In the 2010 Forecast from the Printing Industries of America, it was pointed out that the digital and offset worlds were destined to coexist in the quick and small commercial industry segment for some time to come. “Today’s quick and small commercial printers live in a hybrid world that accommodates both offset and digital. They also live in a world that boasts more potentially significant profit centers such as wide-format, mailing services, ad specialties, marketing services, multi-media, etc. It doesn’t take much of a crystal ball to predict that these new profit centers will continue to grow as this industry segment moves to offer more than just ink or toner on paper. Those printers who grasp these opportunities will be the ones who will outperform those who do not.”
NAPL’s recently released 2010 Strategic Perspective seems to support that observation. Among the areas it thinks are most likely to grow are:
Variable Digital Printing (64.7%)
1:1 Marketing (39%)
Static Digital Printing (38.5%)
Database Management (27.3%)
Mailing Services (24.6%)
These are all the hot button topics for printers looking to expand their offerings from traditional ink on paper and GRAPH EXPO 2010 has exhibitors eager to demonstrate how printers can make money in each of these areas.
Printers also expect growth in other areas with four-color lithography (16%), digital asset management (14.4%), and Web page creating and hosting (13.9%). Only 6.3% see growth in copying and duplicating, while 5.3% predict growth in facilities management and 5.3% see growth in bindery and finishing.
The overriding trend among quick and small commercial printers is the changing balance of offset and digital. In the 1990s, digital accounted for only 8% of revenue industry wide. By 2012 NAPL projects it will account for 45.3% of revenue compared to 51.3% for offset lithography. That NAPL data applies to printers of all sizes, although the majority of NAPL members fall into the small commercial category. Some industry observers even predict that by 2012 digital is likely to surpass offset lithograph in the quick and small commercial segment. That’s not to say that offset will go away, but as time goes by it will play more of a supporting role to digital.
Not surprisingly, companies with their digital skin in the game see this same scenario. Derrick Doi, Xerox VP of Quick/Franchise Print, noted recently in Quick Printing: “Long run print jobs will continue to be run on offset, but with the increasing desire for print on demand and personalized communication digital printing becomes the principle technology the industry turns to.”
Kevin Kern, Konica Minolta VP of marketing, says “It is difficult to say that offset printing will be completely replaced by digital, however, the remaining offset advantages are clearly being challenged by both technology and end user behavior.”
Finally, Forrest Leighton, director of product marketing with Canon’s ISG Production Systems believes that “as digital devices become more robust and consumer demand requires greater output differentiation, we will see more volume transition from offset to other technologies. In the foreseeable future, we expect that offset will hold a smaller piece of the market than it does today.”
Skill sets matter
Times have been tough, but the challenges are different for quick and small commercial printers. As NAPL noted in its spring 2010 report, Quick and Small Commercial Printer Trends, all printers do not deal with crises in the same way. “Success in any market—even hot markets like variable-content digital, static-content digital, and Web-to-print—still hinges on individual company initiatives and execution—i.e. far more on what you do than on what the market does.”
We may be seeing some economic improvement, but even with an improving market, there sadly will be a percentage of quick and small commercial printers who may not survive in the long run. As QP columnist John Stewart, who authored the latest NAPL/NAQP Financial Benchmarking Study for Quick and Small Commercial Printers, says: “The differences in how owners of similar size companies manage their key operating ratios is nothing short of startling. Profitability in the industry ranges from -2% to companies reporting owner’s compensation of 25% or more.”
While digital equipment and capabilities will continue to migrate into our industry segment, management tools and training will become increasingly important, as will association and peer group resources. As always, it is the best business people, not necessarily the best printers, who will win.
Bob Hall is Executive Editor of the Cygnus Graphics Media Group, which includes Quick Printing, Printing News, and Wide-Format Imaging. He has covered the quick and small commercial industry for more than 22 years.