Industry Insights: Specialty Imaging: Capitalizing on a Changing Marketplace

Everyone is searching for opportunities to strengthen their customer relationships and open doors to new markets. But, where do you look? Today, companies that are looking outside of their traditional expertise are finding great resources for creative solutions in related community sectors.

Learning from other sectors in the community provides a huge advantage in the competitive marketplace. It’s true that differentiating your company from the crowd is more of a challenge today than in the past. Leading companies are finding ways to achieve it. Looking beyond the typical capabilities of their sector to find creative opportunities is certainly contributing to their success.


Maximizing Profitability

While there isn’t a one-size-fits-all methodology to growing your business, many of the leading graphics producers are expanding customer support before and after the print. Whether it’s providing creative services, product fulfillment, or other activities valued by the customer, many of today’s most successful graphics producers are redefining their role in the marketplace.

According to the 2011 SGIA Financial Outlook and Business Growth Plans Survey, more than 50 percent of responding companies from the graphic and sign community plan to add equipment/technology this year, which marks optimism even during mixed economic times.


Made in the USA

Another piece of the business puzzle includes looking at what’s happening on a global scale. During the next five years, US-based manufacturing will become increasingly competitive with China as Chinese wages increase and energy prices, market demand, and other factors change global dynamics. The value of US manufacturing is being validated by a number of companies, many with very successful global manufacturing operations.

An analysis by The Boston Consulting Group showed Chinese wages rising by approximately 17 percent each year while China wrestles with skilled labor shortages in key parts of the country. By 2015, Chinese labor rates are expected to be only 30 percent lower than the rates in the most “manufacturing friendly” US states. Combine increased Chinese labor costs, higher energy costs, long-distance transportation issues, and the added value of speed-to-market—and “Made in the USA” begins to look pretty darn good—especially for appliances and other fabricated metal products that are costly to transport.

Through the recession, we saw manufacturing leave the US to take advantage of low cost labor. I found this distressing because without manufacturing, the US loses the incentive to innovate and innovation is critical to future development. In researching this article, I was pleased to discover that the situation isn’t as dire as I thought. The US is still the leading manufacturing nation in the world with 17 percent of global output. Using a financial comparison, current US manufacturing surpasses China’s manufacturing by more than 45 percent. And, US manufacturing is growing. To be successful in the US, manufacturers realize they need to be efficient. They are taking advantage of automation to maximize manufacturing output while holding down labor costs.

Looking forward, the ratio of jobs to manufacturing output won’t be what it used to be. A recent study showed manufacturing output increasing by seven percent over the course of one year, while related jobs increased by three percent. China has had the biggest impact on US manufacturing, but other countries also are expanding their presence in the global marketplace. For example, Vietnam has very low labor rates, but it doesn’t have the infrastructure that many manufacturers want for global distribution. Mexico is an important contributor to global manufacturing, but its struggles with drug-related violence have hurt its development. These countries and others will contribute to the global marketplace, but it’s now clear that the US will be able to compete as the global market matures. The bottom line: With high energy costs, global unrest, and other factors out of their control, manufacturers are finding that building products close to the intended market is a safer bet. Manufacturers are finding that “Made in USA” is increasingly viable and cost effective.


Moving Forward

The SGIA community is fortunate that the emergence of digital imaging technology coincided with customer interest in shorter run, customized solutions. There’s nothing wrong with being at the right place, at the right time, with the right solution, and the positive look at US manufacturing isn’t all that bad either. We can’t afford to rest on today’s successes. Profitability will continue to be a moving target, and the better managed companies, equipped with the right technologies and the ability to adapt to a changing marketplace, will lead the way.

The best way to see the future of the specialty imaging marketplace is to attend the SGIA Expo. I encourage you to spend some time learning about related community sectors as you view the equipment and processes demonstrated on the 2011 Expo floor.