New realities transform world markets for production print

The production print industry is poised to undergo a profound market change across the next five years according to the latest exclusive research from Smithers Pira.

The new Smithers Pira report The Future of Production Printing to 2021: Toner vs Inkjet forecasts the global market for production print totalled $13.8 billion in 2015 and is forecast to be worth $14.5 billion by the end of 2016, with 309.7 billion A4 prints making up 119 billion pages. This will see business across the value chain forced to adapt to a new commercial landscape as postal volumes decline and disruptive print technologies make their presence felt.

Print volume is declining across the period, but page numbers and value will continue growing from 2015–2018 before starting a decline, which will see the 2021 overall market value fall back to $13.9 billion.

Production printing covers a range of print applications where specific information held on a computer by an organisation is digitally printed and sent to an individual or another organisation. The biggest segment of the production print industry is the financial sector, followed by utilities and then the governmental and public sector applications. The splits vary considerably between different countries and regions, though globally there are no unlikely to be any major changes in the relative shares across the 2016-2021 period.

Drivers of production printing

Across this decade production printing is – along with other traditional print segments – being affected profoundly by a number of factors will frame the market’s future. Among the most significant in Smithers Pira’s analysis are:

More economic households

The biggest driver for production print volume is a greater number of households, businesses and individuals across the world that are active economically. This is generally maps to a greater volume of transactions that need to be recorded and documented.

Service providers are gaining access to this bigger store of information. For example, the rise of the ‘smart meter’ for gas and electricity means users can change their behaviour to use appliances at off-peak times. Bills can highlight energy-saving activity – which also benefits the electricity distributor – and tailor these to individual consumption patterns, simultaneously building customer loyalty.

Equally as cashless payment grows, with non-contact payment cards and mobile devices used more frequently for low-cost items, proportionately more actionable data on everyday buying activity is captured.

This trend encourages not only more volume in production print – but also encourages investment as sender and receiver can derive enhanced value from them. 

Postal decline

While the growing global base of economic operators and new value propositions might point to a boom in production print, data shows that across the world, postal volumes have been declining for several years. The Universal Postal Union (UPU) latest statistics show that in 2014 total postal traffic totalled 327.4 billion items, a global decline of 2.6% from 2013. The largest sector is advertising mail, with transactional and production print the next largest.

On a more positive note, the average weight of letters is increasing – a trend led by production printing, which is indicative of the greater detail and personalisation for the recipient that is now possible.

In the longer term this will only partially account for the loss of volume, especially as much of this communication can progressively move to even more responsive and interactive email and online platforms.

According to the 2015 International Post Corporation report, the priority and non-priority letters – both of which are largely comprised of transactional mail sent by businesses and governments – continue to fall faster than total mail volumes, largely driven by e-substitution. Annual volume for these products fell 6.5% and 4.6% respectively in 2014.

In response the cost of postage is rising in many countries as postal authorities look to recover their costs on a declining volume, which further impacts on the business proposition for conventional production printed media as organisations look to minimise their mailing costs.

Environmental impacts

Both paper and electronic communication have impacts on the environment, and making valid comparisons is impossible without sorting through the complex lifecycles of both; however the majority or analysis is pointing away from conventional mail. Telstra in Australia has produced a peer-reviewed independent lifecycle analysis that aimed to differentiate pure online billing over paper billing. The analysis found that ‘for every 1 million online bills received by customers instead of paper bills, 19.9 tonnes of CO2 equivalents is saved, 6 tonnes of fossil fuels and 32 tonnes of toxic substances.’

Given that many public and private sector mailers now have tough environment responsibility commitments cutting back on production printed mailings is often seen as an easy option.

There are instances where paper remains a more sustainable alternative – for example, when all paper bill customers recycle the paper bills, or when 95% of customers print their online bill. The French University of Technology of Troyes compared paper billing and payment (PBP) to electronic billing and payment (EBP), and concluded: ‘The environmental impact of EBP system is much lower than the PBP system.’

These evolving market conditions are collaborating to create a more dynamic complex marketplace with an onus on adopting more flexible business models to adapt and survive. Central to doing this is for print service providers to understand how they can leverage the latest print technology to realise new revenue streams.

Technology inkjet and toner

All value in this segment depends on variable data printed using digital presses – either inkjet or electrophotographic (toner), either in conjunction with a litho printer, or independently. Toner has historically been the dominant technology but inkjet is continuing to grow market share, especially from a new generation of colour presses. Smithers Pira’s analysis shows colour inkjet will be the only technology to actually gain market volume across 2016-2021, with a year-on-year increase of 4.9%.

This manifests itself into differing market outlooks for the print equipment manufacturers in the two segments:

Electrophotography (toner printing)

The bulk of the electrophotography is mono overprinting, with the great majority of that printed on continuous presses, using cut-sheet printers for short runs and repairs. The print and page volume shares are similar: even in 2021 almost 94% of toner print volume will be mono, which is 87.3% of the value, reflecting the higher cost of colour (and highlight) printing.

The market for high-speed continuous mono toner presses is already largely mature, with new press sales very low in 2016. Sales are chiefly replacements. Several of the leading press builders have largely replaced their toner portfolios with inkjet units, as sales of toner machines have dwindled. An established replenishment/refurbishment market now exists, with low printer prices available and several manufacturers offering refurbished machines as a cost-effective alternative to new purchases.

Inkjet

Increasingly inkjet printing methods are penetrating production printing, as imprinting, high-speed fixed-head web presses and new sheetfed machines are launched. The constituent technology is continuing to develop rapidly with improvements in the printheads, inks, software and control, integrated into new press designs.

Machinery from Cambridge-based Domino Printing highlights several innovations that are contributing to ascendancy of inkjet. Its presses now operate with independent printheads mounted using micro-motor controller technology. This means all heads are automatically moved into position and precisely calibrated to print as one, enabling seamless print across the full web width.

When in operation there is Domino’s i-Tech CleanCap system. This is automated printhead cleaning process, with a capping station where the printheads are moved away from the web when not in operation – or during a cleaning cycle – to keep the heads clean. The cycle is completed in under a minute, helping boost the print service provider’s uptime.

In 2016 the bulk of the inkjet is colour printing – 60.4% – as print and page volume shares directly display its dominance over older mono systems. In 2021 this will climb to over 80% as the market hones in on the most valuable targets as overall production volumes decline.

Production print markets by sector

There are many types of production print products. Most are A4 or US letter size documents, some with a perforated tear-off panel that may be printed on both sides with variable information. These may be single-page or multi-page statements. In some applications the mailer may contain more than one product – for example, gas and electricity from a single vendor. There are single piece mailers, and some quite specialist products, such as secure PIN notifications and password updates.

This segment includes some items are not necessarily mailed – for example, weekly or monthly employee payslips and end-of-year summaries. Two of the applications where production print is seeing the greatest change is servicing the healthcare and manufacturing industries.

Healthcare

Healthcare is dominated by the documentation of medical schemes, entitlements, medical records, payment and treatment details. There are individual health scheme membership cards, along with patient, dental and optician appointment reminders, etc. there is a growing animal healthcare sector, particularly with the rise of pet insurance schemes and veterinary medicine.

This is creating a market for specialist services; some linked with digital reporting that can report performance and results to statutory authorities. Xerox Business Services operates a workflow automation solution for health records information management that enables healthcare personnel to capture, extract, process and route patient, health and financial information automatically within their organisation to electronic health records.

Another important application is pharmaceutical product lifecycle management, in the development stage of getting a drug to market, where document management is important. This covers the R&D including clinical trials, where accuracy in results can be aided by controlled communication, with patients receiving coded forms and booklets that are returned and processed to determine the efficacy of the trial. There is also a demand for production print services to report these results to national and supranational compliance and regulatory bodies.

Manufacturing

Many manufacturing companies are now outsourcing non-core activities, with print management companies handling their print requirements – including production print. There are many private sector service providers, some large operations owned by national post service providers in some cases. Xerox Business Services and Ricoh provide these services, with Pitney Bowes providing print and mail services.

The business potential of this approach is shown by one pan-European express parcel delivery company that outsourced production of transactional documents to Ricoh, which prints over 1 million invoices and statements a year for the company. The outsourced service is improving the company’s cashflow while saving money, cutting production costs by 20%. Previously the company used an internal facility to process data, print and dispatch the invoices and statements. The operation struggled to provide the speed and flexibility of service required by the business as it grew. Document processing was slow, with delays of up to six days from receipt of data to dispatch of invoices.

Limited capacity meant that the facility could not cope easily with growing business volumes. Invoice and statement production was further compromised by problems integrating data from different systems. The in-house facility took up space, required dedicated human resource, and tied up capital invested in equipment. The outsourced document processing service has freed up resource and saved the need for the company to invest in its facilities. Transactional data is processed, printed and dispatched by Ricoh using external print facilities. The service has reduced time-to-invoice by four days. Agreed service levels are adhered to and production metrics are regularly reported.

Outsourcing provides access to virtually unlimited capacity, making it easier to handle peak loads, while also offering improved design flexibility. This means more data, such as billing information and parcel delivery metrics, originating from multiple systems, can be integrated.

These, and other advantages, are well understood and sold successfully to manufacturing and service companies across the world. Usually, part of the offer is to examine the document use by the company and improve the effectiveness of the particular operation, by reducing cost and providing multi-channel communication options. The adoption of these services is reducing volumes. The rise of hybrid print and mail services allows centralised production of various business correspondence to be handled by third parties. This trend has been growing for several years, with specialists able to offer print and post services, often below the standard postal costs for the customer.


The complex interplay of the market and technical influence on the production print segment across 2011–2021 are analysed in full The Future of Production Printing to 2021: Toner vs Inkjet and quantified in an exclusive global data set.