In April 2004, the U.S. International Trade Commission (ITC) and U.S. Department of Commerce found there was no foreign dumping of wax and wax/resin thermal transfer ribbons (TTR) in the United States. The action was precipitated a year ago when International Imaging Materials, Inc. (IIMAK) (Amherst, NY) filed petitions claiming certain foreign suppliers from France, Japan, and Korea were selling product below fair market value and hurting U.S. TTR manufacturers. While IIMAK is considering an appeal, other TTR manufacturers want to put the ordeal behind them, claiming it's been too disruptive and costly already. Leaders from four leading TTR producers recently discussed the anti-dumping investigation and other industry trends and their impact on VARs.
1. How do you anticipate the recent TTR anti-dumping ruling will impact the industry?
Brett Cameron, VP, Sales & Marketing, DNP: The petition set the TTR market back at least one year in terms of research and development and VAR support. Companies were forced to protect their products, customers, and market share. However, the petition did strengthen resolve. Many TTR manufacturers made capital and resource investments and developed new alliances resulting in expanded product offerings, improved services, and products that would have been unavailable without IIMAK's complaints.
Frank Ward, VP, Marketing & Sales, Dynic USA: It's already impacted the industry in several ways. Prices for wax have dropped and will continue to fall. Many companies spent considerable time, money, and resources to fight IIMAK's effort and to regain lost revenue and accounts. This will put a financial burden on some, including IIMAK, and industry consolidation will probably continue.
Richard Kingdon, President, IIMAK: An appeal by IIMAK is a strong possibility, but that won't have much of an impact for 18 months. For now, expect a street fight that will be won on the front lines. You can expect some derogatory comments between TTR manufacturers, and some will attempt to "buy" business. Destructive pricing that hurts our industry, eats into distributor margins, and relegates TTR to a commodity will continue in the short term.
Derek West, Director of Sales & Marketing, Union Chemicar America (UCA): Aside from the obvious distraction and investment in time and resources for those of us involved in this action, it appears the impact on the industry will be minimal. The producers are fundamentally unchanged, and the supply/demand outlook remains similar to what was projected prior to the investigation.
2. What should VARs be concerned with regarding the results of the TTR anti-dumping investigation?
Frank Ward, VP, Marketing & Sales, Dynic USA: There likely will be significant TTR industry restructuring and consolidation. VARs should be wary of increased hype regarding new products, which may be intended to mask inherent manufacturing problems.
Richard Kingdon, President, IIMAK: Expect a new round of price cutting in the short term. Stay competitive by recruiting the support of your TTR vendor, who has the products and services to support your success. Keep in touch with end users, know what they value, and move on price when you need to. However, continued price declines are simply not sustainable over the long term. Raw materials, such as petroleum, are going in the opposite direction.
3. How have product features changed in the TTR industry in the past year?
Brett Cameron, VP, Sales & Marketing, DNP: Companies are trying to de-commoditize their wax product offerings through marketing and product add-ons. Some TTR manufacturers have realized the enormous power of the VAR channel and are taking steps to service this channel.
Frank Ward, VP, Marketing & Sales, Dynic USA: Users are demanding products with more durability. The back coats to protect the print heads are standard, and print speed is constantly increasing. Because of these market demands, many TTR manufacturers are reducing their wax lines and culling the products that don't provide increased durability, reliability, and performance. At the same time, manufacturers are increasing their wax/resin and resin formulations to meet this demand.
Derek West, Director of Sales & Marketing, Union Chemicar America (UCA): With the growth in the print/apply and flexible packaging markets, there's been an ongoing requirement for thermal ribbons to print faster and onto a broader variety of film materials.
4. With pricing somewhat stabilized, what features should VARs be focusing on when selling TTRs?
Frank Ward, VP, Marketing & Sales, Dynic USA: Selling value-added features that are beneficial, consistent, and reliable is key to adding profit. VARs need to make sure that ribbon meets all application-specific needs, such as FDA (Food and Drug Administration)-listed ribbon for the healthcare and pharmaceutical labeling market; ribbon that can withstand the high heat of harsh environments; or ribbon providing chemical-, heat-, and dry cleaning-resistance for apparel labels. Make sure the TTR manufacturer is willing to work with you to educate end users on the ribbons that work best for their applications.
Richard Kingdon, President, IIMAK: VARs sell productivity and data accuracy, not just a commodity ribbon. Things like print quality and durability mean more to end users when they remember how critical the ribbon is to their automated processes. Also, VARs can focus on higher-end applications, like pharmaceutical, healthcare, and automotive, that offer higher margin opportunities. Furthermore, there's opportunity for VARs to add value and reduce costs such as inventory and obsolescence for customers in new areas. For example, many companies realize savings when replacing pre-printed labels with labels printed on demand.
Derek West, Director of Sales & Marketing, Union Chemicar America (UCA): VARs need to look beyond the standard wax grade shipping label applications that have become commoditized and offer little opportunity for differentiation. By working closely with their TTR partner, especially those offering education and training programs, VARs can learn about newly emerging markets, understand the problems those users face, and be prepared to offer a TTR solution to meet these needs.
5. If a client is going to print RFID (radio frequency identification) smart labels, is there a particular type of ribbon that is better or worse to use?
Brett Cameron, VP, Sales & Marketing, DNP: There aren't any that are better or worse, but some are much more expensive. Each RFID application will be as specific, if not more so, as a typical AIDC (automatic identification and data collection) application without RFID. VARs are in the best position to assess customer needs and make the right choice in terms of value versus performance.
Frank Ward, VP, Marketing & Sales, Dynic USA: When it comes to RFID smart labels, clients need to remember that these are labels first. It's a substrate with an adhesive and a printed image that just happens to have an RFID-enabled chip in it. In order to get the best print, it's important to match the label and application usage to ribbon type. Most current RFID applications are for pallet, skid, or case labeling. In most cases, these are paper-based labels, and a high quality wax ribbon works fine. There are a few applications where you might want to upgrade to a more durable wax/resin product to be on the safe side. Most importantly, when printing with thermal transfer ribbons on a smart label, make sure the label layout is correct; be careful you're not printing directly over the transponder. Not only does this give you a poor print image, it also can damage the transponder and make your label a dud.
6. Aside from RFID, what do you expect will drive growth in the AIDC industry?
Frank Ward, VP, Marketing & Sales, Dynic USA: Besides RFID, the healthcare and pharmaceutical industries, both traditionally underdeveloped markets, will be big growth drivers for AIDC. With the new FDA rulings, that should happen rather quickly. However, these markets are not for everyone because there are unique regulations and concerns. Compliance labeling in itself is pretty mature and will not see a whole lot of growth, at least at the large company level. Smaller companies in the supply chain, process control, and material flow areas may provide growth opportunities.
Richard Kingdon, President, IIMAK: We
believe security applications offer opportunity for growth. As counterfeiters become more advanced, companies are looking to multiple technologies, both overt and covert, to protect their goods.
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DNP IMS America Corporation
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Sirius Thermal Transfer Ribbons
International Imaging Materials, Inc. (IIMAK)
GP725 Resin Enhanced Wax Ribbon with Clean Start
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Union Chemicar America (UCA)
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