international
Printing ink: nonstop growth in Europe In-depth study, however, indicates that mergers and acquisitions could reduce number of producers by as much as one third The West European printing ink industry will undergo major changes over the next few years. Acquisitions and mergers will sharply reduce the number of companies in the field, possibly by as much as one third. By the end of the 1970's, the industry will be dominated by three to four large firms. At least one of these firms will be controlled by U.S. interests. These, in brief, are the primary conclusions of a detailed study of the European printing ink industry by Chemical Development Corp. (CDC), Geneva, Switzerland. Set up in early 1969, CDC specializes in management services to the chemical and allied industries, and helps companies to find acquisition possibilities. The printing ink survey, carried out in late 1969 and updated to include 1970 results, is the first in-depth study of this industry in Europe, says M. A. Tutundjian, CDC founder and president. Growing. Printing inks is one of the faster growing segments of the West European chemical industry. Production of printing inks in western Europe in 1970 amounted to about 270,000 metric tons. Sales are estimated at $340 million. Sales have been growing at 5.8% per year and will probably continue to increase at this rate to reach $442 million in 1975. However, the growth of the ink industry in the past five years has varied immensely by sector of application. Sales of offset inks, for instance, are the fastest growing at more than 12% per annum, whereas newsblacks sales have only grown by 1%. This trend likely is to continue beyond 1975. The country with the highest output is West Germany, which accounted for 83,430 metric tons of printing inks or 31% of total western European production in 1970. The United Kingdom 38 C&EN OCT. 4, 1971
is second, with 19.4% of the total, France is third (15.3%), and Italy is fourth (11.8%). These four countries account for more than 75% of the total production. West Germany will have the highest rate of growth in printing inks in the 1970's of any of the major European countries (7.1%) and "will further increase its predominant position in Europe," according to CDC. Today the West European printing ink industry consists of about 260 companies (single operating companies that may be part of a larger company or group) with some 18,000 employees. Eleven firms control 60 of the 260 ink companies and account for sales of about $170 million (or half of West European production). The 11 firms are Gebr. Schmidt, Kast & Ehinger (a subsidiary of Badische Anilin-& Soda-Fabrik), Hostmann Steinberg, Siegwerk Farbenfabrik, and Conzentra-Hartmann of West Germany; Coates Brothers, A. B. Fleming, and Ault & Wiborg of the U.K.; LorilleuxLefranc of France; Sicpa Holding of Switzerland; and the U.S.'s Inmont Corp. The four largest firms, with sales of $20 million or more, are Lorilleux-Lefranc, Inmont, Gebr. Schmidt, and Kast & Ehinger. None of these four, however, has a dominant position in the industry. Lorilleux-Lefranc, the largest producer, accounts for no more than 10% of total West European pro-
duction. Also, only one of the top 11 groups (Inmont) is controlled by U.S. interests. Thus the European printing ink industry "is still very much European in nature," Mr. Tutundjian points out. Largest. Lorilleux-Lefranc, headquartered in Paris, has been Europe's leading maker of printing inks for many years. Currently it has sales of about $32 million and subsidiaries in 10 European countries. Inmont has subsidiary companies in the U.K. (Fishburn Printing Ink Co., Ltd., and Griffiths Bros. & Co., London, Ltd.), in France (Inmont, S.A.), and in Italy (ICIDICIS, S.p.A.). Gebr. Schmidt, Frankfurt/Main, has current sales of about $20 million; Kast & Ehinger, acquired by BASF in 1970, is headquartered in Stuttgart and also has sales of about $20 million. Two West German firms—Hostmann Steinberg, in Celle, and Siegwerk Farbenfabrik, in Siegburg-—have sales of $12 million or more. Both of these firms are privately held. The remaining five firms have sales between $7 and $10 million. The three U.K. firms market significant quantities of printing inks on the Continent, b u t through exports and licensing agreements, not through local operations, says CDC. Conzentra-Hartmann, headquartered in Frankfurt/Main, has local operations in several European countries and exports a large quantity of its West German output. In addition to
U.S. printing ink sales exceed western Europe's by almost 30% Western Europea
Total sales, 1970 Average annual sales growth, 1965-70 Number of companiesb Average annual sales per company Number of employees
U.S.
$340 million
$435 million
5.8%
6.5%
260 $1.3 million 18,000
359 $1.2 million 10,000
Average price per kilogram
$1.24
$1.12
Market share of top seven firms
40%
50%
a Western Europe includes Austria, Belgium, Denmark, Finland, France, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, U.K., and West Germany, b Single operating companies that may be part of a larger company or group. Source: Chemical Development Corp.
its operations in Switzerland, Sicpa, in Lausanne, is very active in France and Italy. Two other firms, Dresse in Belgium and France and Couleur in France, are major factors in off set inks, which is the fastest growing segment of the European printing ink industry. In 1970 European exports of print ing inks totaled 27,000 metric tons; imports, 12,500 metric tons, CDC esti mates. For the 1962-70 period, exports grew 10.2% annually; imports, 12.2%. West Germany has been Europe's leading exporter of printing inks, both in tonnage and value, since 1967 when it took the lead away from the U.K. Likely to be a strong competitor in the European market in the future is Japan. Japan's current exports of printing inks to Europe are small— only 3500 metric tons worth $3.2 mil lion in 1970. By the mid-1970's, it will be a major exporter of printing inks to Europe and, Mr. Tutundjian pre dicts, "will also seriously compete with European manufacturers on world markets as it is already doing in the Far East." The highest level of consumption of printing inks in Europe is in Sweden. Per capita consumption is currently about 1.3 kg. Switzerland is second with about 1 kg., and West Germany is third with slightly under 1 kg. The average European consumption per capita is about 0.7 kg. There tends to be a correlation between the level of gross national product (GNP) per capita and the consumption of print ing inks per capita, says Mr. Tutund jian. Sweden, for instance, has the highest GNP per capita in Europe. Portugal has the lowest GNP per cap ita and per capita consumption of printing inks (about 0.14 kg.) is also the lowest in Europe. The average price per kilogram of printing ink in western Europe is $1.24. Generally the highest prices are in Austria, Spain, West Germany, and Switzerland. Higher. U.S. sales of printing ink are substantially higher than those in Europe. In 1970 U.S. sales amounted to about $435 million (28% higher than European sales), up 5% over the previous year, CDC estimates. By 1972, sales will climb to $493 million. Average annual growth in sales dur ing 1965-70 was 6.5%. The U.S.'s National Association of Printing Ink Manufacturers, however, puts 1970 U.S. sales somewhat lower. Sales last year amounted to about $405 million (19% higher than Euro pean sales) down from $417 million in 1969, says the association. Sales this year will be about the same or down slightly, the association adds.
Of the 359 producers of printing inks in the U.S., the top seven account for about 50% of total sales, says CDC. This is in contrast to Europe, where the top seven account for 40% of sales. The three biggest producers are Inmont, Sinclair and Valentine (division of Frye Industries), and Sun Chemi cal Corp., all headquartered in New York City. The remaining four are Cal/Ink division of Tenneco Chemi cals, Inc., Houston, Tex.; Flint Ink Corp., Detroit, Mich.; Levey division of Cities Service, New York City; and the Cilco division of Borden, Inc., New York City. Inmont, the largest producer of printing inks, sells chemicals and al lied products to the printing and pub lishing, packaging, textile, transporta tion equipment, building, and foot wear industries. Printing inks and other graphic art supplies accounted for 15% ($46 million) of its sales in 1970 (Inmont sales were $305.5 mil lion, down 7% from 1969). Hit hard by the depressed economy, Inmont lost money last year slipping $18.5 mil lion into the red. This is compared to a net profit of $9.5 million in 1969. Sinclair and Valentine was a divi sion of Martin Marietta Corp. until earlier this year when it was sold to Frye Industries. Frye is the biggest U.S. commercial producer of one-time carbon paper. Sinclair and Valentine has 40 production facilities in the U.S. and 11 plants in Canada. Last year it had a profit of $1.8 million on sales of about $55 million. Sales of Sun Chemical, the third largest printing ink maker in the U.S., amounted to $111 million in 1970, up slightly over the previous year. It lost $4.7 million last year, compared to a net profit of $3.8 million in 1969. Comparisons. Some very interesting comparisons can be drawn between the printing ink industries in Europe and in the U.S., says Mr. Tutundjian. In the U.S., three of the top seven printing ink producers are backed by large companies with sales of more than $1 billion (Tenneco, Cities Ser vice, and Borden), but only one of the top European makers has such sup port (Kast & Ehinger, which is con trolled by BASF). Also, most of the U.S. producers are backed by chem ical companies. Only two in Europe are backed by chemical firms (BASF and Inmont). The number of employees of the European printing ink industry is nearly double that in the U.S. (18,000 vs. 10,000). In part, this is because of the greater degree of automation in the production of printing inks in the U.S. (particularly in the case of newsblacks) and because of the highly
artisanal nature of the industry in some parts of Europe, particularly in Spain and Italy. Future. As for the future, CDC sees major changes in the structure of the printing ink industry in Europe. These changes will occur through one or more of the following: • Acquisition of at least two of the top 11 firms in Europe by major chem ical companies, which, together with the acquisition of several smaller companies, would create printing ink divisions with sales of more than $50 million. • Mergers between major producers to create larger, more competitive units. • Increasing penetration of U.S. chemical and printing ink companies. By the latter part of the 1970's "at least 30% of the 260 European estab lishments . . . are likely to disappear either through acquisition or elimina tion," Mr. Tutundjian forecasts. By the end of the decade, the Euro pean printing ink industry will be dominated by three or four firms with sales from $40 to $80 million. U.S. interests will control at least one of these firms. These larger companies will have more automated plants and fewer employees, and thus higher pro ductivity. Finally, they will sell at lower average prices as customs bar riers fall, allowing for broader mar keting channels. Printer inks printing press
