2010 State of the Industry: A Better Year Ahead?

The year 2009 closed with a glimmer of optimism about the economy and a touch of pessimism about any major printing industry growth in 2010. Only a third of printers in NAPL’s latest survey expect business conditions to improve during the next six months. However, that’s a marked improvement over the 9.8% that predicted better business conditions in December 2007. NAPL predicts that printing sales will grow between 2% and 3% in the coming year. We’ll see.

Traditional ink on paper printing continues to decline, but still accounts for 56% of total sales in the industry, according to NAPL figures. Digital print sales and value-added services now account for 37.8% of sales. More and more quick and small commercial printers have both digital and offset capabilities, with digital driving growth in their short-run color and variable data offerings.

Our industry segment continues to lose shop numbers through attrition and consolidation, but also continues to grow in sales per shop. In the franchise segment, SPS is $686,000; up from $496,000 in 1999. In the QP Top 100, SPS is $3.44 million; up from $1.36 million in 1999. Expect this trend to continue in 2010, despite the weak economy. Also expect continuing consolidation among vendors such as the recent acquisition of Océ by Canon.

“New normal” is the current jargon for the systemic changes taking place in the printing industry as it moves from just ink or toner on paper to more sophisticated communications offerings. Behind all the jargon is the simple fact that in order to succeed in this changing environment, quick and small commercial printers will have to do more than take print orders. They have to help their customers communicate effectively, no matter what the method or medium. To do this they have to know their customers’ businesses and objectives, which requires a lot more effort and interaction than simply bidding on jobs.

Trade Shows

It is no surprise that trade show attendance is in decline. That has been the case for some years now and has been accelerated by the dismal economic picture of the past year or so. Even the unprecedented move by the Graphic Arts Show Company to lay out a couple million dollars to help vendors defray the cost of bringing equipment to Print 09 did little to slow the decline in attendance, which clocked in at just under 20,000.

The GASC-run Graph Expo/Print shows are major income sources for the three main printing associations—PIA, NAPL, and NPES. These shows have become even more important as income from membership dues and programs has declined. Meanwhile, GASC has eliminated four regional shows due to declining attendance and vendor apathy. Considering how vital Graph Expo/Print now are to the income streams of the three trade associations, I doubt that calls for abandoning the annual events in favor of a show every two or four years will gain much traction.

The two other major annual U.S. shows are On Demand and Graphics of the Americas, both of which also have seen sagging attendance. GOA draws heavily from South and Central America, but is not the major draw for U.S. printers that it once was. On Demand, which co-locates with AIIM, is a digital show that attracts non-printer attendees. Despite this slightly more diversified audience, the show has recently failed to attract some major industry exhibitors. That said, these two shows will likely remain on the calendar for the foreseeable future.

Of course, these are not the only printing trade shows. The two Canadian shows attract some U.S. attendees and the franchise trade shows that cater exclusively to their own franchisees. Various rumors have surfaced of late about vendor pressure to persuade the franchise systems to consolidate these into a single show for franchisees from all systems. While that obviously makes sense for the vendors, the logistic and competitive considerations involved make such a move unlikely.

What’s to come? Well, Graph Expo/Print has already been branching out to attract exhibitors and attendees from other industry segments. Meanwhile, some major vendors have already opened comprehensive, customer-focused centers where they can bring prospects for a more exclusive, in-depth look at what they offer. Combine that with the increasing significance of the Internet as an avenue to connect buyers and sellers and it seems that the best today’s trade shows can hope for is stabilization at current vendor and attendee levels.

Associations

Association membership has also been in decline from its heyday of 10-15 years ago. Part of this is due to a lack of perceived value as benefits once reserved for association members are now available from other sources. Members can often get better deals on pricing than what is offered by association agreements with vendors. Then there is the problem of delivering services where the members live. At one time, both PIA and NAQP had strong chapter structures that delivered benefits and education at the regional level. NAQP is now part of NAPL and only its annual Owners Conference remains intact. PIA also has lost membership at the chapter level. Meanwhile, NAPL has adopted a pay-to-play menu for many of its service offerings. None of this is conducive to growing membership.

There have been calls for the consolidation of NAPL and PIA into a single association. In some ways that might make sense, but it risks depleting the perceived value even more. That said, there is always room for cooperation. That can be seen in the recent announcement of the combining of the “leadership” conferences of PIA, NAPL, and NPES into one major event starting in 2011.

Where does all this leave NAQP? It’s too soon to tell. From my vantage point, NAPL coveted the membership numbers NAQP brought to the table when it was acquired, but has yet to figure out how to provide support and services specific to NAQP’s segment of the industry. It would do well to figure that out since the member profile of NAQP matches the member profile of a significant percentage of NAPL members. Providing programs tailored for this group of entrepreneurial printers could greatly enhance the perceived value of association membership.

Bottom Line

In 2010 we will see sales rebound slightly for the industry and grow even more for those quick and small commercial printers who have recognized the systemic industry changes and planned for the economic recovery. Digital printing and ancillary services will continue to grow. Consolidation will continue for both printers and vendors. Trade shows will hope for a rebound in attendance and associations will look for other avenues of cooperation short of merger. It won’t be a great year, but it won’t be a bummer like 2009.

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