By exploiting niche markets, non-core competencies and more efficient manufacturing methods and technologies label printers can sustain, and even grow, profits.
By David Luttenberger
Tag and label printers have arguably enjoyed success and profits unequaled by converters in any other segment during the past 10 years. But the days of expected and sustained double-digit growth are waning as the millennium approaches. There are, however, as many, if not more, opportunities in this highly versatile segment for tag and label printers to capitalize on developing technologies, manufacturing processes and end-use market trends in order to sustain or even grow profits.
"The impetus has to be to improve overall manufacturing efficiencies," says Bill Klein of the narrow-web and pressure-sensitive label consultancy Business Factors, Inc, Springfield, OH. He says given the capabilities and efficiencies of today's converting presses, throughput is as much as 20 percent greater than just five years ago. But throughput is nothing if it is not accomplished efficientlywhich is where tag and label printers can really "make money" by reducing makeready and waste, says Klein. The technologies to achieve enhanced print quality, while improving throughput and realizing manufacturing efficiencies are available, and have been aptly demonstrated at recent label-specific and general converting exhibitions.
While label printers quote, compete for and land jobs on just fractions of cents, price will obviously not be what drives profits. "Label printers must control costs on many levels and use newly available technologies to improve manufacturing efficiency" says Klein. "Once that is achieved, only then will profitability be realized."
On the whole, label printers were more profitable in 1998 than in '97. A survey of 100 leading label printers by packagePRINTING revealed an average pre-tax profit margin of 8.3 percent. When surveyed a year ago that same group reported margins of 7.9 percent.