Spurred by structural shifts and hastened by the Great Recession, the graphic communications industry is not simply changing, it is being consolidated and essentially redefined. That is the conclusion of the recently published NAPL Printing Industry Profile, which reports that the number of printing establishments will have shrunk by more than one-quarter—or almost 10,400 establishments—between 1998 and the end of 2011.
“The consolidation is not a byproduct solely of the recession,” says NAPL senior vice president and chief economist Andrew Paparozzi, who co-authored the report with NAPL senior economist Joseph Vincenzino. “Clearly, the recession accelerated consolidation, but we were consolidating long before the steep downturn, and will continue to consolidate even after the current recovery more firmly takes hold. Why? Because structural change is redefining our industry.
“Despite the consolidation of the past decade and the record contraction in sales of recent years, we remain an industry with growth potential,” says Paparozzi, “but that growth isn’t going to be found in the same old places or by doing the same old things.”
No Automatic Rebound
The new report, which is sponsored by Xerox, points out that prior to the late 1990s, the number of commercial printing establishments would rebound when a recession ended—if the recession reduced the count at all—but that did not happen after the industry’s steep recession of 2001-2003, and it’s not going to happen after we make our way through the recent downturn.
Charting the performance of the industry compared to the progress of the GDP over the last 25 years, the report finds that the industry grew significantly faster than the economy during the second half of the 1980s, and at about the same rate as the economy for most of the 1990s, but that changed during the last decade.
“We’ve fallen significantly behind since 2000,” says Paparozzi. “Recessions that have hit us much harder than the economy at large are one reason, but not the only reason, or even the main reason. The real culprit behind the widening gap is structural change, led by the Internet and digitization.
Scratching the Surface
The new report provides in-depth data on commercial printing company birth and death rates, sales, establishment size, and sales by region and state. “Although the numbers are important, concentrating on company counts, sales totals, and traditional definitions amounts to just scratching the surface when we’re trying to see the direction of the printing industry,” says Paparozzi. “When we look beneath the surface of industry demographics, the structural changes that continue to redefine print are increasingly apparent.”
He points out that performance during times of change is often a factor of adaptability and the readiness to learn how market forces are changing customer needs. “Companies that are maintaining leadership positions in the industry make change an opportunity rather than a threat,” says Paparozzi.
“They don’t do it overnight, and their numbers may not be pretty while they’re doing it, but Leaders—as NAPL defines leaders—ultimately turn change, no matter how disruptive, to their advantage by making the tough decisions that others delay or avoid altogether,” he continues.
“In effect,” Paparozzi adds, “Leaders prepare for recovery better than others, which is a major reason why they widen their lead significantly as recovery progresses. And the potential for growth is still there, at least for anyone who is also prepared to make structural change an opportunity.”
Joseph P. Truncale, Ph.D., is president and CEO of the National Association for Printing Leadership (NAPL). Reach him at 800-642-6275 ext. 6310 or firstname.lastname@example.org.