2010 State of the Industry: Part One

While Pat Ryan, general manager, Seiko Instruments USA Inc. reported that they've seen improvement in equipment purchases since February 2010, the volumes are still substantially below mid-year 2008. "The economic downturn during late 2008 and 2009 definitely created a situation where the overall age of the installed printers in the field has risen, as companies postponed equipment upgrades," said Ryan. "This is now changing, but companies are much more cautious. Overall, the market seems to be looking for much more value for each dollar spent."

"We have seen improvements in the business climate, but at a slower rate of climb then we had hoped for," said Heidi Luck, marketing communications manager, Gerber Scientific Products. "It is clear that marketing dollars are being freed up for advertising and driving the requirement for wide- and grand-format printing. However, we still see an over capacity in many print-for-pay providers. Therefore, the demand for new equipment to meet capacity is not rising at the same pace."

" Like any industry as it matures consolidation occurs, we have seen this across all aspects… the printer manufactures, manufactures of substrates, distributors of supplies and print for pay providers," said Mike Richardson, director of sales and marketing, print media, Aurora Specialty Textiles Group. "However whereas the demand in 2009 seemed to have been stuck in neutral, in 2010 it has revved back up."

"The grand-format industry has been a tale of two businesses since the credit bust 24 months ago," said Randy Crow, president, Source One Digital. "The stronger players that operated well and persevered are growing again, while the weaker players that simply did not have access to operating or investment capital have been shaken out. We have seen considerable improvement in the business climate over the last 12 months and feeling very strong about the future."

Detours Ahead

Although industry experts share their optimism in the industry, there are still several issues which will slow further recovery. Unfortunately, there is more than just one issue at hand, as well.

"Identifying the biggest challenge really depends on the type of PSP we’re talking about and who their customers are," said InfoTrends' Greene. "In the reprographics market the challenges are the economic recovery—will it lead to a recovery in that segment of the printing industry? In the graphics market also the challenges are numerous but probably the biggest one is the re-allocation of advertising dollars away from print into Internet and digital display advertising."

HP's Yariv Avisar, vice president and general manager, Scitex Large-format Printing, feels the issues really revolve around the mid-size PSP—the wide-format industry's middle-class. "We are seeing our biggest customers become even bigger and capture greater numbers of the printed pages, while small customers are remaining competitive by specializing in niche applications. It's the mid-sized print service providers who are facing the biggest challenge because they do not have the expertise to excel in niche applications, but also do not have the capacity to grow very large," said Avisar.

Financing & Capital

As with 2009, access to capital and financing is still affecting PSPs in the market and this will continue to be a challenge moving forward.

"The greatest challenge for the industry operators will be access to enough capital to make the necessary investments in new technology, said Michael E. Robertson, president & CEO, Specialty Graphic Imaging Association (SGIA). "New technology that allows us to access new markets has been the lifeblood of the industry. An operator has to invest to advance not only in equipment but experienced personal that can deliver a quality product with pride."

"The largest challenge in the industry today is the lack of ability to achieve financing for capital expenditures," said Gerber's Luck. "Companies that are willing to invest into their business with the purchase of additional equipment are not able to obtain leasing. Until the financial institutions’ confidence level increases and funds are more readily available growth will be restricted."

Sue Freihofer, Product Development Manager, Signs Now, concurs, pointing to the economy as the prime challenge the market faces. "The economic climate has made it difficult to secure loans to update equipment in order to be more competitive in the market," she said.