111
irST 1974
ECONOMIC ANALYSIS
OF
PROPOSED EFFLUENT GUIDELINES
PRINTING INDUSTRY
QUANTITY
U.S. ENVIRONMENTAL PROTECTION AGENCY
Office of Planning and Evaluation
Washington, D.C. 2O46O
I
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Ihis document is available in limited quantities through tlic
L'. S. Environmental Protection Agency, Information Center,
Room W-327 Waterside Mall, Washington, D. C. 20460.
The document will subsequently be available through the
Naiion.il Technical Information Service, Springfield, Virginia
22151.
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EPA-230/1-74-053
ECONOMIC ANALYSIS
OF
PROPOSED EFFLUENT GUIDELINES
PRINTING INDUSTRY
August 1974
Contract 68-01-1541
Office of Planning and Evaluation
Environmental Protection Agency
Washington, D.C. 20460
on
230 South Dearbo^ Street
Chicago, Hiinois 6060*
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This report has been reviewed by the Office of Planning and
Evaluation, EPA, and approved for publication. Approval
does not signify that the contents necessarily reflect the
views and policies of the Environmental Protection Agency,
nor does mention of trade names or commercial products
constitute endorsement or recommendation for use.
MVIEOKUEHTAL PROTECTION AGEU6Y
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PREFACE
The attached document is a contractors' study prepared for the Office of Planning and
Evaluation of the Environmental Protection Agency ("EPA"). The purpose of the study is
to analyze the economic impact which could result from the application of alternative
effluent limitation guidelines and standards of performance to be established under Sections
304(b) and 306 of the Federal Water Pollution Control Act, as amended.
The study supplements the technical study ("EPA Development Document") support-
ing the issuance of proposed regulations under Sections 304(b) and 306. The Development
Document surveys existing and potential waste treatment control methods and technology
within particular industrial source categories and supports proposal of certain effluent
limitation guidelines and standards of performance based upon an analysis of the feasibility
of these guidelines and standards in accordance with the requirements of Sections 304(b)
and 306 of the Act. Presented in the Development Document are the investment and
operating costs associated with various alternative control and treatment technologies. The
attached document supplements this analysis by estimating the broader economic effects
which might result from the required application of various control methods and tech-
nologies. This study investigates the effect of alternative approaches in terms of product
price increases, effects upon employment and the continued viability of affected plants,
effects upon foreign trade and other competitive effects.
The study has been prepared with the supervision and review of the Office of Planning
and Evaluation of EPA. This report was submitted in fulfillment of Task Order No. 23,
Contract 68-01-1541 by Arthur D. Little, Inc. Work was completed as of August 1974.
This report is being released and circulated at approximately the same time as
publication in the Federal Register of a notice of proposed rule making under Sec-
tions 304(b) and 306 of the Act for the subject point source category. The study is not an
official EPA publication. It will be considered along with the information contained in the
Development Document and any comments received by EPA on either document before or
during proposed rule making proceedings necessary to establish final regulations. Prior to
final promulgation of regulations, the accompanying study shall have standing in any EPA
proceeding or court proceeding only to the extent that it represents the views of the
contractor who studied the subject industry. It cannot be cited, referenced, or represented
in any respect in any such proceeding as a statement of EPA's views regarding the subject
industry.
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TABLE OF CONTENTS
Page
List of Tables ix
EXECUTIVE SUMMARY xi
I. INTRODUCTION 1
II. WATER USE IN THE PRINTING INDUSTRY 3
A. CHARACTERIZATION OF THE INDUSTRY 3
B. WATER USE REQUIREMENTS 7
C. WATER POLLUTION CONTROL 9
III. INDUSTRY SEGMENTS 11
A. TYPES OF FIRMS 11
B. TYPES OF PLANTS 25
C. INDUSTRY SUBSEGMENTATION 33
D. SUBSEGMENTATION SUMMARY 42
IV. FINANCIAL PROFILE OF THE INDUSTRY 43
A. SALES 44
B. EARNINGS 44
C. CASH FLOW 45
D. NEW CAPITAL INVESTMENT 45
E. MISCELLANEOUS FINANCIAL INFORMATION 45
V. MODEL PLANTS 49
A. SIC 2711 NEWSPAPERS 49
B. SIC 2721 PERIODICALS AND SIC 2741 MISCELLANEOUS
PUBLISHING 49
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TABLE OF CONTENTS (Continued)
Page
V. MODEL PLANTS (Continued)
C. SIC 2751 COMMERCIAL PRINTING, LETTERPRESS 52
D. SIC 2754 COMMERCIAL PRINTING, GRAVURE 52
E. SIC 2793 PHOTOENGRAVING 53
VI. ECONOMIC IMPACT ANALYSIS METHODOLOGY 55
A. FUNDAMENTAL METHODOLOGY 55
B. PRICE EFFECTS 56
C. FINANCIAL EFFECTS 56
D. PRODUCTION EFFECTS AND INDUSTRY GROWTH 57
E. EMPLOYMENT EFFECTS 57
F. COMMUNITY EFFECTS 57
G. INTERNATIONAL TRADE EFFECTS 57
VII. EFFLUENT CONTROL COSTS 59
VIII. IMPACT ANALYSIS 67
A. PROFITABILITY AND CAPITAL AVAILABILITY EFFECTS 67
B. PRICE AND SECONDARY EFFECTS 69
C. SENSITIVITY ANALYSIS 69
D. PRICE EFFECTS 71
E. PRODUCTION EFFECTS 73
F. EMPLOYMENT EFFECTS 73
VI
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TABLE OF CONTENTS
Page
List of Tables i*
EXECUTIVE SUMMARY xi
I. INTRODUCTION 1
II. WATER USE IN THE PRINTING INDUSTRY 3
A. CHARACTERIZATION OF THE INDUSTRY 3
B. WATER USE REQUIREMENTS 7
C. WATER POLLUTION CONTROL 9
III. INDUSTRY SEGMENTS 11
A. TYPES OF FIRMS 11
B. TYPES OF PLANTS 25
C. INDUSTRY SUBSEGMENTATION 33
D. SUBSEGMENTATION SUMMARY 42
IV. FINANCIAL PROFILE OF THE INDUSTRY 43
A. SALES 44
B. EARNINGS 44
C. CASH FLOW 45
D. NEW CAPITAL INVESTMENT 45
E. MISCELLANEOUS FINANCIAL INFORMATION 45
V. MODEL PLANTS 49
A. SIC 2711 NEWSPAPERS 49
B. SIC 2721 PERIODICALS AND SIC 2741 MISCELLANEOUS
PUBLISHING 49
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TABLE OF CONTENTS (Continued)
Page
V. MODEL PLANTS (Continued)
C. SIC 2751 COMMERCIAL PRINTING, LETTERPRESS 52
D. SIC 2754 COMMERCIAL PRINTING, GRAVURE 52
E. SIC 2793 PHOTOENGRAVING 53
VI. ECONOMIC IMPACT ANALYSIS METHODOLOGY 55
A. FUNDAMENTAL METHODOLOGY 55
B. PRICE EFFECTS 56
C. FINANCIAL EFFECTS 56
D. PRODUCTION EFFECTS AND INDUSTRY GROWTH 57
E. EMPLOYMENT EFFECTS 57
F. COMMUNITY EFFECTS 57
G. INTERNATIONAL TRADE EFFECTS 57
VII. EFFLUENT CONTROL COSTS 59
VIII. IMPACT ANALYSIS 67
A. PROFITABILITY AND CAPITAL AVAILABILITY EFFECTS 67
B. PRICE AND SECONDARY EFFECTS 69
C. SENSITIVITY ANALYSIS 69
D. PRICE EFFECTS 71
E. PRODUCTION EFFECTS 73
F. EMPLOYMENT EFFECTS 73
VI
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TABLE OF CONTENTS (Continued)
Page
VIII. IMPACT ANALYSIS (Continued)
G. COMMUNITY EFFECTS 73
H. INDUSTRY GROWTH 73
I. INTERNATIONAL TRADE 73
J. COMPETITION WITHIN THE INDUSTRY 73
K. ECONOMIC IMPACT OF NSPS 74
APPENDIX - DERIVATION OF SENSITIVITY ANALYSIS
FORMULA 75
VII
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LIST OF TABLES
Table No. Page
111-1 Distribution by Number of Establishments 12
III-2 Distribution by Number of Employees 14
III-3 Sales Concentration in Selected Segments of the Printing
and Publishing Industry 15
III-4 Average Annual Value of Shipments Per Establishment 16
111-5 Number of Establishments and Annual Value of Shipments
by Size of Establishment 17
111-6 Industry Segment Concentration and Average Annual Value
of Shipments by Size of Company 20
111-7 Printing Industry Products 23
II1-8 Geographic Distribution of Printing Industry by Employees
and Annual Value of Shipments 28
111-9 Geographic Concentration of Establishments in the Printing
Industry 29
111-10 Geographic Concentration of Employees in the Printing
Industry 30
111-11 Printing Distribution by Cities 31
III-12 Subsegmentation Summary 34
IV-1 Printing Industry Revenues 44
IV-2 Annual Capital Investment 46
IV-3 Financial Profiles of Selected Industry Segments 47
V-1 Financial Profile of Model Plants 50
V-2 Characteristics of Medium- and Large-Circulation
Newspaper Plants ' 51
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EXECUTIVE SUMMARY
It is the purpose of this study to analyze the economic impact of the cost of
proposed Effluent Limitation Guidelines and New Source Performance Standards
on the printing and publishing industry pursuant to the Federal Water Pollution
Control Act, as amended (1972).
This report deals with those segments of Major Group 27 that are concerned
with printing, and printing and publishing, and those establishments that perform
platemaking services for the printing trade. Specifically, it includes the following
industry segments:
SIC Code Industry
2711 Newspapers: Publishing, Publishing and Printing.
2721 Periodicals: Publishing, Publishing and Printing.
2731 Books: Publishing, Publishing and Printing.
2732 Book Printing.
2741 Miscellaneous Publishing (but not micropublishing).
2751 Commercial Printing, Letterpress and Screen.
2752 Commercial Printing, Lithographic.
2753 Engraving and Plate Printing.
2754 Commercial Printing, Gravure.
2761 Manifold Business Forms.
2771 Greeting Card Publishing.
2793 Photoengraving.
2794 Electrotyping and Stereotyping.
2795 Lithographic Platemaking and Related Services.
Industry Characteristics
The printing industry is composed of a heterogeneous collection of over
30,000 companies that range in size from a few employees to several thousand.
Each of these businesses performs one or more of the steps necessary to the
bulk-production of printed materials: the publication function, typesetting, plate-
making, printing, binding, etc.
Some companies are organized to provide all of the services required for a
given product (e.g., newspapers and some periodicals) or for several product
categories (commercial printers). The industry, however, tends to specialize in
that some companies produce only newspapers; others produce only periodicals,
or books, or manifold business forms, etc. Even within the corporate framework
of the larger printing companies one finds plants dedicated to printing books,
other plants that print only periodicals and still others that do commercial
printing. This specialization in product follows directly from the fact that the
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SIC Code Industry Size Number of Plants
2711 Newpapers Large 400
2721 Periodicals Large 4
2741 Miscellaneous Publishing Large 4
2751 Commercial Printing,
Letterpress Large 4
2751 Commercial Printing,
Gravure (Roll making) Medium 8
(Printing) Large 34
2793 Photoengraving Large 17
It is interesting that in all industries where process wastewater is being
generated it is being generated mainly by the large companies. In those few
instances in which small companies are producing waste that is not compatible
with municipal treatment systems, the volumes involved are small and there are
more economic alternatives for disposal than those supplied in the Development
Document.
Industry Financial Profile
Many of the companies in the printing and publishing industry are closely-
held corporations. As a result, financial information is considered proprietary and
is generally difficult to obtain. However, many companies in the industry belong
to trade associations and participate annually in association-sponsored financial
studies of the various industry segments. In many cases the results of these studies
are sold to help defray the cost of the study. In other cases the results are
sometimes available from participating companies. The largest trade association in
the industry is Printing Industries of America, Inc. Its membership represents
firms which account for more than 80% of all the printing produced in the United
States.
Clearly, most segments in the printing and publishing industry are strong and
healthy. They are able to finance new investments, to take advantage of new
technology and to remain competitive and look optimistically to the future as one
of expanding markets and growth opportunities. The exception is the Electro-
typing and Stereotyping Industry (SIC 2794) which is a dying industry and is
expected to be extinct by 1980.
The printing and publishing industry generally does not publish data on
earnings. The best source of such information is the Ratio Studies, e.g., the PIA
Ratio Studies and similar studies carried out by other industry segments.
Although the investment in each of the segments for new capital improve-
ments w,ll vary from year to year by industry needs and new technological
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developments, the data reflect an industry whose plants are attempting to main-
tain their competitive position vis-a-vis other plants and other communication
industries and this trend is expected to continue.
Model Plants
Financial models of representative plants studied for possible impact were
constructed for the Newspapers; Periodicals; Miscellaneous Publishing; Commer-
cial Printing, Letterpress; Commercial Printing, Gravure and Photoengraving
industries. In all cases the models were for large plants, i.e., those having more
than 100 employees, because they are the principal sources of significant amounts
of process contact effluent in their platemaking operations. Small and medium
printing plants generally rely upon purchased services for their plates and thus
avoid such problems. Moreover, the small and medium plants that may be etching
metal for platemaking purposes have the option of disposing of their relatively
small amounts of waste by means that do not require significant capital
investments.
Economic Impact Analysis Methodology
In our determination of the impact of pollution control costs on the printing
industry, the principal considerations were the effects of the costs on profit
margins and the determination of whether the costs could be passed on in the
form of higher prices for printed product. However, a host of secondary effects
were also considered. These included possible effects on level of production,
employment, growth of the company, ability of the company to raise new capital,
hardships on the community, and international trade.
The economic analysis was concentrated on those segments of the printing
industry which use technology that causes significant water pollution. The frame-
work for the analysis was the model plants defined for each of the segments
studied. The feasibility of investing capital to control pollution was assessed on
the basis of the effect of the increased cost on profitability, a comparison of the
required capital expenditure for pollution control with annual new capital
expenditures for each of the models, and estimates of the revenue or price
increases necessary to recover the additional expense and provide the same retun)
on assets with the expanded asset base. The data was also analyzed to determi :
the probable effect of BPT and BAT standards on plant closures directly related
to pollution control requirements. The sensitivity of the analysis under different
conditions, such as those that would obtain because a printing plant did not
conform exactly to a model plant, was also considered.
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Effluent Control Costs
The control COMS used in this analysis are those presented in the Develop-
v.-ivrti Document for Proposed Effluent Limitations Guidelines.
The BPT requirements for the printing and publishing industry have been
determined to ho a combination of flow equalization and reduction of pollutants.
" >s BAT requirements for this industry include a further reduction of pollutants
to specifi-d levels.
Wastes from the Hat-bed letterpress, offset and screen printing operations
will be required to meet only the limitations for BODS, pH, phenols, TSS, oil and
grease, and organic solvents for BPT, BAT and NSPS treatment levels. No
p.-etreatment is required.
Wastes from gnmir". flexography and rotary letu press operations will be
required to meet all limitations specified. NSPS requ'.rcr.iems aix identical to the
SAT icquirements. Pretreatment requirements for new sources are the same as the
3AT requirements.
Impact Analysis
This industry is unusual in that the main source of pollution is the larger
companies. Furthermore, the polluting processes themselves are concentrated in
one part cf the operation, platemaking, and in particular, those steps that involve
etching metal with acid. Although some small photoengravers still etch metal, the
volume of acid waste generated is easily disposed of by drumming without adding
significantly to the cost of the plates. The large companies continue to use
DoUuting technology because of their large investments in printing equipment, the
need for duplicate plates, the demand for top-quality printing for long-run
-."'.ional ads, and the cost of conversion to non-polluting printing methods. Thus
"- c analysis focuses on the profitability, captial availability and price effects for
''- i.?irse irodel plants.
"?as.ic to our analysis is the creation of a hypothetical model plant for each
segment with prototypical financial data. Because our decision of no impact is
b?:ed on an analysis of these hypothetical plants, a sensitivity analysis was
j : ."formed to determine how different from the prototype a plant can be before
the cost of the water pollution control system has significant impact. Thus three
sectors were analyzed Newspapers; Commercial Printing, Gravure; and Photo-
engraving because each contained plants of widely varying financial perfor-
:**< -ic;. Since the ability of a company to afford the water pollution control.
syslem is a function in part of its size, revenue and net assets were used as
appropriate measures of size. The sensitivity analysis was designed to determine
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the minimum-sized company able to afford the specified effluent control systems.
It demonstrates that not only is the model company within a sector unaffected by
the standards, but that no company in the sector would be impacted. The loss in
after tax ROI for all segments falls in the range of 0.06 to 0.92 percent for BAT
control costs. The annual costs as a percent of sales for all segments fall in the
range of 0.06 to 1.94.
The impact analysis indicates that the amount of investment required for
control of water pollution in the industry is such that no price increase would be
anticipated. Duiing the past year the overall increases in the cost of paper, plates,
labor, and equipment have overshadowed the small effect of the cost of pollution
control on the cost of the preparation of plates. The average cost of the
platemaking service is 2 to 5% of the cost of the printing. If the total burden of
the water pollution control investment had to be borne by the cost center
represented by the platemaking operation in the printing plant and if the com-
pany were making a minimum of 100 plates a day (5000 plates per year), the
annual cost would be $15,000 or about $3 per plate. Such an increase in the price
of plates would be very small in comparison with other price increases that have
been affecting this industry. Moreover, the increase will be distributed over the
total number o" impressions being printed, so the overall effect will be even more
miniscule. Thus, no significant price increases are expected as a direct result of the
cost of pollution control equipment except in those service industries where the
total amount of the cost of pollution control is directly attributable to the plate,
since this is the product that is being sold. It is expected, however, that this price
increase can be readily passed on to the printer.
For industry suppliers and consumers the competition between the different
types of printing is expected to continue. In the past ten years offset printing has
been making inroads into letterpress "territory" at higher and higher levels of
printing impressions per run or per job order. It is expected that this trend will
continue. In recent years there has been an increasing use of plastic plates to
replace metal plates in the letterpress industry and it is expected that this trend
will continue. Insofar as the need for water pollution control equipment and
associated costs could be a factor, they would promote decisions favoring either
offset printing or a change to plastic plates in letterpress operations, but the
incremental effect of the cost of water pollution control on the decision that has
already been made by the industry is expected to be very small.
The new source performance standards will not affect the growth of any
segment of the printing industry. No effect on prices is anticipated because of
new source performance standards and new plant locations probably will not be
affected either. The trend in recent years for the larger plants to build in more
rural areas where they have access to land and good transportation will continue
independent of the requirements for water pollution control. The decision to
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build domestic plants versus foreign plants will not be influenced by the proposed
guidelines. Our analysis shows the balance of payments will not affect location or
dollar volume of printing. In all cases pretreatment costs are less than BAT costs
and since no impacts were found for BAT costs no separate analyses were
conducted for pretreatment costs. In addition to the lack of impact noted above
there will also be no adverse effects on production, employment, communities,
industry growth or international trade.
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build domestic plants versus foreign plants will not be influenced by the proposed
guidelines. Our analysis shows the balance of payments will not affect location or
dollar volume of printing. In all cases pretreatment costs are less than BAT costs
and since no impacts were found for BAT costs no separate analyses were
conducted for pretreatment costs. In addition to the lack of impact noted above
there will also be no adverse effects on production, employment, communities,
industry growth or international trade.
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\
I. INTRODUCTION
The purpose of this study is to analyze the economic impact of the cost of
the proposed Effluent Limitations Guidelines and New Source Performance
Standards on the printing and publishing industry. These requirements are being
developed by EPA in response to the Federal Water Pollution Control Act,
Amendments of 1972.
For purposes of this analysis, four levels of effluent limitations will be
considered for each segment:
(1) Best practicable control technology (BPT) currently available - to
be met by industrial dischargers by July 1 , 1 977.
»
(2) Best available technology (BAT) economically achievable to be
met by all {industrial dischargers by July 1 , 1 983.
(3) New source performance standards (NSPS) - to be applied !o all
new facilities (that discharge directly into navigable waters) con-
structed after the promulgation of these guidelines (approximately
November1!, 1974).
(4) New source pretreatment standards - to be applied to all facilities
(that discharge to municipal systems) constructed after the pro-
mulgation 'of these guidelines (approximately November 1, 1974).
The major constituents of concern in the printing and publishing industry
are the metal salts generated in the etching of plates used for printing. The metals
involved include aluminum, chromium, copper, magnesium, and zinc. All of the
organic materials present in wastes from this industry are believed to be easily
biodegradable and to present no problem in setting effluent limitations.
The BPT Standards for one subcategory - consisting of flat-bed letterpress,
offset and screen printing - have been defined in the proposed Effluent Limita-
tions Guidelines Development Document, as normal biological waste treatment
with the costs of achieving the BPT Standards in these segments being essentially
zero. Such plants that discharge to surface waters must provide normal biological
treatment for the sanitary wastes originating in the plants. Because the sanitary
waste flows will far exceed the process wastewajtejr flow, the marginal cost of the
biological treatment system has been assigned to the requirement to treat sanitary
wastes and not the BPT requirement to treat process water. Some metal salts are
generated in the etching of bimetallic and trimetallic offset printing plates.
However, the amount of metal removed in the developing step is small compared
to, for example, < photoen,;|raving prepared for letterpress use. Accordingly, it is
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believed that the use of these plates will not constitute a significant source of
pollution in the limited applications in which they are used.
Treatment levels for BAT and NSPS for flat-bed letterpress, offset and screen
printing are equivalent to that of BPT. The cost of achieving BAT and NSPS
Standards is, therfore, also zero, no treatment being required for new sources. No
cost data are provided for these standards; thus no impact analysis has been made
on these segments of the printing industry.
This report deals with those segments of Major Group 27 that are concerned
with printing, printing and publishing and those establishments that perform
platemaking services for the printing trade. Specifically, it includes the following
industry segments:
SIC Code Industry
2711 Newspapers: Publishing, Publishing and Printing.
2721 Periodicals: Publishing, Publishing and Printing.
2731 Books: Publishing, Publishing and Printing.
2732 Book Printing
2741 Miscellaneous Publishing (but not micropublishing).
2751 Commercial Printing, Letterpress and Screen.
2752 Commercial Printing, Lithographic.
2753 Engraving and Plate Printing.
2754 Commercial Printing. Gravure.
2761 Manifold Business Forms.
2771 Greeting Card Publishing.
2793 Photoengraving.
2794 Electrotyping and Stereotyping.
2795 Lithographic Platemaking and Related Services.
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II. WATER USE IN THE PRINTING INDUSTRY
The following sections provide an overview of the printing industry, with
comments on pertinent trends and emphasis on water use requirements and
sources of water pollution.
A. CHARACTERIZATION OF THE INDUSTRY
The printing and publishing industry is composed of a heterogeneous col-
lection of over 38,000 companies that range in size from a few employees to
several thousand. In total it employs about one million people and has sales of
over $28 billion per year. Each of these businesses performs one or more of the
steps necessary to the bulk-production of printed materials: the publication
function, typesetting, platemaking, printing, binding, etc.
Some companies are organized to provide all of the services required for a
given product (e.g., newspapers and some periodicals) or for several product
categories (commercial printers). The industry, however, tends to specialize in
that some companies produce only newspapers; others produce only periodicals,
or books, or manifold business forms, etc. Even within the corporate framework
of the larger printing companies one finds plants dedicated to printing books,
other plants that print only periodicals and still others that do commercial
printing. This specialization in product follows directly from the fact that the
specialized equipment needed for economical production of one type of product
frequently is neither optimum nor competitive for another product.
Printing itself is intrinsically non-polluting; that is, the process of transferring
ink from a printing plate to paper in no way involves contact process water and
does not in itself cause water pollution. The potential of any segment of the
industry to cause water pollution is in general only indirectly associated with the
type of printing process used. It is related most directly to the platemaking
operation. Only those platemaking operations that involve metal etching or
electroplating steps are possible significant sources of pollution. The pollutants
are usually strong mineral acids and salts of such metals as copper, zinc, and
magnesium in the case of metal etching and salts of copper and chromium from
electroplating processes.
Recent developments in printing plate technology offer alternatives to metal
processing in the form of organic photopolymer materials. These materials can
sometimes be etched with compressed air, water or detergent solutions to provide
either satisfactory engravings or complete printing plates. While such plate ma-
terials are not completely satisfactory for all applications, they are being im-
proved and their use is growing. The waste materials from such platemaking
processes are biodegradable and compatible with municipal treatment systems.
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Still other letterpress plate materials are etched with organic solvents. The
solvents are usually reclaimed by distillation and the polymer either reused or
introduced into the solid waste stream.
The great majority of printing companies and the industries that service
them are located in urban areas and are believed to discharge their effluents to
municipal systems. According to the Guidelines Document a review of permit files
as of September 1973 showed that 33 applications had been received from the
printing industry. Of this total, 22 were for permits to discharge non-contact
cooling water and/or boiler blow-down, water. We believe that a negligible
percentage of printing or platemaking companies discharge process waste waters
to navigable streams.
1. Printing Methods
The most widely used printing techniques are letterpress, offset lithography
(offset) and gravure. Other processes such as screen printing and intaglio (steel
plate printing) are more highly specialized.
a. Letterpress
In this process ink is applied directly from a relief printing plate to the
surface to be printed. Relief plates are made by:
(1) setting or casting type (flat-bed letterpress)
(2) molding a duplicate plate from an original (stereotype, as in the
newspaper industry)
(3) electroplating a conductive base molded from an original (electro-
type for magazine ads)
(4) etching a metal or photopolymer (plastic) plate
Processes (1) and (2) and the photopolymer portion of process (4) are not sources
of water pollution. Spent liquors from process (3) and the metal portion of
process (4) consist of highly acid metal salts which are potential sources o,
pollution.
The letterpress process is the oldest printing process in the industry and one
where little growth is expected.
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II. WATER USE IN THE PRINTING INDUSTRY
The following sections provide an overview of the printing industry, with
comments on pertinent trends and emphasis on water use requirements and
sources of water pollution.
A. CHARACTERIZATION OF THE INDUSTRY
The printing and publishing industry is composed of a heterogeneous col-
lection of over 38,000 companies that range in size from a few employees to
several thousand. In total it employs about one million people and has sales of
over $28 billion per year. Each of these businesses performs one or more of the
steps necessary to the bulk-production of printed materials: the publication
function, typesetting, platemaking, printing, binding, etc.
Some companies are organized to provide all of the services required for a
given product (e.g., newspapers and some periodicals) or for several product
categories (commercial printers). The industry, however, tends to specialize in
that some companies produce only newspapers; others produce only periodicals,
or books, or manifold business forms, etc. Even within the corporate framework
of the larger printing companies one finds plants dedicated to printing books,
other plants that print only periodicals and still others that do commercial
printing. This specialization in product follows directly from the fact that the
specialized equipment needed for economical production of one type of product
frequently is neither optimum nor competitive for another product.
Printing itself is intrinsically non-polluting; that is, the process of transferring
ink from a printing plate to paper in no way involves contact process water and
does not in itself cause water pollution. The potential of any segment of the
industry to cause water pollution is in general only indirectly associated with the
type of printing process used. It is related most directly to the platemaking
operation. Only those platemaking operations that involve metal etching or
electroplating steps are possible significant sources of pollution. The pollutants
are usually strong mineral acids and salts of such metals as copper, zinc, and
magnesium in the case of metal etching and salts of copper and chromium from
electroplating processes.
Recent developments in printing plate technology offer alternatives to metal
processing in the form of organic photopolymer materials. These materials can
sometimes be etched with compressed air, water or detergent solutions to provide
either satisfactory engravings or complete printing plates. While such plate ma-
terials are not completely satisfactory for all applications, they are being im-
proved and their use is growing. The waste materials from such platemaking
processes are biodegradable and compatible with municipal treatment systems.
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Still other letterpress plate materials are etched with organic solvents. The
solvents are usually reclaimed by distillation and the polymer either reused or
introduced into the solid waste stream.
The great majority of printing companies and the industries that service
them are located in urban areas and are believed to discharge their effluents to
municipal systems. According to the Guidelines Document a review of permit files
as of September 1973 showed that 33 applications had been received from the
printing industry. Of this total, 22 were for permits to discharge non-contact
cooling water and/or boiler blow-down, water. We believe that a negligible
percentage of printing or platemaking companies discharge process waste waters
to navigable streams.
1. Printing Methods
The most widely used printing techniques are letterpress, offset lithography
(offset) and gravure. Other processes such as screen printing and intaglio (steel
plate printing) are more highly specialized.
a. Letterpress
In this process ink is applied directly from a relief printing plate to the
surface to be printed. Relief plates are made by:
(1) setting or casting type (flat-bed letterpress)
(2) molding a duplicate plate from an original (stereotype, as in the
newspaper industry)
(3) electroplating a conductive base molded from an original (elecjro-
type for magazine ads)
(4) etching a metal or photopolymer (plastic) plate
Processes (1) and (2) and the photopolymer portion of process (4) are not sources
of water pollution. Spent liquors from process (3) and the metal portipri of
process (4) consist of highly acid metal salts which are potential sources o<
pollution.
The letterpress process is the oldest printing process in the industry and one
where little growth is expected.
-------
b. Offset Lithography,
Offset lithography consists of printing from a plane surface, as opposed to
printing from a relief surface. It is based on the principle that oil (ink) and water
(aqueous fountain solution) do not mix. When the moistening rolls and the inking
rolls on the press contact the printing plate in sequence, the former applies a small
amount of aqueous fountain solution to the non-image areas (which are chem-
ically different from the image areas) and the inking rolls apply ink to the image
areas while maintaining a sharp interface between the two.
Instead of the printing plate contacting the surface to be printed, as is the
case with letterpress printing, the printing plate offsets the ink onto a rubber
blanket roll which, in turn, contacts the paper to be printed and transfers the ink
to it. This printing process is non-water-polluting. Preparation of the plate surface
is essentially a photographic process.
There are two major types of offset printing sheet-fed printing and web
printing - and each has quite different technical and economic requirements and
characteristics. As the names imply, sheets of paper are used in one case and rolls
of paper in the other. Offset has been the most rapidly growing method of
printing in this country, partly because of its compatibility with photocompo-
sition. Web offset is the faster growing segment of offset printing and is expected
to continue to be so.
c. Gravure
i
i
Gravure printing is the opposite of relief printing in that the image is formed
by depressions in the printing plate. In use, these depressions are filled with ink;
the surface of the plate is wiped clean with a doctor blade; and the ink is
transferred, by intimate contact, to the surface to be printed.
In preparing a gravure cylinder, one etches the metal, usually copper, in the
desired pattern either chemically or mechanically. There is also the requirement
of electroplating gravure cylinders with copper and chromium. Electroplating
with copper provides the basic plate surface: chromium plating provides improved
gravure cylinders for long runs. Because chemical etching and metal plating
involve the use of strong acid salts and other metal salts are by-products, there are
sources of water pollution in gravure cylinder preparation. The printing process
itself, however, does not contribute to water pollution.
d. Intaglio Printing
The intaglio printing process, a variation of gravure printing, is used mainly
to print currency, stamps, and stock certificates. In the preparation of intaglio
-------
plates the original engraving is usually made mechanically. Duplicate plates are
made by a process quite similar to that used for electrotypes; i.e., electroplating
on a conductive base molded from the original. The water pollution potential of
this process is similar to that of the electrotype process.
e. Screen Printing
This method of printing utilizes a fine-coated silk, nylon or metal screen that
carries an image prepared by selectively removing portions of the coating. In use,
a squeegee forces the ink through the screen to form an image on a substrate that
is in intimate contact with the second side of the screen.
Screen printing is used in those applications where conventional printing
would not be possible or convenient because of size or shape or surface texture of
the material on which the printing is to be done. It is also used in applications
where only a few impressions are required or where special artistic effects are
desired.
The process of making the screen can be either mechanical or photographic.
In the former case no water pollution should be associated with "plate" prepa-
ration. In the latter case pollution would be similar to that of other photographic
operations. The printing operation itself is non-water-polluting.
2. Photography
Three types of photographic operations are commonly employed in printing
and platemaking plants: film developing, plate developing (e.g., offset plates), and
photoengraving (e.g., surfaces of letterpress plates or gravure cylinders).
Conventional photography, in which page-sized silver-base positive or nega-
tive film is developed, is typical of the operations in the photographic industry. In
operations of any size - e.g., a large newspaper the silver from the developing
bath is reclaimed, mainly for economic reasons. The remainder of the process uses
a large amount of water relative to the small amount of material that is removed
from the photographic film. The organic materials that enter the waste stream are
compatible with typical municipal treatment processes.
In the usual offset platemaking operations, a light-sensitive coating on the
plate is exposed to light through film. The areas struck by the light are insolu-
bilized and become the image on the plate while the unexposed portions remain
soluble and are removed in the developing step by washing. The coating is usually
water soluble, in which case the plate is developed with water, but oil-soluble
coatings may also be used.
-------
The preparation of photoengravings or entire letterpress printing plates by
etching metal with strong acids is a source of water pollution. In areas of the
printing industry where these processes are widely used (e.g., newspaper printing),
there has been a trend to the use of photopolymer materials. The main attraction
of the photopolymers is that they can be etched with water, and in some cases
with compressed air. The materials removed during the etching process are either
disposed of in the solid waste stream or discharged with the waste water. They are
biodegradable and compatible with municipal treatment systems. In recent years
much attention has been devoted to research and development on letterpress
plates that can be processed in ways that completely avoid the problem of water
pollution.
B. WATER USE REQUIREMENTS
1. Cool ing Water
None of the three basic printing processes has any unusual requirements for
non-contact cooling water. Screen printing and sheet printing processes in general
do not require cooling water.
In the preparation of printing plates by mechanical engraving or by hot
metal casting, some non-contact cooling water may be used but there should be
no associated pollution, nor should there be any significant rise in the tempera-
ture of the water because of the relatively small volumes of cooling water that are
involved.
Some of the moving parts of printing presses are water cooled, but the water
does not come in contact with the printed product and is not contaminated.
Water is used in chill rolls that cool the printed paper as it emerges from drying
ovens in heat-set printing operations.
None of this water is subject to contamination and many plants refrigerate
and recycle their cooling water. In solvent recovery operations, such as those
required in the gravure printing industry, considerable cooling water could be
used, the temperature of which might be raised significantly.
2. Process Water
Letterpress printers who prepare their own plates use water in the photo-
graphic department, where material to be printed is prepared, and the develop-
ment of most metal and plastic plates requires water. The principal difficulty
derives from the etching of metal plates in strongly acidic baths. Water is used in
these baths and additional water is used to rinse the plates. Zinc, copper, and
magnesium metal ions are typical pollutants.
-------
The offset printing process uses water in the photographic department, in
the development of plates for lithographic printing, and in preparing plates for
1 reuse after storage. In so doing, small amounts of normally biodegradable material
' are introduced into the wash water but this material does not represent a
|j significant source of pollution. Some lithographic plate developers are emulsions
i that contain phosphoric acid, gum arabic, reinforcing resins and solvents. The use
f of these materials also represents small additions to the wash water. There are also
bimetallic and trimetallic offset plates whose development involves the etching of
, thin layers of metal. These plates represent a small percentage of the total offset
plates used. Their use does not appear to represent a significant source of
pollution in a typical offset printing plant.
i-
Water is used in the printing operation to moisten the non-image areas of
offset plates before the plates are inked, but this water dissipates into the printed
product. In some printing- e.g., offset printing alkali, alcohol and/or phos-
phoric acid may be added to the fountain solution, but these also end up in the
product.
In the preparation of gravure cylinders, water is used in the photographic
department and in the preparation of the gravure rolls if the acid etching process
is used. An acid etch (iron chloride) introduces copper into the bath and these
metal ions (iron and copper) are a source of pollution. Some gravure processes use
water-thinnable inks, but these represent a pollution hazard principally during
clean-up operations.
The screen printing process uses water in the photographic department and
in the preparation of the screen for printing. This technology resembles that used
in preparing lithographic plates, and introduces a small amount of essentially
biodegradeable material into the water. Some of the smaller shops still use silk
screen coatings that contain sodium or potassium dichromate but these should
not produce a significant level of pollution.
In any of the printing plants that include bindery operations, water dilutable
adhesives might be used, and some of these materials would in all probability be
introduced into the waste stream during clean-up. Most are biodegradable. In
general, however, water-base adhesives end up in the product. Many binderies usr
hot melt adhesives which, of course, are non-water-polluting.
3. Clean-Up Water
The possibility of water pollution from press clean-up operations is minor
because the oils and pigments used in printing inks normally are not water
soluble. Organic solvents, therefore, are used in the clean-up operations. The
normal procedure is to wipe printing plates and press parts with rags wet with
organic solvents, with the rags frequently being recovered by commercial cleaning.
8
-------
In gravure and flexographic printing some water-based inks are now in use
and there is a hazard of water contamination during the clean-up operations. The
gravure process, however, is usually used for long-run printing jobs, so the amount
of clean-up required does not represent a heavy load on the waste system. When
solvent-based inks are used in this printing process the waste is usually collected in
a drum and similar procedures could be followed with the waste from the
water-based inks.
C. WATER POLLUTION CONTROL
No unusual difficulties are anticipated in controlling water pollution levels.
In acid etching operations the concentration of metals can be high but the total
volume of water used is frequently small. The problem should yield to established
techniques for removing any oily materials from the surface of the bath: precipita-
tion of the metals, sedimentation or filtration, and control of pH in the effluent
water. Alternatively, with the small amounts of contaminated water that are
anticipated in the shops of small photoengravers, and platemakers, it would not
be unusual to have the contents of the bath neutralized, drummed, and taken to a
sanitary land-fill operation. Rinse water is frequently very small in volume and is
sometimes used as make-up water in etching and plating baths.
The Development Document For Proposed Effluent Limitations Guidelines
and New Source Performance Standards for the printing and publishing industry
describes the recommended technology for achieving the guidelines and will be
published as a separate report by EPA. The reader is, therefore, referred to that
document for technical descriptions of proposed BPT, BAT, NSPS, and new
source pretreatment standards.
-------
III. INDUSTRY SEGMENTS
The purpose of this chapter is to provide a screening of the industry as a
basis for narrowing the study so as to focus primarily on those segments that are
likely to be impacted.
Because of the general relationship between the printing process used and
the water pollution potential, the economic impact analysis would be simplified
by segmenting the industry by printing process. Moreover, the technical Con-
tractor segmented the industry in that manner and it would be convenient to
adopt the same segmentation. Many companies, however, use more than one
printing process and do not report sales and earnings separately. Moreover,
company operations overall tend to follow SIC code categories. Consequently, the
segmentation of the industry must be product oriented and hence follows the SIC
codes. In a number of cases, however, subsegmentation by printing process is
useful and therefore has been used as a means of grouping those parts of an
industry that are similarly impacted.
A structural characterization of the industry is provided showing the types
of companies, types of establishments, number of establishments and their em-
ployment by segment. Each segment is analyzed and subsegmented where indi-
cated, and those segments and subsegments that are most likely to be impacted
are identified. Included also is a discussion of the trends taking place in each
segment, since some of these trends represent switches in technology that will be
accompanied by a reduction in pollution potential.
A. TYPES OF FIRMS
In the opening paragraph of his book, The Printing Industry, * Victor Strauss
states, "The printing industry is a collective name for a wide variety of different
industries, crafts, and trades which belong together because they all serve funda-
mentally similar and related purposes within our modern communications sys-
tem." According to the Census of Manufactures, preliminary 1972 data, there are
38,288 establishments and 969,900 employees in the segments covered by this
study.
1. Number of Plants
Table III-l shows the distribution by number of establishments and number
of employees in the various industry segments with which this study is concerned.
Of the 14 segments included, only five represent more than 5% of the industry
total, measured either as establishments or by employment.
Published by Printing Industries of America, 1967.
11
-------
TABLE IM-1
DISTRIBUTION BY NUMBER OF ESTABLISHMENTS
SIC
CODE
2711
2721
2731
2732
2741
2751
2752
2753
2754
2761
2771
2793
2794
2795
INDUSTRY
Newspapers
Periodicals
Book Publishing
Book Printing
Misc. Publishing
Comm. Print., L.P.
Comm. Print., Litho
Engraving and Plate Print.
Comm. Print., Gravure
Manifold Bus. Forms
Greeting Card Publishing
Photoengraving
Electrotyping and Stereotyping
Litho Platemaking Services
NUMBER OF
ESTABLISHMENTS*
8,022**
2,510
1,186
685
2,000
13,086
8,304
553
127
658
195
584
80
298
PERCENT
OF TOTAL
20.95
6.56
3.10
1.79
5.22
34.18
21.69
1.44
0.33
1.72
0.51
1.53
0.21
0.78
NUMBER OF
EMPLOYEES (M)
347.8
66.4
57.0
41.2
37.5
128.4
183.2
9.4
19.5
38.4
23.2
9.2
1.6
7.1
PERCENT
OF TOTAL
35.86
6.85
5.88
4.25
3.87
13.24
18.89
0.97
2.01
3.96
2.39
0.95
0.16
0.73
38,288
100.01
969.9
100.01
*The numbers given include all establishments which fall within a given SIC code, in some instances in-
cluding establi. ents which publish only and do not have printing operations. See Table 111-12 for
the number of e tablishments in each SIC code that perform printing operations.
**This number is believed to omit some plants with less than 10 employees and therefore to understate the
actual total. A more accurate count is believed to be 9402. See Industry Subsegmentation.
SOURCE: Census of Manufacturers, Preliminary 1972.
-------
The industry is composed of a large number of small companies. This is
shown in Table III-2, which lists by industry segment the number of establish-
ments having less than 20 employees. Overall, about 80% of the establishments in
the printing and publishing industry have less than 20 employees.
Sales concentration in the printing industry tends to follow the pattern
established in many manufacturing industries; that is, the more concentrated the
industry, the higher the average annual net sales per company within the industry.
On the basis of available information, the Greeting Card Publishing industry has
the highest concentration of sales, with the four largest companies representing
67% of industry sales and the 50 largest companies representing 95% in 1967
(Table III-3). In 1972 the 195 establishments in the Greeting Card Publishing
industry had the high average value of shipments per establishment of $3.9
million. This value, as shown in Table III-4, was exceeded only by the Commercial
Printing, Gravure industry whose 127 establishments had an average value of
shipments per establishment of $5.3 million in 1972. Unfortunately, the Com-
mercial Printing, Gravure segment is new and such historical data as is available
does not appear to be consistent.
Two exceptions to the correlation between sales concentration and high
average value of shipments per establishment are the Miscellaneous Publishing
industry and the Electrotyping and Stereotyping industry. Both are highly con-
centrated but have relatively low average values of shipments per establishment:
$521,000 for Miscellaneous Publishing, and $455,000 for Electrotyping and
Stereotyping.
A breakdown of selected industry segments, based on number of employees,
is presented in Table III-5. Included are two relatively stable industries - News-
papers and Commercial Printing, Letterpress and two that are changing with
respect to the number of their constituent plants Greeting Card Publishing, and
Electrotyping and Stereotyping.
In Greeting Card Publishing, there is a trend to larger plants and those plants
are producing a higher percentage of the value of shipments. In 1963, only 6.2%
of the establishments had over 100 employees but by 1967 that number had
increased to 17.6%. Although the total value of shipments increased during this
period there were 35 (14%) fewer establishments at the end of 1967 than four
years earlier. There was also a substantial decrease in the number of Electrotyping
and Stereotyping plants during the same period (51, or 28%) but the decline also
was accompanied by a reduction in total value of shipments. While greeting card
publishing is a growing industry, electrotyping is a dying industry.
The Commercial Printing, Letterpress segment was remarkably static in all
respects. The newspaper industry showed no dramatic change during the period
covered by the data.
13
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TABLE III-2
DISTRIBUTION BY NUMBER OF EMPLOYEES
ESTABLISHMENTS WITH LESS
THAN 20 EMPLOYEES
ESTABLISHMENTS WITH 20
OR MORE EMPLOYEES
SIC
CODE
2711
2721
2731
2732
2741
2751
2752
2753
2754
2761
2771
2793
2794
2795
INDUSTRY
Newspapers
Periodicals
Book Publishing
Book Printing
Misc. Publishing
Conm. Print., L.P.
Comft. Print., Litho
Engraving and Plate Print.
Conn. Print., Gravure
Manifold Bus. Forms
Greeting Card Publishing
Photoengraving
Electrotyping and Stereotyping
Litho Platemaking Services
NUMBER OF
ESTABLISHMENTS
5,951*
2,063
886
409
1,745
11,951
6,193
427
45
290
116
455
56
200
PERCENT
74
82
75
60
87
91
75
77
35
44
59
78
70
67
NUMBER OF
ESTABLISHMENTS
2,071
447
300
276
255
1,135
2,111
126
82
368
79
129
24
98
PERCENT
26
18
25
40
13
9
25
23
65
56
41
22
30
33
TOTAL
ESTABLISHMl
8,022
2,510
1,186
685
2,000
13,086
8,304
553
127
658
195
584
80
298
30,787
This total is believed tt .nit some plants with less than 10 employees.
Source: Census of Manufactures, Preliminary 1972
38,288
Arthur D. Little, Inc.
-------
TABLE III-3
SALES CONCENTRATION IN SELECTED SEGMENTS OF THE PRINTING AND PUBLISHING INDUSTRY
ANNUAL VALUE OF SHIPMENTS-PERCENT ACCOUNTED FOR BY
INDUSTRY AND YEAR
2771
Greeting Card Publishing
1970
1967
1966
1963
4 LARGEST
COMPANIES
75
67
64
57
8 LARGEST
COMPANIES
85
79
76
71
20 LARGEST
COMPANIES
n.a.
88
n.a.
82
50 LARGEST
COMPANIES
n.a.
95
n.a.
92
2794
C/l
Electrotyping and Stereotyping
1970
1967
1966
1963
n.a.
34
n.a.
31
n.a.
45
n.a.
39
n.a.
63
n.a.
57
n.a.
87
n.a.
80
n.a.-Not available
SOURCE: Quarterly Industry Report, January 1973, U.S. Department of Commerce
-------
TABLE 111-4
AVERAGE ANNUAL VALUE OF SHIPMENTS PER ESTABLISHMENT
SIC
CODE
2711
2721
2731
2732
2741
2751
2752
2753
2754
2761
2771
2793
2794
2795
INDUSTRY
Newspapers
Periodicals
Book Publishing
Sook Printing
Misc. ^ubli'-liing
Conn. Irint., L.P.
Conon. Print., Litho
Engraving and Plate Print.
Conm. Print., Gravure
Manifold Bus . Forms
Greeting Card Publishing
Photoengraving
Electrotyping and Stereotyping
Litho Platemaking Services
NUMBER OF
ESTABLISHMENTS
8,022
2,510
1,186
685
2,000
13,086
8,304
553
127
658
195
584
80
298
VALUE OF
SHIPMENTS ($MM)
8,271.5
3,506.3
2,861.3
929.3
1,042.6
3,242.6
5,110.8
197.1
674.0
1,421.5
766.1
215.4
36.4
201.8
AVERAGE VALUE OF
SHIPMENTS PER ESTABLISHMENT ($M)
1,031
1.397
2,413
1,357
521
248
615
356
5,307
2,160
3,929
369
455
677
TOTAL
38,288
28,476.7
Source: Cens-is of Manufactures, Preliminary 1972
Arthur D. Little. Inc.
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TABLE 111-5
NUMBER OF ESTABLISHMENTS AND ANNUAL VALUE OF SHIPMENTS BY SIZE OF ESTABLISHMENT
SIC CODE
YEAR SIZE OF PLANT
2711 Newspapers
1963 Small
Medium
Large
1967 Small
Medium
Large
2751 Comm. Print., L.P.
1963 Small
Medium
Large
1967 Small
Medium
Large
2771 Greeting Card Publishing
1963 Small
Medium
Large
1967 Small
Medium
Large
NUMBER OF
ESTABLISHMENTS
6466
1346
519 '- 8,331
6065
1453
576 8,094
10,705
1,174
230 12,109
10,659
1,198
241 12,098
164
77
16 257
130
53
39 222
PERCENT OF
TOTAL
77.6
16.2
6.2
74.9
18.0
7.1
88.4
9.7
1.9
88.1
9.9
2.0
63.8
30.0
6.2
58.5
23.9
17.6
VALUE OF PERCENT OF
SHIPMENTS ($M) TOTAL
346 , 508
573,947
3,563,137
369,500
712,900
4,674,700
658,824
696,544
1,289,680
762,700
863,800
1,628,800
20,266
39,668
286,027
16,000
45,500
456,400
7.7
12.8
4,483,592 79.5
6.4
12.4
5,757,100 81.2
24.9
26.3
2,645,048 48.8
23.4
26.6
3,255,300 50.0
5.8
11.5
345,961 82.7
3.1
8.8
517,900 88.1
Arthur D. Little, Inc.
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TABLE I!!-1? Continued)
NUMBER OF ESTABLISHMENTS AND ANNUAL VALUE OF SHIPMENTS BY SIZE OF ESTABLISHMENT
SIC CODE
YEAR SIZE OF PLANT
2794 Electrotyping
1963
1967
and Stereotyping
Small
Medium
Large
Small
Medium
Large
NUMBER OF
ESTABLISHMENTS
104
72
8
184 s
76
51
6 133
PERCENT OF
TOTAL
56.6
39.1
4.3
57.1
38.3
4.6
VALUE OF
SHIPMENTS ($M)
10,754
44,123
21,191
w 76,068
9,100
35,000
18,100 62,200
PERCENT OF
TOTAL
14.1
58.0
27.9
14.6
56.3
29.1
00
Small - 1 to 19 employees
Medium - 20 to 99 employees
Large - 100 or more employees
Source: Census of Manufactures, U.S. Department of Commerce, Bureau of Census 1963 and 1966
-------
2. Size of Firms
Establishments in the printing and publishing industry range in size from
very small (e.g., less than 5 employees) to large (e.g., 10,000 to 12,000). Many of
the small companies specialize in providing a single product or service to the
industry and are generally privately owned. The large firms include multimillion
dollar corporations that produce a range of printed products and frequently use
several printing processes.
The range of size and the degree of concentration as indicated by the average
value of shipments by size of company are shown in Table III-6 for the various
segments. This table is adapted from 1967 data for percent value of shipments
accounted for by the largest companies and applied to 1972 data for number of
establishments and value of shipments. In only four of the fourteen industries
included in this study is 60% or more of the industry's value of shipments
accounted for by the 20 largest companies: Greeting Card Publishing, Manifold
Business Forms, Miscellaneous Publishing, and Electrotyping and Stereotyping.
Commercial Printing, Letterpress, is the largest single segment with about
13,000 establishments. The average value of shipments for the 61% of this
industry remaining after subtracting the value of shipments attributable to the 50
largest companies amounts to only $152,000.
Much of the statistical information used in this study was obtained from
Department of Commerce Publications. Some of the data from different publica-
tions appears to be inconsistent, probably because of different definitions,
changes in reporting, non-reporting, and the number of manufacturing firms with
less than 10 employees that were excused from filing reports in the 1972 Census.
These last may be important statistically because so large a percentage of the
printing and publishing industry is comprised of firms having less than 20
employees, but is probably insignificant from an impact point of view because the
small companies are not sources of pollution. Moreover, these inconsistencies are
relatively minor and do not affect the overall conclusions reached in this study.
3. Level of Integration
The printing and publishing industry is not a significantly integrated in-
dustry. Most printing companies either carry out all of the steps involved in
producing a book, magazine or other printed items or perform a single step and
transfer the partially completed work to another non-affiliated company. Rarely
is a printing company integrated back to papermaking and woodlands or forward
to retail stores. There are, however, several instances of common ownership of
large newspapers and newsprint manufacturers, most of whom would also own
woodlands. These are non-typical situations and play no particular role in this
study. Over 80% of the establishments in the industry have less than 20 em-
ployees and several segments show even higher percentages, e.g., 91% for Com-
mercial Printing, Letterpress.
19
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TABLE 111-6
INDUSTRY SEGMENT CONCENTRATION AND AVERAGE
ANNUAL VALUE OF SHIPMENTS BY SIZE OF COMPANY
(Percent of total) and average value of shipments per company($M)
SIC
CODE
2711
2721
2731
2732
2741
2751
2752
2753
2754
2761
2771
2793
2794
2795
INDUSTRY
Newspapers
Periodicals
Book Publishing
Rook Printing
Misc. Publishing
Comm. Print., L.P.
Coma. Print., Litho
Engraving and Plate
Print.
Goran. Print., Gravure
Manifold Bus. Forms
Greeting Card Pub-
lishing
Photoengraving
Electrotyping and
Stereotyping
Litho Platemaking
Services
REMAIN-
ING
ESTABLISH-
4 LARGEST
(16) 330
(24) 210
(?Q) 143
(21) 48
(29) 75
(14) 113
(05) 63
(21) 10
,900
,400
,100
,800
,600
,500
,900
,300
8 LARGEST
(25)
(37)
(32)
(30)
(46)
(21)
(08)
(28)
258
162
114
34
59
85
51
6
,500
,200
S500
,800
,900
,100
,100
,900
20 LARGEST
(40)
(56)
(57)
(48)
(64)
(29)
(15)
(38)
165
98
81
22
33
47
,400
,200
,600
,300
,400
,000
38,300
3
,700
50 LARGEST
(56)
(72)
C/7)
(64)
(75)
(39)
(25)
(52)
92,600
50 , 500
44,100
11,900
15,600
25,300
25,600
2,000
MENTS
(44)
(28)
(23)
(36)
(25)
(61)
(75)
(48)
457
399
579
52 /
134
152
464
188
(47) 167,000 (57) 101,300 (69) 49,000 (81) 23,000 (19) 444
(67) 128,300 (79) 75,600 (88) 33,700 (95) 14,600 (05) 264
(10) 5,400 (16) 4,300 (27) 2,900 (44) 1,900 (56) 226
(34) 3,100 (45) 2,000 (63) 1,100 (87) 633 (13) 158
Sources: Census of Manufactures, Preliminary 1972
Quarterly Industry Report, January 1973, U.S. Department of Commerce
-------
By far the largest commercial printer is R.R. Donnelley & Sons Co., with
1972 sales of over $353 million. This represents slightly over \% of total industry
receipts. The revenues for the various segments of Donnelley's business, shown as
a percent of the total revenues, are:
Magazines 35.5%
Catalogs 26.4
Hardbound Books 19.4
Telephone Directories 11.0
Other Printing 7.7
100.0
Donnelley is a horizontally integrated company in the sense that it provides a
complete range of automated composition, printing, binding, and shipping ser-
vices to its customers. Donnelley's two largest competitors are Arcat;>. National
Corp. with printing revenues of $159 million and McCall Corp. with estimated
printing revenues slightly less than Arcata's. Other major competitors include
Cuneo Press, Inc., W.F. Hall Printing Co., W.A. Krueger Co., Meredith Corp. and a
number of other companies with sales ranging down to perhaps $5 million. Many
of these companies provide services to their customers similar to those provided
by Donnelley and are active in up to five SIC code industries. A large number of
the smaller establishments frequently do only one type of printing, offer a limited
range of services to their customers, and are listed under one SIC code.
During the 1950's and 1960's a number of acquisitions took place in the
printing industry. These were largely in the book, magazine and commercial
printing segments and appear to have been prompted by a variety of reasons; e.g.,
the original owner reaching retirement age, the need for major capital investment,
or the desire of the owner to diversify his investments. This period, which was
associated with growth of the printing industry in general and growth of web-
offset printing in particular, saw major growth by several of today's large printing
companies as they acquired subsidiaries. Such concentration does not appear to
be taking place at present to any significant degree. Other major printing com-
panies increased in size as a result of internal growth.
Integration, in the sense of a company's being both publisher and printer, is
not very prevalent in the industry. Meredith Corp. and McCall Corp. in the
periodical segment and Doubleday & Company, Inc., and Western Publishing Co.,
in the book segment arc examples of companies that are both publishers and
printers. These are exceptions, however; the two functions generally are performed
by separate companies. However, integration is common in the newspaper . -
dustry where the publishers of almost all daily newspapers and maa;, weekly-
newspapers own a plant dedicated to printing the newspaper This is believed to
be a neci ssity i i order to control the late closing of news pages and to meet
delivery schedule s.
21
-------
4. Number of Products
In general, the names of the various segments are descriptive of the main
product each produces, although some secondary products are not apparent from
the code name and several of the segments do overlap. Table 111-7 lists the major
products produced in each of the segments.
5. Level of Diversification
Most of the segments of the printing industry are rather specialized despite
the number of products listed in Table III-7. The Census of Manufactures mea-
sures this degree of specialization with its "specialization ratio," which is defined
as the ratio of industry shipments of primary products to total manufactured
industry shipments of primary and secondary products.
The primary product specialization ratios are as follows:
SIC
Code Industry
2711 Newspapers
2721 Periodicals
2731 Book Publishing
2732 Book Printing
2741 Miscellaneous Publishing
2751 Comm. Print., L.P.
2752 Comm. Print., Litho
2753 Engraving and Plate Print.
275-4 Comm. Print., Gravure
2761 Manifold Bus. Forms
2771 Greeting Card Publishing
2793 Ph 0:0en graving
2794 Electrotyping and Stereotyping
2795 Litho Platemaking Services
Specialization Ratio
0.96
0.89
0.91
0.88
0.95
0.86
0.86
0.92
0.88
0.92
0.76
0.86
Source: ( ^c Manufactures, Preliminary \9~/l
22
-------
TABLE III-7
PRINTING INDUSTRY PRODUCTS
SIC
CODE
2711
2721
INDUSTRY
Newspapers
Periodicals
2731
2732
Book Publishing)
Book Printing r
2741
Misc. Publishing
2751
Comm. Print., L.P.
MAJOR PRODUCTS
Daily and Sunday newspaper
Weekly newspapers
Farm Periodicals
Specialized Business and Professional
Periodicals
General Interest Periodicals
Elementary and high school text books
Technical, scientific, business and
professional books and college text books
General consumer and trade books
Subscription reference books, encycloped-
ias, and religious subscription books
Pamphlets,workbooks and objective teats
Catalogs and directories
Business service publications
Newsletters
Government regulations
Miscellaneous products
Post cards
Sheet music
Maps, charts
Patterns
Racing forms
Shopping news
Magazines and periodicals
Labels for packaging purposes
sheets, rolls
Catalogs and directories
Financial and legal printing
SEC prospectuses
Annual reports
Insurance forms
Bank printing
Advertising printing
Direct mail
Display advertising
Preprinted newspaper inserts
Scientific and technical recording charts
Trading stanps
Newspapers
Tickets and coupons
23
-------
TABLE 111-7 (Continued)
SIC
CODE
2752
IMHJSTRY
Goran. Print., Litho
MAJOR PRODUCTS
Same as Comm. Print., L.P.
2753
Engraving and Plate Print.
2754
2761
2771
2793
2794
2795
Comm. Print., Gravure
Manifold Bus. Forms
Greeting Card Publishing
Phot oengraving
Electrotyping and Ster-
eotyping
Litho Platemaking Ser-
vices
Securities
Social printing
Commercial printing
Intaglio printing plates
Duplicate rubber letterpress print ing
plates
Same as Comm. Print., L.P.
Unit set forms
Sales and other manifold books
Custom continuous forms
Stock continuous forms
Christmas cards
Valentine cards
Seasonal cards
Photoengraving plates
Zinc
Copper
Magnesium
Electrotype duplicate plates
Stereotype duplicate plates
Matrices
Lithographic plates
Diazo type
Wipe-on type
Deep-etch type
Multi-metal type
Color corrected process film
Source: Census of Manufactures, Preliminary 1972
24
-------
TABLE III-7
PRINTING INDUSTRY PRODUCTS
SIC
CODE
2711
2721
INDUSTRY
Newspapers
Periodicals
2731
2732
Book Publishing)
Book Printing j
2741
Misc. Publishing
2751
Comm. Print., L.P.
MAJOR PRODUCTS
Daily and Sunday newspaper
Weekly newspapers
Farm Periodicals
Specialized Business and Professional
Periodicals
General Interest Periodicals
Elementary and high school text books
Technical, scientific, business and
professional books and college text books
General consumer and trade books
Subscription reference books, encycloped-
ias, and religious subscription books
Pamphlets,workbooks and objective tests
Catalogs and directories
Business service publications
Newsletters
Government regulations
Miscellaneous products
Post cards
Sheet music
Maps, charts
Patterns
Racing forms
Shopping news
Magazines and periodicals
Labels for packaging purposes
sheets, rolls
Catalogs and directories
Financial and legal printing
SEC prospectuses
Annual reports
Insurance forms
Bank printing
Advertising printing
Direct mail
Display advertising
Preprinted newspaper inserts
Scientific and technical recording charts
Trading stamps
Newspapers
Tickets and coupons
23
-------
TABLE 111-7 (Continued)
SIC
CODE
2752
INDUSTRY
Goran. Print., Litho
MAJOR PRODUCTS
Same as Conm. Print., L.P.
2753
Engraving and Plate Print,
2754
2761
2771
2793
Coram. Print., Gravure
Manifold Bus. Forms
2794
2795
Greeting Card Publishing
Photoengraving
Electrotyping and Ster-
eotyping
Litho Platemaking Ser-
vices
Securities
Social printing
Commercial printing
Intaglio printing plates
Duplicate rubber letterpress prirt ing
plates
Same as Comm. Print., L.P.
Unit set forms
Sales and other manifold books
Custom continuous forms
Stock continuous forms
Christmas cards
Valentine cards
Seasonal cards
Photoengraving plates
Zinc
Copper
Magnesium
Electrotype duplicate plates
Stereotype duplicate platee
Matrices
Lithographic plates
Diazo type
Wipe-on type
Deep-etch type
Multi-metal type
Color corrected process fil».
Source: Census of Manufactures, Preliminary 1972
24
-------
The major industry segments have shown little change in their degree of
specialization during the last 20 years. The Greeting Card Publishing industry
(2771), however, has shown a steady but slow decline over this period, from 0.93
in 1954 to 0.76 in 1972. The Photoengraving industry (2793) has shown a more
rapid decrease in specialization since 1967, 0.94 vs 0.86. The Electrotyping and
Stereotyping industry (2794) has shown a similar reduction over the same period,
0.89 to 0.82. Both of the latter two industries are experiencing decreasing
demands for their primary products even though a substantial number of plants
are closing each year. The decline in specialization ratio suggests that companies
in these industries are diversifying into other more viable product lines, such as
lithographic printing plates.
B. TYPES OF PLANTS
There is great diversity among the plants that comprise the printing and
publishing industry. Even within a given segment plants vary in size, in the range
of services they provide to a customer, in their degree of sophistication, and in the
product mix they are equipped to manufacture. The types of plants are described
in the following paragraphs with respect to their size, age, location, level of
technology, efficiency and level of integration.
1. Size of Plants
The Census of Manufactures reports plant size by average employment size.
For purposes of this report plant size is defined as follows:
Small Plants 1 to 19 employees
Medium Plants 20 to 99 employees
Large Plants - 100 or more employees
Approximately three years are required for publication of the detailed census
information. Only preliminary information on establishments by employment size
is available for 1972 and this is limited to total plants and to those plants with 20
employees or more. After eliminating the two new segments - Commercial
Printing, Gravure (2754) and Litho Platemaking Services (2795) - for which
comparable data are not available for previous years it is possible to compare the
number of small plants as a percentage of the total. This data for the periods
1963, 1967, and 1972 shows the following:
No. of Plants With Total No. Percent
Less Than 20 Employees of Plants of Total
1963 28,884 35,348 81.7
1967 27,849 34,992 79.5
1972 30,542 37,863 80.6
25
-------
The plant size distribution in the printing industry has been remarkably
stable with an average of about 80% of the establishments having less than 20
employees. A comparison of the data, segment by segment, for the three periods
shows that the percentage of small plants to the total remains essentially constant
1 even though a significant increase in some of the segments has taken place over
| some of the periods for which data are available.
i
! In 12 of the 14 segments covered by this report, comparable information is
! available from which plant size distribution can be calculated for the years 1963
; and 1967. The data for 1967 show a reduction of about 1% in the total number
1 of establishments in the printing industry compared to 1963. Six of the segments
j showed a decrease in the number of plants, four showed an increase and two
segments remained essentially unchanged. For three of the segments the increases
amounted to about 8%. The Greeting Card Publishing, Photoengraving, and
Electrotyping and Stereotyping industries showed decreases in the total number
of plants amounting to 13.6, 16.8, and 27.7%, respectively, for the period. There
was, however, no discernible overall change in the average plant-size distribution
from that existing in 1963. The Greeting Card Publishing and Manifold Business
Forms industries in 1967 had about 5% fewer plants with less than 20 employees
and about the same increase in number of plants with 100 or more employees.
Engraving and Plate Printing showed a decrease of about 5% in the number of
small plants but no change in the percent of large plants.
Limited data are available for 1972 except for number of plants having less
than 20 employees and total number of plants by segment. There was an increase
of 9.4% in the total number of plants for the 12 segments covered for 1972
compared to 1967. Some of the highlights for individual segments are worthy of
note and are as follows:
PERCENT CHANGE IN NUMBER OF PLANTS, 1972 VS 1967
Change In
SIC Change In Total With Less
Code Industry Total Number Than 20 Employees
2721 Periodicals +16 0
2741 Miscellaneous Publishing +34 +1
2751 Comm. Print., L.P. +8 +3
2752 Comm. Print., Litho +22 -1
2753 Engraving and Plate Print. -4 -1
2761 Manifold Bus. Forms +21 -2
2771 Greeting Card Publishing -12 0
2793 Photoengraving -20 +4
2794 Electrotyping and Stereotyping -40 +13
26
-------
TABLE 111-8
GEOGRAPHIC DISTRIBUTION OF PRINTING INDUSTRY
BY EMPLOYEES AND ANNUAL VALUE Of SHIPMENTS
AREA
HO.
1.
EMPLOYEES
AREA
New England
(Me., N.H., Vt., Mass., Conn., R.I.)
2. Middle Atlantic
(N.Y., N.J., Pa.}
3. East North Central
(Wise., Ill, Ind., Ohio, Mich.)
4. West North Central
(N. Dak., S. Dak., Nefcr., Kans.,.
Mo., Iowa, Minn.)
5. South Atlantic
(W. Va., Va., Md., Del., D.C.,
N. Car., Sa. Car.r Ga., Fla.)
6> East South Central
(Ky., Tenn., Ala., Miss.)
7. West South Central
(Okla., Tex., La., Ark.)
8. Mountain
(Ida., Nev., Utah, Ariz.,
Colo., Wyo., Mont.)
9. Pacific
(Wash., Ore., Calif.)
76.2
269.2
258.2
QO* t
116.7
42.0
26.31
105^6
VALUE
OF INDUSTRY
SHIPMENTS
1,712,5
8,427,6
6,612.8
2,228.0
2f54$.2
961*5
5S3.S
2,643^2
Source: Annual Survey of Manufactures,
28
-------
to
TABLE 111-9
GEOGRAPHIC CONCENTRATION OF ESTABLISHMENTS IN THE PRINTING INDUSTRY
SIC
CODE
2711
2721
2731
2732
27A1
2751
2752
2753
2754
2761
2771
2793
2794
2795
NUMBER OF ESTABLISHMENTS
INDUSTRY
Newspapers
Periodicals
Book Publishing
Book Printing
Mlsc- Publishing
Comm. Print., L.P.
Comm. Print., litho
Engraving and Plate Print.
Conur,. Print., Gravure
Manifold Bus. Forms
Greeting Card Publishing
Photoengraving
Electrotyping and Stereotyping
Liuiu Plateraaking Services
TOTAL
8,022*
2,510
1,186
685
2,000
13,086
8,304
553
127
658
195
584
80
298
AREA 1
401
904
96
57
106
877
546
36,0
12
35.0
26
54
8
23
AREA 2
1,008
732
458
254
600
3,014
1,914
171
39
146
73
137
23
74
AREA 3
1,470
467
197
104
348
2,575
(2,499)
115
(45)
130
(45)
(139)
(32)
(118)
AREA 4 AREA 5
1,429 975
189 298
58 112
44 85
141 196
966 1,747
971
29 (83)
53 87
13
71
AREA 6
527
73
30
24
(86)
553
258
25
19
4
(56)
AREA 7
969
157
41
37
(7)
1,063
606
38
20
64
40
AREA 8 AREA 9
427 816
74 348
29 165
28 52
44 357
446 1,850
285 1,225
(81)
(ID
20 98
(124)
(21)
*This number is believed to omit some plants with less than 10 employees and therefore to understate the actual total.
( ) denotes lumping of data for this and adjacent area or areas where blanks exist in the same SIC code.
Sources: Census of Manufactures, Preliminary 1972
Annual Survey of Manufactures, 1971
Arthur D. Little, Inc.
-------
TABLE III }0
GEOGRAPHIC CONCENTRATION OF EMPLOYEES IN THE PRINTING INDUSTRY
INDUSTRY
Newspapers
Periodicals
Book Publishing
Book Printing
Misc. Publishing
Coram. Print., L. P.
Coram. Print., Litho
Engraving and Plate Print.
Comm. Print., Gravure
Manifold Bus. Forms
Greeting Cards
Photoengraving
Electrotyping and Stereotyping
Litho Plateraaking Services
TOTAL
347.8
66.4
57.0
41.2
37.5
128.4
183.2
9.4
19.5
38.4
23.2
9.2
1.6
7.1
AREA 1
25
2
3
6
1
8
13
1
0
2
3
0
0
0
.4
.9
.8
.4
.5
.3
.8
.0
.8
.7
.9
.8
.1
.4
AREA 2
67.3
31.2
26.8
9.3
13.2
31.4
43.4
3.0
4.3
6.8
2.6
3.7
0.6
2.1
AREA
3 AREA 4
72.4 29.0
11.
13.
9.
10.
37.
(68.
1.
(8.
9.
(136)
(2.
(0.
(3.
5 6.0
4 4.8
7 2.0
7 2.9
4 8.0
9)
6 0.4
8)
2 3.2
1)
8)
1)
AREA 5
49.6
6.1
1.5
5.4
2.9
14.2
19.7
(1.8)
4.8
0.4
0.6
AREA 6
15.1
2.6
1.1
4.2
(0.5)
4.3
5.9
1.2
0.2
0.1
(1.0)
AREA 7
29.3
1.3
0.6
2.0
(0.1)
6.8
10.0
0.5
4.7
5.0
0.5
AREA
14.
0.
0.
0.
0.
3.
3.
(1.
(0.
0.
(1.
(0.
8 AREA 9
4 45.3
8 4.1
5 4.5
7 1.4
8 3.8
7 14.3
6 17.9
2)
9)
9 4.5
3)
5)
( ) denotes lumping of data for this and adjacent area or areas where blanks exist in the same SIC code.
Source: Annual Survey of Manufactures, 1971
Arthur D. Little, Inc,
-------
TABLE MI-9
GEOGRAPHIC CONCENTRATION OF ESTABLISHMENTS IN THE PRINTING INDUSTRY
SIC
CODE
2711
2721
2731
2732
27A1
2751
2752
2753
K)
2754
2761
2771
2793
2794
2795
INDUSTRY
Newspapers
Periodicals
Book Publishing
Book Printing
Misc. Publishing
Comm. Print., L.P.
Comm. Print. , litho
Engraving and Plato Print.
Goran. Print., Gravure
Manifold Bus. Forms
Greeting Card Publishing
Photoengraving
Electrotyping and Stereotyping
Liuiu Platemaking Services
NUMBER OF ESTABLISHMENTS
TOTAL
8,022*
2,510
1,186
685
2,000
13,086
8,304
553
127
658
195
584
80
298
AREA 1
401
904
96
57
106
877
546
36.0
12
35.0
26
54
8
23
AREA 2
1,008
732
458
254
600
3,014
1,914
171
39
146
73
137
23
74
AREA 3
1,470
467
197
104
348
2,575
(2,499)
115
(45)
130
(45)
(139)
(32)
(118)
AREA 4 AREA 5
1,429 975
189 298
58 112
44 85
141 196
966 1S747
971
29 (83)
53 87
13
71
AREA 6
527
73
30
24
(86)
553
258
25
19
4
(56)
AREA 7
969
157
41
37
(7)
1,063
606
38
20
64
40
AREA 8 AREA 9
427 816
74 348
29 165
28 52
44 357
446 1,850
285 1,225
(81)
(ID
20 98
(124)
(21)
*This number is believed to omit some plants with less than 10 employees and therefore to understate the actual total.
( ) denotes lumping of data for this and adjacent area or areas where blanks exist in the same SIC code.
Sources: Census of Manufactures, Preliminary 1972 Arthur D. Little Inc
Annual Survey of Manufactures, 1971
-------
TABLE III 10
GEOGRAPHIC CONCENTRATION OF EMPLOYEES IN THE PRINTING INDUSTRY
NUMBER OF AMFLOYEES (M)
INDUSTRY
Newspapers
Periodicals
Book Publishing
Book Printing
Misc. Publishing
Coram. Print., L. P.
Coram. Print., Litho
Engraving and Plate Print.
Comm. Print., Gravure
Manifold Bus. Forms
Greeting Cards
Photoengraving
Electrotyping and Stereotyping
Litho Plateraaking Services
TOTAL
347.8
66.4
57.0
41.2
37.5
128.4
183.2
9.4
19.5
38.4
23.2
9.2
1.6
7.1
AREA I
25.4
2.9
3.8
6.4
1.5
8.3
13.8
1.0
0.8
2.7
3.9
0.8
0.1
0.4
ARIA
67.
31.
26.
9.
13,
31.
43.
3.
4.
6.
2.
3.
0.
2.
2
3
2
8
3
2
4
4
0
3
8
6
7
6
1
AREA
72.
11.
13.
9.
10.
37.
(68.
1.
(8.
9.
(136)
(2.
(0.
(3.
3 AREA 4
4 29.0
5 6.0
4 4.8
7 2.0
7 2.9
4 8.0
9)
6 0.4
8)
2 3.2
1)
8)
1)
AREA 5
49.6
6.1
1.5
5.4
2.9
14.2
19.7
(1.8)
4.8
0.4
0.6
AREA 6
15.1
2.6
1.1
4.2
(0.5)
4.3
5.9
1.2
0.2
0.1
(1.0)
AREA 7
29.3
1.3
0.6
2.0
(0.1)
6.8
10.0
0.5
4.7
5.0
0.5
AREA
14,
0.
0.
0.
0.
3.
3.
(1.
(0.
0.
(1.
(0.
8 AREA 9
4 45.3
8 4.1
5 4.5
7 1.4
8 3.8
7 14.3
6 17.9
2)
9)
9 4.5
3)
5)
( ) denotes lumping of data for this and adjacent area or areas where blanks exist in the same SIC code.
Source: Annual Survey of Manufactures, 1971
Arthur D. Little, Inc,
-------
TABLE 111-11
PRINTING DISTRIBUTION BY CITIES
New York, N. Y.
Chicago, 111.
Los Angeles, Cal.
Philadelphia, Pa.
Washington, D. C.
Minneapolis, Minn.
Detroit, Mich.
St. Louis, Mo.
San Francisco, Cal.
Cleveland, Ohio
Cincinnati, Ohio
Paterson, Clifton, Passaic, N.J.
Milwaukee, Wise.
Dallas, Texas
Newark, N.J.
Dayton, Ohio
Buffalo, N.Y.
Nashville, Tenn.
Atlanta, Ga.
Indianapolis, Ind.
SOURCE: Annual Survey of Manufactures, 1971.
EMPLOYEES
(M)
138.3
84.5
39.6
32.5
20.1
18.3
15.8
15.7
15.4
13.6
13.1
12.5
10.3
9.9
9.1
9.1
8.5
8.5
8.3
8.0
ANNUAL
VALUE
OF INDUSTRY
SHIPMENTS
($MM)
5, -352. 3
2,489.5
1,003.7
877.7
564.0
461.2
417.5
367.7 ,
442.1
364.9
328.6
272.7
242.5
248.4
251.1
238.9
182.6
167.4
232.2
185.2
31
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4. Level of Technology
Prior to about 1950 the printing and publishing industry was very much
craft oriented. Only in the last 10 to 15 years has there been any significant
infusion of new technology. Photocomposition, stimulated by the opportunity to
reduce labor costs, made the first inroad into traditional methods of typesetting.
While photocomposition is applicable to all methods of printing, it found im-
mediate application in offset printing, stimulating the growth of that process and
of the related supplies and equipment.
A number of other significant technological developments have now been
adopted by the printing industry, including:
Automated computer-assisted composition
High-speed full page metal engravings
Advances in high-speed photography
Improvements in color separations
Photopolymer printing plate developments
Improvements in offset plates
Photomechanical (electronic) engraving methods for gravure cylin-
der preparation
Advances in automatic press controls
The larger printers, who compete on a national basis, have adopted most of
the important technical developments that relate to their areas of activity. The
adoption of new technology is usually judged in terms of savings in costs and
time. In a broader context, these large printing companies must also invest in cost
and time saving technology to meet the competition from other communication
services.
Many small printing companies still derive business from local sources and
are operating the same equipment in the same manner now as many years ago.
While it is unlikely that these companies have either the inclination or the
resources to change, the new technical-economical thrust of the larger and more
aggressive printing companies will gain these larger companies a greater share of
the printing dollar. The small printing companies may not be able to base their
competitive posture on amortized plants indefinitely.
32
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C. INDUSTRY SUBSEGMENTATION
Each of the 14 industry segments was subsegmented into small, medium and
large plants. Decisions were then made with respect to how many of the plants in
each segment should be selected for study for possible impact on the basis of their
use of effluent producing processes. The results of the subsegmentation are
presented in Table 111-12.
In those instances of possible impact when a single plant was found in more
than one industry the plant was included in the first industry in which it
appeared, taking the industries in numerical order. The exception was a gravure
printing plant that first appeared under SIC 2721, Periodicals, which was listed
under SIC 2754, Commercial Printing, Gravure, where it could be treated with
similar plants.
1. SIC 2711 Newspapers
At the end of 1973 the newspaper industry was composed of weekly and
daily newspapers according to the following distribution:
Weekly newspapers 7641 Establishments Source: NNA
Daily newspapers 1761 Establishments Source: ANPA
Total 9402
The total number is not in good agreement with the data provided in the Census
of Manufactures, Preliminary 1972 report, and used in several of our statistical
tables. The above data are believed to be the more reliable, however, and are used
in the remainder of the report.
The weekly newspapers are generally composed of establishments having less
than 20 employees. Approximately 2641 weeklies are publishers only; their
newspapers are printed by commercial printers or in other newspaper plants. The
5000 weekly newspaper printing plants are divided into about 4250 offset plants
and 750 letterpress plants. The offset plants represent the more profitable and
growth segment of the business. Most of the letterpress plants use either direct
printing-photopolymer plates or flatbed presses, and do no chemical engraving.
The few weekly newspapers that may be etching direct printing-metal plates have
the option of disposing economically of the small amount of spent etching
solution they generate or of adopting the use of a precoated direct printing-photo-
polymer plate. The weekly newspapers are not sources of pollution.
Some of the 1761 daily newspapers share printing facilities, so only 1560
printing plants are required. These plants print by the stereo, direct printing and
offset processes. The direct printing process uses both metal and photopolymer
plates. The offset and direct printing-photopolymer processes produce no process
contact effluent. The direct printing-metal and stereo processes require metal
33
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TABLE 111-12
SUBSEGMENTATION SUMMARY
Number
of Plants
Impact
Potsible*
None
2711 NEWSPAPERS
Publishing and Printing
Small Plants 4,731
Medium Plants 1,353
Large Plants 476
Total 6,560
2721 PERIODICALS
Publishing and Printing
Small Plants 231
Medium Plants 63
Large Plants 30
Total 324
2731 BOOK PUBLISHING
Publishing and Printing
Small Plants 111
Medium Plants 36
Large Plants 23
Total 170
2732 BOOK PRINTING
Small Plants 409
Medium Plants 200
Large Plants 76
Total 685
2741 MISCELLANEOUS PUBLISHING
Publishing and Printing
Small Plants 200
Medium Plants 40
Large Plants 22
Total 262
400
400
_4
4
_4
4
2751 COMMERCIAL PRINTING, LETTERPRESS
Small Plants 11,951
Medium Plants 932
Large Plants 203 4
Total 13,086 4
'Plants using processes that produce significant amounts of effluent.
6,160
320
111
36
23
170
409
200
76
686
200
40
18
258
13,082
34
-------
TABLE 111-12 (Continued)
Number
of Plants
2752 COMMERCIAL PRINTING, LITHOGRAPHIC
Small Plants 6,193
Medium Plants 1,781
Large Plants 330
Impact
Possible*
Total
8,304
2753 ENGRAVING AND PLATE PRINTING
Small Plants 427
Medium Plants 117
Large Plants 9
Total 553
2754 COMMERCIAL PRINTING, GRAVURE
Small Plants 45
Medium Plants 41
Large Plants 41
Total
2761 MANIFOLD BUSINESS FORMS
Small Plants
Medium Plants
Large Plants
Total
2771 GREETING CARD PUBLISHING
Small Plants
Medium Plants
Large Plants
Total
2793 PHOTOENGRAVING
Small Plants
Medium Plants
Large Plants
Total
127
290
223
145
658
116
40
39
195
455
112
17
584
2794 ELECTROTYPING AND STEREOTYPING
Small Plants 56
Medium Plants 21
Large Plants 3
Total
80
8
34
42
17
17
2795 LITHOGRAPHIC PLATEMAKING SERVICES
Small Plants 200
Medium Plants 68
Large Plants 30
Total 298
'Plants using processes that produce significant amounts of effluent.
None
6,193
1,781
330
8,304
427
117
9
553
45
33
_7
85
290
223
145
658
116
40
39
195
455
112
567
56
21
_3
80
200
68
30
298
35
-------
etching and are sources of metal contamination. It is estimated that plants using
these processes number 40 and 360, respectively, as shown in Table 1II-12.
A summary of the newspaper industry, including those establishments which
publish only, and the types of printing processes used by the weekly and daily
newspapers, is as follows:
Weekly
Publishing Only 2641
Offset Plants 4250
Flatbed Letterpress Plants 750
7641
Daily
Publishing Only 201
Offset Plants 900
Direct Printing-Photopolymer Plants 260
Direct Printing-Metal Plants (Large) 40
Stereo Plants (Large) 360
1761
Total 9402
The newspaper industry is working strenuously to reduce its production
costs and modernize its operations by adopting new technology and by adapting
old technology to new uses. This has resulted in a proliferation of new alternatives
in the area of printing. While the traditional printing method in this industry has
been stereo, there are now several alternatives. Offset newspaper printing is
growing rapidly, with over half of the daily newspapers now being printed by this
process. Direct printing, which bridges the gap between photocomposition and
letterpress equipment, is also growing rapidly. Both photopolymer and metal
plates are used in this method of printing, with the photopolymer variety showing
a strong growth trend. Finally, photopolymer plates are being investigated for use
in the pattern plate process. This last process, a variation of the stereo process,
takes advantage of photocomposition but allows the conventional stereo plate-
making process to continue to be used. Eventually there will be no metal etchim
in the newspaper industry.
Most newspapers are aware of the need to control the metal contamination
from their effluents and many have either installed the appropriate treatment
equipment or are studying the costs and alternatives of doing so. The need to
control contamination has also encouraged a number of newspapers to switch to
non-polluting platemaking processes or to offset printing.
36
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TABLE 111-12 (Continued)
Number
of Plants
2752 COMMERCIAL PRINTING, LITHOGRAPHIC
Small Plants 6,193
Medium Plants 1,781
Large Plants 330
Total 8,304
2753 ENGRAVING AND PLATE PRINTING
Small Plants 427
Medium Plants 117
Large Plants 9
Total 553
Impact
Possible*
None
6,193
1,781
330
8,304
427
117
9
553
2754 COMMERCIAL PRINTING, GRAVURE
Small Plants 45
Medium Plants 41
Large Plants 41
Total
2761 MANIFOLD BUSINESS FORMS
Small Plants
Medium Plants
Large Plants
Total
2771 GREETING CARD PUBLISHING
Small Plants
Medium Plants
Large Plants
Total
2793 PHOTOENGRAVING
Small Plants
Medium Plants
Large Plants
Total
127
290
223
145
658
116
40
39
195
455
112
17
584
8
34
42
45
33
__7
85
290
223
145
658
17
17
195
455
112
567
2794 ELECTROTYPING AND STEREOTYPING
Small Plants 56
Medium Plants 21
Large Plants 3
Total
80
56
21
_3
80
2795 LITHOGRAPHIC PLATEMAKING SERVICES
Small Plants 200
Medium Plants 68
Large Plants 30
Total 298
"Plants using processes that produce significant amounts of effluent.
200
68
30
298
35
-------
etching and are sources of metal contamination. It is estimated that plants using
these processes number 40 and 360, respectively, as shown in Table 111-12.
A summary of the newspaper industry, including those establishments which
publish only, and the types of printing processes used by the weekly and daily
newspapers, is as follows:
Weekly
Publishing Only 2641
Offset Plants 4250
Flatbed Letterpress Plants 750
7641
Daily
Publishing Only 201
Offset Plants 900
Direct Printing-Photopolymer Plants 260
Direct Printing-Metal Plants (Large) 40
Stereo Plants (Large) 360
1761
Total 9402
The newspaper industry is working strenuously to reduce its production
costs and modernize its operations by adopting new technology and by adapting
old technology to new uses. This has resulted in a proliferation of new alternatives
in the area of printing. While the traditional printing method in this industry has
been stereo, there are now several alternatives. Offset newspaper printing is
growing rapidly, with over half of the daily newspapers now being printed by this
process. Direct printing, which bridges the gap between photocomposition and
letterpress equipment, is also growing rapidly. Both photopolymer and metal
plates are used in this method of printing, with the photopolymer variety showing
a strong growth trend. Finally, photopolymer plates are being investigated for use
in the pattern plate process. This last process, a variation of the stereo process,
takes advantage of photocomposition but allows the conventional stereo plate-
making process to continue to be used. Eventually there will be no metal etchiru,
in the newspaper industry.
Most newspapers are aware of the need to control the metal contamination
from their effluents and many have either installed the appropriate treatment
equipment or are studying the costs and alternatives of doing so. The need to
control contamination has also encouraged a number of newspapers to switch to
non-polluting platemaking processes or to offset printing.
36
-------
2. SIC 2721 Periodicals
Tliis industry is composed largely of establishments that are engaged primar-
ily in publishing activities. Of the 2510 establishments included in the industry,
2186 are publishers only, with the remaining 324 engaged in both publishing and
printing.
Subsegmenting the latter into small, medium, and large plants, based on the
average size of employment, indicates that not over 30 establishments have the
potential to pollute by virtue of being large enough to justify their own rotary
letterpress or gravure platemaking activities. A careful analysis of this group shows
that only five plants actually engrave metal and have platemaking facilities. One
of these uses the gravure process and is more appropriately dealt with under SIC
2754 Commercial Printing, Gravure. Thus the proposed guidelines might have an
impact on only four plants under this category.
3. SIC 2731 Book Publishing
The book publishing industry includes establishments engaged primarily in
publishing books and pamphlets. Of the 1186 establishments that comprised this
industry at the end of 1972, 1016 performed publishing functions only, with the
remaining 170 engaged in both publishing and printing.
An estimated 80% of all new books are printed by the offset process, which
is non-polluting. Some reprints of older books are still printed by the letterpress
process. However, letterpress is used because the printing plates already exist,
having been saved from the printing of previous editions, and no significant
number of new plates is required. Those that are required to replace lost or
broken plates or to accommodate revisions in the text are prepared by a plate-
making shop.
A relatively new development in the book industry that is enjoying increas-
ing popularity is the single-book press. This is a printing press that prints a
complete book on a web of paper, accordian folds the web into the desired final
form and feeds it into a bindery line where it is automatically bound and cased.
The printing plates are mounted on an endless flexible belt and are usually
non-polluting photopolymer plastic plates.
Some books are still being printed by rotary letterpress, using rubber plates.
In this operation, type is set by the hot metal technique and a plastic matrix is
prepared from the hot type. The rubber plate is prepared by molding a sheet of
rubber against the matrix in a hot press. The technique is non-polluting. This
industry is not a source of water pollution.
37
-------
4. SIC 2732 Book Printing
The book printing industry is primarily engaged in printing books. At the
end of 1972 the industry consisted of 685 plants. All of the comment and process
descriptions that appear in the previous segment, apply to this segment. This
industry is not a source of water pollution.
5. SIC 2741 Miscellaneous Publishing
This industry includes establishments engaged primarily in miscellaneous
publishing activities not elsewhere classified, whether or not they are engaged in
printing. This segment is comprised of about 2000 establishments.
Separating these establishments into small, medium and large plants shows
that 1745 are small, 200 are of medium size and 55 are large. An analysis of the
large plants showed that 33 are publishers only and that 22 are both publishers
and printers. Further analysis of the 22 plants shows that only 7 are actually
engaged in metal etching and platemaking activities and therefore subject to
possible impact. Three of these plants are also included under the periodicals
segment. Thus the effluent guidelines might have an impact on only four plants
under this category, that are not covered elsewhere.
Data are not available for the number of plants in the medium and small
plant categories that are publishers only. While the lack of this information in no
way influences the conclusions of the study we have estimated and entered in
Table III-l 2 only those plants that are engaged in both printing and publishing.
6. SIC 2751 Commercial Printing, Letterpress
The Commercial Printing, Letterpress industry is comprised of 13,086 plants
that are engaged primarily in commercial or job printing using letterpress or
screen printing methods. Some of the more important products include maga-
zines, newspapers, periodicals, catalogues, and directories.
A large percentage of these plants, many of which use flat-bed equipment
and are non-polluting, have less than 20 employees. Subsegmentation into small,
medium, and large plants shows that 203 plants fall in the large category. O*
these, only nine are engaged in metal etching and platemaking activities and five
of these nine were included in earlier segments. Thus the effluent guidelines might
have an impact on only four plants under this segment.
38
-------
7. SIC 2752 Commercial Printing, Lithographic
The Commercial Printing, Lithographic industry is composed primarily of
plants engaged in commercial printing, using the offset process. Segmenting the
8,304 establishments involved into small, medium, and large plants indicates that
330 are large, 1781 are medium, and 6193 are small. All are non-polluting.
8. SIC 2753 Engraving and Plate Printing
This industry is engaged primarily in engraving steel, copper, wood and
rubber plates; in using the plates to print stationary and various types of cards,
invitations, etc.; and in making wood-cuts for use in printing illustrations. It
consists of 553 plants, all of which are non-polluting. Subsegmentation shows that
9 are large plants, 117 medium, and 427 small.
9. SIC 2754 Commercial Printing, Gravure
The Commercial Printing, Gravure industry includes plants that are engaged
primarily in gravure printing and plants engaged in preparing gravure plates and
cylinders for use by gravure printers. The Commercial Printing, Gravure industry
was included as a separate entity in the Census of Manufactures, for the first time
in 1972. Prior to that time data for gravure printing was segregated under
Commercial Printing, Letterpress but the data for past years are quite variable and
do not parallel the growth of gravure printing in the United States. We believe
that a number of plants listed under this category may be included more
appropriately under another industry.
The gravure printing industry is composed of about 22 large plants. Because
of the large size of the presses and of the gravure cylinders used, each printer must
engrave the cylinders he uses in his own plant. Accordingly all 22 plants are
potential sources of pollution, although some of the newer plants have undoubt-
edly installed pollution control equipment.
That portion of the industry which is engaged in small gravure cylinder
preparation for gravure printers who use smaller presses numbers about 20 plants.
Many of these engrave the printing rolls both chemically and mechanically, and
some make other types of rolls that are used by the printing industry, all in the
same plant. We have estimated that 12 of the plants fall in the large-plant category
and 8 in the medium. The decision was based entirely on the estimated revenues
from the chemical etching part of the business (ignoring revenues from other
operations carried on in the same plant), because the cylinder preparation activi-
ties of some are very small and typical of other plants in that industry segment,
even though the plants themselves are very large.
39
-------
The discrepancy between the number of plants included in the Census of
Manufactures, Preliminary 1972 report, and the number of large gravure printers
and gravure cylinder plants, we have been able to identify is not readily explained.
We believe that some plants included in the census do gravure printing, do not
etch their own cylinders, and probably are also listed in an entirely different
industry. Examples of such plants could be ones that print on paper and foil in
connection with the manufacture of various building products and packaging
materials.
Subsegmentation of the 127 plants that make up this industry show 41 to be
large, 41 to be medium, and 45 to be small. Those plants that might be impacted
by pollution control requirement? consist of 34 large ones and 8 medium ones.
10. SIC 2761 Manifold Business Forms
This industry includes establishments engaged primarily in designing and
printing special forms for use in operation of a business. These may be in single or
multiple sets, including carbonized or interleaved with carbon or otherwise
processed for multiple reproduction. There are 658 establishments: 145 large, 223
medium, and 290 small.
In addition to printing presses, the forms industry has need for specialized
equipment such as collators, folders, gluers, etc., used to combine rolls of paper
and carbon paper into a multiple layer suitable for the final product. The need for
large capital equipment expenditures has tended to concentrate the industry; in
1973 the three largest companies had 50 plants, and these accounted for 42% of
the industry's shipments.
The manifold business forms industry uses both offset and letterpress equip-
ment. The ratio is approximately 80 to 85% for offset and 15 to 20% for printing
by letterpress. However, the letterpress operations use rubber plates to produce
the impression and the preparation of these plates is non-polluting. This industry
is essentially non-polluting.
11. SIC 2771 Greeting Card Publishing
The greeting card publishing segment includes 39 large, 40 medium, and 116
small plants for a total of 195. The Census data indicate that in 1970 the eight
largest companies accounted for 85% of the value of industry shipments.
Among the large plants are some that do most of their own printing
(primarily offset) but the more usual practice in the industry is to purchase
printing services. Most greeting cards are designed well in advance of the occasion
for their sale so the publisher can negotiate prices for printing based on the use of
40
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the presses in non-critical times. The medium-sized companies rely heavily on the
commercial printing segments for their production. Small business may print their
own cards, but they would be using non-polluting printing technology silk
screen, offset, flat bed letterpress. Letterpress is used by many small shops for
imprinting the names of the sender. Plates for engraved cards are usually prepared
by a mechanical process.
Although this industry utilizes all of the printing methods, the big operations
are primarily offset, and where letterpress is used, it is not based on etched metal
plates. This industry is non-polluting.
12. SIC 2793 Photoengraving
The photoengraving industry includes establishments engaged primarily in
preparing photoengraving plates. Much of this work is performed for advertising
agencies, platemakers and printers. Most of the companies in this industry also
make color separations and more recently have diversified into the preparation of
offset printing plates.
The engraving operations of these companies result in zinc, copper, magne-
sium, and other metal salts being accumulated in the acid etching baths they use.
The quantity of the waste from these operations is not large for a small or
medium-sized company. The effluent is frequently placed in plastic drums and
removed to land fill. Sometimes it is neutralized, the solids allowed to settle and
the solids then removed via the solid waste stream. Only the large plants generate
any significant amount of waste.
Subsegmentation of the 584 plants making up this industry shows that 17
are large, 112 medium, and 455 are small plants. The 17 large plants warrant
further study, because they are a significant source of pollution.
The total revenues for the photoengraving industry have been declining in
recent years as has the number of plants that make up the industry. There will be
base line closures of about 35 plants per year through 1980 with total revenues at
that time amounting to only $110 million. This is half the revenues for the
industry for the year 1972.
13. SIC 2794 Electrotyping and Sterotyping
This industry includes establishments engaged primarily in preparing electro-
type and stereotype plates for the printing industry. Subsegmentation by size of
the 80 plants that comprise the industry shows that there are 3 large plants, 21
medium plants, and 56 small plants.
41
-------
The number of plants and the value of shipments in the industry have been
decreasing steadily for a number of years. The estimated value of shipments for
1974, for example, is expected to be only one-third of what it was in 1972. A
corresponding reduction is taking place in the number of plants. This is clearly a
dying industry and it is expected to be extinct by 1980.
14. SIC 2795 Lithographic Platemaking Services
This industry is engaged primarily in manufacturing lithographic plates for
use by offset printing establishments. It is a healthy and growing industry. The
298 plants which make up the industry can be subsegmented into 30 large, 68
medium, and 200 small plants. The industry is non-polluting.
D. SUBSEGMENTATION SUMMARY
The analysis of the 14 major segments carried out above has resulted in each
segment being subsegmented into small, medium, and large plants. Each of these
subsegments has been examined for possible impact as a result of the pollution
control standards. The results of our analyses are summarized in Table 111-12. All
of the plants included in the summary are either printers or platemakers for the
printing trade regardless of what other activities the plant might perform.
It is interesting that in all industries where process waste water is being
generated it is being generated mainly by the large companies. In those few
instances in which small companies are producing waste that is not compatible
with municipal treatment systems, the volumes involved are small and there are
more economic alternatives for disposal than those supplied in the Development
Document.
42
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IV. FINANCIAL PROFILE OF THE INDUSTRY
Many of the companies in the printing and publishing industry are closely-
held corporations. As a result, financial information is considered proprietary and
is generally difficult to obtain. However, many companies in the industry belong
to trade associations and participate annually in association-sponsored financial
studies of the various industry segments. In many cases the results of these
studies are sold to help defray the cost of the study. In other cases the results are
sometimes available from participating companies.
The largest trade association in the industry is Printing Industries of
America, Inc. Its membership represents firms which account for more than 80%
of all the printing produced in the United States. The general well-being and
future of the printing industry was discussed in an address by its president,
Rodney L. Borum, at the annual meeting of the National Association of Printing
Ink Manufacturers on March 28, 1974. The following are excerpts from Mr.
Borum's speech, "The Printing Industry - Its Growth and Future."
"The printing and publishing industries continue to mirror the nation's
economic and demographic trends. Demand for printed products is stimulated by
a combination of population growth, rising school enrollment, higher income
levels and expanded business activity. The printing and publishing industries will
always be characterized by steady growth, stable employment, higher wages and a
large number of small establishments.
For 1973, total receipts for the printing, publishing and allied industries*
amount to approximately $34 billion. Growth through 1974 is expected to
continue, and the dollar volume will approximate $37 billion almost 9% above
the 1973 level."
In presenting detailed industry statistics for 1973 and forecasts for 1974 and
1980, Mr. Borum refrained from commenting on the newspaper publishing,
periodicals publishing, book publishing and miscellaneous publishing segments of
the industry. Those industry segments which were included in both his speech and
this study are listed in Table IV-1, which shows estimated revenues by segment
for the years 1973, 1974, and 1980.
Clearly, most segments in the printing and publishing industry are strong and
healthy. They are able to finance new investments, to take advantage of new
technology and to remain competitive and look optimistically to the future as
one of expanding markets and growth opportunities.
"The 17 segments in Major Group 27
43
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TABLE IV-1
PRINTING INDUSTRY REVENUES
($ millions)
1973
1974
1980
Book Printing
Commercial Printing, Letterpress
Commercial Printing, Lithographic
Engraving and Plate Printing
Commercial Printing, Gravure
Manifold Business Forms
Greeting Cards
Photoengraving
Electrotyping and Stereotyping
Lithographic Platemaking Services
1,045
4,500
5,500
210
825
1,510
585
200
20
260
14,655
1,108
5,000
6,000
225
920
1,650
615
185
12
280
15,995
1,600
7,100
10,500
350
1,800
2,800
815
110
470
25,545
A. SALES
Total values of shipments for the 14 segments included in this study were
$28.5 billion in 1972, as shown in Table III-4. Table III-4 also shows the average
value of shipments per establishment for all segments. Table IV-1 suggests that the
overall average growth in revenues for the industry through 1980 might approxi-
mate 10% per year. The two segments in which contraction rather than growth
will take place Photoengraving and Electrotyping, and Stereotyping together
represent less than 1% of the printing and publishing industry. Many companies in
these two segments have been consolidating and diversifying into trades that are
more in demand.
Table III-5 showed the number of plants and the value of shipments by plant
size for selected segments of the industry. Table III-6 provided information on
industry concentration by showing the percent of the total and the average value
of shipments per plant for the 4, 8, 20, and 50 largest companies in each industry
segment. Similar data are provided for the average remaining plants in each
industry after deducting the total value of shipments attributable to the 50 largest
plants.
B. EARNINGS
The printing and publishing industry generally does not publish data on
earnings. The best source of such information is the Ratio Studies, e.g., the PIA
Ratio Studies referred to in Chapter V and similar studies carried out by other
industry segments.
44
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IV. FINANCIAL PROFILE OF THE INDUSTRY
Many of the companies in the printing and publishing industry are closely-
held corporations. As a result, financial information is considered proprietary and
is generally difficult to obtain. However, many companies in the industry belong
to trade associations and participate annually in association-sponsored financial
studies of the various industry segments. In many cases the results of these
studies are sold to help defray the cost of the study. In other cases the results are
sometimes available from participating companies.
The largest trade association in the industry is Printing Industries of
America, Inc. Its membership represents firms which account for more than 80%
of all the printing produced in the United States. The general well-being and
future of the printing industry was discussed in an address by its president,
Rodney L. Borum, at the annual meeting of the National Association of Printing
Ink Manufacturers on March 28, 1974. The following are excerpts from Mr.
Borum's speech, "The Printing Industry - Its Growth and Future."
"The printing and publishing industries continue to mirror the nation's
economic and demographic trends. Demand for printed products is stimulated by
a combination of population growth, rising school enrollment, higher income
levels and expanded business activity. The printing and publishing industries will
always be characterized by steady growth, stable employment, higher wages and a
large number of small establishments.
For 1973, total receipts for the printing, publishing and allied industries*
amount to approximately $34 billion. Growth through 1974 is expected to
continue, and the dollar volume will approximate $37 billion almost 9% above
the 1973 level."
In presenting detailed industry statistics for 1973 and forecasts for 1974 and
1980, Mr. Borum refrained from commenting on the newspaper publishing,
periodicals publishing, book publishing and miscellaneous publishing segments of
the industry. Those industry segments which were included in both his speech and
this study are listed in Table IV-1, which shows estimated revenues by segment
for the years 1973, 1974, and 1980.
Clearly, most segments in the printing and publishing industry are strong and
healthy. They are able to finance new investments, to take advantage of new
technology and to remain competitive and look optimistically to the future as
one of expanding markets and growth opportunities.
*The 17 segments in Major Group 27
43
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TABLE IV-1
PRINTING INDUSTRY REVENUES
($ millions)
1973
1974
1980
Book Printing
Commercial Printing, Letterpress
Commercial Printing, Lithographic
Engraving and Plate Printing
Commercial Printing, Gravure
Manifold Business Forms
Greeting Cards
Photoengraving
Electrotyping and Stereotyping
Lithographic Platemaking Services
1,045
4,500
5,500
210
825
1,510
585
200
20
260
14,655
1,108
5,000
6,000
225
920
1,650
615
185
12
280
15,995
1,600
7,100
10,500
350
1,800
2,800
815
110
470
25,545
A. SALES
Total values of shipments for the 14 segments included in this study were
$28.5 billion in 1972, as shown in Table III-4. Table III-4 also shows the average
value of shipments per establishment for all segments. Table IV-1 suggests that the
overall average growth in revenues for the industry through 1980 might approxi-
mate 10% per year. The two segments in which contraction rather than growth
will take place - Photoengraving and Electrotyping, and Stereotyping - together
represent less than 1% of the printing and publishing industry. Many companies in
these two segments have been consolidating and diversifying into trades that are
more in demand.
Table III-5 showed the number of plants and the value of shipments by plant
size for selected segments of the industry. Table IH-6 provided information on
industry concentration by showing the percent of the total and the average value
of shipments per plant for the 4, 8, 20, and 50 largest companies in each industry
segment. Similar data are provided for the average remaining plants in each
industry after deducting the total value of shipments attributable to the 50 largest
plants.
B. EARNINGS
The printing and publishing industry generally does not publish data on
earnings. The best source of such information is the Ratio Studies, e.g., the PIA
Ratio Studies referred to in Chapter V and similar studies carried out by other
industry segments.
44
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C. CASH FLOW
This information, like that for earnings, is best obtained from PIA and other
Ratio Studies. Cash flow data is presented in Table V-l.
D. NEW CAPITAL INVESTMENT
Data on new capital investment are included in the Census of Manufactures
reports prepared by the U.S. Department of Commerce. Table IV-2 lists the new
investment data for the various segments for the years 1963, 1967, and 1972. It is
clear from these data that substantial new investment is made each year by the
various industry segments and that the amount is increasing year by year.
Between 1963 and 1967 the average new capital investment increase was about
17% per year compared to that of 1963. Between 1967 and 1972 that increase
averaged about 7% per year compared to 1967.
Although the investment in each of the segments for new capital improve-
ments will vary from year to year by industry needs and new technological
developments, these data reflect an industry whose plants are attempting to
maintain their competitive position vis-a-vis other plants and other communica-
tion industries and it is expected that this trend will continue.
E. MISCELLANEOUS FINANCIAL INFORMATION
Selected financial informaticn is tabulated in Table 1V-3 for the six industry
segments studied for possible impact. These data are almost exclusively for large
plants. The values given are estimated values for 1972 constructed from the
detailed information available from the 1967 Census of Manufactures as applied
to the available preliminary 1972 data. There will be discrepancies between the
data in this table and other average values presented throughout the report. These
values are based on the largest subsegments in each industry segment and should
typify those plants studied for impact.
45
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TABLE IV-2
ANNUAL CAPITAL INVESTMENT
SIC New Capital Expenditures ($MM)
Code Industry 1963 1967 1972
2711 Newspapers 135.2 246.7 360.0
2721 Periodicals 33.8 58.0 54.9
2731 Book Publishing 25.4 55.1 49.0
2732 Book Printing 24.9 45.9 34.0
2741 Misc. Publishing 7.1 10.0 23.4
2751 Comm. Print.. L.P. 89.0 120.4 126.1
2752 Comm. Print., Litho 76.9 125.6 220.4
2753 Engraving and Plate Print. 3.8 3.8 4.3
2754 Comm. Print., Gravure 10.2 22.6 207
2761 Manifold Bus. Forms 23.1 39.8 45.5
2771 Greeting Card Publishing 6.8 14.9 45.2
2793 Photoengraving 5.7 6.3 4.9
2794 Electrotyping and Stereotyping 1.0 0.7 0 4
2795 Litho Platemaking Services - _ s.5
Total 442.9 749.8 998.8
Source: Census of Manufactures, 1963, 1967 and preliminary 1972.
46
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SIC Code
TABLE IV-3
FINANCIAL PROFILES OF SELECTED INDUSTRY SEGMENTS
Industry
2711
2721
2741
2751
2754
Newspapers
Periodicals
Misc. Publishing
Comm. Printing, L.P.
Comm. Printing, Gravure
Large
Large
Large
Large
Large
Printer
Medium
Roll Maker
Average Per Plant
2793
Photoengraving
Size of Plant
Large
Large
Large
Large
Large
Printer
Medium
Roll Maker
Large
Employees
462
389
475
272
456
47
107
Annual
Value of Shipments ($M| New Investment ($M)
12,330
12,122
13,300
6,979
15,867
1,611
3.109
520
312
281
292
511
29
68
Sources: Census of Manufactures, 1967 and preliminary 1972; ADL estimates.
-------
V. MODEL PLANTS
Financial models of representative plants studied for possible impact were
constructed for the Newspaper; Periodicals; Miscellaneous Publishing; Commercial
Printing, Letterpress; Commercial Printing, Gravure and Photoengraving indus-
tries. In all cases the models were for large plants, i.e., those having more than 100
employees, because they are the principal sources of significant amounts of
process contact effluent in their platemaking operations. Small and medium
printing plants generally rely upon purchased services for their plates and thus
avoid such problems. Moreover, the small and medium plants that may be etching
metal for platemaking purposes have the option of disposing of their relatively
small amounts of waste by means that do not require significant capital invest-
ments.
A. SIC 2711 NEWSPAPERS
American Newspapers Publishers Association, Research Institute data show
that the largest group of newspaper plants is the 25,000-100,000 circulation
category and that many of these plants are engraving metal. Smaller plants are
predominantly offset and therefore, non-polluting. Larger plants are engaged
principally in metal engraving because of their duplicate plate requirements and
are contributors to pollution.
We have selected two models as representative of newspaper plants that
contribute to pollution. Financial profiles of both are shown in Table V-l. The
first plant is a medium circulation plant typical of the largest group of newspapers
and characterized as a small city daily. It has an average circulation of 57,000.
Our model (Table V-2) conforms to a survey made in 1973 of about 50 news-
paper plants of this approximate size. The second plant is a larger (167,000
circulation) newspaper plant characteristic of an urban paper publishing both
morning and evening editions. The model is derived on the basis of data for 25
plants of similar size described in the same survey. Table V-2 includes only the
basic economic data necessary to make a preliminary judgment of the fit of our
model into industry averages. The range, which shows a spread of values for the
plants within a similar size group, is compared to the ADL model. This approach
also has been used for the other printing industry segments.
B. SIC 2721 PERIODICALS AND SIC 2741 MISCELLANEOUS PUBLISHING
From a review of the Standard & Poors listing of plants in these two
classifications and ADL's experience with this industry we identified a limited
number of plants large enough to engrave metal and contribute to pollution. We
contacted most of these plants to confirm their engraving activities. Both SIC
2721 and 2741 are included as identical models because of overlapping activities
and size. Our information indicates that a typical plant for these two classifica-
tions would have the financial profile shown in Table V-l.
49
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TABLE V-1
FINANCIAL PROFILE OF MODEL PLANTS
($000*s)
2711
2721
2741
2751 2754
2793
Newspapers
Miscellaneous
Periodicals Publishing
Medium Large
Circulation Circulation
Plant Plant
Sales 6,600
Expenses
PBT
PAT
Depreciation
Cash Flow
Net Assets
Number of Employees
Return on Assets (%)
5,600
1,000
500
178
678
3,384
298
14.80
23,400
20,300
3,100
1,550
565
2,115
15,200
1,006
10.28
30,000
27,150
2,850
1,425
881
2,306
17,625
1,175
8.08
30,000
27,150
2,850
1,425
881
2,306
17,652
1,175
8.08
Commercial Printing
Letterpress
Directory
Printing
Plant
15,470
14,743
727
363
557
920
10,400
650
3.49
Catalog
Printing
Plant
10,530
9,993
537
269
310
579
7,410
390
3.63
Commercial Printing
Gravure
Printing
Plant
10,600
9,752
848
424
564
988
9,540
425
4.44
Rollmaking
Plant
1,000
890
110
55
65
120
1,000
50
5.50
Photoengra
3,775
3,419
356
178
74
252
2,085
150
8.53
(after taxes)
-------
TABLE V-2
Sales ($000)
PBT
(7, of Sales)
Depreciation
(% of Sales)
Net Assets
(7» of Sales)
CHARACTERISTICS OF MEDIUM- AND
LARGE CIRCULATION NEWSPAPER PLANTS
Medium Circulation
Plant
Range
4,200-7,700
11.7-20.2
2.7-4.5
39-6J
ADL
Model
6,600
15.2
2.7
51
Large Circulation
Plant
Range
9,700-25,000
10.3-19.2
2.3-2.9
52-78
ADL
Model
23,400
13.3
2.4
65
TABLE V-3
CHARACTERISTICS OF PERIODICALS AND
MISCELLANEOUS PUBLISHING PLANTS
Industry Range
Sales ($000)
PBT
(% of Sales)
Depreciation
(7, of Sales)
Net Assets
(7o of Sales)
22,000-30,000
2.8-9.7
3.1-5.0
52-60
Source: Printing Industries of America, Ratio Study, 1973.
ADL Model
30,000
9.5
2.9
59
51
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C. SIC 2751 COMMERCIAL PRINTING, LETTERPRESS
A commercial letterpress printer large enough to justify internal platemaking
and therefore, a potential polluter, would be oriented primarily to rotary letter-
press. Our experience and public information indicate that such a printer would
be expected to have a sales volume of at least $8-20 million.
We have constructed two models for this classification; their financial profile
is shown in Table V-l. The first model is a web printer primarily engaged in
directory printing. The second is a printer primarily engaged in catalog printing.
Two models were selected because there are differences in the markets, technol-
ogy and profits for the two products. Our selection of model plants was based on
data abstracted from a 1972 industry survey by PIA (Table V-4).
TABLE V-4
CHARACTERISTICS OF DIRECTORY AND CATALOG PRINTING PLANTS
Directory Printing Plant Catalog Printing Plant
Range ADL Model Range ADL Model
Sales ($000) 8,000-20,000 15,470 9,000-21,000 10,530
PBT
(% Sales) 3.0-9.0 4.7 4.0-10.0 5.1
Depreciation
(% Sales) 2.7-3.0 3.6 2.7-3.0 2.9
Assets
(% Sales) 59-84 67 59-84 70
Source: Printing Industries of America, Ratio Study, 1973
D. SIC 2754 COMMERCIAL PRINTING, GRAVURE
There is essentially no public information regarding the financial profile of
plants engaged in gravure printing or gravure roll preparation. Most of these plant
are privately owned and highly competitive and the firms are quite secretive
concerning financial data. In fact, one contact reported, "In this industry one
comptroller does not even recognize the comptroller of a competitive firm." As a
result we have constructed our models on the basis of in-house knowledge but
these have been confirmed in principal with private conversations with several
financial people in the industry. Our gravure printing plant model prepares its
own chemically engraved rolls and is therefore a potential source of pollution.
52
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The model gravure rollmaking plant is only partially engaged in chemical en-
graving but must be considered a potential source of pollution. The financial
profiles of both models are described in Table V-l.
Our choice of models was based on our best estimation of the range of values
to be expected in this industry (Table V-5).
TABLE V-5
CHARACTERISTICS OF PRINTING AND ROLLMAKING PLANTS
Printing Plant Rollmaking Plant
Range ADL Model Range ADL Model
Sales ($000) 6,000-20,000 10,600 300-1,600 1,000
PBT
(7. Sales) 3.0-11.0 8.0 8.0-14.0 11.0
Depreciation
(? Sales) 2.0-6.0 5.3 2.0-8.0 6.3
Assets
(% Sales) 70-100 90 50-100 100
Source: Arthur D. Little, Inc., estimates.
E. SIC 2793 PHOTOENGRAVING
Photoengraving, as a primary source of income, is a dying business as shown
by most information that is available publicly or from industry contacts. The
main reasons are the decline of letterpress printing and the growth of competitive
plastic plate systems. Those firms that survive will be supplying mainly services,
such as offset plates and color separations, for use in other printing processes. The
more successful firms still engaged in a reasonable amount of photoengraving are
closely associated with advertising agencies or publishers. The rationale behind
their success is their ability to supply the offset and gravure printing industry with
photographic preparatory copy that closely simulates letterpress copy found in
national ads.
We have constructed a model of a large photoengraver, and the financial
profile is shown in Table V-l. It should be kept in mind that photoengraving, as
such, is ;>n esse itial but minor part of the overall business of this model. Our
53
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model is based on data abstracted from 1972 PIA studies supplemented by
individual industry contacts (Table V-6).
TABLE V-6
CHARACTERISTICS OF PHOTOENGRAVING PLANTS
Range ADL Model
Sales ($000)
PBT
(7, Sales)
Depreciation
(% Sales)
Net Assets
(% Sales)
3,500-4,000
7.4-12.0
1.0-5.0
40-60
3,775
9.4
2.0
55
Sources: Printing Industries of America, Ratio Study, 1973, and Industry Contacts.
54
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VI. ECONOMIC IMPACT ANALYSIS METHODOLOGY
In our determination of the impact of pollution control costs on the printing
industry, the principal considerations were the effects of the costs on profit
margins and the determination of whether the costs could be passed on in the
form of higher prices for printed product. However, a host of secondary effects
were also considered. These included possible effects on level of production,
employment, growth of the company, ability of the company to raise new capital,
hardships on the community, and international trade.
The economic analysis was concentrated on those segments of the printing
industry which use technology that causes significant water pollution. The frame-
work for the analysis was the model plants defined for each of the segments
studied. The feasibility of investing capital to control pollution was assessed on
the basis of the effect of the increased cost on profitability, a comparison of the
required capital expenditure for pollution control with annual new capital expen-
ditures for each of the models, and estimates of the revenue or price increases
necessary to recover the additional expense and provide the same return on assets
with the expanded asset base. The data was also analyzed to determine the
probable effect of BPT and BAT standards on plant closures directly related to
pollution control requirements. The sensitivity of the analysis under different
conditions, such as those that would obtain because a printing plant did not
conform exactly to a model plant, was also considered.
A. FUNDAMENTAL METHODOLOGY
The development of model plants in the previous chapter shows representa-
tive values for profit after taxes, depreciation, cash flow and net assets for each of
the segments studied. The primary factors in assessing the financial and produc-
tion impact of pollution control costs are the changes in profitability as a result of
adding the incremental costs to the financial models and the ability to recover
these costs and maintain profitability levels through higher prices. A number of
factors will, of course, influence closure decisions but these two measures offer an
acceptable guide to the financial analyst.
One other factor that might influence closure decisions importantly, and
that is a most important variable in this analysis, is the nature of the polluting
operation, e.g., whether it is a division of a large printing company, or whether
the principal business of the company is supplying printing plates to the printing
trade.
The first object of the analysis was to determine the extent of the financial
impact. Subsequently, any areas that would suffer significant impact were ana-
lyzed for closure decision based on cash flow. If the water pollution control costs
55
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reduced profits or were small relative to annual depreciation expenses, there was
no necessity for a detailed cash flow analysis.
B. PRICE EFFECTS
Calculation of the price increase necessary to offset lower profitability took
into consideration the expanded asset base resulting from the addition of the
water pollution control equipment as well as the associated annual costs. We
computed the return on assets before the new investment is made. We then
determined the expanded asset base by adding to the present total assets the cost
of water pollution control equipment. Multiplying the total asset base by return
on assets, we determined the new profit before taxes that is needed to provide the
same return being made before the pollution control equipment was installed.
This approach does not jeopardize or weaken the competitive position of the
affected plant.
Because this is a sales price increase, the additional revenue received will be
additional profits before tax and there is no incremental cost of goods sold to be
subtracted. Our actual volume of sales does not increase, only the revenues. The
difference between necessary new profits computed on the expanded asset base
and the previous profit earned equals the necessary increase in revenues. Accord-
ingly, this increase in revenues divided by the previous revenue level defines the
percentage revenue increase equal to the percentage price increase. This then is
the price effect brought about by passing along, completely to the consumer, the
cost of installation of a water pollution control system.
In the printing industry there would appear to be two areas for application
of price increases to be imposed on a product though in reality there should be
only one. For a company in a service industry or for a company in the roll-making
portion of the Commercial Printing, Gravure segment, the cost of pollution
control would affect the price of the product, that is, the printing plate or
cylinder. This price increase would have to include allowance for profit and
depreciation. In an integrated plant where the platemaking operation is part of
the whole printing service, the incremental cost from pollution control might not
be seen as directly applicable to the cost of preparing the plates although this
would be a reasonable method of cost accounting. The latter plant might take
the alternate view of spreading the cost of the plate over the cost of the amount
of printed material that the plate would produce, in which case the apparent cost
per unit of printing would be a function of the length of the run, and thus dilute
the burden of the increase.
C. FINANCIAL EFFECTS
The financial characteristics of the model plants were used as the reference
base for the analysis of the financial effects of the added costs due to pollution
56
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control. The measures of profitability used were Return on Assets and after-tax
profit as a percent of sales. The resulting ability of the industry to finance the
required pollution control expenditures will vary from one segment of the
industry to another, so capital availability and cost were examined for each model
plant in the segments studied.
D. PRODUCTION EFFECTS AND INDUSTRY GROWTH
Production effects are related to price increases and profitability insofar as
they influence sales volume and plant closures or adversely affect industry
growth. In this industry there is a history of change and adaptation, and the
current situation is one of rapid change in technology. We relied principally on
our background in and experience with this industry to assess the impact of the
costs of pollution control on production curtailment and industry growth.
E. EMPLOYMENT EFFECTS
Employment effects were estimated from the potential plant closures. Where
curtailment in production or slowdown of industry growth was anticipated the
effect on employment was estimated on the basis of the extent of the change
expected in the segment of the industry affected.
F. COMMUNITY EFFECTS
Community effects, direct and indirect, were considered on the basis of the
segments shown by the analysis to be adversely affected. Significant factors would
be the loss of revenue to employees, loss of employment, the loss of taxes to the
community, and the size of the printing industry in the community.
G. INTERNATIONAL TRADE EFFECTS
There is some international trade traffic in raw materials (paper, ink, etc.),
and in finished products (books, magazines, etc.), both import and export. This
traffic is variable and influenced by many considerations. These were evaluated to
determine whether any major production or price effects would have an impact
on this trade.
57
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VII. EFFLUENT CONTROL COSTS
The control costs used in this analysis are those presented in the Develop-
ment Document for Proposed Effluent Limitations Guidelines.
The BPT requirements for the printing and publishing industry have been
determined to be a combination of flow equalization and reduction of pollutants
to the levels shown in Table VIM. The BAT requirements for this industry are
the reduction of pollutants to the levels shown in Table VII-2. (All tables in this
chapter except Table VII-7 are taken from the Development Document.)
TABLE VIM
CONCENTRATION LIMITATIONS FOR BPT
Limitation
Parameter (mg/1)
Biochemical Oxygen Demand (20°C, BOD ) 30 ,
Hydrogen Ion (pH) 6.0-9.05-'
Phenols 0.1
Total Suspended Solids 30
Oil and Grease ^-^v,/
Organic Solvents None
a/ Expressed as standard units.
b_/ Maximum in-plant control to prevent discharge.
Wastes from the flat-bed letterpress, offset and screen printing operations
will be required to meet only the limitations shown in Table VIM. Treatment
levels for BAT and NSPS are equivalent to those for BPT. No pretreatment is
required.
Wastes from gravure, flexography and rotary letterpress operations will be
required to meet all limitations in Table VII-2 to satisfy the requirements for BAT
and NSPS.
The Development Document indicates that the cost of achieving BPT, BAT,
and NSPS requirements for flat-bed letterpress, offset, and screen printing is zero
and that the cost of pretreatment is also zero.
The Development Document estimated costs of the different levels of
pollution control for the gravure, flexography and rotary letterpress facilities are
59
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reproduced in Tables VII-3 through VII-6. These cost data are summarized in
Table VI1-7 for each of the model plants studied in the impact analysis. The
Development Document estimated the cost for plants of three sizes. Since the
largest plant in existence is only about 5000 gpd (process waste), only this size
was considered in the analysis.
TABLE VII-2
CONCENTRATION LIMITATIONS FOR BAT
Parameter
Aluminum
Biochemical Oxygen Demand (20°C, BOD,.)
Chromium, Total
Copper
Hydrogen Ion (pH)
Iron - Total
Lead
Magnesium
Manganese
Phenols
Total Suspended Solids
Zinc
Oil and Grease
Organic Solvents
Limitation
(mg/1)
0.5
*J
0.5
0.5
6.0-9.0^
i.o
0.05
100
1.0
0.1
a/
0.5
10
None5-/
a/ These concentration levels will be the same as those to be defined
as best practicable control technology currently available for
publicly-owned treatment works.
b_/ Expressed as standard units.
c/ Maximum in-plant control to prevent discharge.
60
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TABLE VII-3
ESTIMATED COST OF BPT GRAVURE,
FLEXOGRAPHY AND ROTARY LETTERPRESS FACILITIES
FACILITY SIZE
33 1
19 m /day 95 m /day 190 m /day
(5.000 gpd) (25.000 gpd) (50.000 gpd)
INVESTMENT COSTS:
Neutralization and flow $10,000 $20,000 $30,000
equalization including
automatic pH probe
and chemical storage
and feed
Package biological treat- 15,000 40,000 55,000
ment plant
Pipes and pumps
TOTAL COST
ANNUAL COSTS:
Chemicals $ 300 $ 1,300 $ 2,500
Sludge removal 100 500 1,000
Operation & Management 1,000 3,000 4,500
Capital 2,600 6,200 8,800
Depreciation 2,600 6,200 8,800
TOTAL ANNUAL COSTS $ 6,600 $17,200 $25,600
(less power)
Power $ 500 $ 1,500 $ 2.500
TOTAL ANNUAL COSTS $ 7,100 $18,700 $28,100
(sq ft)
1,000
(200)
$26,000
2,000
(600)
$62,000
3,000
(1,000)
$88,000
61
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TABLE VII-4
ESTIMATED INCREMENTAL COSTS OF BAT ABOVE BPT GRAVURE,
FLEXOGRAPHY AND ROTARY LETTERPRESS FACILITIES
FACILITY SIZE
INVESTMENT COSTS:
Chemical feed, mix tank
Sedimentation tank
TOTAL COST
ANNUAL COSTS:
Chemicals
Sludge removal
Operation & maintenance
SUBTOTAL
Power
Depreciation
Capital
TOTAL ANNUAL COSTS
19 m3/day
(5,000 gpd)
$ 3,500
3,000
$ 6,500
$4,000
2,500
500
$ 7,000
650
650
95 m3/day
(25,000 gpd)
$ 4,000
8,000
$12,000
$20,000
12,500
1,000
$33,500
negligible
1,200
1,200
190 m3/day
(50,000 gpd)
$ 4,500
15,000
$19,500
$40,000
25,000
1,500
$66,500
1,950
1,950
$8,300
$35,900
$70,400
62
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TABLE VI1-5
ESTIMATED COSTS OF NSPS GRAVURE,
FLEXOGRAPHY AND ROTARY LETTERPRESS FACILITIES
FACILITY SIZE
19 m3/day 95 m3/day 190 m3/day
(5.000 gpd) (25.000 gpd) (50.000 gpd)
INVESTMENT COSTS:
BPT Investment $26,000 $62,000 $88,000
Costs
(Table VII-3)
Incremental BAT 6,500 12,000 19,500
Investment Costs
(Table VII-4)
ANNUAL COSTS:
BPT 6,600 17,200 25,600
(Table VII-3)
Incremental BAT
(Table VII-4) 8.300 35,900 70,400
TOTAL ANNUAL COST $14,900 $53,100 $96,000
(less power)
Power 500 1.500 2.500
TOTAL ANNUAL COST $15,400 $54,600 $98,500
63
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TABLE VII-6
ESTIMATED COSTS OF PRETREATMENT FOR NEW SOURCES GRAVURE,
FLEXOGRAPHY AND ROTARY LETTERPRESS FACILITIES
FACILITY SIZE
19 m3/day 95 m3/day 190 m3/day
(5,000 gpd) (25,000 spd) (50.000 gpd)
INVESTMENT COSTS:
Existing Source $10,750 $21,500 $32,500
Investment Costs
Incremental BAT 6,500 12,000 19,500
Investment Costs
(Table VII-4)
TOTAL COST $17,250 $33,500 $52,000
ANNUAL COSTS:
Existing Source $ 2,850 $ 6,950 $10,750
Incremental BAT 8.300 35.900 70.400
(Table VII-4)
TOTAL ANNUAL COSTS $11,150 $42,850 $81,150
64
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2793
TABLE VII-7
COST OF PROPOSED EFFLUENT GUIDELINES FOR MODEL PLANTS
BPT COSTS ($M)
BAT OR NSPS COSTS ($M)
FACILITY
SIC CODE
2711
2721
2741
2751
2754
INDUSTRY
Newspapers
Med. Cir^,
Lge, Clr.* -
Periodicals *,
Miec. Publishing -
-------
VIM. IMPACT ANALYSIS
As indicated earlier, this industry is unusual in that the main source of
pollution is the larger companies. Furthermore, the polluting processes themselves
are concentrated in one part of the operation, platemaking, and in particular,
those steps that involve etching metal with acid. Although some small photo-
engravers still etch metal, the volume of acid waste generated is easily disposed of
by drumming without adding significantly to the cost of the plates. The large
companies continue to use polluting technology because of their large investments
in printing equipment, the need for duplicate plates, the demand for top-quality
printing for long-run national ads, and the cost of conversion to non-polluting
printing methods. Thus the analysis focuses on the profitability, capital avail-
ability and price effects for the large model plants.
A. PROFITABILITY AND CAPITAL AVAILABILITY EFFECTS
Capital availability can be affected on either the cash outflow or inflow side.
On the outflow side, if the necessary investment in the water pollution control
system is a large percentage of the total funds available, capital will not be
available for investment elsewhere.
Table V-l contains financial data of the model plants who use polluting
technology. The models are large companies because polluting technology is used
almost exclusively by large printers. The level of investment necessary to comply
with the BPT and BAT guidelines is shown in Table VIII-1 to be small, especially
with respect to the size (assets, sales, etc.) of these large companies. Our approach
begins with an analysis of the size of the company relative to the necessary
investment.
In Table VIII-1 we compare the investment cost of BPT and BAT standards
with annual depreciation. Faced with inflation and advances in technology, the
larger printing companies are probably now investing more in new fixed assets
than their depreciation allowances suggest. By using depreciation, we err on the
conservative side, showing a higher percentage of capital investment to be invested
in water pollution control equipment.
Our second comparison is sales revenue with the annual operating costs of
these systems. Again, Table VIII-1 shows the amount to be insignificant. We
conclude that the capital outflow will not be increased greatly by installation and
operation of water pollution control systems.
On the inflow side, capital availability is affected as investors perceive the
potential worth of a company. Money market conditions being otherwise con-
stant, the amount and trend of earnings will affect the price the investor is willing
to pay for the company's securities, the price/earnings ratio, or bond rating. This
in turn, affects availability of capital.
67
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TABLE VIII-1
POLLUTION CONTROL INVESTMENT AND OPERATING COSTS IN RELATION TO
CURRENT FIXED INVESTMENT AND ANNUAL SALES
Os
oo
BPT - investment = $26,000
Incremental BAT - investment = $ 6,500
NSPS investment * $32,500
BPT Annual operating costs =$7,100
NSPS or BAT Annual operating costs = $15,400
Depreciation
(SOOO's)
BPT Investment
(as % of Depreciation)
Incremental BAT Investment
(as % of Depreciation)
NSPS Investment
(as % of Depreciation)
Sales Revenue
($000's)
BPT Annual Operating Costs
(as % of Sales)
NSPS or BAT Annual Operatii j
Costs (as % of Sales)
2711 2721 2741 2751 2754
Miscellaneous Commercial Printing Commercial Printing
Newspapers Periodicals Publishing Letterpress Gravure
Medium Large Directory Catalog
Circulation Circulation Printing Printing Printing Rollmaking
Plant Plant Plant Plant Plant Plant
178 565 881 881 557 310 564 65
14.60 4.60 2.95 2.95 4.66 8.38 4.60 40.00
3.65 1.15 0.74 0.74 1.17 2.10 1.15 10.00
18.25 5.75 3.69 3.69 5.83 10.48 5.76 50.00
6.601 23,453 30,000 30,000 15.470 10,530 10,600 1,000
0.10 0.03 0.02 0.02 0.04 0.06 0.06 0.71
0.23 0.06 0.05 0.05 0.09 0.14 0.14 1.54
2793
Photoengraving
74
35.13
8.78
43.91
3,775
0.40
0.40
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Profitability can be measured by return on assets or return on investment.
For purposes of this study, the investment is defined as total net assets; therefore,
return on assets equals return on investment.
In analyzing return on assets we assume it is not possible to pass on the
increase in expenses to the customer. The results, presented in Table VIII-2, Case
A, show a very small change in return on assets. The reduction in return on assets
amounts to only a fraction of a percent. A correlation can be found between the
size of the company and the amount of reduction in return on assets. The larger
the company, the smaller the reduction in return on assets. Attention is called to
the rollmaking gravure segment where the company size is relatively small and a
decrease in return on assets of 0.5 to almost 1% is experienced. We conclude that
neither profitability nor capital availability on the inflow side will be affected by
installation of a water pollution control system.
B. PRICE AND SECONDARY EFFECTS
Should profitability be affected adversely by an investment in water pollu-
tion control equipment, as is true to some extent in the rollmaking gravure
segment, a predictable remedy would be to raise product prices to pass on the
additional expenses to the customer. Decreased demand, product substitution,
etc., could be secondary effects of a price increase.
Case B in Table VIII-2 demonstrates the alternative analysis of assuming that
costs can be passed on to the customer. Case B demonstrates that only a 1% to 2%
increase in sales price is necessary to maintain present return on assets for the
rollmaking gravure segment. A 1% to 2% price increase for rolls is negligible to the
printer who has seen a much higher price increase for paper in the recent past.
Case B further demonstrates that in other segments the necessary sales price
increase is negligible for companies this size. Because the price effect is so
negligible in all segments, we conclude that there are no secondary effects.
The variability of water pollution control effects on prices between the
largest and smallest plants in a segment may be reflected in reduced profits for the
smaller of the plants if the prices of rolls are highly competitive which we do not
believe. However, the analysis indicates that the effect on profitability would not
result in a closure decision.
C. SENSITIVKTY ANALYSIS
Basic to our analysis is the creation of a hypothetical model plant for each
segment with prototypal financial data. Because our decision of no impact is
based on an analysis of these hypothetical plants, a sensitivity analysis must be
69
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TABLE VI11-2
PROFITABILITY AND PRICE EFFECTS OF POLLUTION CONTROL
CASE A
Assumption: Additional expenses incurred due to water pollution control equipment cannot be passed on to customer.
Before Pollution Controls: After tax return on net assets before pollution control system is installed.
ABPT: Effect on ROA of BPT system.
ABAT: Effect on ROA of BAT system.
2711
2721
2793
Newspapers Periodicals
RETURN ON ASSETS
Before Pollution
Controls
ABPT
ABAT
Medium
Circulation
Plant
14.80
(0.21)
(0.37)
Large
Circulation
Plant
10.28 8.08
(0.04) (0.03)
(0.08) (0.06)
MisceTTaneous Commercial Printing
Publishing Letterpress
Directory
Printing
Plant
8.08 3.49
(0.03) (0.05)
(0.06) (0.09)
Catalog
Printing
Plant
3.63
(0.07)
(0.12)
Commercial Printing
Gravure Photoengraving
Printing
Plant
4.44
(0.05)
(0.10)
Rollmaking
Plant
5.50
(0.49)
(0.92)
8.53
(0.27)
(0.49)
i
u
CASE B
Assumption: Additional expenses can be passed on to the customer. f
What revenue or price increase is necessary to recover the additional expense and provide the same return
on assets with the expanded asset base?
Newspapers
Miscellaneous Commercial Printing Commercial Printing
Periodicals Publishing Letterpress Gravure Photoengraving
% INCREASE IN REVE* i
BPT
BAT
Medium
culatior
Plant
0.28
0.48
Large
i Circulation
Plant
0.06 0.03
0.12 0.06
Directory
Printing
Plant
0.03 0.05
0.06 0.10
Catalog
Printing
Plant
0.09
0.17
Printing
Plant
0.07
0.16
Rollmaking
Plant
1.01
1.94
0.29
0.54
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performed to determine how different from the prototype a plant can be before
the cost of the water pollution control system has significant impact. Analysis was
conducted on those three sectors which contained enough plants to have a
likelihood of widely varying financial performance: newspapers, commercial gra-
vure printing, and photoengraving. Results are shown in Table V1II-3. The ability
of a company to afford the water pollution control system is a function in part of
its size. Revenue and net assets were used as appropriate measures of size. Table
VIII-3 shows the minimum-sized company able to afford this system.
The assumption is made in Case A that return on sales and return on assets
are identical to those of the model plant, but allows a 5% price increase to pass
along cost to the customer. Calculations demonstrate how much larger than
"necessary" these model plants are.
Case B looks at the other end of the curve by assuming a sick company
earning only half the return of the model plai.t. Furthermore, it assumes the
pollution control standards will require investment costs equivalent to the
50,000-gallon-per-day system. The calculation is then performed to answer the
question, "How large must the asset and revenue base be under these conditions if
the 5% price increase can be passed along to customers?" Case B demonstrates
that even assuming a very bad "worst case," all of these model companies are two
to ten times larger than the critical threshold for companies that would be
impacted under these conditions.
The sensitivity analysis demonstrates that not only is the model company
within a sector unaffected by the standards, but that no company in the sector
would be impacted. Companies of the size suggested in Table VIII-3 will probably
be using different (non-polluting) printing technologies. None of the gravure
printers is small enough to fit the lower values calculated.
D. PRICE EFFECTS
The impact analysis indicates that the amount of investment required for
control of water pollution in the industry is such that no price increase would be
anticipated. During the past year the overall increases in the cost of paper, plates,
labor, and equipment have overshadowed the small effect of the cost of pollution
control on the cost of the preparation of plates. The average cost of the
platemaking service is 2 to 5% of the cost of the printing. If the total burden of
the water pollution control investment had to be borne by the cost center
represented by the platemaking operation in the printing plant and if the com-
pany were making a minimum of 100 plates a clay (5000 plates per year), the
annual cost would be SI5,000 or about S3 per plate. Such an increase in the price
of plates would be very small in comp. rison with other price increases that have
been affecting this industry. Moreover, the increase will be distributed over the
71
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TABLE VIII-3
SENSITIVITY ANALYSIS
($000's)
2711 2754 2793
Newspapers
Medium Large
Circulation Circulation
Sample Companies ' Plant Plant Commercial Printing Gravure Photoengraving
Revenue 6,601 23,453 10,600 3,775
Assets 3,384 15,200 9,540 2,085
CASE A
Assumption: Maximum sales price increase of 5%
Derivation: The minimum revenue and asset base to support the incremental expenses of the BPT system (5,000 gpd),
Newspapers
Medium Large
Commercial Printing Gravure Photoengraving
Revenue 219 195 165 186
Assets 112 127 149 103
CASE B
Assumption: Worst possible case. Returns on sales and assets half that of the sample company. Standards and
expenses of BAT system equivalent to those of 50,000-gpd plant, allowing a 5% sales increase.
Derivation: Minimum revenue and asset base to support the incremental expenses of the BPT system.
Newspapers
Plant I Plant II Commercial Printing Gravure Photoengraving
Revenue 1,970 2,081 2,018 2,062
Assets 1-.009 1,348 1,818 1,140
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total number of impressions being printed, so the overall effect will be even more
miniscule. Thus, no significant price increases are expected as a direct result of the
cost of pollution control equipment except in those service industries where the
total amount of the cost of pollution control is directly attributable to the plate,
since this is the product that is being sold. It is expected, however, that this price
increase can be readily passed on to the printer.
E. PRODUCTION EFFECTS
No production curtailments or plant shutdowns are anticipated as a result of
the water pollution control guidelines.
F. EMPLOYMENT EFFECTS
No adverse employment effects are anticipated as a result of these water
pollution control regulations on the printing industry.
G. COMMUNITY EFFECTS
No community effects on either plant growth, industry growth, or side
effects are anticipated.
H. INDUSTRY GROWTH
Capital availability and profitability will not be obstacles to industry growth.
I. INTERNATIONAL TRADE
No international trade effects are expected as a result of these costs because
no general price increases or production curtailments are expected to result from
these guidelines.
J. COMPETITION WITHIN THE INDUSTRY
For industry suppliers and consumers the competition between the different
types of printing outlined previously is expected to continue. In the past ten years
offset printing has been making inroads into letterpress "territory" at higher and
higher levels of printing impressions per run or per job order. It is expected that
this trend will continue. In recent years there has been an increasing use of plastic
plates to replace metal plates in the letterpress industry and it is expected that
this trend will continue. Insofar as the need for water pollution control equip-
ment and associated costs could be a factor, they would promote decisions
favoring either offset printing or a change to plastic plates in letterpress opera-
tions, but the incremental effect of the cost of water pollution control on the
decision that has already been made by the industry is expected to be very small.
73
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K. ECONOMIC IMPACT OF NSPS
Neither the new source performance standards nor the new source pretreat-
ment standards will affect the growth of any segment of the printing industry. No
effect on prices is anticipated because of new source performance standards and
new plant locations probably will not be affected either. The trend in recent years
for the larger plants to build in more rural areas where they have access to land
and access to good transportation will continue independent of the requirements
for water pollution control. The decision to build domestic plants versus foreign
plants will not be influenced by the proposed guidelines. Our analysis shows the
balance of payments will not affect location or dollar volume of printing. In all
cases pretreatment costs are less than BAT costs and since no impacts were found
for the BAT costs no separate analyses were conducted for pretreatment costs.
74
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APPtNDIX
DERIVATION OF SENSITIVITY ANALYSIS FORMULA
The derivation of the formulas used for sensitivity analysis begins with a
definition of return on sales and return on assets. A textbook definition of return
is the profit after taxes divided by revenues (Equation 1) or assets (Equation 2).
If assets are going to increase and revenues will be affected or necessarily
incremented, we should be able to derive a new formula which will take this into
account. Equation 4 does this. Note that the incremental revenue (I) is only for a
sales price increase. If it were an increase in volume, we would necessarily have to
compute contribution andXwould have to be multiplied by the return on sales.
The annual operating expense of this system is subtracted to reduce the
profit appropriately. The left side of the equation has an expanded asset base
against which the return on assets constant is multiplied to arrive at the new
profit level. Substituting return on assets times assets or return on sales times
revenue in Equation 4 produces a simplified equality - both sides are equal to
profit. The incremental revenue is defined as 5% of previous revenue. Substituting
this definition for J_ we are able to solve for the revenue base, having been given
only the original investment cost and annual operating expense. We can use the
ratio of return on sales and return on assets defined in the initial description of
the company to solve for the net asset base.
ROS-P/R (1)
ROA = P/A (2)
:. A ROA = R ROS (3)
ROA [A + C] = ROS R - E + I (4)
ROA -A + ROA -O ROA-A -E + 1 (5)
ROA -C= I-E (6)
1= .05R (7)
.'. R= 20CROA-C + E)
P = Profit Before Tax C = Investment Cost of WPC System
R = Sales Revenue (Before WPC) E = Annual Operating Expense of
A = Total Net Assets* WPC System
ROA = Return on Assets I = Sales Price Revenue Increase
ROS = Return on Sales
"Total Assets less depreciation on Fixed Assets, Amortization of lease holds and patents, and
bad debt allowance of accounts receivables.
75
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II < IIM< \l Kl I'OR'I
l> \ I \ I'AU
1 Report No
EPA-230/1-74-053
Economic Analysis of Proposed Effluent Guidelines:
Printing Industry
":""'s) J. J. Clancy, J. W. Rafferty, L. B. Wheeler
and R. S. Brenneman
r 111 in-, uif OiiMiu/.tlioiv N.I me am!
Arthur D. Little, Inc.
Acorn Park
Cambridge, Massachusetts 02140
^ (>ri;jni/.itioii Name and Addiess
Economic Analysis Division
Environmental Protection Agency
Washington, D. C. 20460
3. Recipient's Accessionj No.
5. Report Date
August 1974
6.
8. Performing Organization Kept No.
C-75923
10. Projcct/Task/Work Unit No.
Task Order No. 23
11. Contract/Grant No.
68-01-1541
13. Type of Report & Period Covered
Final
14
nl.iry Notes
It \hslr.nls
' An analysis of the economic impact on all printing and plate-making seg-
ments of the printing and publishing industry (Standard Industrial Classification
Major Group 27) of 1977 and 1983 effluent guidelines. No significant impact was
found on profitability, capital availability, price, production, employment,
community, international trade or competition.
17. Ke\ Words and Document Analysis. I7a. Descriptors t
Effluent Abatement
Economic Impact Analysis--Printing
17b. Identifiers/Open-Knded Terms
17,. COSAIl I iold/r.roup
IS AvjiLilulity Statement
Availability through U.S. Environmental
Protection Agency Information Center; Rm.
W327, Waterside Mall, Washington, D.C. 20460
19. Security Class
USCOMM-IH' I49SM'7.'
''! '1
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