Last year, Konica Minolta Graphic Imaging U.S.A. named Kazuhiko Fukushima as president and chief executive officer, responsible for overseeing the company’s graphic and platemaking operations. Fukushima, a 31-year Konica veteran, held a number of senior management positions with the vendor before moving to Grand Rapids, Mich., to head up the U.S. unit last June.

Fukushima recently talked with Newspapers & Technology about the state of the newspaper industry and the consumable vendor’s position within it.

Newspapers & Technology: What are the trends affecting the newspaper industry in North America and what do they mean for Konica Minolta?

 Kazuhiko Fukushima: Large metropolitan newspapers are experiencing a loss of circulation and reduced page count, and as a result are having to adjust their business models. In many cases, technology offers a way to reduce costs and improve quality, and provide a broader range of products. The centralization of production sites provides a way of taking advantage of new technologies as does the startup of new printing facilities. We see growth opportunities with community newspapers as they continue to provide valuable information and advertising services at the local level.

 

N&T: Does this mean that you see the most potential in community newspapers?

Fukushima: Yes. We believe that community newspapers have a good chance of increasing circulation in the current market.

From Konica Minolta’s perspective, the newspaper print market in the USA represents approximately 30 percent of the total consumption of film, plates and consumables, and is an important business segment for us.

N&T: What is your position regarding digital printing for newspapers?

Fukushima: Konica Minolta has a very strong technology for electro-photo toner technology, and our mid-range digital color print system enjoys one of the largest sales volumes in the world. We offer our mid- to high-end electro-photo color digital printing system, designated LD 6500, into both the commercial printing market and the newspaper market.

N&T: Offering new products implies a commitment to R&D. Do you conduct R&D in the United States or Japan?

Fukushima: Both. We conduct R&D for CTP and analog plate improvements at our Grand Rapids, Mich., facility. New products for CTP and digital solutions come from our R&D center in Japan.

N&T: The newspaper industry has experienced significant consolidation on the supply side in recent years with a number of alternative suppliers being greatly reduced. You have made acquisitions in the past; will you make more acquisitions?

Fukushima: It is our basic philosophy that if there is an area where we do not have any good technology, we may have to consider some type of supplemental approach. In the case of the acquisition of American Litho, we wanted to acquire a production facility and its supporting technology.

The most important priority within the Konica Minolta group is future technology. The objective of expanding the company through acquisitions to achieve cost reduction or increased sales is a second priority.

N&T: Do you see newspaper customers further consolidating their operations? What are your expectations for customer actions going forward?

Fukushima: I believe that there may be some consolidation, but newspaper group ownership is already a strong characteristic in the U.S. market. Newspapers are looking to other media and broadcasting as outlets for news content. Therefore, consolidation will not only occur between newspapers, but may also expand into broadcasting or advertising companies as newspapers search for a new, more dynamic business model.

N&T: Printing plate consumption could drop by as much as 30 percent by the end of this decade. As discouraging as these projections are, will Konica Minolta remain committed to this segment under these circumstances?

Fukushima: Over a five-year period, we do not see any real decline in the total market for newspaper and commercial printing plates. It will remain flat, or possibly show a small decline, (but) certainly not 30 percent. While the use of digital printing is up in newspapers, the cost justification is very difficult, which will limit its growth.

Many newspaper customers have told us that they are concerned about suppliers dropping out of the newspaper segment, and their product choices becoming more limited. This is the reason we’ve increased plate production capacity in Grand Rapids and installed special lines (thermal and violet) for new technology. We have good technology, including patents, and we believe we can expand our business, especially for CTP, in the newspaper market. Improved quality plates will lead to savings in ink and paper, and these savings will become even more important if the price of newsprint increases significantly as a result of paper supplier consolidation.

N&T: What characteristics will the new products you’ve mentioned have?

Fukushima: We have announced the start of a new production line for both violet and thermal CTP plates. For violet our product provides faster rollup resulting in minimized startup paper and ink waste. It also uses less chemicals, offering customers additional savings.

N&T:  Do you plan to introduce a chemistry-free or processless plate?

Fukushima: Chemistry free means that there is no developer in the processing step, only water or gum, and the processor is not eliminated. Processless means that no chemicals are used to develop the plate, and this is accomplished on the press cylinder during press startup.

There are issues with processless plates such as scratching and lack of visibility of the latent image and the fact that printing conditions have to be changed. Chemistry-free plates exhibit similar characteristics to regular plates and do not require a change of printing conditions. There is a long way to go before newspapers accept these types of products. While we are not yet offering these products, we are looking at both technologies.

N&T: Is there a plate capacity problem in the United States?

Fukushima: Some suppliers have limited production capacity in the USA, and they solve this problem by importing product from Europe. This can extend delivery time to 60 days or more. Other suppliers have discontinued the supply of analog plates. We are committed to supplying both analog and CTP plate products. The lead time for our newspaper CTP plates is 30 days or less. This is facilitated by three plate production lines located in Grand Rapids. We are not, however, prepared to disclose any figures describing the manufacturing capacity of this facility.

N&T: What is your view of the outlook for analog plate products in the newspaper area?

Fukushima: While demand for CTP plates is continually increasing, some newspapers find it difficult to justify converting to CTP because of the capital required and the higher price of consumables. This will be especially true for some of the weekly or smaller daily newspapers with the result that these newspapers will not be converting for the next few years. Consequently, we have to offer both analog and CTP plates.

 

N&T: Will there be a crossover point in the purchase price (as opposed to the cost of a press-ready plate) where analog plates will become more expensive than digital plates?

Fukushima: We do not think that the purchase price of CTP plates will be less expensive than analog plates.

Analog requires the use of imagesetting film and a conventional plate as compared to the direct imaging of a CTP plate. A comparison of ROI will involve all costs, and has to be determined by each customer. If the total cost of the analog process exceeds the costs of digital, this will accelerate the trend towards CTP.

Production costs for CTP plates are much higher than that of conventional plates. The technical specification and cost for the aluminum substrate is also higher for CTP plates than for conventional plates. We will be making the best efforts to reduce the cost of CTP plates in accordance with the customer needs.

N&T: Do you believe thermal or violet plate imaging will surface as the standard for newspapers using CTP in North America?

Fukushima: There are benefits associated with both systems.  Currently, a bigger portion of the CTP market in the U.S. is using thermal plates. Thermal provides good cost benefits, and violet offers good printing quality, lower hardware cost, and less running cost of chemicals. I would expect that the use of violet will go up. However, the ROI between thermal and violet will depend on customer conditions. Both technologies are necessary for the newspaper market and that is why Konica Minolta decided to develop and market both products.

N&T: What is the relative market share between thermal and violet as measured in volume (square feet) shipped?

Fukushima: Thermal is higher but thermal was introduced earlier, and I believe the use of violet plates is catching up.

Thermal plates have been offered with a very competitive price, which has generated volume. Which will be bigger three years from now? I don’t know. The performance characteristics of the next generation of plates will determine the relative market share between the two technologies. Ultimately, the answer will be determined by the customer.

N&T: As the CTP marketplace matures, service revenues will become increasingly important to suppliers. Maintenance contract pricing will be competitive. How does your company plan to provide an affordable service platform if fees have to be reduced?

Fukushima: From the manufacturer’s point of view it will not be an easy task to make profits out of maintenance. The customer’s objective is to make a high-quality product with less cost and high yield. Since we are providing not only plates, but also platesetters and workflow in a total solution, we have to provide support to our customers. Even if maintenance and service profits are reduced, we have a very important responsibility to the customer. We have no plans to change services or outsource them to a third party at this moment, nor will we reduce our service staff.

N&T: Newsprint and ink prices are increasing, and aluminum metal prices have already increased. What is your perspective on consumable price inflation for newspapers over the next 3-5 years?

Fukushima: Newspaper customers are in a very severe situation right now, and therefore they have to reduce costs and improve quality with technology change. Aluminum prices have approximately doubled and this is a very difficult situation for a plate manufacturer.

We must use our best efforts, technology and more efficient production methods to reduce costs as much as we can. We must try to hold prices even though raw materials prices are going up. Our solution is to provide new products that will enable the customer to save cost through reduced paper waste and lower ink consumption.

N&T: Do you plan any North American management changes and if so, will that impact whether decisions are handed down from the parent in Japan or localized?

Fukushima: The most important consideration in the management of the North American company is the talent of people, and it does not really matter if management is from North America or Japan. Konica Minolta is a global enterprise of 35,000 personnel with the ability to identify excellent managers and move them around. If we have excellent local management, that is an advantage. The most important consideration is to understand customer needs.

N&T: What is Konica Minolta’s message to the industry going forward? What is the brand image that you will promote?

Fukushima: First, as a result of our direct sales, marketing and support, we should be the premier supplier to the newspaper industry in the USA. Also, we will remain alert to the changes in the workplace, and what the newspaper customer wants in the future.

Customer input will drive the introduction of new products and new technology into the market. Despite current difficulties in the U.S., the newspaper market is demanding quality and new technology. We expect that newspaper companies will develop an effective new business model and concept. I have a lot of expectations for the newspaper industry in the U.S. 

NT: It sounds like you are very bullish about the industry

Fukushima: Yes. My message to our clients is one of confidence and support.