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Business Printing Technologies Report
May 2004
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TABLE OF CONTENTS
CTP: Understanding the Real Costs Part II
The Source
Hotline Online
CTP: UNDERSTANDING THE REAL COSTS PART
II
by John Zarwan, Ph.D.
Editors Note: In the second of a two part series, we look into the real costs
of running a CTP system. We'll include all the things that are usually looked at
and those that are often overlooked. The study is based on work conducted by
John Zarwan Ph.D. a graphic arts consultant.
Cost of Plate Processors
Plate processors can cost from $20,000 to $40,000 or more, depending on size,
vendor, and plate type. Very few printers, however, explicitly pay for
their processors. Almost all processors are provided "free" with even a minimal
volume of plates. Accordingly, we have omitted the cost of the processor as an
explicit cost, since its cost is already "buried" in the price of the
plates.
Floor Space
One of the hidden costs of plate making is the cost of the space it consumes.
Printers rarely allocate this cost because they, unfortunately, do not always
account for all of their costs. The space required for the processor is
typically small. The attitude of most is, "We have the space," so they do not
see a reason to charge for it. In fact, only one of the plants contacted (an
operation of one of the larger printers in North America) explicitly charges for
floor space used by the processor. Nevertheless, using even very simple
assumptions, the cost of space can be very expensive, frequently as much as the
chemistry itself. Charges for floor space ranged from $6 to $10 per square
foot. Obviously, in higher-rent urban areas such as New York City, San Francisco
or Boston, costs can be much higher. But even using these lower figures, the
space consumed by the processor can cost as much as $5,000 to $10,000 per year.
Even for a moderate to large plant that spends $100,000 to $150,000 a year on
plates, the cost of the space can amount to 10% of the cost of the plates.
Cost of Chemistry
Chemistry is often considered a nondiscretionary cost of
doing business, and thus, these costs are often not tracked accurately.
Printers must understand and know all of their costs. This is an absolute
requirement--especially in today's environment--in order to have all production
processes under control. Further, each step in the production process
represents an opportunity for error. It is critical to understand the potential
sources of mistakes and their associated costs. In so doing, it is necessary to
analyze the cost of each piece of the operation. While the cost of the chemistry
itself may appear to be relatively small, it in fact often represents a
significant proportion of the cost of the plate. Failure to understand its true
cost can be symptomatic of broader business issues.
Printers can spend as
little as $2,500 per year on chemistry, or as much as $75,000 or more, depending
on their plate volume, type of plates, and operational practices. The variation
in the prices of chemistry-particularly of developer but also of replenisher and
finisher-is much less than that of the plates. This is true for different
suppliers as well for the same product purchased in varying volumes. The
major source of price differential comes from quantity purchased at a single
time and/or container size (e.g., 2.5 gallon jugs versus 55 gallon drums).
Printers' chemistry practice and use, however, differ dramatically, even among
similarly sized plants using the same plates. And in estimating cost and
chemistry usage, not every printer included all costs. For example, some
printers indicated they employ a replenisher, priced differently from the
developer, while others do not. Many printers omit the cost of water or other
neutralizing processes. For printers who bake, some mention pre-bake chemistry,
while others do not. Accordingly, chemistry costs per square foot
vary. Overall, however, chemistry is typically equivalent to about 18% to
20% of a printer's annual expenditures on plates, although it can be more than
70% and as low as 5%. There are a number of reasons for the variation, but the
major ones are plate volume, the specific requirements of each type of plate,
and the ability of the chemistry to be "pushed" beyond the manufacturer's
recommendations.
Costs can vary based on low or high plate usage. Although a few
printers had low enough plate volumes to need to change chemistry before the
plate volume would otherwise require it, most printers do not feel they
"waste" chemistry due to low plate volumes or variability of usage.
However, in practice, the cost per plate decreases as more plates are run
through the chemistry.
Chemistry for Thermal Plates
KPG Thermal/Gold/830
Printers who use the bakeable KPG plates, primarily
the Thermal Gold, typically spend about 20% of plate costs on chemistry,
although some plants on consignment can spend fully half as much on chemistry as
they do on plates. Chemistry costs about $0.20 to $0.25 per square foot of
plates, on average, although the range is from a low of less than $0.03 for high
volume national accounts to more than $0.70 per square foot of plate material
for some users. The average chemistry expenditure is about $25,000 to $30,000
per year, reflecting the higher-volume nature of plants using this plate and the
added costs of pre-bake chemistry, among other factors.
KPG Sword
The range of chemistry cost for printers who use the no-bake KPG
Sword plate is much narrower, between 8% and 18%, as a percentage of plate
expenditures. The chemistry for the Sword costs printers about $0.12 per square
foot of plates, or about $10,000 per year.
Fuji
Chemistry costs Fuji LHPI thermal plate customers about $0.18 per
square foot of plate media. Some plants spend as little as $0.03 per square
foot, while the high end is about $0.45 per square foot. This is an average of
10% to 15% of the typical customer's expenditure on plates, with the low being
about 3% and the high 40%. Depending on plate volume, this works out to about
$10,000 to $15,000 per year for chemistry.
Western/Lastra
A typical Western/Lastra thermal plate customer spends
about $16,000 per year on chemistry. Although the range of total chemistry
expense is very narrow, the cost per square foot of plate developed varies
greatly and ranges from as little as $0.05 to more than $0.65, with an average
expenditure of $0.25 per square foot. Some printers actually spend half as much
on chemistry as they do on plates, but on average, chemistry expense is about
25% of the cost of the plate.
Presstek
Presstek plates use no chemistry. The Anthem plate requires
a water wash after imaging. Costs are therefore zero (most printers use tap
water).
Chemistry for Visible Light Plates
(Violet)
Agfa
Chemistry costs
Agfa visible light plate customers about $0.20 to $0.25 per square foot of plate
media. Some plants spend as little as $0.10 per square foot, while the high end
approaches $0.80 per square foot. This is an average of a little more than 20%
of plate costs, with the low being about 6% and the high 75%. Depending on plate
volume, this works out to an average of about $10,000 to $15,000 per year spent
on chemistry. Because Agfa violet plate customers change their chemistry more
frequently than others, typically every week or two, smaller volume printers are
more likely to have excess waste. As one owner put it, "My chemistry costs
wouldn't go up at all if I ran twice or three times the volume."
Fuji
Chemistry costs Fuji violet plate customers less than $0.15 per
square foot of plate media. Some plants spend as little as $0.09 per square
foot, while the high end approaches $0.20 per square foot, for a printer with
relatively small plate consumption. This is about 10% to 15% of the average
customer's expenditure on plates. Depending on plate volume, this works
out to about $13,000 per year spent on chemistry.
Baking
The cost of baking is another cost that most shops do not account
for--other than the cost of the oven itself. Oven operating costs are difficult
to identify and track. And, as with most things that aren't measured, they do
not appear to be important in the overall scheme of things. But in fact,
for those who bake plates--which includes a significant proportion of those
using thermal technology--the added cost can be substantial. Most indicated the
added cost of operating an oven (excluding the capital expenditure for the oven
itself ) is in the range of $10,000 to $15,000 per year, although for one $100
million printer, the reported cost was closer to $5,000 a month. Baking
may also require a pre-bake solution, which can add another $2,500 to $6,000 or
more per year in expenses. Thus, it would behoove printers to gain an
understanding of the cost of baking in order to clearly grasp its overall impact
on operational costs.
Inventory
Printers must maintain some inventory of chemistry, both for
routine operation and to meet unexpected and emergency needs. Although interest
rates-and therefore carrying costs-are relatively low, maintaining any
inventory nevertheless has a financial implication that should be minimized.
Those printers whose inventory is on consignment generally pay more for
chemistry and plates. Most hold about one to two chemistry changes in
inventory, with enough replenisher and neutralizer to last between changes. The
typical printer holds about 7% or 8% of the annual chemistry spend in inventory,
although many have as little as 1% or 2%, and some have as much as 60%. In
practical terms, this works out on average to one week to two months of
chemistry, typically two to three weeks. The average dollar value of the
chemistry in inventory is about $850, although there is a fairly wide range
around this,from $125 to $2,500 or more.
Processor Maintenance
The plate processor needs to be maintained. All
brands and models, for all plate types, require checking the chemistry and
adding developer or replenisher to maintain the proper concentration or pH
levels. Most processors also require some minimal level of daily or weekly
cleaning, typically of parts such as rollers, as well as a more thorough
servicing at each major chemistry change. While maintenance schedules and
practices vary, printers generally spend about an hour each week in routine
processor upkeep, with an average of another hour or two per week for chemistry
changeover. The overall mean is almost 2.5 hours per week for processor
maintenance. At an average cost of $20 per hour ($15 labor, $5 benefits and
overhead) that works out to $2,600 per year for labor for routine maintenance
alone. It should be noted, however, that NAPL estimates fully burdened
labor costs at more than $40 per hour, which would double this annual
figure. Maintenance requirements naturally differ by plate type and
manufacturer, as outlined below.
Thermal Processors
Agfa
Printers who use Agfa thermal plates change the
chemistry weekly, with the changeover taking approximately four to five
hours. Standard annual cost - maintenance only: $5,000.
Fuji
Chemistry for the Fuji LHPI thermal plate is apparently fairly
forgiving. Printers using this plate typically change the chemistry every month;
many extend the chemistry life far beyond Fuji's recommendations. One
mid-size printer only changes the chemistry "every few months... We use
stochastic screening. We couldn't be consistent on reprints until the chemistry
is just right. We don't change it in order to hold the chemistry
consistency, and we found it wasn't necessary to do so. We clean the processor
every 30,000 square feet or so, just to see what's going on in the bottom of the
tanks. The replenishment rates have been balanced to the mix of plate
sizes and volumes and stay consistently consistent."
Accordingly, the average
weekly maintenance for these processors is less than 2 hours per week.
According to one respondent, "Fuji is very nice. The chemistry can be
dumped and changed in 1-2 hours." Standard annual cost - maintenance only:
$1,750
KPG Bake (Thermal/830/Gold)
As one of the most popular digital plates, the
experience and practices of printers using KPG thermal bakeable plates
(including the 830 and particularly the Thermal Gold) are varied. Printers spend
an average of 2 to 3 hours a week cleaning and maintaining their processors,
although some spend as little as 1 hour or as much as 10 hours. While most
change chemistry weekly, the average is slightly less frequently, with some
printers only changing chemistry every month or two. Standard annual cost
- maintenance only: $3,000
KPG No Bake (Sword)
KPG Sword chemistry appears to require relatively
infrequent changes, typically every two to four weeks. Accordingly, processors
require only about 1.5 to 2 hours each week to maintain; few printers spend more
time. Standard annual cost - maintenance only: $1,800
Western/Lastra
Chemistry for the Western/Lastra DiamondPlate LT-2 is
apparently very complex. While most printers change the chemistry weekly, a few
change it much less frequently. One respondent commented, "Western guarantees
the chemistry for a month, but we get 4 months before we change it."
Processor maintenance is a bit more intensive, however. The chemistry "doesn't
have to be dumped to clean [the processor]," said one printer. "We clean it once
a week, the top rollers every evening." This combined with the difficulty
of cleaning the processor increases the average time allocated to maintenance to
about two to three hours per week, with some users spending even more
time. Another printer indicated, "It's a heavy chemistry. We spend 5
hours a week cleaning; and for a complete chemistry change it takes 2 people
about 10 man hours cleaning... There's a lot of grit on the dryer unit... It
also takes a while to warm it up and get to operating temperature [after a
change]." Standard annual cost - maintenance only: $3,250
Presstek
The Anthem plate from Presstek uses a water wash. Presstek users
clean the washer every week or two, although some report doing so monthly.
Cleaning takes about 15 to 30 minutes, the more meticulous can spend longer. We
also found one Applause beta site; as there is no water wash for Applause, there
is no processor to clean. Standard annual cost - maintenance only:
$500
Visible (Violet) Processors
Agfa
Printers using Agfa LAP-V violet
plates typically change chemistry every two weeks. These plate processors
require an average of two to three hours of weekly maintenance. One small
printer indicates he needs 25% of one full-time employee for processor
maintenance and cleaning. Another comments, "We're on a four week cycle... It's
a5-hour process for 2 people (10 man-hours). We do full maintenance every month;
it's not required but it provides a better plate appearance. It doesn't affect
the quality of the plate, just the appearance; there's less squawking out of the
press room". Standard annual cost - maintenance only: $2,000.
Fuji
Chemistry for Fuji violet plates, which are relatively new on the
market, is typically changed every one or two weeks, somewhat more often than
Fuji thermal plates. Processor maintenance is therefore slightly greater,
typically 2 hours a week. "It takes a full day to clean the processor,"
noted one respondent. Standard annual cost - maintenance only: $2,500.
Waste Disposal
Most chemistry can be neutralized and made acceptable for
disposal by adding water or an appropriate neutralizing agent. Accordingly,
almost all printers dispose of their waste chemistry by putting it down the
drain into the public sewage system. Nevertheless, many do not, preferring
to dispose of their waste chemistry using a hazardous waste removal company. An
exception is the Agfa LAP-V violet plate. As with other processes, waste
chemistry is often neutralized and disposed in the drain. Printers using this
plate must remove the silver. Although the silver can be treated/diluted for
disposal down the drain with the neutralized waste chemistry, most have it
trucked away with other hazardous waste; some also dispose of their waste
chemistry in this manner. The cost of this disposal can vary markedly. The cost
of disposal of the hazardous waste averages about $2,500 per year, and can range
from a low of about $0.02 per square foot of plate media to a high of about
$0.15 per square foot. This can be between 6% and 45% of total chemistry costs,
so it's not insignificant. Users of this plate technology shared the
following comments: "There is minimal toxicity; it's on the borderline
between [safe to] dump or [having it] removed; we can probably dump, but we have
hazardous waste removal to be safe." "We don't have any sewage; so everything is
hauled away, even waste water. It ain't cheap." "I wish we had considered
the cost of silver. It was never mentioned. It costs $5 per gallon just to
dispose of that."
We can expect environmental regulations to become even more burdensome. So,
while it probably will remain possible to neutralize the waste chemistry,
tolerances will be tighter and it is therefore likely to become more
expensive to continue to dump this waste into the public waste system. According
to Tony King of Agfa, many countries now see the environmental laws tightening
with restrictions to any processor waste being discharged directly to drain,
especially where higher pH developers are used. So containerized collection of
processor waste is increasingly becoming the norm for many.
Moreover, the
generator of the waste is ultimately responsible for that waste, with no
time limit, even if all rules associated with hazardous waste handling and
disposal are followed. If an improperly disposed of barrel is ever discovered,
the printer is responsible for its clean up, as well as the associated fines.
Costs are therefore likely to increase, either directly for waste disposal or
indirectly to ensure that the effluent meets environmental
regulations.
As we have discussed here, the cost of getting a plate on press can vary for
any number of reasons, including:
· the type of plate and the accompanying chemistry requirements
· plant
procedures and processes
· plate volumes
While chemistry prices vary across plate types, prices paid by printers are
consistent for a specific chemistry. Chemistry costs are, however, influenced by
the nature of the plate contract, including pricing, length, and whether
inventory is consigned.
In addition to the cost of plates and chemistry,
other cost centers that must be considered in accounting for total plate
production costs include:
· chemistry inventory (for routine use; replacement; and emergencies)
·
processor, including floor space
· processor cleaning and maintenance
·
cost of baking (if appropriate)
· waste management and disposal
Larger printers with higher volumes and throughput tend to make more
efficient use of chemistry and pay less for it. For a typical mid-sized printer,
chemistry alone can be $20,000 to $35,000 per year, while a smaller printer can
spend $10,000 to $15,000 per year. With the addition of other required
operating costs--excluding capital costs--total plate production costs can
easily double the cost of chemistry.
A special thanks to John Zarwan for contributing this article.
John Zarwan is president of J Zarwan Partners, a consulting firm specializing
in market strategy and implementation; product planning and positioning; and
market research. From 1990 to 2003 he was principal of State Street Consultants,
a sales and marketing consultancy serving manufacturers and distributors in the
graphic arts industries, where John was responsible for sales and marketing and
directing research activities and publications.
He can be reached at:
165
Queen Elizabeth Drive,
Charlottetown,
Prince Edward Island C1A 3B2
Canada
Phone: 902-892-7272
Email: <mailto:jzarwan@islandtelecom.com>
jzarwan@islandtelecom.com
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