Competitiveness of Indian Printing Industry

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

II

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

III

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

IV

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 Opportunities Costs Other trends Demand for print Output E-business Performance of the industry Environment Print markets Finance Productivity Foreign trade Profitability Industrial relations Scenarios Industry Characteristics Strengths Industry organizations SWOT analysis industry structure Technical trends Industry suppliers Technologies Labour market Threats Management Weaknesses Obstacles

V

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

VI

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

VII

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

VIII

LIST OF FIGURES

Figure

Number

Title of the Figure Page

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

LIST OF TABLES

Table

Number

Title of the able 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

1

INTRODUCTION

2

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.

3

– 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.

4

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.

5

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.

6

ONE

INDUSTRY CHARACTERISTICS

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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 Year %

Rs. In lakhs Year on Year %

Rs. In lakhs

Year on Year %

AS % of GDP

1999-00 1792292 6.10 89793835 14.57 239584 0.1337

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

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

8

– 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

Year General Index

% Year on Year

Printing, Paper & paper products

% Year on Year Base Year

1981-82 109.3 - 108.3 - 1980-81 =100) 1990-91 212.6 94.5 198.0 82.8

1994-95 108.4 - 108.6 -

1993-94 =100)

1995-96 122.3 12.8 125.5 15.6 1996-97 130.8 7.0 136.9 9.1 1997-98 139.5 6.7 146.4 6.9 1998-99 145.2 4.1 169.8 16.0 1999-00 154.9 6.7 180.5 6.3 2000-01 162.6 5.0 164.0 9.1 2001-02 167.0 2.7 169.0 3.0 2003-03 176.6 5.7 180.5 6.8 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.

9

Table 1.3:

Principal Characteristics by Industry Group for Publishing, Printing and Related Activities

(Value figures in Rs. Lakh, Others in Number)

2002-03 2003-04

NIC-22 All % NIC-22 All %

Factories 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

Workers 76954 6161493 1.25 70634 6086908 1.16

Total Persons Engaged 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

Net Value Added 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

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

10

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 2003-04

22 All % 22 All %

Factories 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

Workers 76954 6161493 1.25 70634 6086908 1.16

Total Persons Engaged 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

Net Value Added 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

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

11

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.

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–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

13

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:

14

– 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:

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– 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

16

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 e-

business 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 pre-

press, 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.

17

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,

18

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

19

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.

20

Table 1.5:

Skill Requirements for Modern Printing

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

Size Size Current – leading edge Future Future 1-9 employees

Multi-tasking in pre-press: 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 employees

Multi-tasking in pre-press: 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 above employees

Internet/ISDN/Intranet Convergence of pre-press skills Operating computerised conventional litho and direct digital colour presses and screen presses Finishing – in-house/increasingly digitised Data management/archiving Knowledge of alternative media Customer relations – training /advising customers Press staff with clients Direct to screen projection

Convergence of pre-press skills Operating computerised conventional litho and direct digital colour presses and screen presses Finishing – in-house/increasingly digitised Data management/archiving Knowledge of alternative media Dedicated customer service’ relations Training/advising customers Knowledge of JIT printing/distribute to print Press staff with clients

21

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 computer-

based 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%

22

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

23

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.

24

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,

25

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.

26

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 over-

capacity. 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

27

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 5-

10% 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 water-

based 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.

28

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.

29

TWO

LITERATURE REVIEW

30

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

31

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

32

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.

33

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.

34

CHAPTER THREE

PERFORMANCE

35

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.

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– 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

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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.

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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:

39

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

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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

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– 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 1999 2000 Sales over operating assets (ratio) 1.72 1.56 1.57 1.54 1.49 1.57 1.88 Sales per head 103.9 117.4 123.4 130.6 138.9 135 142.35 Value added per head 106.4 119.9 119.9 125.9 130 133.9 141.07 Value of output per head 103.4 114.9 116.4 120.8 125.7 129.4 128.38 Value added as a % of sales 100.2 98.4 97.9 101.6 102.1 103.1 101.02 Sales per Re of wages 99.3 99.7 102.3 101 99.3 98.4 101.32 Value added per £ of wages 98.9 101.1 99.5 102.2 101.6 100.5 103.23 Profit as a % of operating assets 115 110.1 104.6 119.4 113.4 114.1 136.82 Profit as a % of sales 114.2 122.3 109.7 127.4 125.3 125.9 112.29 Profit as a % of value added 114.9 129.1 124 127.9 126.7 136.8 91.62

Note: 1993=100 Source: AIFMP Printing for Profit 2000

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.

42

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 cross-

national 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

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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 long-

term 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

44

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

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CHAPTER FOUR

FORESIGHTS

46

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 2000-

2010. 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.

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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

48

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.

49

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.

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– 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 5-

year 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.

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– 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

52

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.

53

– 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

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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.

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– 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

Decline Maturity Rejuvenation Markets More electronic

information distribution – print increasingly seen as old-fashioned medium, with additional problem of variable product quality. Insular management limits international opportunities.

Some traditional print markets hit by internet, e-books 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.

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.

Financial health

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 under-invests 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.

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.

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

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.

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.

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Table 4.2:

Summary of SWOT Analysis*

Strengths

Satisfied customers

Technical competence

High levels of investment

Entrepreneurialism

Good industrial relations

Good business support

Weaknesses

Low margins

Variable quality of management

Lack of performance data

Poor marketing

Low levels of training

Unrepresentative workforce

Poor image

Fragmentation

Opportunities

Growing print markets

Growing demand for print-related

services

Relatively low-cost producer (excluding

currency changes)

Develop new clusters

English language

Threats

Currency movements

Substitution

Skills shortages

Lack of policy support

High input costs

Anti-competitive practices

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

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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

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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

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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

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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 impression-

based 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 (sub-

divided 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

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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 Printing Heavily dependent on advanced information and communication technologies (ICT)

A large employer of staff with IT skills and a leading edge sector for many ICT applications such as data –intensive networking

Substantial capital investment to keep pace with technical change

Investment as percentage of turnover ahead of most n manufacturing sectors and comparable to the international printing industry

Service based 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

Innovative 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

86

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 better-

informed 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 print-

relevant 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.

89

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.

90

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.

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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.

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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. Chand & Company Ltd., New Delhi. pp639-704. 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. 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 D-71332, 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/annual2004-5/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) 385-1339, 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.

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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) 519-8100, 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 22031-3489, 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

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Checklist of items for the Final Dissertation Report This checklist is to be attached as the last page of the report.

This checklist is to be duly completed, verified and signed by the student. 1. Is the final report properly hard bound? (Spiral bound or Soft

bound or Perfect bound reports are not acceptable.)

Yes / No

2. Is the Cover page in proper format as given in Annexure A? Yes / No

3. Is the Title page (Inner cover page) in proper format? Yes / No

4. (a) Is the Certificate from the Supervisor in proper format?

(b) Has it been signed by the Supervisor?

Yes / No

Yes / No

5. Is the Abstract included in the report properly written within one page?

Have the technical keywords been specified properly?

Yes / No Yes / No

6. Is the title of your report appropriate? The title should be adequately

descriptive, precise and must reflect scope of the actual work done.

Yes / No

7. Have you included the List of abbreviations / Acronyms?

Uncommon abbreviations / Acronyms should not be used in the title.

Yes / No

8. Does the Report contain a summary of the literature survey? Yes / No

9. Does the Table of Contents include page numbers?

(i). Are the Pages numbered properly? (Ch. 1 should start on Page # 1)

(ii). Are the Figures numbered properly? (Figure Numbers and Figure

Titles should be at the bottom of the figures)

(iii). Are the Tables numbered properly? (Table Numbers and Table Titles

should be at the top of the tables)

(iv). Are the Captions for the Figures and Tables proper?

(v). Are the Appendices numbered properly? Are their titles appropriate

Yes / No

Yes / No

Yes / No

Yes / No

Yes / No

10. Is the conclusion of the Report based on discussion of the work? Yes / No

11. Are References or Bibliography given at the end of the Report?

Have the References been cited properly inside the text of the Report?

Is the citation of References in proper format?

Yes / No Yes / No Yes / No

12. Is the report format and content according to the guidelines? The report

should not be a mere printout of a Power Point Presentation, or a user

manual. Source code of software need not be included in the report.

Yes / No

Note: Softcopy of Final Report and Copy of Final Presentation (in PDF Format) to be

uploaded on BITS VU by October 28, 2009. No CD is to be enclosed in the report.

Declaration by Student: I certify that I have properly verified all the items in this checklist and ensure that the report is in proper format as specified in the course handout. ________________________________ Place: ________________________ Signature of the Student

Date: _________________________ Name: ___________________________

ID No.: ___________________________

97

BIRLA INSTITUTE OF TECHNOLOGY & SCIENCE, PILANI

WORK-INTEGRATED LEARNING PROGRAMMES DIVISION First Semester 2009-2010

Fax No.: 01596-244183

Signed Hard copy Scheduled Date to reach Pilani: October 23, 2009 Softcopy of Final Report & Presentation (in pdf format) to be uploaded by October 23, 2009

ID No. : 2007hz79592_____________________________

NAME OF THE STUDENT : N.KRISHNASWAMY________________________ EMAIL ADDRESS : [email protected]_______________ NAME OF THE SUPERVISOR : Shri. S. Sivananda Reddy____________________ DISSERTATION TITLE : A STUDY INTO THE COMPETITIVENESS OF

THE N PRINTING INDUSTRY Dissertation Final Evaluation (Please put a tick (Q ) mark in the appropriate box)

S No.

Evaluation Component Excellent Good Fair Poor

1. Final Dissertation Report 2. Final Seminar and Viva-Voce

S.No. Evaluation Criteria Excellent Good Fair Poor 1 Technical/Professional Competence 2 Work Progress and Achievements 3 Documentation and expression 4 Initiative and Originality 5 Research & Innovation 6 Relevance to the work environment

Please ENCIRCLE the Recommended Final Grade: Excellent / Good / Fair / Poor

Supervisor Additional Examiner Name Shri. S. Sivananda Reddy Shri. B. N. Chakraborty Qualification M. Tech LPT Designation Manager Deputy General Manager Employing Organization & Location

Bharatiya Reserve Bank Note Mudran (P) Ltd. Note Mudran Nagar, Salboni – 721 132, Midnapore West District, West Bengal

Phone Number +3227-280212 Extn. 4260 +3227-280202 Mobile Number +9233500152 +9434010002 Email Address [email protected] [email protected] Signature

Place & Date October 10, 2009 October 12, 2009

BITS ZG629T : Dissertation EC-3 Final Evaluation Sheet

Remarks of the Supervisor: