At drupa08 we met with several large web offset manufacturers, and taking a risk, we brought up the subject of their survival in their present configuration. Not surprisingly with North American newspaper circulations declining, this topic was on everyone’s mind in addition to the usual drupa rumours of who is buying whom.

We were curious if these large companies are profitable enough and if they have a strong growth outlook on their own or if we should expect further consolidation or restructuring in this segment. These companies are strongly focussed on newspapers and almost all have heatset presses for magazine and commercial printing as well. Of the seven, three, namely KBA, manroland, and Mitsubishi are also manufacturers of sheetfed presses.

The seven manufacturers of 70K+ newspaper presses include Goss, KBA, manroland, Mitsubishi, Seiken, TKS and Wifag. Our back of the envelope estimate is that they had a combined sales turnover of approximately US$ 8.7 billion in 2007. This considerable figure includes their sales of sheetfed presses, postpress and other equipment, and increasingly, the sales revenue of spare parts and services including consultancy.

If one extracts from this just the web press sales (including slower presses and heatset), then the combined figure for all seven companies is close to almost US$ 5 billion or 57 per cent of their combined sales turnover. However if one looks at their combined sales of presses of speeds above 70,000 copies an hour, then the figure comes to approximately US$ 3.35 billion or 39 per cent. This is considerably less than the figure we expected or the general belief among major manufactures that the market size for 70K+ presses is between US$ 4 and 4.5 billion. However, adding slightly more than 25 per cent of the press sales or US$ 850 million for services and spare parts, the market size for 70K+ presses and ancillary services comes up to US$ 4.2 billion and tallies with the general belief about this segment’s market size.

The top two manufacturers in the 70,000-plus-cph markets are manroland and KBA and our estimates put manroland ahead of KBA by about US$ 300 million in this category. Together they currently command almost 60 per cent of the market and the other five players share the balance 40 per cent with Goss perhaps the sales leader of this group in this type of presses. With most of these manufacturers hovering between US$ 250 to 325 million in sales of 70K+ presses, will all five survive in their present structure on their own?

In our discussion with industry insiders we have heard several opinions. The first opinion says: “We cannot all stand.” However although one or several companies may have the requisite leadership and the vision they may not be in a position to come up with the requisite cash to actually take consolidation forward. Another opinion (not that of a manufacturer) says, “We need for all of them to survive,” implying that the newspaper industry requires the variety of technical approaches and options, and the competition. Still another opinion is that although the competition has made it unprofitable to sell these presses at the price that newspapers are willing to pay, there is enough money in servicing and the aftermarket of spares and upgrades that can allow these companies to survive for the time being.

Among the Indian newspapers there is more interest in the 70K+ presses, particularly in the 4 x 1 category (double width single circumference) than hitherto thought possible but some find the current prices are too high. More than two hundred 4 x1 towers have already been bought by Indian newspapers -- from Goss, KBA, manroland, Mitsubishi and Wifag. “Why can’t these presses be assembled or partly manufactured in India?” ask some Indian newspaper owners. Not surprisingly, some of the manufacturers may also be tempted to think along these lines.