2009 State of the Industry - Part Two

Last month, we took a snapshot of the wide- and grand-format industry, and looked at how business has been over the last year. In this article, I’ll focus on the future aspects of the market: what areas show the largest opportunity for growth, what technology will drive change forward, and where we see ourselves in one year’s time.

Coping Mechanisms

As discussed before, no segment of the wide-/grand-format market has been exempt from the downturns brought on by the current global recession, with some shops seeing profits decline 30 to 50 percent from the previous year. This, in turn, has forced many to make tough decisions in order to keep their businesses afloat.

“Both from a sales and operations standpoint we see people making changes to their business,” said Tim Greene, director, Wide Format & Jetting Technologies, InfoTrends. “From a sales standpoint we have companies reporting that they are taking a harder look at new vertical marketing strategies and more aggressively promoting and discounting their services. From an operations standpoint we see people doing what they have to do to drive down costs, reducing employee hours, using more third-party ink and media, and using less expensive types of media that may not be as durable, but satisfies the need for short-term promotional graphics.”

According to Joseph Mergui, president, Caldera, many shops are reacting wisely. “They invest in securing their assets, managing workflow, monitoring costs and labor time. They also invest in new equipment, not just to replace simply an old one, but to secure a better profit ratio per square foot,” he said.

Christopher Howard, senior vice president, sales & marketing, Durst Image Technology US, LLC, agrees. “I think many shops have looked at their operations and the efficiencies thereof as stated earlier, and they have also looked at this as a time to focus on market share in their key segments.”
“Every shop is different in their strategy to grow through this economy,” said Ken Van Horn, product marketing manager, EFI. “Many shops took a very aggressive approach and continued to invest in the technology and workflow management systems that would enable them to not only capture more business but also become more profitable. As customers add production they are also looking for predictable uptime and running costs. So enhanced service and support is critical.”

Cost Reductions

The primary way many businesses have coped—across all industries—has been though close control of costs. We’ve seen the reports of the increasing number of the unemployed and, unfortunately, the wide-format industry has had its share of layoffs and cuts.

“We’ve seen workforce reductions at shops, as well much greater competition for business with customers who’ve established long-standing relationships with particular fabricators,” said Joseph N. Masters, graphic display marketing manager and sustainability manager, Alcan Composites USA.

“In general, PSPs are streamlining their operations, laying off employees and consolidating production on certain printers. The challenges are likely to remain immense as long as excess capacity remains,” said Adam Florek, research analyst, Lyra Research, Inc..

“Some are cutting costs and right sizing their businesses for this ‘reset economy’,” said Rick Scrimger, vice president/general manager, Roland DGA, “while others haven’t seen the impact based on their niche and local territory. Some shops closed their doors as a result of the dramatic changes in business over the previous 12 months.”

“In most cases, downsizing and cost control have been the response. Partnering opportunities have been more prevalent, especially where synergies exist. Companies need to focus on their revitalization strategies,” said Steve Bova, executive director, International Reprographic Association (IRgA).