Hello!
Andreas Weber of INKISH in Germany.
And I am delighted that we have a very special guest here with us today.
Rainer Wagner, he has a bit of an accent.
You’re about to find out which one.
This leads in the wrong direction, in the completely wrong direction.
Because he no longer lives in Germany,
but as a German he has been living in Latin America for 30 or 40 years.
And I’m handing it over there,
across the ocean,
into the big wide world of Central America.
Hello,
dear Rainer,
welcome to our little show and our wonderful conversation.

Hello!
Yeah, I’m sitting here in Costa Rica.
In this charming country,
where I have been working as a printing engineer since about 1989.
And I am a print shop consultant,
advising print shops throughout Latin America.

And not with a largely Bavarian accent,
but of course in the local language.
And you have also lived in Chile and to give us some insight.
How big are the differences between Central America and South America?

Yeah.
So for example Costa Rica has a total of five million inhabitants,
currently 531 active corona infected people
and Chile has in comparison about twelve million inhabitants
and Santiago de Chile has almost six million inhabitants.
South America is dominated by Brazil,
but countries such as Argentina,
Chile, Peru, Colombia, Paraguay and Uruguay
are also very important for the printing industry in Latin America.

And we met in São Paulo – in Brazil.
At a wonderful congress and through the mediation
of our mutual friend Hamilton Costa.
And that’s where I was very impressed by the sovereign handling
of state-of-the-art technologies.
From a European point of view, people often have completely wrong ideas.
One always hears a lot of poverty and partly also misery,
the favelas and everything that exists.
And when you get there,
you realize that these are highly developed countries
that have really brought print to flourish.
Through a mad creativity.
Am I guessing that right?

You’re right – when we met here in São Paulo –
and for those of us who live in Latin America and work in the printing industry,
Brazil is of course the heart of graphic design.

Does this mean that one works from Brazil
for other countries in Latin and Central America?

Partly, yes.
But here in Central America, for example,
we are of course very much influenced by
the American market and by American design,
and therefore, also by American products that are sold here.

And that means there are definitely cultural differences.
And how do you ultimately bring things together?
You said that you are a consultant in the whole region,
which is huge compared to tiny Europe.
And how do you put that together?

Yes – I have the small example of a product in the underwear industry.
And there was the problem:
That there is of course the Caribbean,
where only dark-skinned people live.
That there is Central America,
where Indians also experience mulatto skin tones,
but we have for example Costa Rica,
where the people have a lighter skin color
and also, in South America many countries have lighter skin color.

In this respect, the advertising campaigns
and the products and packaging must be adapted accordingly.
So, to the different skin colors of the people who live in the different countries.

And that means you have to work very filigree and target in a group specific way.
Simply because there are differences in this range.

It is impossible to distribute an underwear catalogue
that was made for the Caribbean,
in South America or in Chile for example.
That would go against business.
Yes, absolutely.

And this takes place on a conceptual level of content, so to speak.
To what extent are there differences
that now affect the technology?
That’s basically our main topic –
what role does print technology play and what effect does it have?
And I can imagine many things that
Europeans, North Americans or Japanese imagine,
that are absolutely necessary
and are packed into these machines and systems.
Does all this always make sense?
Or shouldn’t one try to tackle it rather calmer?

Latin America consists of very many extremes.
In this respect, the printing industry is also extreme.
There are companies that are still managed as they were 20 or 30 years ago.
And there are also companies that are already highly automated.
As I mainly work in the packaging sector
and mainly serve medium-sized to large companies,
I am naturally in a world of automation.
Because in Latin America-
The more you automate,
the fewer errors you will have in production.
And of course, the higher your productivity will be.
In this respect, automation is very advanced in these companies.
In other companies it is actually still very, very antiquated.

Other companies are more likely to refer to
what we would call commercial printing.

Right.

Yeah yeah, and

Yes, please go on.

Yes – especially in the field of packaging
and in relation to advertising agencies the same is true now,
that the situation has changed in this respect,
that now the advertising agencies
no longer have such an extreme influence on production.
Since many advertising agencies are bought up at the moment
because they are financially less successful,
and they are now being integrated into the graphic companies
and therefore, the graphic companies have more possibilities again,
to have an influence on the products.

And this is a very interesting aspect,
which we do not know here at all.
Here we rather have the situation
that the advertising agencies
are looking for the big money and turn away from print.
That is more the situation.
But that it actually happens that production companies
take over creative companies and thus
have direct access to the advertiser,
the client and the brand itself.
That’s great.

Yes Andreas –
remember that we here in Latin America
are also undergoing the so-called digital transformation.
In other words, transformation naturally means
that you have to integrate creativity and innovation
into your business.
Now you have two options.
You build it up on your own or you integrate know-how people
who have mastered both digital marketing and creativity.
Directamente – immediately into your print company.
And that way you will have integrated the creativity process
back into your print company in a fairly short time.
A process you probably gave up many years ago.

That’s right.
That’s when you were leaving us – late ’80s.
In the mid-80s it happened primarily because
everyone wanted to industrialize and specialize.
You actually decoupled yourself from the prepress,
there was printing,
and another one did the postpress.
And when the desktop publishing revolution came along,
you were actually standing there like a fool
because you could no longer cover the communication chain mentioned here.
Yes, it was exactly the same in Germany,
and of course, it was passed on over here to Latin America.
But the companies have now been in
the transformation process for about three or four years.
And one of the key points here is
the integration of creativity and innovation
into the business process.

What does this mean for the classic supplier industry?
Which, probably looking at it from the headquarters,
cannot even imagine this situation.

This is the very big problem.
That the supply industry and the providers
have so far believed they didn’t need any transformation
and that they could just continue as they did before.
And that is a real problem now,
because the providers and the suppliers
must of course also change.
That only makes sense.

In other words,
all out of a sudden we have quite a discrepancy,
or as Americans would say a gap,
between the ideas one has on the side of technology development
and what is actually needed in the companies.

Right.
That’s exactly what’s happening.
That’s what’s happening.

And how do you help yourself
to get out of a situation like that?
Because then things can’t run so smoothly overall.

The best way to get out of this situation is
to work out your own distribution channels,
your own purchasing channels for your business.
This means that you detach yourself from the general providers
and from the general suppliers
and buy according to your own plans.

This means that in the companies themselves,
a completely different level of competence
must prevail somewhere,
because actually, one takes over many tasks
that a dealer or even a large manufacturer
would traditionally perform.
And you have to do that on your own.
Are companies coping well with this?

The companies that are in transformation
are coping well with this.
Most of the companies do not see this problem at all
and simply continue on their way as before.
But in Latin America, of course,
this is not the best thing you can do at the moment.

And what does that mean for you?
As someone who has very specific expertise?
We’ll get to that later.
What does that mean for your work?
Has it changed much?
Or do these developments actually work for you?
Through people listening better?

The developments actually work for me.
For example, one of the most important recent developments is
artificial intelligence in the various programs
and in the application, in machines for example,
but much more importantly of course,
in the application, administration and management
of printing companies.
Artificial intelligence is already indispensable
for these companies that are undergoing transformation.

This is a very exciting development.
And is it coming…so to speak?
Is all this born out of necessity?
Or do you see a logic that is actually accelerated
by digital transformation as if by a catalyst?

Absolutely.
The catalyst works 100 percent at the moment.
On the one hand the need is natural
and on the other hand the offer
that these technologies exist.
The need is actually: How do I manage to achieve good,
high productivity in order to be competitive in prices?
And that leaves me with a technology like artificial intelligence, which,
once it has learned what the production processes look like
and how to handle them, is the only technology I have.
This intelligence then gives me tips
on how I can optimize this
and how I can optimize costs in production, for example.

We know this over here also
and above all from the online printing sector.
But my guess is that the more people
get involved in this transformation,
the more the temptation is to simply produce commodity products,
i.e. what everyone produces,
and then try to gain an advantage through price.
Is that the point?

That’s not the point, of course not.
That’s why you naturally try to incorporate creativity
and innovation and thus create products for your customers
that reflect the image that the customer wants to have
of his products in his sales process.

This means that we are now back at the beginning of the story.
That means that this involvement of the upstream stages
is virtually vital to survive through the transformation,
not only to overcome it or to be able to put oneself in this situation,
but above all to be able to do a better job.

Absolutely, absolutely. It solves two problems.
Number one: I bind the customer to my company
and to my business
and number two: I optimize my production processes
and still have the possibility to manufacture new products
with new technologies despite the optimization.
And one keyword is: digital pressure rebellishment.

And that would have been my question.
Yes, where do you actually see the greater benefits
of digital transformation?
When I move out of the old world of printing,
that is, the static reproduction of content,
and actually try to move beyond what is called targeting,
marketing, variable data printing, and so on, to digital printing.
Do you see advantages there, or how is that distributed?

That depends, of course, on the pressure,
on the business itself.
The main technology, which continues to excel,
is of course offset.
And that’s basically static printing, static reproduction.
It is also necessary to make individual productions
for certain projects, that is, to offer digital printing.

And how widespread is this in Latin America?

Hybrid printing companies are actually
quite common in that they move away from specialization
and offer as much as possible, i.e. they offer
all kinds of products to the customer.
So many printers have several printing systems
up their sleeve to meet this demand.
I, for example,
work mainly with hybrid printing companies
that have at least offset, digital printing and flexo.

And these are already three very important printing processes.
And that sounds wise to me,
but from a German or European point of view it is not necessarily the norm,
because many of them have specialized again.
As in the eighties, they either specialize in offset printing
or in flexographic printing or even in digital printing.
With digital printing –
Which technologies, if you use toner, inkjet etc.,
are the preferred ones in your region?
Now related to digital printing.

In relation to digital,
indigo is of course very common
and otherwise in smaller printing houses Xerox.

That means the toner-based systems or electro-ink,
as I think you call it with indigo.
How is the topic of inkjet printing received?

Inkjet printing is not so important at the moment
in my opinion and perception.
In these companies, in these hybrid companies.
Because the predominant production
and revenue share naturally comes from offset.
And flexo and digital are actually only accompanying.
That means 80 percent,
between 60 and 80 percent of the income,
comes from offset printing
and the rest is flexo and digital.
In this respect, the high-priced inkjet machines
with high performance are actually too expensive to buy,
and also too expensive to produce.

And therefore they are not applicable.
But basically, as you say, printers have a very strong tendency
to put themselves in the shoes of the individual situations
and to think things through.
In other words, they observe it and simply wait
until cheaper systems and solutions are on the market.

Yes or the customer.
After all, the company goes along with the needs of the customer.
In other words, the company supports the customer
in his sales activities.
And the printing company manufactures products
for the customer’s sales activities.
Does the customer need an inkjet system in a system?
Then this inkjet system is purchased in order to create this special product.
That was developed together,
from the creativity of the print house
plus the needs of the customer.

In other words, then this is not a supplier-driven market,
but a truly demand-driven market,
which is based precisely on demand.

The companies I work with and with which
I carry out the transformation work
according to this system. Exactly.

Which is actually much more logical
than the way we do things here.
I would say.

Absolutely.
It may be that you invest in machines, for example,
that you may not be able
to use to full capacity in one, two or three years.

And then we’re back to that.
At the moment when the market environment is difficult,
I have to work out of necessity
to achieve the greatest possible flexibility.
Do I understand this correctly?

Absolutely, absolutely.
And it can and will be the case
with some of the companies I work with
that they will detach themselves from machines.
Simply to reduce the volume that they currently offer.

And this is not an effect that is only caused
by the Corona crisis,
it was already foreseeable before.

It was also foreseeable before.
Yes, in Latin America we are seeing the effect
that large multinational companies,
for example in Brazil,
which started a year ago,
have had to close down because
they have not converted their production.

Right.
I think RR Donnelley even had the book factory,
I know, that in São Paulo it was closed.

Exactly and RR Donnelley in Chile is also closed.

Ultimately, it means that the market
is becoming smaller, so to speak,
and the medium-sized companies
or even smaller companies
that are enormously flexible.
They can then even beat the larger ones out of the race?
Absolutely.
This is the new situation.
So right now it’s that through Corona
it doesn’t matter if you’re small, medium, large or multinational.
Slow business can happen to anyone, really,
And if you’re not flexible
and if you can’t always adapt to what your customers need,
even in your size,
then you won’t be able to cope with the costs.
And of course artificial intelligence is very helpful
in making these decisions.
It optimizes your production and tells you:
Where do you have to reduce?
Where are the groups?
And where are the production lines
that you actually have to eliminate now
because they are too expensive?

And if you transfer this to the
classic manufacturer-supplier structures,
which suppliers have the advantage at the moment?
And for which ones will there be problems?
Because they cannot focus fast enough
on this needs-based purchasing mentality of the customers.

So if by suppliers you now mean, for example,
the machine manufacturers,
then of course manufacturers like Heidelberg.
They are at a great disadvantage at the moment.
For example, Heidelberg has changed
its product portfolio in such a way
that in principle it can now only offer formats 54 to 104 or 105.

And that’s a limitation, you say?

That is, in my opinion, a limitation.
But it can always be that a company has to go back
to large format or has to go
into a smaller format in offset.

That’s a pretty exciting situation,
because Heidelberg announced in mid-April
that it was going to streamline its portfolio.
And that can be disadvantageous.
And in terms of flexo and digital printing.
What is the situation there?

Flexo and digital printing for the companies
I cooperate with
are purchased according to the customer’s needs.
This means that these are smaller purchases
that are not as expensive as offset printing machines.
And these are purchased
according to the volume and need
of the customer or customers.

So also there – if I may summarize it briefly – The most important thing is flexibility.

Absolutely.

The most important thing is to understand
transformation in a way
that I need completely new artificial intelligence tools.

Absolutely.
Now not only to control my production workflow,
but to be able to control my business in general
and to realign it as fast as lightning if necessary.

Absolutely.
That’s the big advantage.
That’s the big edge.
I can change parts of my production quickly, relatively quickly.

And thus act very quickly, so to speak.
When you say very quickly,
in which cycles does that happen?
I say, let’s take a hybrid printing company
that has everything now and decides all at once:
Flexo printing no longer fits.
So how quickly do the change processes take place?

The change processes
are actually happening very quickly.
It takes between three and six months
to make these decisions and change production
if artificial intelligence is already involved.

And when you talk about artificial intelligence.
This is a whole new software architecture.
Who provides that?
Where does it even come from?

So for example in the whole administration area
there are own providers in Chile for example.
I advise many print shop owners to take a look at Twist-Print.com,
where the entire production is controlled via cloud
and the individual information is programmed in.
For example the costs, the standardized costs are controlled
and if they are malized.
Twist-Print is something very interesting.
Everything is output via a computer.
The entire production is controlled.
Monitors are set up in the work environment.
So that each of the workers is informed
about their productivity contribution at that moment in production.

And is it possible that if you have a hybrid company,
you have hardware and also production software
from different manufacturers.
Is it a problem to get it synchronized?

No problem at all.
Twist-Print guarantees.
And I can actually confirm this from a printer in Paraguay.
So they say they can connect any size of printer to the system
within three to five weeks
and get the production system up and running.
You rent a space in the cloud from them.
And depending on the data sent
from your printing company to this system,
you pay for the service.

Like a pay per use or subscription model – that is what is behind it.

A working subscription model.

A working subscription model, that’s doubly true.

It really sounds to me as if I’m looking into the magic sphere,
into the future of the print world.
And yet I sit here arrogantly in Europe
and think everyone here is doing a better job.
But somehow you guys are way up there at the front.

It looks that way now.
But of course there are only
very, very, very few companies in Latin America
that operate in this form.
The vast majority of them still work under the old system
and with the old production planning,
with the slow conversion of production,
with the slow adaptation to the market and,
of course, with high costs and low productivity.

That is, there is a steep gradient,
but certainly those who have become more agile
must be made more agile
by exactly what you are talking about.
These few, they must then be
incredibly more successful than the others.

And above all, there is one thing
that I have already experienced in 2009, 2008/2009,
during the financial crisis,
and especially in Germany.
That suddenly your competitors around you
are no longer there,
because they are simply pushed out of the market.
And that will of course happen very strongly here.
It’s already happening.

And is now probably accelerated by Corona crisis?

Absolutely, absolutely – yes.
Yeah, right.

That is, it is so to speak, Darwinists would now say:
Survival often he fittest.
And I would say that was the fact in the 19th and 20th centuries.
Now it’s all about the smart, so to speak, knowledge workers,
making it to the top. Is that right?

Andreas – you are conducting this interview with me
at an absolute turning point in the printing industry.
This is now the first real turning point ever.
This means that developments will start now
and this turning point will act as a catalyst
that will completely change the printing industry.
And rigid systems,
rigid production systems will not survive.
You have to be able to adapt quickly
and you have to be able to adapt quickly
to the needs of the customers.
And customers are in the process of changing right now.
Because the new consumer post Covid will be very different
than the consumer before Covid.

And these adjustments you’re referring to?
Can we now break this down a bit to the individual market segments?
We have said that your focus is on packaging anyway,
so it is very consumer-oriented.
I hear it is relatively stable, at least here with us,
because consumption is still going on.
There is no more shopping, it is delivered via Amazon,
but the products still have to be packaged.
And how is that in other areas?
Especially in commercial printing?
What is your prognosis and vision there?

Commercial printing –
the extent to which commercial printing can continue
to hold its own in the digital society is very important.
Of course I don’t have the big crystal ball in front of me.
But commercial printing will be very difficult in the near future.

And the packaging area simply has the better cards in play.

The packaging area
has the better cards in play
and the few commercial jobs that remain after this transformation
can easily be included into the packaging area.

And when you talk about the packaging market,
does that include label printing?
Or is that a separate area for you again?

This also includes label printing and flexible packaging.

You have a rather holistic view, so to speak,
and this is also reflected in the range of products
and services offered by the companies.

Absolutely.
It is not that the companies are very specialized,
but that the companies can offer practically any product
that the customer needs for his sales process.
This goes from point of sale pieces
that are cut out by digital plotters.
Corrugated board products,
cardboard products
and we must not forget that in the near future
all plastic materials will be banned.
So we will then have to work on eight or nine
certified products and substrates.

This is really an exciting conversation
and I take it very seriously when you say
that we have now reached a turning point,
which is moving forward even more dramatically
and quickly due to the Corona crisis.

Absolutely.

If I may summarize:
So, based on the customers throughout Latin America
that you serve, you see the task:
There must be a generalist who can transform himself confidently
and who makes very specific use of cloud services
and artificial intelligence in order to be able to
produce all kinds of things on demand,
namely exactly what customers currently need.
And today this way and tomorrow that way.
Is that right?

Absolutely right.
Absolutely right.
This is the basis of the current transformation.
Naturally accelerated by Covid and
naturally accelerated by the environment.

Does that scare you somehow, or does it inspire me?

Totally inspiring.
Never before has the industry been as interesting as it is now.

And that is not someone who is saying that
who started the day before yesterday,
but you are experienced.
Could you have imagined this 20, 30 years ago?

I wanted it to have happened 20, 30 years ago.
But now it’s finally happening.

Very nice!
Dear Rainer, thank you very much.
I look at the clock.
Actually we have already used a lot of good time very well.
And I’m afraid this will not be our last conversation.
But one should always stop when it is at its best.
And do you have any greetings?
An advice to our INKISH Community
here in Germany, Austria and Switzerland?
They are of course fascinated by what you report
from the faraway world.
Do you have a good advice for them?

Not so much good advice,
but all I can say at the moment is that the printing industry
is one of the most interesting industries to work in.

So then I can now refer back to my chest-message “Confidence”.
You’ve got your thumbs up now.
That’s very good.
And then we’ll take that.
And I want to thank you very, very much.
And we’ll keep talking,
and whenever you make observations
that you would like to share with us here at INKISH,
you are very welcome.

Thanks a lot Andreas.
I am very happy that you are in this INKISH project.
I hope that this will result in critical reporting
for the printing industry in the future.
And maybe one day the opportunity
to do a press test to determine
which of the presses
available on the market is really the best.
I’ve been wishing for this to happen for 30 years now.

Then we’ll take that up.
And as I said,
I thank you for your wonderful insights
that you have shared with us.
And stay confident,
stay well,
and we’ll see you again.

Many thanks for the interview!
Thank you!

Cheers! Bye!

Bye! Pura Vida!