By: JIM ROSENBERG
It’s a bull market for ink and paper as newspaper publishers
invest megabucks to enhance their printing capabilities
DESPITE DIRE WARNINGS about the future impact of the Internet and other digital technologies on the newspaper industry, that industry is investing record amounts to expand its printing plants and improve its ability to put ink on paper.
Incredibly, fewer than 10 projects that have been announced, will be announced or are already underway this year account for almost a half-billion dollars in new spending for printing presses and related facilities. That’s between one-half and two-thirds what the entire industry spends annually on new plants and equipment.
The reason is simple: presses still print money as well as news for publishers. At the Wall Street Journal, for instance, it took less than three years for new advertising to repay a two-year investment of $63 million in four-color capacity at the company’s printing plants nationwide. As for its current two-tower-per-plant project, parent Dow Jones & Co. figures the “after-tax internal rate of return would be 18% over 20 years.”
Other dailies are seeing the same benefits or more and better color, often in multiple zoned editions that can further burden existing presses.
Their response, said Goss Graphic Systems marketing director Barbara Gora, “is a great testimony to the strength of the industry right now and going forward the next five years.”
In contrast to the high-visibility new construction projects of recent years, publishers are now spending to add to and upgrade existing offset capacity within existing plants ? most commonly by adding towers to press lines. (See related story, p. 22)
GOOD TIMES FOR PRESS MAKERS
Good newspaper earnings, a generally healthy economy, pent-up demand for more color and capacity and even the recent downturn in Asia have combined to break the logjam in press expansion projects.
For Japan’s TKS Ltd., which a few years ago added its towers to a western daily’s Goss press, “the exchange rate has been putting us into a much more competitive position than in the past,” remarked TKS (U.S.A.) Inc. national sales manager Mike Shafer.
From Goss, which added its Colorliner towers to an eastern daily’s TKS presses, marketing chief Gora observed that “the activity in the U.S. for color extension is really quite strong.” Moreover, many customers, she said, “are also looking at . . . upgrades to their existing presses to put them better in sync” with operation of those new extensions. “It’s not just double-width; it’s single-width, too,” she added.
The price of newsprint can also crimp spending. After “a rash of orders” about four years ago when newsprint prices rose, Shafer recalled, sales of TKS digital inkers and controls declined along with newsprint prices. “Now we’re starting to see a lot more interest in people wanting to upgrade . . . systems for an existing press,” he said.
More generally, Gora observed that while most papers are extending presses because they “have a demand for color from advertisers, they also seem to be doing product planning that extends beyond the immediate horizon.”
In one case, neighboring dailies dueling for the same suburbs are adding iron. That called for a large investment in one of Knight Ridder’s newer properties ? one that competes with a larger daily in a larger neighboring city.
“We probably have considered press expansion in one form or another over the last four or five years,” said Fort Worth (Texas) Star-Telegram operations vice president Gerald Zenick. With last year’s purchase from Cap Cities/Disney came the “opportunity to get this project off the ground,” he said.
Following an “exhaustive study” of the area, he continued, Knight Ridder concluded that it is “a very viable, vital” market with a good business climate and growth prospects.
“It says something . . . that after spending $1.65 billion to buy those newspaper properties from Disney, they turned around and in less than . . . a year have given us well over $30 million to do a capital expenditure project,” Zenick said.
With 102 to 116 separate press runs per week, he said, “we had reached the point of capacity problems ? in page count, process-color position availability and section position availability.” So the Star-Telegram is upgrading everything, from its reelroom automated guided vehicles to the press delivery conveyors. In between, it will add two towers to each of its four presses and outfit them all with the same control system. (The same press and controls vendors are undertaking an almost identical upgrade at the San Diego Union-Tribune, which at one point considered building a satellite plant on land it owned well north of the city.)
The competing Dallas Morning News, already printing on TKS presses with newer TKS color towers and on Goss presses from the defunct Dallas Times Herald, is spending heavily itself on two new presses from a third manufacturer, Wifag. The News has yet to decide whether it will expand its existing North Plant in Plano, replace older presses there or build a second plant on land it owns at the city’s far southern limits.
With shaftless drives and on-the-fly page-changing, the Swiss-made presses also are distinguished by price. “From the get-go,” said operations vice president Frank Tyler, “we knew they were expensive.” Though there was concern that price might be an issue for upper management, he said, it proved not to be the case. “In the long run, we expect to get our money’s worth from these presses,” said Tyler.
?(New presses such as the Wifag OF 370 PCU, above, and the Goss MetroColor, right, are hot sales as papers upgrade.) [Photo & Caption]
?(Editor & Publisher Web Site:http://www.mediainfo.com) [Caption]
?(copyright: Editor & Publisher August 15,1998) [Caption]