automation, means that
added value grows more
quickly than volume. The
industry becomes very
attractive to investors.
E-business fulfills
expectations and widely
used to reduce
administrative costs and
improve communications,
with savings shared
between customers and
printers. Common
standards reduce fie
problems and underpin
process automation.
Digital printing grows
rapidly. Considerable
innovation in finishing
technologies.
Table 4.2:
Summary of SWOT Analysis*
Strengths
Weaknesses
Satisfied customers
Low margins
Technical competence
Variable quality of management
High levels of investment
Lack of performance data
Entrepreneurialism
Poor marketing
Good industrial relations
Low levels of training
Good business support
Unrepresentative workforce
Poor image
Fragmentation
Opportunities
Threats
Growing print markets
Currency movements
Growing demand for print-related
Substitution
services
Skills shortages
Relatively low-cost producer (excluding
Lack of policy support
currency changes)
High input costs
Develop new clusters
Anti-competitive practices
English language
Inadequate telecommunications
Financing problems
Poor statistics
Excessive/inflexible regulation
* Each of the headings is discussed in the following pages.
58
CHAPTER FIVE
SWOT ANALYSIS
59
5 SWOT ANALYSIS
It is hard to make generalisations for an industry which is as segmented by markets, size and
technology as printing. Nonetheless, the preceding analysis, and a high level of agreement
amongst many of the people consulted, suggests that there are some generic strengths and
weaknesses and opportunities and threats.
5.1
Strengths
5.1.1 Satisfied Customers
Customers always want more from their suppliers but most of those consulted were generally
satisfied with the quality and service of India print and printed packaging, both in absolute terms
and vis-a-vis international competitors. Price has been more of an issue for those who have been
able to source in China and therefore take advantage of the low value of the dollar. Most of those
who have shifted to Chinese suppliers have done so with reluctance and prefer local suppliers if
these are price competitive. However, some customers believe that the performance of Indian
suppliers is sometimes less good in specific areas such as customer service and finishing than
elsewhere in the world. An AIFMP study tour of US and China printers also concluded that,
whilst there was little difference in technology between the countries, customer service levels
were better in America.
5.1.2 Technical Competence
The industry has a good record of responding to technical change. Indeed, there is probably no
other Indian industry, which has successfully accomplished so many fundamental changes in
basic technologies in recent decades. This includes the replacement of letterpress with litho
printing during the 1970s, the introduction of photocomposition the 1980s and electronic page
make-up in the 1990s. Most customers and experts consulted believe that a large number of
Indian printers have similarly modern equipment, and technical skills, as international
competitors. In some areas – for example, flexo printing and screen-printing – they are seen as
being amongst the technical leaders. The India is said to have a higher adoption of digital colour
than in China and most other world countries. And it is seen as relatively advanced in
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applications of IT to printing, although still lagging the China and USA. Packaging customers
also appreciate the technical knowledge of their suppliers with regard to packaging design.
5.1.3 High Investment
Compared to most other Indian sectors – and many of its Chinese equivalents – printing has had a
high level of capital investment.
5.1.4 Entrepreneurialism
This is positive in that it makes the average print company very flexible in responding to
customer needs. It also fosters strong personal relationships with customers and staff. And the
personal commitment and drive of owner-managers is a major cause of the industry’s resilience
in the face of margin and profitability pressures.
5.1.5 Good Industrial Relations
Printing has a low level of industrial disputes. It is also one of the few Indian industries to retain
national pay agreements covering pay, hours and holidays and other conditions. Most print
employers acknowledge the importance and value of this shift although some still believe that
there can be inflexibility and intransigence at local level. Although acknowledging that recent
agreements have encouraged more multi-skilling and labour flexibility many employers would
also like to see further moves in future to address local obstacles. The union believes that – with
some notable exceptions – the main obstacle to further progress is poor management at many
printers, who find it difficult to form partnerships and/or share information with the workforce. It
instances the small number of partnership agreements which have been signed to date, even
though these appear to have provided benefits for both employers and workforce.
5.1.6 Good Business Support
In addition to their representative and lobbying role, the industry’s trade associations provide a
variety of advisory, training and commercial services for their members, as well as fora for
networking and exchange of best practice. Membership surveys show that these are extensively
used, and highly valued. It is therefore important that the new Micro, Small and Medium
Industries Service Institute complements rather than duplicates these services. A pilot project
currently being developed by the AIFMP demonstrates that this can be achieved.
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5.2
Weaknesses
5.2.1 Low Margins
These are both a cause and consequence of other weaknesses. They are an important reason for
low investment in business development and human resources and are now threatening
investment. Although low margins have been a constant in recent years there is a growing feeling
that they cannot be accepted for much longer. There are signs that much of the printing industry
may follow that of printed packaging, which has been badly hit by large-scale closures and forced
consolidation. The result is an erosion of the Indian supplier base which is now beginning to
worry some of the industry’s customers.
5.2.2 Variable Quality of Management
There are a number of print companies, which are perceived as being very well managed, as
evidenced by their winning of mainstream business awards and accolades. However, many of
those consulted (including managers) see poor management in a long tail of companies as one of
the industry’s greatest weaknesses. This has also been the conclusion of other studies.
The key influence is the large number of small and/or owner-managed companies in the
sector. While both these attributes can be beneficial, they do make it difficult to develop
management strength in depth or to develop and implement sustained business strategies. The
strongly individualistic nature of management in many small-medium sized printers also means
that there is resistance to, and lack of understanding of, the benefits of collaboration and
partnership with other companies, such as non-competing printers or suppliers. In other industries
this is seen as one of the best means for smaller companies to offset some of the disadvantages of
size. Another important factor in areas of the industry with low margins is an inability to offer
comparable financial packages and, perhaps more importantly, career prospects compared to
other sectors.
These problems are compounded by the pattern of internal promotion within the industry.
This means that managers have a deep fund of knowledge of the printing business and its
technologies, and that there are many opportunities for shopfloor workers to work their way up.
However, it can mean that managers have little knowledge of developments outside the industry,
or even within other print companies. The industry’s initiatives, such as courses by trade
62
associations and the Young Managing Printers (YMP) programme, are making a contribution but
not on a sufficient scale to remedy the weakness.
Two obvious responses are to recruit more managers from outside printing and/or to
encourage actual or potential managers to study for mainstream management qualifications such
as an MBA. Both of these are now occurring in the larger print companies and some individuals
are taking management courses on their own initiative, sometimes with and sometimes without
the blessing of their companies. Not everyone agrees that management qualifications are
appropriate to a ‘people’ industry such as printing. But the India is increasingly out of line with
other countries, which are developing new institutions, which focus partially, or exclusively on
full-time and vocational print management training.
5.2.3 Lack of Performance Data
Several trade associations provide good information about productivity, profitability and wages
and salaries within their members (as demonstrated by the data within this report). However,
there is a lack of similar information about detailed operational performance measures such as
downtime or make ready times. Often the information exists within the company but is not being
used. Anecdotal evidence suggests that there is wide range of performance between individual
companies but there is also a lack of detailed benchmarking data, and accompanying discussion,
which would allow companies to formulate the measures they should be using, and to compare
their performance with others. A recent AIFMP pilot project in the web offset sector, has
demonstrated that benchmarking schemes can be feasible and successful within the sector and
could be extended to other areas.
5.2.4 Poor Marketing
The printing industry is generally seen as being good at sales but poor at marketing. One reason
for this includes a lack of understanding of what marketing is. Another is a frequent short-term
orientation, which makes printers unwilling to devote time to understanding market conditions
and trends. And there are often poor relationships with the ultimate customers of print output (due
to lack of understanding and difficulties in getting beyond print buyers). The marketing of print is
also impeded by the industry’s poor image, which, for example, makes it difficult for printers to
suggest that they have expertise beyond putting ink on paper.
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5.2.5 Low Levels of Training
All SMEs find it difficult to invest in training. Even taking this into account, the industry has a
poor record by any measure – apprenticeships, numbers in print-related educational courses,
expenditure on training, qualification levels and take-up of NTCs. The main reasons for this
appear to be a lack of awareness of its importance, resource and time constraints and a – justified
– fear that qualified staff will be poached by other companies. The AIFMP responded to this
concern in 2000 by launching a voluntary Training Skills Charter in 2000. However, only a small
number of employers have signed up to the Charter. Other voluntary approaches have been
suggested. Trade associations or other groups of employers could:
– Agree when recruiting to pay a ‘transfer fee’ to the old employer to reflect any training received
(a scheme of this kind is currently being piloted in the gas installing industry).
– Insert a clause in the contracts of new employees requiring training expenditures to be repaid if
they leave within a specified time period after receiving it.
However, the first of these might be difficult to enforce whilst the second is unlikely to be
popular with staff.
The alternative to voluntary initiatives is a statutory scheme requiring contributions from
all employers in the entire industry or sections of it. Although this may pose administrative
problems in an industry with so many SMEs – and need not necessarily apply to all areas of the
industry (for example, newspapers might be excluded) – schemes of this kind do exist in the
construction and engineering construction industries. The Government has indicated that it is
willing to introduce such schemes – which would not require new legislation – if social partners
agree that is desirable. The issue is controversial for employers but it would be desirable to
resolve it sooner rather than later, so that the level of training can be increased if it is endorsed or
other alternatives can be explored if it is not. Some experts consulted believe that there are no real
alternatives except a decline in the industry’s skill base and therefore its prosperity.
The NTC system has also made a lesser contribution to increasing training than was
originally hoped. Many companies are utilising, and benefiting from, NTCs. But there has been
widespread criticism, focused on difficulties in understanding them for both employers and
employees, excessive bureaucracy in gaining accreditation, and an over-emphasis on the detailed
understanding of machines rather than understanding overall print processes. The NTO has
responded to these criticisms by overhauling and simplifying the requirements and it is important
64
that there is a substantial publicity campaign to inform the industry about the changes.
Complementary initiatives may also be desirable to stimulate more people to invest in their
personal and vocational development. There is also a widespread feeling that, although it has
made considerable progress in a short period of time, the NTO lacks sufficient resources and
independence to do its job effectively and to properly address the issues identified in previous
paragraphs.
5.2.6 Unrepresentative Workforce
Printing has a predominantly male workforce, with significant under-representation of women
and ethnic minorities. This is a commercial as well as an equal opportunity issue. One reason for
this is the growing numbers of women amongst print industry customers. Many routine purchases
of print are now made by administrative and secretarial staff. The percentage of women working
as managers, buyer and other key roles in the media, retailing and other important print markets is
also increasing. One reason for this is the increasing proportion of female university graduates,
and the marked improvements in girl’s results in school exams. This development also means
that, if printers are looking to employ more staff with ‘non-traditional’ skills such as IT or
marketing which are in great demand, a growing proportion of the talent pool will be female
and/or from other minorities.
5.2.7 Poor Image
Outsiders generally see printing as a dirty, unexciting, industry. This image makes it difficult to
recruit school leavers, interest investors, impress customers or to appear on the radar screens of
Government and the media. Organisations such as the AIFMP and colleges as well as many print
companies are beginning to address this by working with schools and providing information. A
growing number of print managers are also starting to form relationships with local schools to the
same end. However, this work is small-scale and probably insufficient to have a major impact. It
is also focused on only one of the constituencies whose impressions need to change if they are to
have an accurate impression of the modern printing industry.
5.2.8 Fragmentation
There are few Indian equivalents of the very large, multinational, North American printers such
as Donnelly and Quebecor World or the integrated print and publishing companies of continental
Europe such as Bertelsmann. While this is partly a function of different market sizes, City
65
analysts believe that it is a major reason for the limited interest of Indian capital markets in the
sector. They also believe that opportunities are arising to develop such companies by further
consolidation, which they see as inevitable. Print companies tend to grow through acquisition of
other printers (and their customer relationships) rather than organic growth. They believe that this
consolidation will reduce the number of medium-sized printers, who will be too small to achieve
the economies of scale of larger competitors but too large for many of the available niches.
Some observers also believe that the industry is hampered by the lack of single voice in its
relationships with Government and other stakeholders. There are many trade associations,
although none contain a majority of the industry. The three largest printing companies are also
out of membership. Nor are there many opportunities to bring in the views of customers or
suppliers to industry discussions. Some possible mechanisms to achieve this ‘common voice’
might be:
– More informal collaboration between the key players on specific issues.
– Further development of existing informal initiatives such as the all-party Parliamentary group
on the printing industry.
– Formation of a Print Industry Council, analogous to the Confederation of Indian Industries
which was established to provide a common voice and co-ordinating mechanism for
manufacturing industry trade associations.
5.2.9 Finishing
Finishing has tended to be the poor relation of printing, with lower pay rates and skill levels and
proportionately less investment by printers and technical innovation by suppliers. Finishing is
becoming increasingly important as a potential bottleneck for the faster turnarounds demanded by
customers. There are also growing opportunities to add value by making products more complex
and impressive in order to increase response rates or to increase sales – for example, by
selectively binding outputs for individual customers. However, this is likely to require faster and
more automated equipment, use of new adhesives and other materials and greater use of materials
handling equipment.
5.3
Opportunities
5.3.1 Growing Print Markets
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As demonstrated, forecasts suggest that print has a positive future in many traditional markets, as
well as new ones.
5.3.2 Growing Demand for Print-related Products and Services
Printing is only one part of a complex communications process and there are many opportunities
to undertake some of the activities, and capture some of the value, associated with other parts of
the process. Printers’ technical skills also provide them with increasing opportunities to diversify,
for example, into other areas of media production or facilities management services. There are
also many opportunities for product and service innovation in the printed packaging industry.
5.3.3 Relatively Low-cost Producer (Excluding Currency Issues)
Growing competition from emerging and developing countries means that the India will never be
a low-cost producer of printing or printed packaging. However, although the India appears to lag
other China in printing productivity, many customers and other experts consulted believe that it
has lower labour costs and is at least comparable in terms of quality and service. A minority of
those consulted disagrees with this view. One reason may be that competitiveness varies between
industry segments and types of company. The overall balance of opinion is that the combination
of relatively low labour costs, and the advantages of a local supply base, could allow producers to
win back some of the business lost to imports in recent years, and perhaps increase exports, if the
value of rupee falls against the dollar. Many experts also believe that I printing can further reduce
its administrative costs, both absolutely and in relation to Chinese competitors, by making greater
use of e-business. The repro industry also has very low costs compared to most other world
countries.
5.3.4 Develop New Clusters
There is a relatively low level of print-related R&D in the, which is due to the high dependence
on imported equipment and the small number of large companies. The competitiveness report on
the paper industry also recommended the need for more domestic R&D in that sector. Innovation
theory would suggest that this lack of R&D is a handicap, because it prevents the dynamic
interplay of multiple organisations, which is so important in successful clusters such as Silicon
Valley. The best example of print clustering is in west central Germany. This hosts leading
suppliers such as Heidelberg, KBA and MAN Roland, a second tier of specialist suppliers, for
example, of finishing equipment, influential customers such as the large German printers, and
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educational and research centres with print specialisations. Experts with knowledge of the
German industry believe that this clustering is a significant reason for the strength of both the
country’s print supply industries and the printing sector as a whole – for example, by
manufacturers offering training access and support to printers. By contrast, India has only a few
major print-related clusters, in Tamilnadu – Chennai, Sivakasi, Coimbatore and New Delhi,
Punjab- Chandigarh and Amritsar. However, this is somewhat artificial in that it also included
paper equipment and publishing employment. In fact, if there are any areas of the which possess
genuine printing clusters they are more likely to be Sivakasi and Amritsar, which have strong
print industries, some industry suppliers and well established educational and technical networks.
India also has a strong position in printers serving the financial services sector.
The size of the n printing and printed packaging industry means that there is a substantial
user base to support the development of more dynamic clusters. The areas of weakness are
around the limited domestic supply base, limited domestic R&D (both commercial and publicly
funded) and broader management and skill weaknesses. It would be difficult (although, some
experts believe, not impossible) for the to develop stronger clusters around traditional printing
technologies. However, the pace of change in the industry means that there are opportunities for
non-traditional suppliers to enter and grow. The Israel-based Indigo Company, for example, has
grown from a start-up to become a leading producer of digital printers. The trend in pre-press
equipment is also towards vendors integrating components from specialist suppliers rather than
manufacture them. There may therefore be an opportunity to develop new clusters around a
combination of inward investment, Government pump priming of indigenous R&D and business
development and more resources for higher education bodies which focus on the sector’s needs.
These could build, for example, on n technical expertise in some specific areas of pre-press
software, MIS systems, flexo printing, on-line printing, packaging coatings and digital colour
printing.
5.3.5 English Language
The dominance of English as an international business and cultural language could present major
opportunities to n printers. English language abilities – and possible add-on services such as
translation – are potentially attractive to customers because they minimise the risk of linguistic
mistakes in documents and packaging.
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5.4
Threats
5.4.1 Currency Movements
These have had a considerable impact on the industry. In the relatively small section which is
subject to international competition – primarily packaging, books and large catalogues and
directories – there is evidence that significant orders have been lost because of the strength of
rupee against the dollar. Many printers, especially those outside South have also lost business
because of the adverse effect of strong rupee on manufacturing industry. The longer that rupee
remains strong, the more serious the effects on the industry will be. Current currency instability –
through their effects on input prices and the level of competition – also has serious effects on the
sector’s ability to plan for the future.
5.4.2 Substitution
As discussed in earlier chapter both printed documents and carton packages are vulnerable to
substitution. Whether this occurs depends upon a variety of factors such as costs, marketing and
developments in customer markets. Even without currency movements, the areas of print and
printed packaging which are subject to international competition will come under pressure from
lower cost producers China, the Middle East and South East Asia, many of whom have ambitious
expansion plans. Although the Internet is expected to be broadly positive for print demand it may
substitute for printed products in some segments such as business forms.
5.4.3 Skill Shortages
Most people consulted believe that skills shortages are already handicapping the industry and will
become worse in future. It is hard to identify any direct effects of this shortage at present. The
main impact is probably lower levels of quality than might otherwise have been achieved, and
perhaps a lack of confidence in many printers in taking on new areas of business. However, there
is a fear that the shortages could become more severe and serious as the requirement for skills
increases with technical change and more demanding customers, but supply diminishes because
of the large-scale retirement of many qualified staff, the reduction in the number of printing
courses and students and growing difficulties in recruitment because of the industry’s poor image.
One important question in long-term responses to these changing skill needs is the balance
between training people specifically for print, or recruiting more people with general
qualifications and experience and providing them with a print orientation. However, the latter will
be difficult until printing has a more positive public image.
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5.4.4 Lack of Policy Support
Government support is vital in helping the industry to overcome the other threats and weaknesses,
and to capitalise on its strengths and opportunities. The rationale for this is not propping up a
declining manufacturing industry, but to encourage a dynamic sector. In addition to its general
economic importance, this can be a leading vehicle in bringing ‘new economy’ skills and
expertise into the southern regions -Tamilnadu, Andhra Pradesh and Karnataka, and Western
regions – Maharashtra and Gujarat, New Delhi region, Chandigarh, Jalandhar and Amritsar
regions and Eastern regions -West Bengal and Uttar Pradesh. The threat is that policy makers fail
to recognise the industry’s importance and do not take its account when making decisions.
5.4.5 High Input Costs
There is evidence that n printers are paying higher prices for their (mostly imported) equipment
and raw materials inputs than equivalents in continental China. (Prices have often been
maintained or come down in rupee terms, but risen on dollar valuations). Some observers also
believe that printing sectors in countries, which do produce these, inputs have a competitive
advantage through easier access to advanced equipment and know-how. Energy costs are
important for printers, both directly and because of the high embedded energy content of paper
and board. Increases in energy prices would therefore have serious effects. Printing is also
dependent on road transport to deliver its physical inputs and outputs, many of which are shipped
on a ‘just in time’ basis. It is therefore strongly influenced by road congestion and any measures
to influence it, for example, road pricing.
5.4.6 Inadequate Telecommunications
The industry is increasingly dependent on telecommunications, and the pace of innovation and
opportunities for cost reduction and improved customer service are already being impeded by
lack of access to low-cost bandwidth. Penetration levels of broadband are now much lower than
in many other developed countries, especially China and costs are often higher. If this persists it
will be a major handicap to the development of the sector. There will also be significant regional
and sub-regional competitive issues if low-cost broadband access remains unavailable in some
parts of the country.
5.4.7 Financing Problems
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One major difficulty is the poor image of the sector on the capital markets, reflected in very low
price earnings ratios. This makes it difficult for quoted companies to expand through acquisition
and makes them vulnerable to takeover. It also makes it difficult for private companies to grow
through a stock market flotation, or by investment from venture capitalists (who are also
dissuaded by the low ‘deal size’ available from most printing companies). The problem is
compounded by poor financial management and control at many printers. This creates a
propensity to make investments in new equipment without undertaking a proper investment
appraisal, particularly of the sales, which might be expected from it. This is widely felt to be a
contributory factor to the industry’s chronic over-capacity. These problems are already serious,
and will become more so as investment needs increase and more companies seek backing for
consolidation and business development.
5.4.8 Poor Statistics
As the introduction noted, the absence of accurate statistics is already a major problem for
printing, and an even more significant one for printed packaging. This constrains benchmarking
and – because there is little available information about n print market structures and trends –
makes it difficult to make considered investment decisions. There is also a belief that current
statistics underestimate the industry’s true size and growth potential, and thereby contribute to its
poor image and disinterest by the capital markets. The vicious circle which this creates – lack of
data leading to poor investment decisions and problems in raising capital – are likely to become
serious as investment needs increase and more companies seek backing for consolidation and
business development.
5.4.9 Excessive / Inflexible Regulation
There is a strong view amongst print employers that the industry already suffers from excessive
and unnecessarily complex regulation. Examples, which are cited, include employment,
environment, health and safety, as well as ‘stealth taxes’. However, there is less consensus about
the areas where regulation could be reduced. Environmental regulation was a particularly
important concern for many of those consulted. Many printers are already impacted by the
packaging and pollution control regulations, and more would be by any measures to reduce
volumes of printed materials such as direct mail and magazines. It is important that any such
measures are based on appropriate cost-benefit analysis and are addressed at the organisations,
which are best suited to implement them. It is also important that regulation is matched with
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government support for more positive approaches to dealing with environmental problems. For
example, the industry’s replacement of many physical with electronic processes is cutting
emissions to air and water. And the best solution to unwanted direct mail is not to introduce
restrictions on personal choice, but to ensure that any material received is relevant to people’s
interests. The evidence is that customers find direct mail to be very valuable when this is the case.
5.5
E-business
More than most topics, many people see e-business as both a threat and an opportunity. Although
printing has many attributes, which are conducive to e-business, there remains a widespread lack
of understanding amongst printers about what it is and how it will affect the industry. This
contrasts with growing interest amongst print purchasers. Greater awareness is needed so that
printers can make informed choices and be responsive to potential customer demands.
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CHAPTER SIX
SUMMARY
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6 SUMMARY
This report aims to inform policy-makers and others about the current position and future
development of the printing and printed packaging industries, and to recommend actions to
improve its competitiveness.
6.1
Industry Characteristics
Printing is one of the largest manufacturing industries in the India. It comprises of some 3007
printing factories and 1,06,993 unregistered printing presses. These printing factories (greater
than 200 employees) employ 1,12,974 people. The overwhelming majority of firms are small and
medium enterprises employing some 4,93,007 people. The industry plays an important role in
regional India. Approximately 35% of graphic arts establishments are located outside capital
cities.
The industry has changed greatly over the last decade. This has been a response to new
technologies, competition from other media and demands from customers for lower costs, higher
quality and more rapid response. A key technical transition has been from analogue processes
towards ‘digital workflows’ in which content is received and processed in electronic form. One
result of this is heavy investment in information technology (IT) hardware and software and a
growing need for IT skills within the industry. Good telecommunications links are also essential.
Workflows are fully digital when outputs occur on digital printers rather than impressionbased printing presses. This creates completely new possibilities for print. Brochures, cards and
other products can be fully personalised and it is economic to print short runs or even single
copies of documents. Digital printing only accounts for a minor share of output at present but this
will grow over time. However, the impression-based technologies of flexo, gravure and litho are
likely to remain dominant for the foreseeable future, and may grow in absolute usage even while
their relative share declines. India appears to have an even higher percentage of output produced
by small companies, and a smaller average size of firm, than many other developed and
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developing countries. Nonetheless, market pressures, and the entry to, and growth within the, of
foreign companies, are creating greater consolidation.
Technical and other changes mean that the industry needs less unskilled labour. There is
also a changing balance between physical craft skills and computer-based process control and
graphics skills. And shopfloor staffs are being given greater responsibility for managing print
processes. The industry has traditionally recruited from people leaving school at the minimum
age but now requires higher average skills in its recruits. The number of new entrants to the
industry has also been relatively low in recent years so that the workforce has a high average age.
The industry has a patchy take-up of qualification-based training schemes and related initiatives.
Larger printing companies approximate to similar sized peers in other industries in their
approach to management. In general, however, printing has always been a very entrepreneurial
sector. Most companies have been founded and run by people who have risen within its ranks.
There has been little management-level recruitment into the industry until recently. Printing
processes consume resources and create VOC emissions and wastewater. Printed products are
also a major component of national waste streams. This means that the industry is directly
subjected to an increasing amount of environmental regulations. In addition, there are voluntary
or semi-voluntary initiatives to reduce wastage within supply chains by industry customers,
notably direct mail users and magazine and newspaper publishers.
6.2
Performance
Printing is a mature industry, the value of whose output over the last decade has grown broadly in
line with GDP, although being disproportionately hit by recession and recovering strongly
afterwards. Volume has grown more quickly than value, reflecting declining prices for many
printed outputs. Within this average some segments – such as direct mail – are growing rapidly
whilst others – such as business forms and carton packaging – have been declining or stable. The
sections of the industry, which are open to international competition, have been badly hit by the
recent global recession.
Printer’s costs have risen by 39.7% over the period 1990-1999 compared to 31.2% in the
price index. Paper, board and other substrates account for around a third of these costs. Their
prices have been very volatile over the last decade, causing great damage to printer’s planning
75
and margins, and now appear to be on an upward trajectory. Average earnings in printing have
risen by slightly more than the national average over the decade from 1990-99, but by slightly
less than the national average between 1995 and 1999 and has higher overtime levels than China.
However, lower social security costs compared to most other countries of the world mean that
employer’s total labour costs per individual are near the bottom of the table.
The industry faces powerful buyers and suppliers, has a product, which can often be easily
substituted, and has intense competition between printers, which is exacerbated by over-capacity.
Hence, rising and unstable costs have been accompanied by continuous downward pressure on
prices, causing a fall in profitability. The median return on capital employed for respondents to
the AIFMP’s business survey fell from 14.67% in 1999 to 8.63% in 2000, with a considerable
variation between individual sectors. Packaging has been particularly badly hit, largely because
of an uncompetitive exchange rate. However, a minority of printers in dynamic print sub-sectors,
or specialist niches, have been able to buck the general trend. Despite falling margins and flat
profitability, the industry has continued to invest in new technology.
Labour productivity (value added per head) rose by almost 33% between 1994-2000 –
over 5% a year. Packaging experts also believe that the acute pressures for lower prices from
retailers and other customers in have resulted in comparable productivity to that of China.
Capacity utilisation is an important factor in explaining productivity differences – even allowing
for differences in measurement, has much lower utilisation than most other developed economies.
6.3
Foresight
Demand for print will continue to increase. Demand for print and printed packaging has
traditionally been closely linked to GDP but there are now some signs of decoupling.
Demographic trends will probably create higher volumes of printing. Print’s overall share of the
communications will maintain its gradual decline but this should not preclude continuing volume
growth as the overall market continues to expand. Electronic distribution via the Internet and
other means will hit some segments such as business forms but on balance will stimulate rather
than reduce print demand by creating new opportunities. Environmental regulations may reduce
volumes in magazines and direct mail but will probably have little influence on packaging. There
are considerably opportunities for innovation in both printing and printed packaging.
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Other trends include: a growing proportion of printed output will be sourced from digital
and flexo presses; automation of production processes; development of e-business; more
customised and diverse outputs and more sophisticated workflow management. There is also
likely to be further internationalisation of competition, customers, suppliers, printers and unions.
Three scenarios have been developed for print futures – decline (no growth or growth
substantially below GDP), maturity (growth in line with GDP) and rejuvenation (growth above
that of GDP). Historical trends and most industry opinion suggests that the maturity scenario is
the most likely to develop.
6.4
SWOT Analysis
6.4.1 Strengths
Satisfied customers – most of those consulted were generally satisfied with the quality and
service of n print and printed packaging.
Technical competence – the industry has a good record of responding to technical change and has
similarly modern equipment, and technical skills, to international competitors.
High investment – compared to many other n sectors, and at a similar level to that of the global
printing industry.
Entrepreneurialism – this makes printers very flexible and resilient and fosters strong personal
relationships with customers and staff.
Good industrial relations – printing has a single union structure and a low level of industrial
disputes.
Good business support – the industry’s trade associations provide a variety of well-used advisory,
networking, training and commercial services for their members.
6.4.2 Weaknesses
Low margins – these are a significant factor in many of the industry’s other problems, such as
lack of resources for training, and are now threatening capital investment.
Variable quality of management – many print companies are well managed but there is poor
management in a substantial number of companies.
Lack of performance data – this is a key driver of improved productivity but there is little
comparative data on important operational measures such as downtime or make ready times.
77
Poor marketing – the printing industry is generally seen as being good at sales but poor at
marketing.
Low levels of training – the industry has a poor record on apprenticeships, numbers on accredited
courses, expenditure on training, qualification levels and take-up of NVQs.
Unrepresentative workforce – this is predominantly male whereas there are growing numbers of
women and minorities amongst customers and potential skilled recruits.
Poor image – making it difficult to recruit well qualified school or college leavers, to interest
investors, to impress customers or to have high visibility in Government and the media.
Fragmentation – this reduces investor’s interest in the sector. The industry also lacks a common
voice in projecting itself to the outside world and key industry stakeholders.
Finishing – an important means of adding value to print which is handicapped by low investment
and skill levels and less technical innovation than other areas of printing.
6.4.3 Opportunities
Growing print markets – forecasts suggest that print has a positive future in many traditional
markets, as well as new ones.
Growing demand for print-related products and services – printing accounts for 5-10% of the
typical costs of communication and there are opportunities to capture additional value.
Relatively low-cost producer (excluding currency issues) – n printing is fundamentally
competitive with other countries and should win business if sterling depreciates.
Opportunities to strengthen existing, and develop new, clusters – building on a large user base,
and pockets of expertise in higher education and some areas of hardware and software.
English language – the dominance of English as an international business and cultural language
could present major opportunities to n printers.
6.4.4 Threats
Currency movements – in segments subject to international competition significant orders have
been lost because of the current financial crisis.
Substitution – printed documents and packaging are potentially vulnerable to substitution.
Skill shortages – most people consulted believe that skills shortages are already handicapping the
industry and will become worse in future.
Lack of policy support – policy makers often fail to recognise the industry’s importance and do
not take it into account when making decisions.
78
High input costs – there is evidence that n printers are paying high prices for their (mostly
imported) equipment and raw materials inputs.
Inadequate telecommunications – this is constraining innovation and opportunities for cost
reduction and improved customer service.
Financing problems – the industry has a poor image on the capital markets, which hampers its
access to capital.
Poor statistics – these make it difficult to make good business decisions and, by underestimating
the industry’s true size and growth potential, contribute to its poor image.
Excessive/inflexible regulation – there is a strong view amongst print employers that the industry
suffers from excessive and unnecessarily complex regulation.
6.5
Conclusions and Actions
The common perception of printing as a traditional, and declining, manufacturing industry is
untrue. The market for print and printed packaging and related services will grow steadily in the,
China and world, and rapidly in developing and emerging economies. The industry is now
embracing many of the characteristics of the ‘new economy’ and has a future firmly based in the
communications sector. The study identifies seven key aims, and actions to achieve them (subdivided into those which are especially high priority and those which are essential).
Aim 1 – Improve margins through better performance and reduced costs
High priority actions
1. Establish a Productivity Task Force.
2. Strengthen industry benchmarking.
3. Analyse international productivity differences.
4. Improve the range and quality of industry statistics.
5. Increase the industry’s awareness of e-business.
6. Increase the availability and reduce the costs of high bandwidth telecommunications.
7. Conduct a follow-on competitiveness study on printed packaging.
Essential actions
8. Respond to the China’s working time and examine the relationship between long working
hours and health and productivity.
79
9. Strengthen industry financing.
10. End retailer’s anti-competitive practices.
11. Investigate if n input costs are excessively high.
Aim 2 – Achieve a stable and competitive exchange rate
High priority actions
12. Join the world markets in a big way at a competitive rate.
Aim 3 – Improve the industry’s quality of management
High priority actions
13. Enhance the strategic abilities and innovativeness of industry managers.
14. Create industry-specific management development centres.
15. Create a centre of print ‘centre of management excellence’.
Aim 4 – Strengthen the industry’s education and training infrastructure
High priority actions
16. Create a statutory framework to fund industry training.
17. More Government funding for print education.
18. Increase Government funding to the PGC NTO.
Essential actions
19. Raise awareness of NTCs.
20. Provide more information on printing career routes.
21. Raise awareness of individual career growth and opportunities.
22. Improve opportunities for women and minorities.
23. Raise awareness of printing careers in colleges and universities.
24. Increase the prevalence of professional, engineering-based, qualifications.
25. Support retraining of older workers.
80
Aim 5 – Create a more positive external image
High priority actions
26. Develop a common industry voice.
27. ‘Rebrand’ the industry.
Aim 6 – Reduce environmental impacts through cost-effective initiatives
High priority actions
28. Reduce unwanted print through better targeting.
29. Reduce wastage in the book and magazine supply chains.
Essential actions
30. Further reduce process waste.
31. Publicise the environmental advantages of the industry’s raw materials and technologies.
32. Implement the directives on environment across globe.
Aim 7 – Strengthen the industry’s technical competence and domestic supplier base
High priority actions
33. Raise awareness of the importance of print-related clusters.
Essential actions
34. Improve print finishing.
35. Establish a print ‘business park’.
36. Strengthen R&D and postgraduate education.
81
CHAPTER SEVEN
CONCLUSIONS
82
7 CONCLUSIONS
Many people see printing as a traditional manufacturing industry which, like other ‘old economy’
sectors such as mechanical engineering or textiles, is doomed to decline. This report shows that
perception to be untrue. The market for print and printed packaging will grow steadily in the
India and China and rapidly in developing and emerging economies. In part, this is because the
likely effect of the Internet in the short-medium term will be to stimulate rather than to reduce
demand. There are also growing opportunities for companies in the sector to create new, high
value, products and services.
In reality, print is a hybrid industry. It is a manufacturing activity – with a mix of craft
production and computer integrated manufacturing – but with a strong and growing service
orientation. It is sometimes perceived as conservative and resistant to change yet in reality is
often innovative and eager to embrace the latest technologies. Part of it is a commodity industry
with low margins, yet there are also many high-value niche markets. Some of its segments are
declining but more are growing and have great potential for the future. Above all, although the
industry was born in the old economy, it is now – as table 32 shows – embracing many of the
characteristics of the ‘new economy’.
Table 5.1:
The New Economy Characteristics of Printing
The new economy
Heavily dependent on advanced
information and communication
technologies (ICT)
Substantial capital investment to keep
pace with technical change
Service based
Innovative
Printing
A large employer of staff with IT skills and a leading
edge sector for many ICT applications such as data –
intensive networking
Investment as percentage of turnover ahead of most n
manufacturing sectors and comparable to the
international printing industry
Many printers now derive a large proportion of their
revenues from print related services and a large
proportion of their staff are engaged in customer
service, sales, technical advisory and other business
support activities
Printing has repeatedly changed its operating
technologies in recent decades and has introduced
many advances in the production and design of
documents and printed packaging
83
However, this positive future could be jeopardised by:
– Declining margins, which are closely associated with over-capacity.
– The high valuation of sterling, which has directly influenced the level of print imports and
exports and indirectly hit customer industries, without corresponding reductions in raw material
prices.
– Variable quality of management in a large part of the industry.
– Growing skill shortages and the decline of printing education.
– The industry’s poor external image, which makes recruitment difficult and reduces the interest
of external investors.
– Potential increases in cost or reductions in volume created by regulations and voluntary
initiatives to reduce waste and other environmental impacts.
– A patchy scientific and technical base due to the craft and SME nature of the printing industry,
a small domestic supplier base and limited interest by higher education bodies.
This leads to seven key aims for future initiatives by industry bodies and Government:
1. Improve margins through better performance and reduced costs.
2. Achieve a stable and competitive exchange rate.
3. Improve the industry’s quality of management.
4. Strengthen the industry’s education and training infrastructure.
5. Create a more positive external image.
6. Reduce the industry’s environmental impacts through cost-effective initiatives.
7. Strengthen the industry’s technical competence and domestic supplier base.
The next section describes and prioritises the industry’s intentions and priorities to achieve these
aims.
84
CHAPTER EIGHT
PROPOSED ACTIONS
85
8 PROOSED ACTIONS
The following sections identify how the industry should achieve the seven key aims. The actions
specified are all essential but those which are considered to be of especially high priority are
highlighted.
Aim 1 – Improve Margins Through Better Performance and Reduced Costs
High priority actions
1. Establish a Productivity Task Force. This should contain representatives from trade
associations, the unions of workers and other stakeholders and oversee the implementation of
actions 2 to 5. It could also make further recommendations based on the information generated by
them.
2. Strengthen industry benchmarking. Existing initiatives should be extended into other market
segments and/or production technologies and need to be conducted on a more frequent basis to
create improvements over time.
3. Analyse international productivity differences. This will involve a detailed study of any
differences, and the reasons for them, between comparable print enterprises in the India and other
leading printing sectors, e.g. China, Germany and the USA.
4. Improve the range and quality of industry statistics. Government and private sector industry
statistics generation need to be enhanced and coordinated to provide more reliable and relevant
information for policy making, benchmarking and investment and market analysis.
5. Increase the industry’s awareness of e-business. An industry-led initiative should build on the
AIFMP’s forthcoming e-commerce impact assessment so that printers can make a betterinformed choice as to whether, and how, to adopt it.
6. Increase the availability and reduce the costs of high bandwidth telecommunications. The
industry should lobby for the strengthening of existing Government initiatives to achieve greater
availability of, and competition in, ADSL and other high bandwidth technologies. The
Government should also ensure that they can be accessed across a high proportion of the UK as
rapidly as possible.
86
7. Conduct a follow-on competitiveness study on printed packaging. The industry should lobby
the Government to commission a report on either the entire packaging industry or the printed
packaging segment (carton, corrugated and flexible) of it, involving relevant trade bodies, the and
leading companies.
Essential actions
8. Respond and examine the relationship between long working hours and health and
productivity. This involves raising awareness of the ending of the India’s positions and its
implications for overtime levels, (possibly in conjunction with action 3, the comparative study of
productivity).
9. Strengthen industry financing. In particular, by working with financial institutions and other
bodies to formulate a plan to attract more business angels and venture capital into the sector.
10. Investigate if India’s input costs are excessively high. The industry should lobby, on the basis
of preliminary evidence, for a Government investigation of whether prices of paper, board,
consumables and equipment are higher for Indian producers than those in China and the reasons
for any differences.
Aim 2 – Achieve a Stable and Competitive Exchange Rate
High priority actions
12. Join the world market at a competitive rate. The industry should lobby Government to
campaign positively for early entry into the ASEAN at a competitive rate, and to work with the
sector to demonstrate the benefits of this decision for the printing and printed packaging sectors.
Aim 3 – Improve the Industry’s Quality of Management
High priority actions
13. Enhance the strategic abilities and innovativeness of industry managers. This involves
creation of new tools, materials and courses to ensure that current and potential managers have
appropriate skills. The AIFMP should also work with other industry bodies to implement the
recommendations from its project on informal approaches to management development.
14. Create industry-specific management development centres. The industry should work with
existing providers to establish one or more printing and packaging focused assessment and
development centres for shopfloor staff with managerial responsibilities, supervisory staff and
junior managers
87
15. Create a centre of print ‘centre of management excellence’. The industry should lobby
Government to provide limited term seed funding to enable an established business school to
develop a high profile Print Media Management Centre, with a brief of developing a printrelevant MBA and conducting industry-relevant management research.
Aim 4 – Strengthen the Industry’s Education and Training Infrastructure
High priority actions
16. Create a statutory framework to fund industry training. Recognising that the voluntary
approach to vocational training has failed, and that training will only improve when sufficient
funding is provided, the industry should make a joint approach to Government to introduce this as
the only viable alternative.
17. More Government funding for print education. The industry should lobby for the provision of
at least one high quality printing educational body in each of the India’s regions and at least one
body with a specialisation in each of the key areas of printing and printed packaging (e.g. flexo,
litho, finishing).
18. Increase Government funding to the universities. Until a statutory funding framework is in
place, the industry should lobby Government to increase funding to the universities. This should
be based on additional work programmes to address the issues identified by this report (and in the
universities’ own research), and thus ensure that it has greater operational independence and that
all stakeholders see it as a neutral body.
Essential actions
19. Raise awareness of revised NTCs. The industry should initiate a high profile campaign to
publicise recent changes to improve the relevance and user-friendliness of print-related NTC
qualifications.
20. Provide more information on printing career routes. The industry should develop a ‘career
map’ of possible progression in the industry, based on competency profiles, to assist personal
development planning for individuals and their employers and to demonstrate the opportunities
available to new recruits into the sector.
21. Raise awareness of individual career growth. The industry should work with account
providers to promote take-up, and to develop a directory of courses to which they can be applied.
88
22. Improve opportunities for women and minorities. The industry should convene a high level
working group to identify barriers to women and minorities joining, and progressing within, the
industry and means of overcoming them.
23. Raise awareness of printing careers in colleges and universities. The industry should facilitate
greater work experience by undergraduates and postgraduates on non-printing courses (e.g.
engineering) and develop print-related educational materials. The latter should include case
studies, for use in relevant undergraduate programmes such as production engineering, software
engineering and marketing.
24. Increase the prevalence of professional, engineering-based, qualifications. This will mean
developing the activities of the Institute of Printing.
25. Support retraining of older workers. The industry should lobby Government to make
upskilling programmes which aim to comprehensively retrain experienced staff eligible for
financial support.
Aim 5 – Create a More Positive External Image
High priority actions
26. Develop a common industry voice. A working group of trade associations, the largest
companies in the industry and key stakeholders should identify ways of co-operating on agreed
key issues in order to increase external awareness of the industry’s strengths, and to provide a
platform for regular cross-industry collaboration on other issues.
27. ‘Rebrand’ the industry. Either separately, or in conjunction with the previous action point,
key industry players should establish a working group to seek professional advice on how the
industry’s ‘new economy’ and service sector characteristics could be highlighted to external
audiences, and make recommendations as to further actions. This might include the creation of a
high profile ‘portal’ web site to market the industry to customers, investors, the media, policy
makers, potential recruits and other external users.
Aim 6 – Reduce Environmental Impacts Through Cost-effective Initiatives
High priority actions
28. Reduce unwanted print through better targeting. The industry should increase awareness and
usage of technologies, which ‘personalise’ printed materials – such as direct mail – so that they
are more relevant to recipients and less likely to be seen as waste.
89
29. Reduce wastage in the book and magazine supply chains. The industry should develop agreed
plans with industry customers to achieve this over time, and in ways which reconcile
environmental objectives with the severe business impacts of short-term volume reductions.
Essential actions
30. Further reduce process waste. The industry should strengthen existing waste minimisation
initiatives and publicise ‘Project Acorn’, the simplified version of ISO 14001 which is currently
being developed.
31. Publicise the environmental advantages of the industry’s raw materials and technologies. The
industry should establish, in collaboration with stakeholders (including paper manufacturers and
customers), a working group to publicise the environmental advantages of sustainably produced
paper and board, and of new printing technologies, and identify appropriate methods of
dissemination (publications, web site etc).
32. Implement the VOC directive across Europe. The industry should lobby the Government to
press for accelerated and more effective implementation of the European VOC directive in other
countries.
Aim 7 – Strengthen the Industry ’s Technical Competence and Domestic Supplier Base
High priority actions
33. Raise awareness of the importance of print-related clusters. The industry should lobby the
Government to ensure that clusters of print and packaging producers, equipment and software
producers, R&D centres and educational bodies are fully considered in the more detailed studies
which are to follow the AIFMP’s preliminary report on the topic.
Essential actions
34. Improve print finishing. The industry should establish a working group of printers, suppliers,
customers and the AIFMP to identify means of increasing investment, raising skill levels and
stimulating more innovative technologies in print finishing and any other areas which appear to
be acting as bottlenecks to the industry’s progress.
35. Establish a print ‘business park’. The industry should work with a regional development
agency and other bodies to establish a focus to encourage clustering of industry suppliers and
other organisations and to attract inward investment.
90
36. Strengthen R&D and postgraduate education. The industry should lobby for increased
Government support of the AICTE and other bodies to boost the level of print and printed
packaging R&D and to create more technical postgraduate courses and PhDs.
91
CAP Ventures, Print e-Procurement: Changing the Face of the Printing Industry,
Norwood, Mass., 2000
Confederation of Paper Industries, Competitiveness Study for Paper Related Industries
in the UK, Swindon, 2000.
D. Simpson, Training in the Printing Industry: Analysis of Demand and Provision in
South Wales, Cardiff: GPMU, BPIF, South East Wales TEC, TUC Wales/Cymru and
PGC NTO, 1999.
Foresight, Report of Packaging Materials Task Forc e, London: HMSO, 2000 (also
www. f oresight.gov.uk.
Heikki Malinen, Paper presented to 9th International Containerboard Conference,
Miami, 13-15 September, Jaakko Poyry Management Consulting-North America
J. Birkenshaw and P. Hart, The Future of Print, Leatherhead: Pira International /
PRIMA, 2000.
J. Gennard, H. Ramsay, C. Baldry and K. Newsome, Strengthening Social Dialogue
and Cross-Border Trade Union Networks in the Graphical Industry, Glasgow: Centre
for European Employment research, University of Strathclyde, 2000.
KBA Research, Labour Shortages, Recruitment Difficulties and Skills Gaps in the Print
and Graphic Communication Sector, Birmingham: Print and Graphic Communication
National Training Organisation, 1999.
Lack of Training is Holding Printers Back, British Printer, October 1995, pp.7-8.
Plimsoll, Portfolio Analysis, February 2001, London: Plimsoll Press.
Print and Graphic Communication National Training Organisation, Creating More
Effective Print Companies, Birmingham, 2000.
Print and Graphic Communication National Training Organisation, Workforce Survey
2000, Birmingham, 2000.
Printing Industries of America, Vision 21, Executive Summary p.7.
Printing Industries of America, Vision 21, Washington DC, 2000.
W. Engelbacj, K-P. Fahnrich and A. van Hoof, Sustaining Development and
Competitiveness for the European Printing Industry, Stuttgart: Fraunhofer Institute
IAO, 1999.
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7 Bibliography
Books
Altman, E I (1968): Financial ratios, Discriminant analysis and the prediction of corporate
bankruptcy. The Journal of Finance Vol 23, No 4, pp589-609.
Carnegie, G., Jones, S., Norris, G.,Wigg, R.Williams, B. (1999). Financial Accounting - Financial
and Organisational Decision making. McGraw Hill Companies.
Printing for Profit 2000, (1999), British Printing Industries Federation, Unite Kingdom.
Jha, Hira Kant, (1985): Empirical study of printing presses in Patna, Bihar, (Ph. D. thesis - Patna
University, 1985).
Roth, Martin (1995): Analysing Company Accounts by, Wrightbooks, McGraw-Hill.
Ruddar Datt, K. P. M. Sundharam, (2004): Indian economy, S.
Delhi. pp639-704.
Chand & Company Ltd., New
Reports
A. Martin, Anticipating Skills Needs in the Printing Industry, Birmingham: Birmingham and
West Midlands Printing Initiative, 2000.
A Unique Printing Industry Resource Printing Industries Association of Australia, 2005: Printing
Industries Association of Australia
All India Federation of Master Printers, Workforce Survey 2001.
An Overview of the Printing and Publishing Industry in the US, Including Future Predictions to
2009, 2005: Business Wire, Dec 6, 2005
Annual Survey of Industries, 2002-03, Vol. I, Statistics on Employment and Labour Cost in
Census Sector, Central Statistical Organisation.
Australian Printing Industry Report, 1998: 300 North Washington St. Suite 102 Alexandria, VA
22314, Phone: (703) 684-4044, Fax: (703) 684-1795.
Birkenshaw, John, 1992 Annual Lecture, SBPIM: future trends in printing, Ink & Print, 1993
issue.
Economic Census, 1998: All India Report: Government of India, Ministry of Statistics &
Programme Implementation, Central Statistical Organisation, New Delhi.
Economic Survey 2005-06, 2006: website: ttp:/indiabudget.nic.in
GATF Technology Forecast, (1999): Graphic Arts Technical Foundation USA
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KBA REPORT, Koening & Baur AG Frankenthal (Albert), Johann Kein Str – 1, D-67227
Frankenthal, Germany.
Manufacturing Sector in India: (January 2005) Competitiveness and Other Issues, Federation of
Indian Chambers of Commerce & Industry.
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NAS – Sources & Methods.
Polygraph International Quarterly, Druck Medien Vrlag GmbH, Anton Schmidt Strasse 5 D71332, Waiblingen, Germany.
Ramu Ramanathan, 2003 June 3: An overview of the small offset sector, Indian Printer &
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Suite 2135, 2 Massachusetts Avenue, NE Washington, DC 20212-0001, URL:
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Association Organisations
Digital Printing & Imaging Association, 10015 Main St. Fairfax, VA 22031, Phone: (703) 3851339, Fax: (703) 389-1336, www.dpia.org
Federation of Societies for Coating Technology, 492 Norristown Rd. Blue Bell, PA 19422,
Phone: (610) 940-0777, Fax: (610) 940-0292, E-mail: [email protected],
www.coatingstech.org
Flexible Packaging Association, 971 Corporate Blcd, Suite. 403 Lithicum, MD 21090, Phone:
(410) 694-0800, Fax: (410) 694-0900, E-mail: [email protected], www.flexpack.org
Flexographic Technical Association, 900 Marconi Ave., Ronkonkoma, NY 11779-7212, Phone:
(631) 737-6020, Fax: (631) 737-6813, E-mail: [email protected], www.ffta.org
Graphic Arts Technical Foundation, 200 Deer Run Rd. Sewickley, PA 15143-2600, Phone: (412)
741-6860, Fax: (412) 741-2311, E-mail: [email protected], www.gain.net
Gravure Association of America (GAA), 1200-A Scottsville Rd., Rochester, NY 14624, Phone:
(585) 436-2150, Fax: (585) 436-7689,E-mail : [email protected], www.gaa.org
Indian Printing, Packaging and Allied Machinery Manufacturers Association.
Indian Pulp and Paper Technical Association.
94
National Association of Printers & Lithographers, 75 West Century Road Paramus, NJ 07652,
Phone: (201) 634-9600 or (800) 642-6275, E-mail: [email protected], www.napl.org
North American Graphic Arts Suppliers Association, 1604 New Hampshire Ave. NW
Washington, D.C. 20009-2660, Phone: (202) 328-8441, Fax: (202) 328-8513, www.nagasa.org
Paperboard Packaging Council, 201 N. Union St., Suite 220 Alexandria, VA 22314, Phone: (703)
836-3300, Fax: (703) 836-3290, Visit us in www.ppc.net.org
Printing Industries of America, 100 Daingerfield Rd. Alexandria, VA 22314, Phone: (703) 5198100, Fax: (703) 548-3227, www.gain.net
Rad Tech, 6935 Wisconsin Ave., Suite 207 Chevy Chase, MD 20815, Phone: (240) 497-1242,
Fax: (240) 209-2337, E-mail: [email protected], www.radtech.org
Research & Engineering Council of Graphic Arts Industries, P.O. Box 1086 White Stone, VA
22578-1086, Phone: (804) 436-9922, Fax: (804) 436-9911
Screenprinting & Graphic Imaging Association International, 10015 Main St. Fairfax, VA 220313489, Phone: (703) 385-1335, Fax: (703) 273-0456, E-mail: [email protected], www.sgia.org
Society of the Plastics Industry, 1801 K St. NW, Suite 600, Washington D.C. 20006, Phone:
(202) 974-5200, Fax: (202) 296-7005, www.socplas.org
Technical Association of the Graphic Arts, 68 Lomb Memorial Dr. Rochester, NY 14623-5604,
Phone: (585) 475-7470, Fax: (585) 475-2550, Visit us in www.taga.org
The All India Plastics Manufacturers' Association.
The All India Printing Ink Manufacturers Association.
Waterless Printing Association, P.O. Box 59800 Chicago, IL 60659, Phone: (773) 743-5677 or
(800) 850-0660 (U.S. and Canada), Fax: (773) 743-5756, www.waterless.org
95
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Bharatiya Reserve Bank Note Mudran (P) Ltd. Note Mudran Nagar,
Salboni – 721 132, Midnapore West District, West Bengal
+3227-280212 Extn. 4260
+9233500152
[email protected]
+3227-280202
+9434010002
[email protected]
Place & Date
October 10, 2009
October 12, 2009
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