2010 State of the Industry: Part One

Editor's Note: In part one of the 2010 State of the Industry Report, we'll focus on the current state of the wide- and grand-format industry, getting a snapshot of how business is and what are the biggest industry challenges. In November/December edition, part two will focus on the future market, including: the top three growth markets, what technology will drive change forward, and where we see ourselves in one year's time.

We're gotten pretty accustomed to the reports from The Conference Board and the ups and downs in the Stock Market over the past several months. The latest reports, indicate that the consumer confidence index dropped has dropped again in September to 48.5 from 53.2 in August—which was below what analysts were expecting. Although, confidence remains low in the US and unemployment high, experts believe the economic data indicates the country is strong enough to avoid falling back into recession.

The wide-format industry has not been immune to the same economic factors. The recession has taken its toll on manufacturers and print-service-providers (PSP) alike. We've seen the age of the printer install base increase because PSPs are reluctant to spend the money they have on hand for new equipment or could not secure funding or a loan for the equipment they need. Purchasing of supplies and hardware has varied by region, but manufacturers are still seeing lower volumes than 2008 across the board.

But even with much of this "bad" news, many industry experts believe that the worst is behind us. "The data that we have indicates that conditions are improving, but I would definitely say any existent overall wide-format graphics market recovery is fragile," said Tim Greene, director - wide format, InfoTrends. "I know many people are seeing business pick-up somewhat, but their customers are being very cautious, so they have to be cautious regarding new hiring or equipment investments."

"Currently, I would grade our segment of the industry as a 'C'," said Kevin Huseman, president, Point Imaging. "Comparatively, the wide- and grand-format digital segment is faring much better than screen and traditional off-set commercial which I would grade as a 'D-'."

"Overall, the industry is faring better," said Rick Scrimger, vice president and general manager for Roland DGA Corp. "We are seeing improved equipment and supplies sales this year and expect this trend to continue as the economy slowly recovers. However, we expect some unevenness in terms of the growth trend going forward due to uncertainties that still remain."

"Every customer I talk to answers this question the same way 'compared to 2009, anything is an improvement'," said Rick Moore, director of marketing, MACtac Graphic Products. "As far as the industry is concerned, there have been a lot of changes, consolidation, mergers, acquisitions, players that just didn’t quite make it. I think the industry is doing fairly well, but it is not stable, and there certainly will be more shaking and moving before stabilization."

"The last few months have marked a positive change in the business climate and we are beginning to see green shoots in the wide-format industry emerging after what has undoubtedly been a tough time," said Frazer Chesterman, managing director, FESPA. "When considering the economy and wide-format market in general, our Economy Survey revealed that, encouragingly, only five percent of respondents suggested that the recession would continue beyond 2011. Fifty-seven percent think the recession has passed, 10 percent believe the market has recovered and 28 percent believe that recovery will come later this year."

Caution Signs Remain

In terms of equipment purchases and business decisions, caution still seems to be the current mindset of the majority of the industry. We can easily see the evidence of this with the postponement of equipment upgrades. Overcapacity, though, is also a growing issue. With print volumes still significantly lower than 2008, many PSPs are not running their current equipment at full production speeds. This, in turn, also slows new equipment purchases. They reason, "why should I spend money on new equipment if I'm not using the printers I already have?"