Doubts expressed about inkjet growth at the IMI Europe conference
It can be argued that the most important part of strategic planning for your business is understanding the future. There are many ways of watching where markets are going, and an important one is conferences, such as the recent IMI Europe Digital Printing Conference in Berlin. While other events focus on components and technology, in Berlin future prospects, opportunities and challenges were, as always, the focus.
Industrial print markets are stalling
We are familiar with the inexorable decline in desktop home and office markets for print, and commercial printing is of course in decline too (by 40% from 2008-2018 in the US). The big hope for everyone has been the promise of digital inkjet entering textile, packaging, decor and other more manufacturing-based applications, offsetting this decline with growth into new markets.
Marco Boer, IT Strategies, kicked off the conference, saying that in the declining commercial print market you need to be brave to make large investments in digital presses outside of a few, relatively niche applications. It is easy to get into defensive mode when markets are declining, leading to mergers and acquisitions to acquire market share. The predicted growth in digital over the next 5 years is not sufficient to overcome the decline in conventional print, meaning an overall declining market.
Marco also spoke about the higher-paid skills needed with digital compared with conventional printing. Print finishing is a key part of the process, but this requires a pool of low-wage labour, which is disappearing due to demographic and political trends. There is therefore an incentive and opportunity for automation in print finishing.
Case studies such as HP, Xerox and EFI were discussed, with the challenges they face in a market that is not growing quickly enough to satisfy shareholder demands, even though they are still very profitable.
Decline in start-ups
Ken Stack of M&A advisors Proximus noted an overall growth rate of 8% CAGR for industrial inkjet from 2010-2018. However, the growth rates in 2018 were in most cases lower than the CAGR quoted for the previous years, meaning that great-sounding CAGR numbers can be very misleading. There has been a significant decline in the number of start-ups in the industry in the last decade, with a corresponding decline in job creation and innovation. With a limited number of exceptions (software, Israel etc.) this has fallen almost to zero in the inkjet industry, which is a worrying trend. Macroeconomic factors like the trend towards nationalism and away from globalism, increasing trade tariffs, increasing global debt and fears about recession are stalling investment and risk-taking.
Reduction in M&A activity
The mergers and acquisitions climate was also discussed, where activity has declined after a record year in 2016, mainly due to lack of actionable target companies in most areas outside software.
These and related themes were developed over the two days of the conference, with the panel discussions giving an opportunity for people to get involved and discuss in depth the challenges and opportunities facing the industry.
You can find out more by coming along to future events, or if you would like to obtain the proceedings from the 2019 Digital Printing Conference in Berlin, and the supporting Mergers & Acquisitions session, you can order them here.
Mike Willis and Tim Phillips