Is the Perfect Storm Over? For Most, Not Quite Yet.

Written by Howard Fenton
Senior Technology Consultant, NAPL

Perfect StormI mentioned in a presentation recently that the print industry has been in the midst of a perfect storm for a decade now, leading someone to ask if I thought we had bottomed out, or better yet, if we are moving toward a recovery. I thought the question was incredibly relevant and worth expanding on in a blog.
As most people know, the concept of a perfect storm usually involves two or three major storms combining to create a super storm, as the folks in the Northeast experienced with Hurricane / Superstorm Sandy.
In the printing industry our perfect storm is the result of several major disruptions such as the cyclical changes in our economy, the structural changes like rising postal rates, more work done on local printers and copiers, technology changes which include both Internet tools like the web and new printing technologies such as inkjet, and last but not least, changes to the business model such as the decline in purchases of traditional products such as offset lithography and the increase in new products such as digital printing and digital services.
The question of whether we’ve bottomed out or not, really depends on who you ask or what data you look at. If you look at the big picture, we see that the percentage of money spent on lithography from 1998 to 2012 fell from approximately 90% to 50% and is not bottoming out. If you look at the number of printing companies in 1992 compared to 2012 you see that companies declined from approximately 40,000 to 26,000 and is not bottoming out.
But if you look at some specific indicators such as print sales, we are seeing a modest, albeit inconsistent improvement. In a recent NewsTalk live webinar sponsored by Xerox, Andy Paparozzi, NAPL’s VP and Chief Economist said, “Business picks up, but then slows right back down. It’s nothing sustained; it’s nothing we can count on. Let’s look at sales. Sales from all sources were up 1%, on average, during the first half of 2012 for the owners we survey. As always, results varied dramatically from company to company, with sales up an average of 22% for the top 20%, but down an average of 15% for the bottom 20%. And while one-fifth report sales growth of 10% or better, nearly one-fifth report sales fell by 10% or more.”
So if you’re one of the leading companies, not only has the recession bottomed out for you, you are also in the midst of a recovery. The next group of companies under the profit leaders are not achieving a 20% growth, but are seeing a 10% or modest growth. If those two groups make up about one third of all companies, then we could say that third are doing well and two thirds are still struggling.
If you are one of those companies struggling some questions to consider are:
What are you doing to create your own recovery? And,
How are you going to increase sales, decrease costs, or identify new revenue streams?
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Howie Fenton is a consultant and business advisor at NAPL. Howie advises commercial printers and in-plants on benchmarking performance against industry leaders, increasing productivity through workflow management, adding and integrating new digital services, and adding value through customer research. He is a paid contributor to this blog.

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