Vol. 1, No. 10 | May 17, 2006
TABLE OF CONTENTS
This Month's SBI Trivia Question Stumper:
Who invented LED?
For the answer, scroll to the bottom of the newsletter.
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Industry News
[[HOT TOPIC]] Oil Prices and HDU: Can Wood Sneak Back in the Picture?
If you've been to the gas pump lately, you know the price of oil in the U.S. is skyrocketing. What you may not know (or want to acknowledge) is that expensive oil can mean expensive signs. This is especially true for HDU (high density
urethane) substrate, a highly oil-based product. With the competition between wood signs and HDU seemingly unbalanced the past few years, will the higher cost of HDU production and end-products allow wood to sneak back into the picture? SBI Update spoke with John Meeks, operations manager at Everwood HDU in Greenville, South Carolina, and asked how the spike in oil prices is affecting business, and whether wood sign companies can take advantage. Here's what he had to
say:
"Since the middle of last year, our raw material [cost] has gone up probably 20%. And it's affected our selling price by about 10%. It's created shortages throughout the past ten to twelve months. We just got another letter today that our transportation costs are going up two cents per pound on raw material coming in, which is probably the third surcharge they've tacked on this year alone. That's just on
the shipment; then another five cents per pound on the raw materials themselves.
This really started before [hurricane] Katrina and all that. We started seeing price increases in the beginning of last year. Prior to that, it had been two to three years since we'd seen a price increase at all. Since January of last year to now, we've probably had about ten or twelve separate price increases. We've had long-standing contracts with our raw material people, but by them implementing these
surcharges they're just throwing the contract out the window, because they don't show it as a price increase, they show it as a surcharge, which is an addition to your set price.
It doesn't seem to be getting any better, either. The raw material that we use comes from the top 5% of the quality petroleum coming out of the ground. We have a new vendor who has a soy-based urethane. The costs are not that much better yet, but availability is.
Right now, we're not that bad with the
domestic competitors. We used to be one of the lowest priced products, and then a few of our competitors went below us to try to buy back market share, and now they've had to go up higher than us. The folks that are buying for quality--we're fine with them. Those that are buying on price and price alone--we're losing business with them.
One of the things we're looking at now to counteract all this is going with a material that has a filler in it. We're the only company to date that has
used 100% urethane material in our board, and everyone else has used anywhere from 15% to 45% filler. So that's what we're looking to do over the next 90 days. Implementing some filler into our product will help offset these rising costs. Based on the testing we've done so far, the filler offers a pretty decent quality product, so we may not even go back to 100% urethane.
Wood, however, is its own worst enemy. For a 4' by 8' redwood glue-up, you can pay in excess of $20 per square foot
for a finished product. So you're looking at $600 to $700 for a board that you can get as urethane for $300, or half the price. And it's never going to warp, never going to rot.
And the quality of the redwood now compared to 10 or 15 years ago is poor because of all new growth. Trees are raised quickly with hormones in them, they have a lot more sap, more knots, and they rot. Historically, redwood signs would never rot; now they will. Your best blasters are lucky if they can get a
quarter-inch of depth in a redwood substrate, versus going as deep as you want with a urethane sign. A lot of people are using western cedar now, which I don't recommend. In 16 years of making signs, I've never had luck with cedar not warping or cracking on me. It might not do it overnight, but in the first two years that sign eventually looks pretty bad.
When you look back ten years ago, if a sign shop made one sign out of 100 from HDU, that was a lot. Now, it's more like one out of 100
signs are made of redwood and 99 are HDU. So it's definitely flip-flopped.
Otherwise, the oil prices are felt everywhere. The price of Coke will go up because it will cost more to make the plastic bottles. The wood industry will feel it because their trucks and cutters use gas. The HDU market has increased 30% in raw materials, and wood hasn't increased at all. I don't of anybody who is immune to it right now."
Check out next month's follow-up, when SBI Update checks in with
the natural side of sign building to find out whether rising oil prices are opening a hole for wood sign manufacturers and suppliers to climb back into the substrate race!
Outdoor Advertising is Thriving
With the Internet having a noticeable affect on advertising in the print world of magazines, newspapers, and even on stalwart television and radio revenues, it seems one form of
advertising is thriving outside of the World Wide Web--billboards and other outdoor ads.
According to research conducted by the Outdoor Advertising Association of America (OAAA), outdoor advertising revenue grew 8% in 2005, with total revenue in excess of $6.3 billion compared to 2004 revenue of $5.8 billion.
Even in the face of online ad sales that continue to spike, outdoor ads--including billboards and ads in bus shelters, train stations, etc.--continue to be effective and
profitable. According to CNNmoney.com, stock value of Clear Channel Outdoor (a spin-off of Clear Channel Communications) shares are up nearly 30% since its IPO last November, and Lamar Advertising stock is up more than 15%.
"Outdoor advertising's ability to effectively reach its core mobile audience while other media struggle to maintain audience share is one of the major reasons why more national brands are moving ad budgets to the outdoor medium," said Stephen Freitas, chief marketing
officer for the OAAA. "Consumers are spending more time away from home where they are being exposed to increasingly more outdoor messages instead of in-home media."
New billboard and outdoor advertising technology will continue to help the market thrive. Digital billboards, outdoor signage that sends messages via cell phones, and other advancements will only add to the value that outdoor ads bring to the table.
Paper, OLED Displays to Reach $10 Billion by 2011
A new report on the OLED (organic light emitting diode) marketplace and paper-like displays says that the combined sales of such products will reach $10.2 billion by 2011,
and $14.7 billion by 2013.
Along with these numbers, NanoMarkets LC, an industry analysis firm based in Glen Allen, Virginia, also predicts that flexible displays will see $1.7 billion in revenues by 2011.
The firm's report cites several factors behind the increases, such as the low cost of manufacturing both OLED and paper-like displays. It also says that "paper-like displays are the first technology that offers the visual clarity, cost points and networking capabilities to
enable retailers to continuously update product information," and that "this capability is one of the main reasons that shelf-edge displays will be the biggest opportunity for the paper-like display business in the next few years." NanoMarkets says these technologies will "transform signage."
Nazdar Purchases Lyson
Nazdar, a printing-ink manufacturer based in Terrace Shawnee, Kansas, has acquired British company Lyson Ltd and its subsidiary Lyson Inc., an Illinois-based ink manufacturer. According to Nazdar,
the Lyson brand and inkjet product line are now parts of the Nazdar Inks and Coatings Division.
"Nazdar is committed to the digital ink market," said Nazdar President Mike Fox. "It's an increasingly important part of our core business. We intend to maintain and build the Lyson brand, which has an outstanding reputation for innovation, service, and support."
Lyson founder Jeff Ball added: The acquisition is a great fit for both companies. It gives the Lyson brand the resources
necessary to further our penetration into the marketplace and to continue to research and develop Lyson products at the very highest level."
The Lyson product line includes solvent and water-based digital inks for inkjet print technologies.
FASTSIGNS International Inc. to Open 500th Franchise
FASTSIGNS International Inc. recently announced an agreement with Bob Weber of Kalispell, Montana to open a FASTSIGNS(R) location there. It will the first FASTSIGNS in
Montana, the 410th in the U.S., and the 500th throughout the world.
In addition to the American franchises, FASTSIGNS can be found in Canada, Mexico, Brazil, the U.K., and Australia, where stores operate under the SIGNWAVE(R) name.
"We are now in our 21st year as a company, and there's no letting up in the demand for either the signs and graphics that our centers provide or the business opportunity we offer entrepreneurially minded individuals," said FASTSIGNS President Larry
Lane.
New FASTSIGNS centers will now be provided a development team to work with the owner towards streamlining the opening process and consistently reach the break-even point at first.
In related news, FASTSIGNS International Inc. has relocated its corporate headquarters to a larger facility in Carrollton, Texas. The new 37,000-square-foot facility is 10,000 square feet larger than the previous facility, also located in Carrollton.
Signage Printer Installs World's Largest Press
National Posters, the flagship company of National Print Group of Chatanooga, Tennessee, says the signage market represents 60% of the company's business. In order to accommodate such a
workload, National Posters recently installed the world's largest printing press--KBA Rapida's 81-foot, seven-color plus coater sheetfed press. Said to be the world's largest litho press, it weighs some 600,000 pounds.
"This press will enable our company to present our customers with more print opportunities and options than ever before," said National Print Group Chairman George Diamantis. "There will be no single competitor that will be able to do what we can with this press, or have
the ability to offer the variety of printing we offer, from digital screen to litho."
The company built a new, glass-enclosed pressroom to house the giant piece of equipment, complete with an adjacent customer lounge and viewing area to watch it in action.
New Appointments
Allegra Network LLC, one of the world's largest print and graphic communications franchises, announed that Steve White, Allegra's vice president, has been named president of Signs Now, the company's sign division. Signs Now
is a provider of indoor and outdooor signage, exhibit displays and large-scale graphics.
JaxWraps, a manufacturer of custom fleet advertising based in Jacksonville, Florida, appointed Nicole Brosch to the company's newly-created position of art director.
LED Lighting Fixtures, Inc. (LLF) announced three key additions to its executive team. Mike Rogers, formerly vice president of sales at Cree, Inc., has been appointed president of LLF. Cynthia Merrell, former CFO and treasurer at Cree, Inc., joins LLF as CFO. Mike Fallon was named vice president, sales
and marketing. LED Lighting Fixtures is a start-up venture of Neal Hunter, one of Cree's co-founders and a former top executive and chairman at the firm.
Meetings and Events
JUNE
June 22-24: Midwest Sign Show 2006, an ISA-sanctioned event, is scheduled for the Marriott Northeast in Cincinnati, Ohio. For more information, call 513/753-6048 or log on to www.msassn.org.
Sponsored Links
M2 Lighting Solutions, LLC -- NEW epoxy-encapsulated UL recognized LED channel letter lighting system that will stay bright even in your most challenging conditions. www.M2Lighting.com
Elliott Equipment Corporation -- Award-winning HiReach & BoomTruck aerial-workplatforms and cranes. Elliott products increase your productivity, and give you the highest ROI available. Do more with Elliott. www.elliottequip.com
This Month's Trivia Answer:
Nick Holonyak
According to Wikipedia, American scientist Nick Holonyak invented the first visible LED in 1962 while working in the General Electric Company laboratory in
Syracuse, New York.
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For in-depth coverage of these topics and other sign industry topics, check out
www.signshop.com
ATTENTION SUBSCRIBERS:
Coming up in the June 2006 issue of
Sign Builder Illustrated,
feature articles on:
Digital Printing Inks
Dimensional PVC
Inflatables
Magnetic Vehicle Graphics
Digital Printing Software
Vinyl
P-O-P
ATTENTION ADVERTISERS and SUBSCRIBERS:
Coming up in the July 2006 issue of
Sign Builder Illustrated,
feature articles on:
Digital Printing on Banners
Electronic Digital Signage
LED Lighting
Routers/Engravers
Tri-face
Large Format Vinyl
Contact your ad sales representative to reserve your space today.
As we shape SBI Update into the premier
e-newsletter for the sign industry, we encourage our
readers to send us feedback on what you like, what you'd like to see, and any other comments you might have. To do so, send an e-mail to Associate Editor Chris Ytuarte at cytuarte@sbpub.com.
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Diversify your business with a laser engraving and cutting system from Epilog. Engrave and cut acrylic, cloth, plastics, wood, and more. Systems start at $9,995 and are as easy to use as a printer. www.epiloglaser.com. For a free CD demo and samples created with a laser, visit the Web site by clicking on the Epilog logo above.
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OSRAM SYLVANIA's DRAGON family of hi-flux LED modules is rapidly bridging the gap between the requirements of white light illumination and the capabilities of LED technology. The company offers a complete range of products and services for every aspect of contemporary and advanced sign and display lighting. Click on the Osram logo above to visit the Web site.
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Adding a MultiCam to your shop will decrease job times and increase profits! Use our machines to cut a wide variety of materials, including aluminum, acrylic, and wood, to create dimensional signage and to finish digital prints. www.multicam.com. Click on the Multicam logo above to visit the Web site.
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Sign Builder Illustrated is the "How-To" magazine for the sign industry. With step-by-step instructional features, columns penned by industry experts, and news spanning the signage landscape, Sign Builder Illustrated has the answers. For subscription information, click on the magazine cover above.
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Sign Builder Illustrated:
The How-to Book Vol. 1
Learn secrets to fabricating neon, illuminating with LED, sandblasting signs, applying paints, cutting and printing vinyl and more in this 288-page, full-color reprinting of Sign Builder Illustrated's how-to articles. To visit the How-to Book Web site, click on the image above.
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Outdoor Advertising
Thriving