In recent years, Latin and South America have been solid areas of growth for the printing and ink industries. However, as the region is made up of many countries with different influences, it is an area that defies easy characterizations. Ink World places the region’s ink market at approximately $2 billion annually, led by Brazil and Mexico, and leading ink manufacturers are active throughout Latin America.
 
Fernando Tavara, president, Sun Chemical Latin America, reported that Sun Chemical has seen positive growth in Latin America during the past year, but there is currently a lot of uncertainty throughout the region.
 
“Latin America is a vast area with big differences between countries and economies,” Tavera noted. “Brazil, for example, which in the first quarter of 2017 had shown some initial signals of recovery after two years of heavy economic contraction, has been plagued by ongoing political challenges and may continue to languish in recession. It is hard to predict how Brazil will fare over the next year.
 
“Mexico, the second biggest market, depends on the US economy to spur growth,” Tavera continued. “The uncertainty generated by the new US administration is already impacting the Mexican economy. Investment decisions are being put on hold and consumer spending is declining due to the rapid increase in the interest rate implemented by the government to defend the Mexican peso.
 
“Argentina’s plans for reforms still haven’t taken root with its new administration, so changes that were expected, still haven’t crystallized,” Tavera added. “Printers in Colombia have seen a reduction in work in the first quarter of 2017, so the uncertainty across the entire region are showing effects elsewhere.”
 
Pablo Paduani, Siegwerk’s VP and BU head Flexible Packaging LATAM, said that Siegwerk saw stagnant volume, which can be primarily attributed to political and economic instability, across the Latin American and South American (LATAM) region during 2016.
 
“In addition, the high volatility in many local currencies has also had a negative impact on profitability,” Paduani added. “Siegwerk has seen brand owners looking for more competitive options, and in some cases going as far as moving print jobs to countries with more favorable pricing. Lastly, across LATAM we have seen drastic drops in print media volumes.”
 
Alex Garcia, director of business development for INX International Ink Co., noted that the digital printing sector of the industry has struggled over the last two to three years just like other industries.
 
“Parting from the marked political differences between countries in Latin and South America, you would almost have to look at each country independently rather than pooling an analysis by continent,” said Garcia. “The one common denominator however, is that since late 2013 to early 2014, most countries in the region if not all have struggled with devaluating currencies. In general terms, when it appears like some stability will finally prevail (as is the case in Brazil, for instance), this is offset by random acts of corruption, taxation or speculation that again sends shocks of uncertainty throughout.” Garcia added that this is further accentuated by political rhetoric in the US.
 
“The digital printing market has remained vibrant and grown in many areas, but the growth is also moving towards more economical solutions primarily dictated by Asian suppliers of less quality and consistency,” Garcia reported. “While the market for superior and consistent solutions continues to be in demand, it is also at the expense of manufacturing and logistic cost improvements.”
 
Sergio Pera, director of Toyo Ink Brasil Ltda., observed that the Latin American ink and printing industries had another rough year in 2016.
 
“Weak domestic demand and the continuing rise of digital media presented another harsh business reality for companies in the publishing and commercial printing markets,” Pera reported. “Early industry indicators for 2017 already point to a dismal year, with countries like Brazil posting a double-digit downturn in volume. In such difficult times, many commercial printers tended to focus on making productivity improvements and adding value-added services to help offset the drop in demand. In addition, printers were reluctant to spend on major capital expenditures.
 
“The one bright spot has been packaging, a sector that is relatively immune to recession,” Pera added. “Consumers are going to eat, in good times or bad. As such, Toyo Ink continues to build up its portfolio of innovative packaging solutions that are manufactured in Brazil and customized to the needs of the region.”
 
Outlook for Latin America
 
Pera noted that the long-term growth prospect for Latin and South America remains strong, marked by growing populations, expanding middle class and rising urbanization.
 
“The Toyo Ink Group has taken a cautious stance in 2017 in terms of new project investment,” Pera added. “We have taken a wait-and-see approach with the new Trump administration and its actions towards Mexico and beyond.”
 
“INX sees Latin America as a key growth market,” said Garcia. “Even with continuous uncertainty in Latin America, a slow recovery in Brazil and Argentina and the future of trade relations between Mexico and the US, Latin America as a whole appears to have emerged from recession with much better prospects mid to long term.”
 
Paduani said that for Siegwerk, the LATAM region is one of the company’s growth regions in which it is investing continuously to expand its local capacities and offerings.
 
“To take advantage of future growth, it is always important to build up the best trained staff to grow with the market and meet the requirements of our customers,” Paduani noted. “For Siegwerk this means have the right proximity, the best quality service and ink know-how. Going forward, new investments are foreseen for the Pacific Alliance trade block beginning in 2018 and beyond.”
 
“Sun Chemical expects the Latin America market to continue to grow despite the uncertainty in the region and as a company we’re well prepared to support the growing plans of our customers with local operations in each and every country of Latin America.