Executive Suite: Where Is Our Industry Going?

We are halfway through 2011 already and it’s time to look downfield through 2012. To understand the future of the printing industry we need to look at a number of things. The first is the national economy. In each of the last four decades the nation has experienced a substantial recession. Unfortunately, unlike the previous three in which the rebound has a “stronger than ever” impact to it, movement out of this on at a limping and sputtering pace. The crystal ball guys see a national growth rate of 3 to 3.5 percent over the next two years. What that means is that the tide is spiking sufficiently upward to lift some graphic arts boats but not enough to keep others from capsizing. 

According to the published PIA report (“Moving Past the Great Recession: Print’s Recovery Path for 2011-2012 and Beyond” — a report you would be wise to read), during the 2007-09 national economic brownout, 8 percent of the nation’s printing companies put a permanent lock in their doors, and production volume belly-flopped by over 15 percent. This dip did not affect what is termed “product logistics” (packaging, labels, product manuals, etc.) and digital printing; they continued to grow but at the expense of other conventional printing.

This underscores the previous point — that although things figure to get a tad better in the next two years owing to the upward national trend, that 3 percent is not strong enough to protect everyone. In short, the Darwinian nature of our industry will continue and a number of companies will be in peril. Some will not make it.

General commercial printers that do conventional rather than digital printing are going to be most at risk in the coming years. Put it this way: PIA estimates that “conventional printing” will grow only 4 percent in the next two years. That’s 4percent volume, not profit. Digital will up 16 percent as will “ancillary services,” but basic product-driven conventional printing will stay in first gear.  

The PIA uses four profitability brackets: Super (9 percent and up), Survivors (5 percent), At Risk (2percent), and Expendables (-2 percent).  What separates these four is not luck nor is it geographic region. We can be happy about that, because those are components are largely out of our control. What separates them is what they sell. 

Back to the Future: “Niching”

In the '80’s “niching” was omni-present at every print conference. In came the marketers shouting, “You have to have a niche; you can’t be everything to everyone.”  You heard it.  I heard it. And what you and I heard was often wrong. I saw a whole lot of all-things-to-all-people printing companies continue to do very well, thank you. Updated equipment, efficient production, excellent customer service, and aggressive selling won the profitability ballgame over and over again, all without any special market identity. In fact, some of the “nichers” narrow-cast themselves so severely they were rolled out of the market while other, more conventional companies crowded in. 

But not now. There are just too many identity-less, vanilla printing companies out there to survive in the musical-chairs economy we face. 

What are the keys to profitability today? What sells is the ability to solve problems and gain control of the printing needs of our major clients. More specifically, we have to move away from “general commercial printing,” in which we scrounge around looking for jobs on which to bid, only to be hammered down by another low-baller here or online. Downward price pressure is not going away. One reason for that is the tightness of the economy. Another, however, is that buyers know they have the edge and will pit one printer up against another until someone says “uncle.”  Especially if those printers are indistinguishable “general commercial printers.”  Only cracker-jack salespeople will save the generalists, and there are too few of those to go around.