2012 State of the Industry Report: Fundamental Market Shifts Underway

This isn’t your father’s sign and graphics industry anymore. Thanks to the recession in 2008, there has been a fundamental change in the way we do business. Old sales models don’t work and new sales models are still in flux. Some printing markets have been commoditized, leaving very small—if any—profits remaining for PSPs. Additionally, the recession has “removed the slack” according to Rick Moore, marketing director, MACtac Graphic Products. PSPs have been forced to be “leaner and meaner”, managing waste and headcount much closer than ever before.

Additionally, the recession has altered the landscape when it comes to the number of companies still doing business in the printing industry. According to a recent NAPL printing industry annual study, we’ve seen a decline from 30,230 US printing establishments in 2008 to 27,285 in 2011. This number, of course, also includes wide-format shops. “The consolidation of print shops is creating a dynamic where there are fewer customers, but those who are remaining are larger, and have greater purchasing power,” says Steve Bennett, vice president, digital finishing business, Esko.

But is it all doom and gloom? On the contrary, experts are very positive about industry growth—and for good reason. According to a recent survey by InfoTrends, Wide-Format Imaging, and Cygnus Business Media, things are looking much better than they have in a long time. “Dealers are reporting that they expect their wide-format business to grow an average of 14.8 percent, while manufacturers are expecting 6.2 percent growth in their wide-format business,” says Tim Greene, director, wide-format, InfoTrends. “Print service providers are expecting right around 14 percent as well, so the numbers look strong, which I think is because people that buy advertising recognize the value of wide-format signage and graphics as an effective advertising medium.”

“The overall sign & display market is performing solidly, growing versus last year, and certainly recovering since the recession,” says Xavier Garcia, vice president and general manager, HP Scitex Industrial Presses, Large Format Printing Division. “Although there are still many macro-economic uncertainties and currency is impacting companies with global businesses, the digital printing industry continues to grow.”

“Based on the activity we see from some of our largest customers, it appears that this industry is faring quite well considering the current economic challenges,” says Brian Phipps, general manager, Mutoh America. “The downturn in the economy that happened four years ago definitely effected the market negatively, but over the past few years we have seen some steady progress and healthy indicators within this group. The ability to enhance the digital or electronic sign market with printed graphics is also something many of the traditional sign shops have begun to incorporate into their business. It is a great way to capture the entire opportunity with some of the major venues and their signage and display needs.”

Where Do We Stand?

Considering the economic conditions, the market as a whole is doing reasonably well—better than most other print segments—and it is growing rather than shrinking.

“The heyday of the past was, in part, fueled by an unlimited flow of credit, and we will probably never see that again in our lifetimes—and that’s a good thing,” says Pat Ryan, general manager, Seiko Instruments USA - Infotech Division. “It supported unsustainable business models and created a false sense of success in many business management circles. Today’s market is more grounded in the fundamentals of business success—with a clear focus on serving customer needs and investing more carefully in capital equipment and personnel resources.”