The Inkjet Insight team has dedicated a lot of its recent editorial activity towards understanding the impact of mill closures and paper supply issues on the production inkjet market. In addition to interviewing print service providers, equipment manufacturers, mills, and paper merchants, we also sent out a survey to our audience in order to validate what we were learning.
We recently completed the survey of U.S. based print service providers who either own a production inkjet press or are considering one. All respondents also play a role in the procurement of paper. The findings below are based on a high quality sample size of 30 responses.
A little more about the respondents:
The top applications they print include transaction, direct mail, books and marketing collateral
- 72% had at least 1 inkjet press
- 38% had more than one
- 54% had a production roll-fed inkjet device
- 12.5% had production sheet-fed inkjet devices
- 33% had both roll-fed and sheet-fed devices
Also, of interest is that 70% of respondents indicated they use pigment inks and 45% indicate they use dye inks (multiple select question).
Paper Types and Purchasing Habits
The two most popular paper types were uncoated and inkjet treated followed by inkjet coated and offset coated. We also learned that 63% purchased paper from a merchant or distributor, 7% direct from the mill, and 29% from both.
We wanted to get a sense for whether mills are putting their customers on allocation, if their order quantities are being limited, and what’s occurring with paper costs. We learned that 37% of the respondents are having their order quantities limited. We didn’t specifically ask about allocation, but this would indicate some rationing. The good news is that this is still not affecting the majority of the print providers surveyed.
Pricing is a good indicator for what is happening in the market. No respondents indicated a decline in pricing in the last year, while the majority indicated an increase in the range of 5-10%. There was a greater increase in pricing for uncoated and inkjet treated papers compared to coated papers.
Paper Supply and Inventory Trends
Missed Shipments is a good indicator of supply tightness. We asked about respondent’s experience with missed shipments over the last 12 months, 6 months and prior month. We would expect that, if a problem exists, cumulative results over the longer period of time would show a greater response. A good way to read the chart is to look at the “Never” choice. Over the last 12 months, 31% indicated their vendors never missed a shipment. That also means that 69% indicated there were missed shipments. In the last month, 50% indicated that shipments were “Never” missed. But also look at the number of times shipments were missed. They appear to be easing up but again it’s difficult to compare cumulative to a single month. We hope that there is some good news in this chart and perhaps there is some balance emerging.
We wanted to get a sense for lead times and paper availability. 62% appears to be the number to remember. First of all, 62% of the respondents indicated that they have run into situations where paper stocks are unavailable. When asked about lead times, 62% indicated that their average lead time is 4 weeks or less. However, 62% also indicated that their longest lead times are 6 weeks or longer.
We asked about inventory and learned that 69% of the respondents typically keep less than a 4-week supply of paper and 53% plan to increase their inventory to account for disruptions.
Impact on Print Providers
Respondents also shared with us how paper supply issues are impacting their business. We asked the respondents to select “all that apply” and were glad to hear that 42% indicated it has had no impact. Unfortunately, 46% indicated they have responded by rescheduling jobs, 31% indicate they’ve lost jobs to paper availability and 23% lost jobs due to long lead times.
In a related question, 96% of the respondents indicated that they are concerned about paper availability, with 46% very concerned, and 12% extremely concerned. Another way to read this is that 57% of the respondents are either very concerned or extremely concerned.
So, what are the respondents planning to do about it? The last two questions of the survey looked at the impact to their strategic plan and whether this will slow down or change buying decisions for inkjet press acquisitions. Here we see more awareness and caution with 27% evaluating their plan, 19% considering changes, and 23% implementing changes. Another way of looking at this is 42% are either considering changes or implementing them. You can look at this from different perspectives, but it’s clear that paper supply issues have reached the level of strategic impact and respondents are carefully looking at how to recalibrate their business.
The silver lining is that supply issues don’t appear to be having a major impact on plans to add new inkjet presses. In another question, 63% indicated it has no impact on their planning, while 13% indicated that it is causing them to rethink which equipment to purchase. 8% (2 respondents) indicated they are delaying future purchases.
First of all, a big thank you to everyone who completed the survey. We now have a good sense that paper supply issues are having some impact on the production inkjet printing market. You have given us some clues, increased paper prices, and delayed or lost jobs due to supply issues and concerns about future supply. We also know that many of our readers are evaluating their plans to adjust to the current realities of the paper market.
What we don’t know is how long it will last and the financial impact to your businesses, how it will affect the adoption of inkjet technology, and the overall impact to the structure of the industry. We do hope that the situation will balance out. As one respondent shared “Patience…we expect some leveling in the next 90-days or so. Paper will increase as will lead times.” Inkjet Insight will continue to monitor the situation and provide further guidance as the long-term picture emerges. Don’t be surprised if we send out a similar survey towards the end of the year.
We would also like to encourage our readers to go back and review our articles covering the paper supply topic and suggested remedies for all members of the supply chain.
- Elizabeth Gooding discussed trends in pulp production, competition from growth markets, and the impact on paper availability in Pulp Fiction – Challenges Within the Paper Supply Chain
- Mary Schilling’s Inkjet Summit presentation talks about how the exit of key mills that supplied papers for inkjet printing has impacted the industry. See Key Trends in Inkjet Paper Development & Evaluation.
- Elizabeth Gooding addresses the reality of long lead times and offers strategies for print providers to ensure a ready supply of paper in Mitigating Risk in the Paper Supply Chain.
- My review of industry research and thoughts on the strategic impact. See Paper Supply and Strategic Planning. I also considered how paper suppliers should react and help their customers – Paper Suppliers and Crisis Communications, as well as how print providers and buyers can adjust to new market realities – Print Providers and Buyers Managing Paper Together.
Do you Need the Data?
Do you need the data for strategic planning or customer presentations? The complete dataset is available for purchase. It includes 34 questions and addresses applications, use of primers, paper types, weights, pricing, paper contracts, supply issues, and business impact. Please contact Andy Gordon for details (firstname.lastname@example.org).