The 5th FAGAT/2000 in Manila
Information Exchange Meeting

---

Mr. Masuo Tsukada/Supreme Adviser of JAGAT

1.Actual Situation of Printing Industry
2.Technological changes and the related industries vanished
3.Tomorrows Structure and Technical Architecture of Japanese Printing Industry
4.Proposals on the FAGAT Members Discussions made to get over all difficulties and improve the actual situation of the printing industry

Today, our society has entered the information-oriented age when computers and the Internet were prevailing. The business style and life style in the society have been rapidly changing. These changes have had direct and drastic influences on the printing industry both in terms of business and technology. The changes occurring in the printing industry can be outlined as follows:

1. Customers in this sector have generally used computers and the Internet in their sales management and office work.
2. 70% of the texts and pictures supplied by the customers to printing companies have been transmitted in digital data discs and through the Internet.
3. Recently, customers have begun to take the printing estimates and tenders through the Internet. These customers account for nearly 5% of the total at present, but it is anticipated that the figure will probably be increasing.
4. It is expected that the production technology of printed matters will be under network control in the fields of pre-press, press and post-press. An international collaborative group of nearly 40 leading companies is now developing a kind of workflow named CIP3 (Collaboration for Integration of Prepress, Printing, Postpress).
5. It is also expected that the business management in printing companies will come under network control in all the sections such as personnel, finance, accounting, estimation, progress, production, sales activity, profit control, etc.
6. The diversification of media and the advent of digital printing technology will be unlikely to increase the demand for conventional products.
7. In the printing industry, it is predicted that the over capacity will make the supply and demand always out of balance, and that companies will be suffered from severer competition and lower prices.
8. Printing and related industries
   a) The downtrend of prices seems to make it difficult to secure a nominal growth of the printing industry.
   b) The number of companies, especially small-sized, will probably continue to decrease.
   c) It is expected that the productions of paper and ink will be stabilized or sometimes slightly increase in volume. However, it seems that the dropping prices will make it difficult to grow the productions in value. It is predicted that the domestic demands for films and press machines will extremely decline in Japan, though the exports increase.
   d) It is anticipated that the corporate integration will have an increasing tendency.

Under these circumstances, the printing industry must be exposed to a grave menace not only in Japan, but also in the other countries such as U.S.A. and EU. This menace is caused by changes in the whole social and technological systems. Therefore, it involves not only the advanced countries, but also Asian developing countries with a lag of one or two years. Also in Asia, the printing industry must urgently respond to such a menace in the information-oriented society.

1. Actual Situation of Printing Industry
- Portrait of the Japanese Printing Industry based on Statistical Data -

I would like to discuss the situation in Japan using tables showing various statistical data.

a) Number of companies (See table A)
The number of business establishments is decreasing year after year for both printers and plate-makers. Though official data have not been published for 1999 and 2000 yet, the figures are bound to reflect a rapid fall observed in these two business segments. In particular, the number of firms engaged in the pre-press process has decreased to too few, so that they are no longer capable of constituting an independent business segment in the industrial classification, and they have lost strength as an enterprise. This is because skills required in the pre-press process, such as type setting and color desk-top publishing, no longer remain with companies engaged in the pre-press process or printers but have shifted into the hands of graphic designers. The number of printers is declining due mainly to small-scale firms being driven out of business. Printing businesses today increasingly require process computerization, but printers without young successors are unable to modernize their business processes and are being forced out of business.

b) Distribution of companies by size in 1997(See table B)
Small-scale printers with fewer than 20 employees account for 88% of the business firms in Japan's printing industry. They are the most vulnerable class when digital printing using toner-base machines is spreading throughout society.

c) Business indicators(See table C)

Japan's printing industry has more than 30,000 medium and small-scale printers as its members, while it also embraces two world-class industrial giants, DNP and Toppan. The reason why companies of different sizes, from giant printers to medium to small-scale ones, can find a niche for themselves lies in the diversity of jobs. Large-volume jobs are normally for large-scale companies, while small-volume jobs are undertaken by small-scale companies. This has manifested in a percentage figure called &qout;the Ratio of sales & management costs&qout;. The large-scale companies such as DNP and Toppan normally have a figure of around 10%, while that of medium and small-scale companies is over 20%. The percentage is usually about 25% for companies with 20 to 50 employees and over 30% for companies with fewer than 20 employees.

d) Total sales in printing industry (in billion yen) (including plate making and bookbinding)

e) The growth rates of GDP and printing industry's shipments

Sales by the printing industry are closely linked with ups and downs of the overall economy. The 1990s have been a very disappointing decade for Japan's economy and are referred to as a lost decade. For the printing industry, the last three years, 1998, 1999 and 2000, have been particularly bad.

Of the combined total sales by about 30,000 companies in the printing industry, sales by the top ten companies account for nearly 30%. This indicates that major companies are overwhelmingly price competitive. During a period when the economy is depressed and the industry is going to negative growth, like today, medium to small-scale printers feel pressure from major companies.

As shown in Table e, Japan's GDP growth has slowed drastically since 1992. The average growth rate during the period from 1992 to 1998 was 1.1% in nominal terms. The printing industry shrunk by 1.1% during the same period. In other wards, the printing industry will continue to show a negative growth as long as Japan's GDP growth rate remains between 0 and 2%, meaning that the Japanese printing industry has reached its maturity.

f) Printing material shipments (See table F)
The major materials for the printing industry are paper and inks. Process Films used to be one of the major materials used by the industry, but their consumption has declined rapidly and they are no longer considered a major material due to the spread of DTP and the anticipated spread of CTP. If you examine the shipment value of paper and inks, you will find that they have not fallen as much as printing sales did. The shipments of coated paper and offset ink were much higher, by 116.5% and 108.0% respectively, in 1999 than in the previous year, though they are not shown in the table. Two factors have disrupted the correlation between material consumption and printing sales:

1. Demand for printing has been on the increase in terms of volume, but prices have declined badly, offsetting volumetric increases and resulting in negative growth in value.
2. Increasing demand for printing comes mainly from sales fliers and manuals, so-called 'web-press jobs'. As mentioned below, the unit price for printing of web-press jobs has declined to less than half during the last five years.

g) Actual situation of price competition (in subcontract price for web offset)

- A1 size 1 pass (8 colors) US$0.016 1 color US$0.002

- B2 size 1 pass (8 colors) US$0.012 1 color US$0.0015

The table shows prices charged by subcontractors, but prices of a prime contractor are only about 20% higher. The price level of printing jobs has declined to half that of five years ago or one-third that of ten years ago. Although the productivity of web-press printing has improved remarkably, the price level today includes only the costs of materials such as inks and gases as well as the running cost of machinery depreciation, but no labor costs. The current price level makes printing business nothing but a money losing business. This indicates how badly Japan's web offset printing industry has been damaged by the price competition resulting from its utterly excessive capacity. And again, it indicates tremendous pressure from major companies

To head

2. Technological changes and the related industries vanished

a)30 years ago (1970): 'Good-bye hot-type, hello cold-type'
Vanished firms - Hot-type casting, stereotype casting and letter press printer
b)1994 to present: 'Good day computerization or DTP'
Vanishing firms - Type-setting firm
Declining firms− Pre-press firms and small-sized printer

I was involved in the structural reform planning of printing industry for about 30 years from 1963 to 1994. During the period I created a number of modernization plans for medium to small-scale printers and helped them develop their businesses.

The major changes I initiated with these modernization plans are as follows.

1) From hand feeding to automatic feeding

2) From letterpress to offset printing

3) From camera working to monochrome scanning

4) From layout table to CEPS (color electronic pre-press system)

5) From CEPS workstation system to DTP (desk top publishing) system

During this 30-year period, Japan's printing industry has achieved remarkable growth and modernization. On the other hand, it is also true that a large number of companies and industry segments have disappeared and that the evolution demanded a lot to sacrifice. And we will yet see many new changes awaiting us in the coming century.

To head

3. Tomorrow's Structure and Technical Architecture of Japanese Printing Industry

1. In the normal business life, people will work by using not only a desktop computer set but also a mobile computing network connected to the Internet.
2. The daily workflow in the printing industry will involve the technical system using DTP, CTP and digital printing network.
3. The printing business is and will be based upon the 'ink-on-paper' technology. To strengthen its competitiveness and diversify its scope of activity, however, efforts must be also made in the areas such as data management, computerized-equipment management, the creation of application software, the provision of service packages, contents business, etc.
4. It is forecast that at least 30% of the conventional printing companies operating at present will be lost within 5 years. The directors in printing companies will have to concentrate their efforts on the survival of their companies.

To head

4. Proposals on the FAGAT Members' Discussions made to get over all difficulties and improve the actual situation of the printing industry

Agenda in FAGAT Information Exchange Meeting

The FAGAT is a forum of graphic arts technology by nature. Therefore, its agenda should be technical. However the 'ink-on-paper' technologies have already been matured in the pre-press, press and post-press fields, and most of them are being stored in computer microchips. Today, the printing industry has the keenest interest in the following agenda:

1. Problems due to the over capacity in the printing industry Excessive competition, dropping prices, the decreasing number of printing companies, and business restructuring.
2. The spread of ISO plants It is necessary to increase the plants meeting ISO standards among the FAGAT member countries.
3. Training and education of computer experts The training & education in application software creation and network control skills and the employment of human resources skilled in these fields.
4. The spread of CTP system and the related technological environment
5. The dissemination of technical information and the issue of publications.
6. Commitment to e-business

It is expected that these agenda will be discussed in the FAGAT meetings for several years, though they are not closely related to the 'ink-on-paper' technologies.

Therefore, it is desirable that all the FAGAT members will provide their own information concerning more than one of these agenda in the coming FAGAT meeting.

To head

(Table A) Number of companies

		1988	1990	1993	1995
*	Number of companies/ Printing	34,500	33,600	32,900	31,600
	Number of companies/Pre-press	6,700	6,600	6,300	5,700
*	Total sales in printing Industry (in 100 billion yen)	60,8	71,8	73,7	73,6

(Table B) Distribution of companies by size (in 1997)

No.of employees	1-3	4-9	10-19	20-29	30-49	50-	Total
No. of companies	12,982	9,858	3,326	1,596	894	1,151	29,807
%	43.6	33.1	11.2	5.3	2.9	3.9	100.0

(Table C) Business indicators

in Apr. to Sept. 1998 for Dai Nippon and Toppan

in 1997 for small- and medium-sized companies

	Dai Nippon	Toppan	Small-and medium sized companies
Sales	100.0 %	100.0 %	100.0 %
Production costs	83.7	85.0	76.3
Sales & management costs	11.1	10.2	20.4
Operating profit	5.2	4.8	3.3

To Number of companies

(Table D)Total sales in printing industry
(including plate making and bookbinding) (in billion yen)

	1997			1998			1999
	Apr.- Sept	Oct-Mar	Total	Apr.- Sept	Oct.-Mar	Total	Apr.- Sept.
10 largest printing companies listed on the Tokyo Stock Exchange	1225,9	1255,3	2481,2	1138,9	1196,0	2334,1	1138,7
Change rate over the sales in the same period of the previous year	4,3	▲2,1	0,9	▲7,1	▲4,7	▲5,9	▲0,02
Small- and medium-sized companies	3024,1	3271,0	6295,0	2916,8	3133,5	6050,3	2829,8
Change rate over the sales in the same period of the previous year	▲1,1	▲2,3	▲1,3	▲3,5	▲4,2	▲3,9	▲3,0
Total sales in the printing industry	4250,0	4526,3	8776,2	4055,7	4329,5	8384,4	3968,4
Change rate over the sales in the same period of the previous year	1,3	▲2,2	▲0,5	▲4,6	▲4,3	▲4,5	▲2,2

(Table E) The growth rates of GDP and printing industry's shipments
(over those in the previous year)

	1990	1991	1992	1993	1994	1995	1996	1997	1998
GDP in value	7,5	6,6	2,8	0,9	0,8	0,8	3,5	1,5	▲2,5
GDP in volume	5,1	3,8	1,0	0,3	0,6	1,5	5,1	1,4	▲2,8
Print shipments in value	9,7	7,2	▲1,5	▲3,1	▲3,7	3,5	2,4	▲0,5	▲4,5

To Total sales in printing industry

(Table F) Printing material shipments

	1996		1997		1998
	Shipment Previous year	volume comparison %	Shipment Previous year	volume comparison %	Shipment Previous year	volume comparison %
Coated paper (in kt)	4,077	100.0	4,346	106.6	4,301	99.0
Offset ink (in kt)	128	100.0	138	107.8	137	99.3
Process copy film (in K�u )	69,4	100.0	67,4	97.1	58,6	86.9

To head

2000/11/04 00:00:00

公益社団法人日本印刷技術協会