The Industry Today - from our vantage point:
Originally Published November 2014 By APT Press Direct
As we aggressively enter the paperless age, we must consider what this new era means for the printing industry, a longtime stalwart of the U.S. economy. In this new era, banks don’t want to mail paper statements; payroll services have stopped printing pay stubs; major magazines, like MacWorld, have discontinued print-editions; and paper-cash is no longer king. Now, everything is plastic, and everything is online.
Although almost a decade has passed since the Great Recession of 2008, the economy continues to experience a sluggish recovery. One of its ill effects is the continuous contraction of the print-service supply chain. But this economic downturn is not the only troubling factor. Printing companies also face competition from new technologies (including their impact on total print-spend), inefficient procedures and outdated equipment, tight capital markets, and the high cost of new production equipment. Additionally, the supply costs that are unabsorbed by print-purchasers are likely to continue to rise, creating a classic profit-squeeze for commercial printing companies. These issues are particularly grave for printing companies that are already too overburdened by day-to-day operations to respond to the industry’s changing climate.
With these uncertain conditions, print-service providers must take a new approach to distributing printed materials. In the past, any company marketing a product or service would order large quantities of a printed material and place them in storage. This was an efficient practice because bulk-ordering came at a lower price. Unfortunately, this strategy is no longer adequate for today’s competitive industry. Modern printing companies want on-demand solutions that will lower their print expenditures, reduce run-lengths, and consolidate suppliers. The print industry is radically evolving, and printing companies will continue to be challenged by the shrinking demand for their traditional services. In order to remain afloat in this new landscape, printing companies must be prepared to adopt new distribution strategies.
These new distribution strategies must market-specific. In the past, a printing company’s primary focus was to fill press schedules, while offering print-buyers flexibility. This approach required little to no market sophistication. But, in today’s world of diminished demand, printing companies must turn their focus to growing niche markets and develop their marketing and production skills accordingly. The most opportune niche markets for printing companies still include digital color, variable data, personalized digital marketing and promotional programs, and online capabilities, such as email-marketing, online storefronts, and web-based solutions. Additionally, shorter-run, sheetfed opportunities exist for printing companies that are able to re-organize their service offerings. Although these types of opportunities consist of smaller, individual transactions, their resulting sales dollar are significant. Therefore, larger printing companies, who are not used to such activity, must support the effort by building lean, fast, state-of-the-art production facilities with tightly-controlled headcounts and factory-overhead conditions.
Generally speaking, measures of market size and growth reveal little about how the market share is being redistributed. And, as the commercial printing industry is not growing fast enough to allow all companies to prosper, getting on the right side of market redistribution (i.e. growing at someone else’s expense) is becoming increasingly important. NAPL (National Association of Printers & Lithographers) states that there were 27,285 commercial printing establishments operating in the U.S. economy in 2011, 11.1% less than in 2007 and 27.6% less than in 1998. As discussed in the NAPL 2011 Printing Industry Profile, this decline has been widespread across all company-size categories and geographic regions. Data in the report shows that the commercial printing industry is mostly made up of small establishments; 82% of printing companies have fewer than twenty employees and 70% have fewer than ten. At the other end of the spectrum, NAPL estimates that fewer than 4.0% of printing companies have one hundred or more employees. In addition to the large share of small establishments, the commercial printing industry is concentrated geographically; its top ten states (headed by California) account for 55.4% of all printing establishments and for 56.4% of industry sales.
The commercial printing industry’s evolving landscape will continue to adversely impact its employment rate. It is expected that another 2,000-3,000 jobs will be eliminated in the next year and a half, bringing the total reduction in employment to 145,000 jobs since 2005 (according to NAPL published studies).
Nonetheless, the industry will not disappear - at least not yet. It will recover incrementally and reconstitute itself back into the valuable, contributing infrastructure quotient of the economy. However, printing companies must respond to this warning by smartly adjusting their strategies - and they must do it now. If you are engaged in buying, selling, or re-marketing intermediate-use printing equipment, you will need the services of a seasoned and sophisticated group of professionals who are well familiar with the industry’s continuous changes. By working with such a group, you will be able to, not only grow in, but, also, contribute to the rising economic tide of the future.
(NAPL was reconstituted in 2014 to become the Idea Alliance / Epicomm)