Challenging Manufacturing ‘Truth’: Is Small Beautiful?

An unscientific rule of thumb taught to those entering the banknote industry used to be that a country needed a population of about 40 million people to justify having their own banknote printing works. That was when a line of printing equipment produced about a billion banknotes a year, working three shifts, which was about how many banknotes were typically needed by that population.

As of 2022, just 37 countries have a population of 40 million or more. Which means the majority does not.

In reality, modern banknote printing equipment can produce about 1.4 billion banknotes because the number of notes per sheet has gone up and the machines run faster. Even if we assume that the same number of banknotes per head are required, based on 1.4 billion banknotes per line of equipment, the population needs to be 56 million people to justify investing. Only 25 countries have that many people.

Building a state printing works in specialised premises with one line of equipment, and staffing it with qualified people, is no small undertaking. Modern banknotes are complex, involving lithography, intaglio, letterpress, silk screen printing, the application of foils, varnishing equipment and online and offline quality control systems.

Add in the design and plate making capability, the ink management, quality laboratory waste disposal and secure waste destruction, and mechanical support for all this. Finally, overlay the security systems. The cost will lie between $50- 120 million before you staff up and begin production. This is not small change.

However, money and national sovereignty go hand in hand. Many countries have their own print works not because of economics, but for resilience and national pride.

Just in time manufacturing

But what if you could buy a line of equipment capable of printing and finishing 500 million banknotes, with a price tag to match? Then a population of 20 million would be sufficient to justify the investment. 63 countries have a population of 20 million or more, and 18 of those don’t have a banknote printing works.

Another 11 countries have a population of 15 to 20 million, of which six have note printing works. So even though banknote volumes are falling due to more digital payments and/ or the adoption of longer lasting banknote substrates, there remains the perennial importance of resilience and national pride, which in many countries is gaining strength. So, should more central banks consider printing their own banknotes?

To make this work, the cost of the line needs to be low, but preferably incorporating modern on-line quality control systems. Staff will need to be trained to the necessary skill levels to operate the pre-press, platemaking and printing equipment should be attainable within normal training periods. Waste management, quality control, production management and security need to be achieved in efficient and cost- effective ways.

An impossible brief? Perhaps. Perhaps not. If the footprint of the equipment was small, for example a mini-intaglio Orloff press linked to a digital or modern commercial litho press and with automated finishing equipment, the space, operator skills and the cost could be minimised. Some security features could be acquired as part of the substrate, others added or applied during printing.

If some of the more difficult elements were outsourced, for example design and origination and intaglio waste disposal, again the skill and site challenges could be made easier. Equipment is already available to manage quality control and packing (with no human intervention, which reduces the security risks) without requiring skilled labour.

Perhaps the vision is a central bank holding substrate stock, with or without built in security features, with printing on demand to meet the banknote denominational needs of their nation – resilience, pride and cost savings may be available that are way out of reach today.

It is interesting that Koenig & Bauer Banknote Solutions (KBBNS) is launching AKTINA® at its Equinox 2024 event, which is currently underway. While not exactly as described here, AKTINA is a major change to how banknotes are currently produced.

AKTINA offers a new manufacturing approach for the production of banknotes whereby printworks select manufacturing modules matching the specification of their banknotes, and then create a production flow. Printers can add to standardised feeder and delivery modules units such as litho, screen and inspection modules, allowing a continuous production flow. More printing processes are being made ready to be added to this list. If the specification changes, modules can be added or removed.

Size matters

In a similar vein, further along the chain of cash supply, we report in this issue of CPS’s new strategy, which is to reduce the environmental and financial cost to central and commercial banks of banknote sorting by substituting large high speed sorters with smaller versions, two of which will do the same job for less money and a smaller carbon footprint.

According to the legendary Greek teller of fables, Aesop, ‘good things come in small packages’. In the case of the banknote industry and in the context of this article, small is a relative term. But nevertheless, the adage could still hold true.