Ten years ago, when the CtP era began at Drupa 95, many printers wondered why digital plates cost twice as much as analog offset plates. Many reasons were given, but almost none of them are valid anymore. So will digital plates finally get much cheaper?

  Not long ago, I visited Bonifatius Druck near Paderborn, Germany. Following Drupa 2000, this printing company had bought a Basysprint platesetter because it could use normal UV-sensitive contact plates like those traditionally used in the industry. In contrast with other printing companies that purchased computer to plate units using thermal or violet-sensitive technologies only to see their plate costs double, the plate costs at Bonifatius Druck remained the same. The savings in plate costs alone were enough to cover its investment in the platesetter in less than a year and a half. It thus turned out to be an excellent decision (see TSR Vol.5, No.1, April 6,2005).

  At the beginning of the year, Bonifatius faced another platesetter purchasing decision, and it took another look at thermal and violet machines. Since the plates for these machines were still 80% more expensive than today's contact plates, Bonifatius decided to buy the successor version of the Basysprint platesetter.

  The only perplexing aspect was the argument that salesmen of various plate vendors made against Basysprint, claiming that the price of digital plates would soon decline to the level of contact plates (and even lower) due to the combination of ever-increasing production volume and competition. I'd like to explore these predictions and the likelihood of a decline in digital plate prices.

  Prices of Analog Plates

  At the beginning of the 1990s, none of the 15 offset plate vendors could be considered the market leader. Two single-minded managers at plate vendor Polychrome (at that time a 100% subsidiary of Japan's Sun Chemical) decided to make a bid for market leadership. The company built new, highly automated plate production facilities in Germany and the U.S. and came up with an aggressive sales approach in which new clients were offered very attractive prices in exchange for yearly contracts. This led to a downward spiral in plate prices over the next five years, but also to declining margins. The result was too little profit despite high levels of production.

  As a consequence, many other plate vendors (and their parent companies) lost interest in the plate market and sold their operations to the large vendors, namely Polychrome and Agfa. Kalle-Hoechst, Howson-Algraphy and the Dupont plate division went to Agfa, and in 1998, Kodak combined its plate business with Polychrome's to form Kodak Polychrome Graphics (KPG). Those two managers from Polychrome then took over Freudorfer-Horsell-Anitec from International Paper. Just last year, Agfa took over Italy's Lastra. This year, Kodak bought back Sun Chemical's 50% share in KPG. And Creo's quest to become a plate vendor (through its purchase of two plate manufacturers ) ended when it was bought this year by Kodak.

  The international plate market is thus in the hands of three global vendors - Agfa, Fujifilm and Kodak - which produce about 75% of the world's plates. Still, they haven't been able to raise the price of analog contact plates over the past 10 years. Analog plates have become a consumable whose manufacturing technology has been mastered by smaller firms outside the big three.

  The Price of Digital Plates

  Anyone who walks an offset plate production line comes to realize that the coating and packaging of digital thermal plates cannot, in principle, cost more than the corresponding costs for analog plates. Why, then, is their price higher?

  The usual explanations are:

  developing highly sensitive plates is expensive, silver-based plates contain much expensive silver,  switching to a new production process is very costly, and
there are many costs in introducing a product to the market. I consider these explanations invalid because:

  The R&D division would be required in any case for ongoing development of analog plates, and changing the focus of development to digital plates would not incur substantially higher costs.

  Since silver-based plates contain more costly materials than polymer plates, why do they cost twice as much (that is, they are twice as expensive as analog plates)?

  Vendors that switch between producing contact plates and thermal plates on the very same production lines have assured me that switching production to thermal plates is not, in fact, very costly.

  Introducing a new product certainly carries substantial costs, but these same firms have been introducing new and improved contact plates for years without doubling prices.

  The Return To High Margins

  What really lies behind the doubled prices of digital plates is vendors' fervent desire to return to their old margins in the course of switching technologies and avoid the likelihood that two highly motivated managers will ever set off a margin-eroding price war again. How this works can be shown in a couple of examples.

  Over the past few years, all of the plate vendors have begun offering a complete line of platesetters for thermal and violet plate technology. When a printing company decides to move into CtP, plate usage is totaled at the end of the year and, at most, a volume rebate from the list price is given. In exchange for the plate contract, the platesetter receives enormous price concessions and the plateprocessing machines are generally thrown in "gratis," as a report from Zarwan Consulting in Canada has shown.

  It is particularly lucrative for the vendor if a platesetter is technologically capable of imaging only a single plate, as is the case with the Agfa silver plates. Those who buy violet-laser systems with polymer plates have it a little better, since they can choose from two or three plate vendors.

  The same dependence recurs with the move to processless plates. Presstek, the first to offer this type of plate, is a typical example. Anyone who invests in the Dimension platesetter for Presstek plates using ablation technology is entirely reliant on Presstek's pricing and its ability to deliver plates. That's why Heidelberg began to switch its DI printing presses over to plate material from a Japanese source. This meant that the material was somewhat cheaper, but more importantly, it also meant that its plate customers are now totally dependent on Heidelberg.

  Comparing this type of dependency with the situation at Bonifatius Druck, you can only congratulate Bonifatius' management on its decision to continue with analog plates.

  Reduced Competition

  When Agfa wanted to acquire Lastra two years ago, many analysts wondered why no competitors lodged a complaint with European cartel authorities. Kodak's desire to take over Creo this year should have led to complaints in both the U.S. and Europe, since the acquisition meant that some competitors once again would disappear from the market.

  After Drupa 2004, Basysprint declared bankruptcy due to a liquidity crisis and was acquired by the Punch Group from Belgium. Punch was already familiar with selling platesetters, since it had acquired the Belgium firm Strobbe five years earlier. In the 1990s, Strobbe had developed the Polaris, a fast newspaper platesetter. Agfa successfully took over its sales and as a result, eventually became the worldwide market leader in the newspaper industry. (Basysprint's competing newspaper platesetter used conventional plates.)

  Strobbe, Xeikon and Basysprint combined to become Punch Graphix at the beginning of this year, and Punch went public on the London Stock Exchange. In May, we learned that Agfa had extended the Strobbe production contract for the Polaris platesetter. Shortly after that, Basysprint informed its dealers that it would stop manufacturing and selling newspaper platesetters using the economical contact plates.

  Platesetters

  In the fall of 2004, Esko Graphics announced that it would end production and sales of platesetters for commercial printing, since platesetters could only be sold at a profit if plate sales could be bundled in. For the same reason, Creo Products bought two offset plate factories in South Africa and the U.S., and also commissioned plate production from smaller vendors, such as Spain's Ipagsa. While this allowed Creo to bundle plates with its platesetters, it also led to a rather painful learning experience in dealing with the very high demands inherent in the production, delivery logistics and maintenance of the sensitive thermal plates.

  It didn't work out because Creo was trying to turn the business model on its head, offering price concessions on plates in exchange for selling platesetters at full price. While the three large plate vendors sold platesetters and processing machines at low cost while keeping plate prices high, Creo could not follow suit. To offer low-margin platesetters and processing machines, it would have had to keep plate prices high while making substantially more plate sales. Creo just wasn't big enough to do that.

  Why High Prices?

  We might continue to hear fairy tales that digital plates will soon become as cheap as analog plates. But the three large vendors cannot afford to see this happen.

  There are, however, two legitimate reasons prices will remain high. First, while materials and labor costs have increased over the past 10 years, vendors have been unable to pass these increases along in contact-plate prices, so they compensate with their digital plate pricing. Moreover, Agfa in Europe has had to raise analog and digital plate prices to offset the latest increases in the costs of raw aluminum and transportation.

  Second, all of the printers involved in CtP want to see the vendors they rely upon survive for at least the next few years and are therefore willing to pay extra for plates. Plates account for just 2% of the overall cost of a printing job. And since the same issues affect all printers using digital plates (whether they are thermal or violetsensitive) equally, plate pricing issues do not disrupt competition.

  But as my example of Bonifatius Druck at the beginning of this article has shown, the move to CtP does not mean that a printer has to double his plate costs. As long as these platesetter do a good job, the money they save annually can substantially increase the profit a printing company can generate in these competitive times.

 

 

[时间：2005-11-25  作者：Kurt K. Wolf  来源：本站原创]