But even more than color standards are needed, as MACtac’s Moore points out. Right now there is no set of universal standards that are driven independently with regard to consumable materials and applications. “The creativity that drives the sign and graphics market must remain on the front end of the campaign. However, there needs to be more rigor around industry best practices driven by a vested, independent third party; not manufacturers and printers,” says Moore. “You will see articles related to principles and best practices that everyone would agree to, but someday, for example, you should be able to see the industry specification for installing a window film with wet application.”
Regulations, too, pose another hurdle for shops. “This can be anything from getting a sign permit to install a sign down the street all the way to the halls of Congress, where a bill may be passed that adds cost to small businesses. Then add in keeping up with regulatory and code-making bodies. These issues have a tremendous effect on the day-to-day operations of sign companies,” says ISA’s Anderson.
In addition to government regulation, an area that we all need to watch is the potential lack of an educated workforce. “We’re in the beginning stages of shortages, which seems odd to say when unemployment has remained as high as it has for as long as it has,” continues Anderson. “But the shortage comes from finding trained and skilled employees. This is affecting all segments of manufacturing and our industry is not immune. It is becoming increasingly important for the sign industry to develop and train its own workforce. We no longer can rely on workers to come in our doors ready to go to work. An added challenge is the technology that is changing our industry. Workers must be trained to keep up. And the economic downturn proved that workers must be able to handle multiple tasks, which also requires training. This will require a commitment on the part of employers going forward.”
Margins, commoditization, and increased competition continue to be top of mind as we move into the end of 2012 and into 2013. Today, the vast majority of the sign and display market is still using analog equipment and competing based on pricing, which is driving revenues and margins down. As a result, print service providers are struggling to grow their businesses and maintain profitability.
“Digital imaging has leveled the playing field in terms of image quality. Because of commoditization, profitability becomes a challenge. Margins are tight,” says Robertson. “Sign and graphics companies need to find value points, in addition to imaging, in order to stand out from the crowd and win business. The successful businesses are redefining their role in the marketplace.”
“As an industry, our focus should be on selling value and purpose rather than selling on price,” says Ray Palmer, president, Signs By Tomorrow.
“Constraining costs and improving profit is probably at the forefront of everyone’s mind,” says Jim “JT” Tatem, president, SIGNARAMA. “Obviously, sales have to come first. That’s the hallmark of any successful business. After that, being able to maintain profit levels by reducing expense and becoming more efficient has to be front of mind. Competition is also growing with products being imported from China and other countries. It’s also apparent that some staple products have become more commoditized. That means profits are eroding, and in some product lines it has become a price war.”
“Our industry is already beginning to compete with lithographers and screen printers. These companies are very good at what they do, and because they work in an industry that has seen much consolidation, they truly know the meaning of efficiency,” says Gary Schellerer, vice president of operations, Bloomingdale Signs by Tomorrow. “This type of competition will force our industry to take a hard look at the inner workings of our business from a standpoint of efficient workflows.”
“Addressing the issue of price competition requires some fundamental changes in how companies do business,” says InfoTrends’ Greene. “If you are a shop that gets the majority of your business by responding to RFPs then you are always going to be price-shopped, that is simple. The key is to work with client companies at a higher level, where you will be offering your expertise as a signage and graphics supplier but also as a service provider, a design consultant, an installation expert, a materials advisor. Working with clients at a higher level should make you stand apart and above the price-shopped print-only company.”