"While credit is starting to loosen up, financing issues still persist for many small businesses, making it difficult for them to invest in capital equipment. This problem affects the entire industry from sign shops to manufacturers," said Roland's Scrimger.
"I think we have to acknowledge that in these economic times, lower prices will be necessary due to lower budgets and those not prepared to adjust, will have serious problems," said Malcolm Lane, president, Colortrac Inc., Americas & Japan Operations.
According to Jaime Giannantonio, marketing manager for Ultraflex Systems Inc., the issues with capital has also affected inventory and demand—and a PSP's ability to fulfill orders now as demand increases.
"The most significant challenge we’re experiencing is the increasing number of smaller orders, as companies remain hesitant to have money tied up in inventory due to the fluctuating economy," elaborated Lorna D’ Alessio, director of sales, advertising media, Value Vinyls. "The just-in-time mentality changes our work climate and administrative costs, as we rush to fulfill customers’ needs that were formerly managed more proactively."
"From a manufacture’s stand point local inventories are still depressed and large purchasers of wide-format graphics are waiting until the 11th hour to make their decision to run a campaign. As a result upward pressure is placed on manufactures to produce large quantities in a short period of time," said Aurora's Richardson.
Focus on Bottom Line
Because of the pressures of the economy, PSPs have been forced to focus on their bottom line—which sometimes also means they have to make difficult decisions about other aspects of their business.
"There is a reluctance to spend money on infrastructure and labor," said Dean Derhak, product director, ONYX Graphics. "We see this driving demand for automation and getting more done with less. The challenge for print shops is how to invest in software and process changes that will give them the increased productivity needed to meet customer demands with less infrastructure."
"Many providers are looking at improving their bottom line, by reducing elements such as labor and other elements that cause strain on cash flow," said Sal Sheikh, vice president of marketing, Oce North America. "They are also streamlining their internal production processes. Because of the economic conditions faced in the last 18 to 24 months, companies need to find more profitable opportunities and customers for growth."
Finding Profitability amidst Competition on Pricing and Tight Turnarounds
But where will those profitable applications come from? According to experts, it will be from a combination of factors which will enable PSPs to differentiate their business and expand into new markets.
"Just a few years ago print quality was the key competition point between wide-format graphic producers. Today, high quality imaging is a given. With image quality standardized, margins on graphic production are extremely tight. Successful graphics producers are changing their business models to find profitability before and after the production of the image," said Michael E. Robertson, president & CEO, Specialty Graphic Imaging Association (SGIA).
"Another challenge for the industry is to continue to advance technology into what you might call 'blue ocean' applications. In order to stay viable as manufacturers, we need to provide our customers with tools that allow them to both explore new markets and differentiate themselves in their core business segments," said Scrimger.
"The greatest challenge right now is how to stimulate sales while making that business profitable. We have all seen profits erode as we try to maintain business and perhaps try to pick up," said Michael A. Andreottola, President & CEO, American Ink Jet Corporation.
"The greatest challenge in the industry right now is finding cost effective methods to innovate. Prices have been driven down on most media, inks and hardware with the maturing print market and increased pressure from Asian commodity products making it difficult to invest heavily in R&D. We have not seen the media side of the industry launch breakthrough products since the advent of air escape, probably because of the diminishing return on R&D investment due to margin erosion," said Phil LaFata, Director of Marketing & Int'l Sales, Arlon, Inc. "The key challenge will be to introduce new products, imagine new applications & drive innovation, without driving the cost of inks and medias above current levels."