2009 State of the Industry Report – Part 1

Who am I? Where am I? Where am I going? Those are some of the most fundamental questions we ask ourselves as we go through life. Business isn’t any different. From time to time we need to step back and evaluate the state of our businesses, answering those ever-present questions. In times of economic and financial uncertainty, these kinds of thoughts—and discussions—are even more important because the answers will shape the fabric of our businesses for the upcoming years.

In this year’s State of the Industry Report, we’re going to break it into two sections. This month, we’ll focus on the current state of the wide- and grand-format industry, getting a snapshot of how business is and what areas have been affected the most. In our November/December issue, I’ll focus on the future of the market: what areas show the largest opportunity for growth, what technology will drive change forward, and where we see ourselves in 12 months.

As you are probably well aware, the wide- and grand-format industry has been converging for the past decade. Your company is probably very different from when it originally opened its doors. No longer are shops only printers, they’re partners and facilitators, assisting corporations large and small with their marketing programs and critical projects. And by the time this recession rebounds, the industry will be very different, and every company will look very different than it did back in 2008.

While many financial pundits have officially announced the end of the recession, with the recovery already underway, I think most in the wide- and grand-format industry can agree that it still seems like we’re at the bottom—and a very bumpy bottom at that.

No one segment of the industry has been immune from the recession. The entire industry has been hit, regardless of ink technology or application specialty. We’ve heard about companies closing, about firms merging and consolidating to stay afloat, and about business being off, and not by a few percentage points.

According to Joseph N. Masters, graphic display marketing manager and sustainability manager, Alcan Composites USA, within the overall graphic display industry, “our fabricators tell us that their business is down on average 30 to 50 percent, depending on the shop, and business hunger is driving aggressive sales approaches. We’ve certainly seen some shops close in this economy.”

“We have seen market declines related to this economic downturn in the range of 15 to 20 percent in terms of volume, and I think perhaps greater in terms of revenue because of the discounting and ‘mix’ changes that drive revenue downward,” said Tim Greene, director, Wide Format & Jetting Technologies, InfoTrends.

“From watching dealer sell-through of hardware, it appears that the market has hit bottom in Q3, 2009. The quarter over quarter declines have stopped, and we’re likely to see some renewed growth in Q4, 2009. However, it has to be put into context because while we may see statistics that show 10 percent or higher growth from Q3 to Q4, 2009 in unit sales, the reality is that sales may still be down as much as 40 percent or more when compared to one year ago,” said Marco Boer, partner, IT Strategies.

The New Normal

In some instances, the growth in previous years made this crisis more painful, as companies had to adjust to the new economic realities. “The industry has been used to double digit growth in large format graphics market overall for a number of years now,” said Christopher Howard, senior vice president, sales & marketing, Durst Image Technology US, LLC, “so the slowdown has certainly been a bit of a difficult environment.”

“The industry as a whole is struggling,” said Angie Mohni, vice president marketing, Neschen Americas. “We are seeing some stabilization within the economy, but we are not quite out of the woods yet.”