When HP Indigo launched the B2-size Series 4 presses – HP Indigo 10000, HP Indigo 20000 and HP Indigo 30000 before last drupa, the company had clear market segments in mind – commercial, labels and packaging respectively. Since then it has sold 250 of the large presses; 200 of the 10000, 33 of the 20000 and 17 of the 30000.
It’s been a remarkably successful assault on the large size printing market but it hasn’t gone exactly as its designers planned. At the HP Indigo customers’ event in Israel, it quickly became clear that the industry has little appetite for a large-scale label press such as the 20000. Of those installed, I was told only three are running as dedicated label presses, the rest are for flexible packaging.
I won’t say it came as a surprise to Alon Bar-Shany, head of HP Indigo and his team; flexible packaging was always promoted as a strategic use for the press. But it has caused a change in how they talk about it and how they see the market. It also reinforces why they like to bring customers to their factory at Kiryat Gat, in the south of Israel – to listen and learn. It’s a worthwhile exercise.
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The HP Indigo manufacturing site in the south of Israel has some clever neighbours. Across the road is chipmaker Intel, a potent symbol of the region’s high-tech make up. Palm trees line the roads of the industrial park and there are plenty of signs of heavy industry. The sprawling facility is a lot bigger and more settled than the raw structure I first visited many years ago. A massive new building, built entirely to accommodate the production of the Series 4 B2-size presses, has expanded its scale. This impressive site is where HP Indigo makes all its presses. It also houses one of its the electro ink plants (the other in Singapore) as well as the Scitex wide-format ink factory.
We arrive after 45 minutes driving from Tel Aviv through a bright, hot, summer morning. Three hundred milling customers, prospects, analysts and journalists are herded into the canteen for a welcoming address by Bar-Shany. His easy going, longhaired style can easily disguise the fact that he’s been at the wheel during the company’s quite impressive growth over the past ten years. He’s passionate about Israel, unabashedly promoting its virtues, while giving a nod to its challenges. He's also quite a charismatic in his passionate belief in the unique advantages of the HP Indigo technology. Maybe it comes with the job.
Change is the challenge
He focuses on the big C, or rather lots of them … competition, currency, consolidation, commodification, China and chaos, before hitting his theme of dealing with Change. Promoting partnering with reliable others as a strategy for survival and success, it's no surprise that he sees HP Indigo as a suitable candidate.
He dwells on the successes of the brand, pointing out that print volumes from HP Indigo machines have multiplied by as much as 28 times since 2001. HP Indigo label presses will produce more than 600 million metres2 in 2015, representing 10% of market volume.
It soon becomes apparent that Bar-Shany sees the future of the company as intimately wrapped up in its success of moving beyond commercial print, which as a sector is flatlining at best, into the growth sectors of flexible cartons, labels, and packaging. It's not just wishful thinking – HP Indigo has long been engaged with labels and packaging, producing its first press targeted at the sector, the Omnius, in 1995.
Series 2 in the early part of the new century after HP took over, saw it refine the concept with the release of the WS4000 models, which enjoyed good success in moving the brand into the industrial printing market.
The Series 3 WS 6000 label press, launched at drupa in 2008, was the game changer. It's robust production accelerated the adoption of digital technology by the label industry worldwide. Australia and New Zealand embraced the marque where it captured over 90 percent of the digital label market With 800 presses installed worldwide since launch, the narrow web digital press has catapulted the company into being the leading label press manufacturer, not just digital, in the world. Since its introduction it has produced over 3 billion labels in over 50 countries.
The introduction of the WS6800 last year moved the debate along with 100 already sold around the world, a fine example of a press that absolutely meets the market’s requirements. Its design was based on the feedback from customers of their need to diversify into producing a wider range of products, such as wraparounds, in-mould, shrink sleeve and speciality labels, as well as labels.
In the bright summer light of Kiryat Gat it soon becomes apparent that the company really wants very much to talk about the Series 4 B2 presses. These are already producing over 30% of its revenues and it clearly is where Bar-Shany sees the most growth potential, especially in flexible packaging/labels and folding carton packaging.
The local market in Australia and New Zealand enjoys one of the best take-up ratios in the world with 10 of the HP Indigo 10000s in commercial printers around the region. So far though, the local industry has been reluctant to follow into the larger industrial printing presses, a comment, perhaps, on the state of manufacturing in the country.
Mark Daws, Currie Group product manager, is here, escorting a representative of a well-known Melbourne label printing company, who asked to remain anonymous. Jason Beckley, HP Indigo Australia, is also attending, shepherding the scion of a high-profile Queensland packager who has long been considering his digital moves.
Straight after the opening presentation we have a customer panel of printers from France, Israel and Mexico talking abut how they’re making money with digital applications on the big presses in what was until very recently a flexo and gravure market. One fact stands out clearly, the 20000 is a flexible packaging press, first and foremost.
We are treated to accounts of how the capabilities of the press are driving innovative packaging products. Tellingly, none of the presenting customers are using the big 20000 for label production, all for flexible packaging. (The programme for the following day includes a visit to Tadbik Group, the country’s largest label printer, where the 20000, one of two the business has bought, is also used exclusively for flexible packaging with two WS6000s and one WS6800 fully occupied printing labels.)
It's not that the 20000 cannot be a hugely productive label press across its 73.6cm (29 inch) web, but that's just it, the width. Although UK-based engineering manufacturer, ABG as HP Indigo's preferred label conversion manufacturer, has developed a slitting option, not too many label converters have enthusiasm for changing their narrow wed width. especially with the availability of the WS6800.
Touring the manufacturing halls later in the day it becomes apparent that HP Indigo is keeping busy. It may not be operating at full production capacity in press construction but I'm told it's turning out 187 presses, of all types, per quarter. Combined with the company's R programme for refurbished and up-graded presses to the market, it plays into approximately 1000 presses per year. Parlay that into a guesstimate of an average of $700K per press, including Series 4 and – do the math – you're looking at press revenue in the region of $700 million per year. According to Alon Bar-Shany, consumables contribute about the same level of earnings with a significant, if much smaller service stream adding to the pot, and HP Indigo is about a $1.5 billion business. Not bad for a 1993 start-up in a market where many press manufacturers have since gone bust
All in all, it’s a fine example of how the market ultimately is king. Series 4 is proving a success, moving digital printing into mainstream commercial and industrial production. It may not be playing out exactly as people figured it would but that's OK. Printers recognise the unique characteristics of a press, what it's good for, better than any manufacturer. The 20000 is proving to be an excellent digital flexible packaging machine.
It proves that it pays to listen to your customers, which is what HP Indigo is doing again during this event in Israel.
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