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Commentary by Steve Aranoff & Robert FitzPatrick, The EAGLE
April 4, 2007 -- Way back in the late 60s and early 70s, when the nation's politics were in turmoil and Americans deeply divided (so different from now, of course), there was a popular expression in some circles. It was a loaded rhetorical question: "Do you know what time it is?"
It asked about awareness of sweeping and fast changing political and economic conditions (war, civil rights, corruption, impeachment, etc.), their stages of development and about what were the proper responses personally and as a nation. Referring to the apathy and lack of information displayed by large numbers of people, or in heated private arguments, one often heard, "Some people just don't know what time it is!"
A walking tour the Graphics of the Americas show in Miami Beach this month (March 2-4), raised the same question. How many are paying attention to what time it is in the printing industry and its various sectors?
A bridge between North and South America, the GOA show provides a unique perspective from which to view the industry, with two continents revealing different aspects of one picture.
This is not the show where the newest products are highlighted and hyped, which can divert our eyes from the present to ponder some idealized future. The Miami show is a street scene, a photo-quality portrait of our industry. No one is theorizing and pontificating at this show. In breakout rooms, people are learning how to use existing technology. On the floor, people are buying, often in cash. Vendors with valid solutions to today's challenges do well here. Of course, se habla español is required in the booth.
Here are some snapshots from the show, regarding what time it is in the printing industry.
A consultant in the traditional quick print (offset) franchise sector notes that one major franchise offers an equipment package for new startups with offset printing hardware but now they also offer an equipment package for digital-only print production. Franchise strategy managers now question the efficacy of a hybrid program for new franchisees. The future, some believe, for successful startups is in going all-digital right from the start. Hybrid technology packages work for those already established but may not be practical for today's (often younger) startup owners.
In the new dynamics of digital-versus-offset the very role of printing has shifted from production to integration. The old parameters of cost-per-page and dot-versus-continuous tone are now overshadowed by integrating digital print devices with data bases and information systems. The print device is just part of the information chain. Some of the information will go on the web, CD, data base, PowerPoint or other on-screen applications and some will eventually go on to a substrate. The print devices that are most suitable for this integrated information system dictate the purchase decision not necessarily print speed or cost-per-page. Those old quality-and-cost factors were dominant when print was "produced" on presses and until it hit the paper the information was only "pre-press."
However, in Latin America, digital print's more basic value - to produce short-run color at an affordable price on many new substrates - looms larger than software connectivity. Hence, Latin America is embracing digital printing for special printing - posters, banners, cut outs, signage, and a host of other new uses too numerous to list. The wide format printing technology is exploding in Latin America where color imagery is greatly appreciated and this was evident on the show floor.
One indicator of the extraordinary new opportunities developing in Latin America in digital print is the new graphic arts show produced by veteran show organizer, Oscar Pereda, Imprexpo Digital in Mexico. The diverse usage of wide format printing and finishing also is well supported by Latin America's large and diverse community of graphic arts dealers. Many quickly adapted to digital wide format technology, while few in the US seized the opportunity.
Brands (Las Marcas)
Turning from the newest digital output devices to the fully matured world of pressroom chemistry, in the USA the manufacturer brand is rapidly losing relevance. Low price and reliable technical support rule. The name on the bottle means little by itself. Marketing power is shifting from manufacturer to distributors and the dealers will push the more profitable and better supported product, not the most advertised. More and more dealers are also developing their own technical support capability.
The privately owned manufacturer/distributor PRISCO was years ahead of its time in branding its own chemistries, selling its own private label blankets and offering its own technical support. PRISCO early-on abandoned the manufacturer-controlled market of pre-press supplies. Many other US dealers continued to labor in the morass of channel conflict in film, plates, proofing materials and digital pre-press hardware, only later to be terminated or consolidated.
Yet, in Latin America, a USA pressroom chemistry brand still holds status. The quality and consistency of the national brands, utterly taken for granted in North America, is still appreciated in Latin America. In North America, the quagmire of the private label brand looms in the future for suppliers. In that market, they have no security that the bottle won't later be filled by another suppliers' product. Little wonder that the pressroom products suppliers are in force at the GOA show, while nearly invisible a the large USA shows.
Uno, Dos, Tres
Since Latin America's market has a less integrated digital infrastructure offset still meets the needs of many of its diverse, stand-alone markets. Labor is less costly for offset while technical support for digital is less available - good omens for the continued growth of offset related products for the foreseeable future.
And, while most of Latin America has a common language, Spanish, the continent is actually a mosaic of various versions of Spanish. These geographical difference further splinter digital print's ability to integrate the region (produce once distribute and print many times), leaving more room for the dependable offset press to generate localized materials.
The Miami show is well known as a used equipment bazaar. This is still true but far overshadowed now by new digital output sales. Latin America is no longer a dumping ground for obsolete offset equipment from the USA. It does remain a strong market for high quality used presses. The sustained value of offset in South America, while it declines in the North, provides Latin American buyers with opportunities to find excellent used machinery at good prices.
The North-South transfer of modern - though used - equipment is a different process from the earlier era. The past transfer of outdated equipment strengthened and supported new press sales in North America. Today's transfer of up-to-date machinery reflects offset's obsolescence in the North and serves to further soften the market for new offset presses in the South.
The Miami show is warmer (not just because of the weather) and happier than other shows. It reflects the importance of relationships south of the border, manifested in the many hearty embraces exchanged on the show floor. Digital printing's mode of automating "interactions" and eliminating the role of humans is less valued in Latin America. Mexico's El Impresor magazine published by Joaquin Menendez captures the culture of Mexico and much of Latin America in which industry leaders and industry conferences are lavishly illustrated throughout the publication. The message is clear. The business is about people, not machines. While "partnership" became a Dilbertesque cliche in the dealer/manufacturer community of North America, it is authentic in Latin America.
While the names of prominent brands and companies in the US are consolidated and vanish and once famous individuals are downsized, never to be seen again, in Latin America, veteran industry figures and many local companies are adapting and still thriving. US suppliers with competence and commitment in building long term relationships with dealers and customers will, therefore, prosper in Latin America. In the US suppliers can carry on with terminations, consolidations and direct selling with little adverse consequences.
Latin America, as seen in full color, culture and language at the Miami show reveals a different stage of the life cycle of the printing industry. And by contrast, it also brings the conditions in the North into sharper relief where they can be better understood.
However, one area where Latin America is closely integrated with North America, and Europe and Asia as well, is in manufacturer consolidations. The concerns about acquisitions and mergers of the major suppliers concern the Latin American printers and dealers as much and in the very similar ways as they do the rest of the world.
It was therefore of great concern that AGFA announced that it would be breaking the corporation into three parts, each to operate on its own as a separate, publicly traded company. AGFA (along with Lastra, which AGFA acquired) is a highly respected brand in Latin America with a strong network of dealers. Some wondered if the recent terminations of AGFA dealers, reducing the AGFA USA channel to 10 companies, related to the financial breakup? Many in Miami speculated whether the deconstructing of AGFA might result in another vendor controlling AGFA sales.
There are few major printing equipment or supplies manufacturers in Latin America. With no real power over the outcome of these events, printers and dealers at the Miami show, like their counterparts at the last show in Chicago when rumors swirled of an acquisition of AGFA, watched closely, listened cautiously and imagined the worst. They knew that long term relationships, important in their local markets, have less and less significance in the global markets.
Stephen P. Aranoff is founder and principal of ARTTEX Associates. He has 28 years experience in the development and profitable distribution of printing/digital imaging market products. Managing prepress technology companies from start-up through significant growth, such as Xyvision, Eikonix, Raytheon Graphics, UNDA, and ScanView, he has played a leading role in introducing many first-of-a-kind successful printing industry products.
Since 1986, ARTTEX has provided pragmatic business, marketing and sales strategy and implementation consulting to both large and small client companies based upon this successful operating expertise - including bringing off shore products to the domestic market.
Well known clients include: Cactus/3M, Dainippon Screen, Heartland Imaging/VieNet, Island Graphics, Kodak, Ricoh, and Scitex, as well as venture capitalists, law firms and startup technology ventures.
Since 1995, Mr. Aranoff has specialized in the marketing and distribution of Digital Imaging products, with emphasis on marketplace convergence brought about by the use of powerful off-the-shelf components.
Mr. Aranoff also holds a Masters Degrees in Systems Engineering and an MBA Degree, with Distinction, in Sales/Marketing. He often serves as a speaker and forum moderator and for many years, has done so at NAGASA's Forums. He is also a frequent guest writer for digital imaging publications.
Contact Stephen Aranoff at: 25 Canyon Shadows Drive, Sedona, AZ 86336 USA, Tel: (928)282-4173, Cell: (928)300-8757, Fax: (775)254-5768, email: Steve@arttex.com
Robert L. FitzPatrick, president of FitzPatrick Management Inc., is an industrial relations consultant, writer, speaker, facilitator, and trade association advisor. He is a nationally recognized analyst of mature industries. His work involves grasping the fundamental economic needs of all parties in the supply chain as well as understanding the dynamics and life cycles of products.
Since 1981, Robert FitzPatrick has continuously published THE EAGLE, a unique and influential journal that analyzes technology, manufacturer/ dealer relations and trends in analog and digital product distribution. His articles on the dynamics of mature industries have appeared in trade journals for graphic arts, sanitation supply, automobile parts, office automation, wholesale florist and food processing industries, among others.
He has been a featured speaker at dealer conferences for Hewlett Packard, FujiFilm, among other major companies and he has organized international dealer/manufacturer conferences in Antwerp, Belgium and in Guadalajara, Mexico. Consultancy clients of FitzPatrick Management include Fuji Photo, DuPont, Lastra S.p.a., Anchor Chemistry, AB Dick, #1 Network, London Litho, Heartland Imaging, VieNet.com, among others.
He was a consultant and featured speaker at the meetings of Food Industries Suppliers Association (FISA) four consecutive years. In 1997, Robert FitzPatrick co-authored and published the first book to expose and critique the multi-level marketing model of sales and distribution. Entitled, False Profits, this book is available in bookstores nationwide or from the publisher at web site www.falseprofits.com. He has served as Expert Witness in various cases involving pyramid scheme fraud perpetrated against independent distributors.
Contact Robert FitzPatrick at 1522 Lilac Rd., Charlotte, NC 28209 USA. Tel.: (704) 334-2047, Fax: (704) 334-0220, Email: email@example.com.
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