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By Kevin Keane, IAPHC CEO The past week saw a flurry of news regarding issues, events and vendors of note to everyone in the graphic arts industry. We offer a capsule: Profitability The June 8th issue of Printing News includes an article by Hal Gaffin, Director of the School of Printing Management and Sciences at RIT. He writes: "We are the 3rd largest industry in terms of employees, and the 5th largest in terms of gross domestic product. In terms of industry profitability however, we are just 26th....a relative ranking of 26th for profitability is nothing short of abysmal performance. Because of its low profit margins, the industry cannot sustain long-term growth. Within it, many firms become prime candidates for more profitable companies to take them over or for new media to displace them completely. This, obviously, is not going to happen overnight. It has, however, been happening gradually, and is accelerating as the new digital media technologies take a stronger hold." Thanks to International Printing Week Chair Frieda Sarubbi for passing along the article. We also received a copy of the 1998 NAQP Operating Ratio Study. The 444 participating firms had average gross sales of $820,779 in 1997 and average net owners compensation of 11.94%. The Net Owners Compensation in quick printing has been dropping for the last several ratio studies. Mr. Gaffin's analysis applies to most segments of the industry it seems. Xerox Rocks The June 28th Sunday Washington Post ran a fascinating in-depth story on Xerox. The final paragraph: "The importance of this geographic diversity - and the fact the people and ideas flow both directions - was driven home several years ago when rival Canon beat out Xerox to market with a quality color copier. While the primary engineering team in Webster scrambled to catch up, a group at Fuji-Xerox - the company's Japanese joint venture - threw itself into research and came up with a competitive product within a year. Thanks to their efforts, Xerox had color sales of $1.5 billion last year, up nearly 50%. 'Fuji saved our bacon on color' declared one executive." IBM Bows Out Yesterday's Wall Street Journal reported that IBM is looking to sell its printer division for a reputed $2 billion. Some folks reading the story might have focused only on the laser printer machine aspect of the story. But in a digital age one can't miss the implication of a player like IBM stepping out of the enterprise printing market. What happens to the IBM Info Print 60 now? And again the final paragraph is worth chewing on: "Both Xerox and Oce NV of the Netherlands, which are major global players in high end printing, are seen as unlikely buyers because of technological incompatibility and potential antitrust concerns." Meanwhile, Hewlett-Packard asked a federal judge to throw out a Xerox Corporation patent involving inkjet printers as part of its response to Xerox's May lawsuit alleging H-P's violation of the patent, according to the digital edition of the Rochester Democrat and Chronicle on June 25th. (www.rochesterdandc.com) Copy Drops Several major players (and consolidators) in the imaging field had a rough couple of days recently. On Friday, June 26th, Danka Business Systems PLC saw its share price drop 22% (to under $14.00) after reporting that sales and profits in its first quarter would be below expectations. It appears that the costs incurred by Danka after acquiring the copier unit of Eastman Kodak are still impacting Danka's operations. Then on Monday, June 29th the share price of Ikon Office Solutions Inc fell 31% to under $16.00. Both firms are struggling to compete with the revitalized Xerox which had such great press in the Washington Post story mentioned above. Ikon has been on an acquistion binge. In its fiscal year end report dated September 30th, it detailed the purchase of 28 technology service companies, 27 outsourcing and imaging companies and 34 copier firms. Let there be no mistake, some of those 'imaging' companies were printing businesses. Meanwhile the one time highflying Presstek stock price dipped below $12.00 on Tuesday June 30th; this for a stock that once zoomed to $200 a share. Presstek makes, among other products, the Pearl imaging kits that go on Heidelberg QuickMaster DI presses. Whither CTP? We found this quote in a press release from Screen (USA) to be worth sharing with you: "The majority of our work is four color. However, I firmly believe any company should be CTSF (computer to stripped film) long before they go Computer-to-plate (CTP) systems. As most companies now realize, CTP is not the end-all solution. When you add CTP, it should be nothing more than an imagesetter that happens to make plates. We realized TaigaSPACE would work with our other equipment and when it is time to go CTP, we know it will be compatible with any system we choose." Barry Harvey, V-P of Operations for Digital Color Network of Las Vegas owned by Creel Printing. Zap you're Dry! Gene Barisonek of the North Jersey Club faxed us a note that Suttle Press in Waunakee, Wisconsin is the largest single installation of Shinohara presses in North America. Suttle is doing more waterless printing and has outfitted its presses with Soneko InfraRed dryers marketed by Gene's firm. (www.soneko.com) One of the intangible yet highly valuable benefits of IAPHC membership is to be able to access accurate information about such topics as waterless printing or IR dryers from fellow members who will freely share their knowledge. Macattack "Macworld is the chance to be the first on your block to see the iMac in person," said Steve Jobs of Apple Computer speaking of Apple's new consumer computer which will be unveiled at the huge Macworld Expo which will take place at the Javits Center in New York City, July 8-10, 1998. This writer, your friendly albeit stubborn technology curmudgeon, still doesn't understand why the iMac won't have floppy disk drive. E-Fax? Dataquest reported on June 29th that the market for fax machines and the newer hybrids that fax, print and scan will top $3 billion this year, a rise of 18%. "The fax machine going forward is going to be much more capable as far as being able to scan things and send them to people's e-mail addresses. It's not ignoring the e-mail trend and preference, its more like piggybacking." Andrew Johnson of Dataquest. Immediate past Chairman of the IAPHC, Chris Kerlick of the St. Louis Club, sends along a note from the Roper research firm indicating that 23% of American adults accessed the Internet in 1997. Pro-Net Charles Miller of the Kansas City Club sends along the news that Uncle Sam wants to attempt to make its procurement process more accessible to small business. (www.pronet.sba.org) "Pro-Net gives small companies an edge by providing direct online exposure to contracting officers in charge of the $200 billion per year federal market," says SBA Administrative aide Aida Alvarez. Meanwhile north of the border it has been possible to bid online for Canadian government contracts for quite some time. More on Zellerbach In last week's TMN we wrote about the plans of International Paper to combine its xpedx business with Mead Corporation's Zellerbach division. John Kohnke of the San Francisco Club passed along an item from Reuters indicating that some Wall Street analysts see the divestiture as a good strategic move for Mead. "This move takes a big weight off Mead's shoulders," said James Flicker an analyst at Lehman Brothers. "Zellerbach didn't meet Mead's business line and poor earnings gave it trouble over the last year."
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