Two check printing companies have invested in new technologies that they hope will prepare them for increasing competition.
Clarke America Checks Inc., San Antonio, invested $28 million to develop a laser printing system with Xerox Corp. The system, now up and running, eliminates the need for printing plates and shortens production time.
Liberty Check Printers, Mounds View, Minn., is developing a fully computerized check printing operation. The company did not reveal how much it was spending on the system, which is to be operational in July.
Both of these companies trail the market leaders, Deluxe Corp. and Harland Co. Experts said the upgrades, which will let the companies offer enhanced products, are part of an effort to play catch-up.
David Medeiros, a technology consultant with the Tower Group, Wellesley, Mass., said Clarke American's investment is a "textbook case of a less- than-dominant provider trying to come up with a new product to gain more a competitive position."
Though electronic payments are expected in the long run to reduce the number of paper checks written, volume is still growing, though more slowly than the 6% annual rate of the earlier 1990s.
Last year 61 billion checks were written in the United States, 2% more than in 1994, according to Tower Group. Mr. Medeiros said the total should hit 70 billion by the year 2000.
Check printing continues to be profitable, and check printers are expected to keep spending to upgrade their operations.
"We are investing in our core business to meet the demand of the check market out there," said Bruce Tillotson, a vice president in charge of operations at Clarke American.
"We believe the check is here to stay, and that financial institutions and consumers also believe that."
Charles Corbell, the company's president and chief executive, said the joint development with Xerox, which was funded entirely by Clarke American, has resulted in technology that is "a quantum leap" above existing systems.
The company, which prints more than eight billion checks annually, is No. 3 to Deluxe and Harland Co.
Kevin Cammack, a London-based equity analyst for Merrill Lynch, said the hefty investment dollars were a part of Clarke Americans' larger efforts to revamp its operations and provide added value for its bank customers.
Although Clarke American, which is a unit of London-based Caradon, lags others in volume, it nonetheless provides one of its parent company's "highest profit earners."