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FLEXO Magazine : November 2008
TECHNOLOGIES & TECHNIQUES Profit/Loss Statement Flexo $6,225,562 Sales Cost of Sales $1,656,950 $356,269 $183,750 $22,372 $217,555 $3,788,666 $203,627 $3,585,039 Paperboard Ink Dies Plates Direct Labor Gross Profit Depr. Expense Net Income $2,099,529 $323,791 $95,000 $8,763 $748,670 $2,978,957 $551,596 $2,427,361 Capacity Statement (in MSF) Flexo 294,024 66,278 23% 227,746 Total Used % Remaining Offset 116,738 78,487 67% 38,251 Table 1. We can examine the positive effects that a 10 percent across- the-board paper cost reduction makes on the profits of a carton converter. Without resorting to a financial statement, simply per- form the following mental calculation: Paper cost = 70 percent of overall cost, so a 10 percent reduction is 7 percent of the overall cost. For every $100,000 of overall production cost, $7,000 can go directly to the bottom line. In these times of keen competition and unrelenting down- ward price pressure from package buyers, I don’t know too many converters who couldn’t benefit from a 7 percent cost reduction. And remember, this is just the cost reduction resulting from pa- per savings. The productivity advantages discussed earlier, when added to the paper savings presented here, make for a truly com- pelling business case. In fairness, there are cost components of the inline flexo pro- cess that are higher than corresponding costs in offset. The most loudly decried cost is that of rotary dies. Also, photopolymer flexo printing plates cost more than aluminum offset plates, and flexo inks (especially UV flexo) can run 10 to 15 percent higher in price than offset ink. So, any professional comparison will take all the cost figures into account before presuming to declare an advan- tage for either process. 34 F LEXO At Mark Andy, I have developed just such a model. We look at all the relevant factors and produce a pro-forma financial state- ment for prospective customers. As an example, we recently evaluated the operations of a large, primarily sheetfed integrated carton producer. A group of 10 cartons were selected, ranging from small to large in size and short to long in run length. We analyzed each individual carton for layout, paper weight, number of colors, ink, die and labor costs and compared those numbers to the equivalent sheetfed data which was given to us by the con- verter. Table 1 shows the summarized results. We encourage all sheetfed carton printers to contact us and send sample boxes for a free evaluation. For many this is the first step toward implementing a new and cost-effective compliment to their offset operations. In the modern folding carton market, having the ability to produce cartons with either process gives converters the flexibility to deal with most anything that comes their way, maintaining market share, reducing costs and maxi- mizing profitability as they go. ? F O O O F F F 21% 9% 48% 61% 71% 21% 32% Revenue per Labor Hour Flexo $4,121 Offset $6,254,710 Advantage (F=Flexo | O=Offset) % Offset $907 ABOUT THE AUTHOR:Michael R. Pfaff is director of paper- board and folding carton press sales for Mark Andy’s Comco Product Division. NOVEMB E R 20 0 8 www. f l e x o g r a p h y. o r g