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Inks for Wood Laminates Remains Niche Market.

A fast growing sector for European ink producers is inks for wood laminates, particularly for flooring. Despite predictions that it will continue to expand at a double-digit rate for several years, it is likely to remain a niche market served by a relatively few ink makers.

For three major ink makers - Sun Chemical Hartmann, BASF and SICPA - the sector represents a small but high-growth outlet.

But the market has presented big opportunities for rapidly rising sales to some specialty ink makers, like Arcolor of Switzerland and Tabercolor of Spain.

Wood laminates is too small a market to appeal to other big ink producers, particularly since technologically it can be difficult. But for suppliers concentrating mainly or solely on this segment, these technical challenges provide a high barrier against other small-sized competitors.

It is in fact a sector which is technically demanding throughout the value chain so that the paper making, printing, paper treating and laminating all require special expertise. Even intermediates like ink pigments have to be high performance products.

As a result, it is one of the few sectors in which European printers are expanding geographically not through acquisitions but by setting up their own plants across Europe and also in markets in the Americas and Asia. Hence it provides opportunities for their ink providers to become worldwide suppliers.

Traditionally within the wood laminates market, European companies have had a technological edge, with the Japanese exerting the strongest competition.

Recently, European operators have taken advantage of increased availability of wood composites, in particular medium density fiberboard (MDF) and oriented strand board (OSB), to strengthen their position in the wood flooring and laminated furniture markets.

In addition to having big forest-products industries in areas like Scandinavia, Europe has also benefitted from rising output of wood in Eastern Europe, especially in Poland and Russia. Supplies have also been substantially boosted by fierce storms which in December 1999 felled nearly 200 cubic meters of roundwood in France, Germany and Switzerland alone, equivalent to two to three years of harvests.

As a result, prices of fiberboard products have tumbled, making Europe one of the world's fastest growing markets for wood composites. One of the most rapidly expanding segments is laminate flooring, where annual sales are rising at 10 to 20 percent.

Laminate Flooring

European laminate flooring producers have a three-quarters share of the European market, which is by far the world's largest, being over three times larger than that of North America and more than double that in Asia Pacific.

The manufacture of laminate flooring and its components tends to be concentrated in Germany and Switzerland, possibly because traditionally that is where the expertise in the production machinery has been. The main suppliers of paper and the printers of decorative laminating papers are located in this area.

Eastern European countries, especially Poland and Russia, have recently become bigger producers of wood for flooring and hence also have become centers for laminating work.

Poland is now a big exporter of particleboard, even though it only started producing MDF in 1994 and OSB in 1997. But it is steadily moving downstream into the manufacture of finished products, with furniture now being its fastest-growing export sector.

Leading printers of decorative laminates like Interprint and Schatt Decor, both of Germany, have been responding to the growth of Eastern European Flooring output by setting up their own plants in Poland and Russia.

European laminate printers are supplied by around half a dozen Europe-based ink producers. Outside of Europe, the main ink producer in the market is Toyo Ink of Japan.

Ink Challenges

For ink makers, the sector is technically challenging with the laminate paper being printed on large rotogravure machines at high speeds and high temperatures.

The printed paper then has to withstand the effects of being impregnated by resins before being glued at tremendous pressure onto the flooring boards. Furthermore, the suppliers of flooring to consumers are trying to make themselves more competitive with solid flooring by providing quality guarantees lasting as long as 15 years.

Ciba Specialty Chemicals recently increased its sales of pigments to producers of laminate inks by supplying a high-performance pigment that ensures a high level of lightfastness in the colors of the flooring.

"Brown is obviously the most common color in the flooring because of the need to have a wood effect," said Urs Schlatter, global industry head for inks at Ciba's colors division. "In the mix of colors for brown, red has become the vital pigment because there has been no difficulties with lightfastness with yellow, blue and black and blue pigments."

Ciba found a solution to the problem by adapting its patent-protected diketo-pyrolo-pyrrol (DPP) red pigment, the biggest outlet for which is for automobile coatings, for use in laminate flooring.

"We think we have now provided a secure solution for the whole of the laminate flooring industry," said Mr. Schlatter. "At a time when flooring makers are offering such long guarantees for their products, it is a nightmare to be using colors which do not have sufficient lightfastness."

Specialty Companies

The complex technical specifications being demanded by printers from their ink suppliers have given specialty producers opportunities to grab market share by being able to concentrate entirely on a single segment.

"Printers like the fact that we are able focus solely on meeting their technical needs," said Dolf Krapf, director of Arcolor, Waldstatt, Switzerland.

"Our products are not cheaper than those of our competitors but from the technical viewpoint we believe we can produce better inks," he continued. "We supply to order, so that we can provide inks for special colors and designs. Since we are not producing any other type of ink, we must be one of the best. Otherwise, we would not survive as a business."

Arcolor was founded three years ago by Mr. Krapf, an engineer specializing in ink manufacturing machinery, and by Gunter Werner, a chemist who worked for Sun Chemical Hartmann.

The company now has annual sales of around SFr 20 million ($12 million), which, after an initial rapid increase, are now growing at about the same rate as the laminate flooring market as a whole.

Arcolor has a staff of 17, most of whom are technically qualified, so that administrative work like bookkeeping is contracted out. Approximately six are technical specialists who spend most of their time visiting customers, numbering 15 to 20, mostly in Europe.

"Basically everyone here can do most jobs, including, if necessary, helping to run the production equipment," said Mr. Krapf.

"We are expecting sales of SFr 20-30 million in the next five years but we do not want to get any bigger than 20 people. We have enough production capacity to accommodate that sort of growth rate, but if the market expands much faster than that we may have to think again about the matter."

The inks supplied by Arcolor are water-based and use a casein protein as a pigment binder. The casein comes from a local Swiss company.

"Switzerland does not have a big source of raw materials, so we have to make use of what is provided by the Swiss dairy sector," said Mr. Krapf. "Casein is very effective as a holder of pigments because it stops migration in the paper during the printing process."

Tabercolor, Barcelona, Arcolor's main competitor among specialty ink producers in the sector, claims that in addition to being an ink maker it has the advantage of also being a niche supplier of related products to the laminating sector.

These include pigments dispersions for manufacturing paper and topcoats and basecoats for pre-impregnated and post-impregnated papers.

"This makes us knowledgeable about all the requirements during the various production steps in laminate flooring," said Ramon Guivirnau, Tabercolor's head of sales and marketing. "It also helps us tackle the technical difficulties facing ink manufacturers in this sector."

In addition to the crucial requirement of lightfastness, he sees the main technical demands as stemming from the saturation of the printed paper by melamine resins and the need for thermal stability during the high temperatures of the printing process.

"It is vital that there is no bleeding from the inks while the paper is being bathed in resin, otherwise colors will get into the resin and it will not be able to be re-used," he explained. "Nor do you want the ink to migrate through the laminated resin onto the board. Consequently the inks being used in laminate flooring are unique to the sector."

The company is looking to expand into the U.S. within the next two years, where it has already been in touch with both paper mills and printers.

The sector is in fact beginning to divide into two separate groups of producers -- the paper producers, ink makers and printers at one end and board makers, paper treaters and laminators at the other. Increasingly, the paper treaters and laminators are combining into single operations.

At the same time, the printers, working closely with both ink makers and the laminators who have the closest contact with the flooring retailers, are becoming a driving force behind the color design of the final products. Hence they are becoming even more dependent on the technical skills of their ink suppliers in providing the highest quality colors.

European Editor Sean Milmo is an Essex, England-based writer specializing in coverage of the chemical industry.
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Author:Milmo, Sean
Publication:Ink World
Date:Feb 1, 2001
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