A Fascinating Look at the State of the Printing Industry
Printing now happens in many places and increasingly is done in-house on a network. That trend, coupled with the impact of the Web on the distribution of information, has taken a toll on Doc’s buddies in the commercial printing industry. That’s why an article by my friend and excellent writer Cary Sherburne at the Web site What They Think really caught my eye. It’s an interview with the Executive VP of Mergers and Acquisitions, Jim Cohen, at Consolidated Graphics (CGX), one of the largest commercial printers in the country.
The comments from Jim paint what I think is a pretty realistic picture of the state of the commercial printing industry in the United States. The outlook is both good and bad: Those printers who survive will do okay, but quite a few will continue to fail. The statistics are sobering. Here’s just a glimpse into a fascinating article:
Jim Cohen, Executive VP of Mergers and Acquisitions, CGX
WTT: Jim, how has CGX weathered the current economic storm, and what steps has the company taken to prepare for a different future?
JHC: We’ve been beaten up just like everyone else, but because of our strong balance sheet we are weathering the storm and will be well positioned when the economy begins to improve. On a relative basis, we are doing better than a lot of folks in the industry. For example, last quarter revenues were down 15% from the same quarter a year ago. But many of the companies I am looking at today have revenues that are down 25-50%. So on a relative basis, I shouldn’t complain too much. Our cash flow is still strong, but many of the companies in our industry today are experiencing negative cash flow. The environment out there is brutal.
WTT: What about the market as a whole?
JHC: If you looked at the number of traditional commercial print companies in 2001 before 9/11, not including companies printing phone books, newspapers or magazines, there were 50,000 printing companies. Then after 9/11, that whittled down to about 35,000 commercial printing companies by 2003. I am hearing that when this recession corrects itself, we will go down to about 20,000 companies. I am not sure where the data came from or whether it is right, but from what we see here, most of the companies we are looking at today probably won’t be around a year from now if we or someone else doesn’t buy them. The other interesting thing is the lag that exists in any recovery. What I mean by that is that we will see printing companies continue to fail even a few years after the recovery begins.
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RE: A Fascinating Look at the State of the Printing Industry
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every business in this economy.
Because I am a home biz, I try not to charge the same "Retail" prices as other small and medium print shops do so as to better compete as well as offer a wider range of printing capabilities than the small and medium local shops can.
Printing now-a-days is not only technologically challenging, it is also the ability to outsource to gain price leveraging. I think that is the reason many companies went under during this "recession" - they had no "contingency plan"! They were over-stretched purchasing new technology - which IS cheaper to operate, but require trained personnel to operate, Graphic Artists, Computer literate printers and so on.
When there were no more work orders coming in, the bottom line fell out and these companies were either absorbed by bigger, stronger companies, or they "merged" with similar same-sized companies that had more careful control of their debit/credit columns, creating larger, leaner and more efficient companies.
That is what happens during every recession. We were just small enough to stay under this "recession's" radar, and carried on as if nothing really changed.
Heck, I even undersell Staples for colour copying LOL, Thanks in part to my OkiData C9500DXN printer I picked up for a song!
recession hurts but technological change is the big one.
Paradoxically changes in computer technology that have
led to faster and easier production techniques have also
led to a reduced need for printed products.
Faster presses easier setup etc. have contributed to an
oversupply, that is a large number of commercial printers
vying for a limited and decreasing market, as evidenced by
the actual decline in paper sold. (How many people still use
the yellow pages?) The only growth area has been the
digital field - and the copiers (read digital presses) have
gotten very good at speed and quality and are inexpensive
to lease and operate. Why print 50,000 brochures you
have to store - rather than 50 on demand. They are great
until your customer gets one.
I have seen the changes for the past 27 years. The advent
of fax and email has led to fewer letterheads being printed.
Product manuals that were printed are now on dvds or
moved online. Fancy annual reports that were done with
multicolour, foil and embossing, also online.
The irony was lost on one of my print equipment suppliers.
When I asked him for a brochure or catalogue he said
here's my business card just go to our website.
yes, you can differentiate yourself with service and quality
and specialty niches, but do you think you are the only
one? And when the amount you can charge for a job is
lower each year, despite your increasing costs the only
thing is left is increasing the volume. The lower the profit
on each order means the less time you can really spend on
it. And this will continue with e-readers, tablets etc.
But this has always happened. Handloom weavers saw
their earnings drop to 1 fifth from 1800-1830. They
buggywhip industry was replaced by the auto industry.
You adapt.
Peter Aardvark
Think you can specialize in "brouchures"? expect more people to have tablets so sales ppl can "send you a link". or "bluetooth it".
What about large prints for ads to post on walls? Well, look how digital displays have penetrated various signs. Including giagantic Times Square monoliths.
Desktop printers to give a handy hardcopy for whatever reason? Well, LCD's are getting larger and cheaper every day. And multiple displays are no longer just for the stock trader. Hey, Windows 7 is "optimized" for multi-displays. Is that like a hint or what?
Heck, there are still lots of ppl who like to circle / underline / hilite, etc. I know. Wait a second...now what can a touch screen do for them?
You guys are all history. bye!
Xerox just setup a print centre to service the University of British
Columbia. So one day they are trying to sell me their copier and the
next they're the competition. Never mind that they've already flooded
the markets. And I have to say the quality, ease of use and capability
is impressive - I can practically print and bind books in one go, at the
same time the, the margins are much smaller.
Same for the large press manufacturers - they continue to make
(expensive) machinery that is faster easier to setup and has much
higher resolution when most people are happy with the quality they
get from their desktop printer.
In the 50s we were the third largest industry in
Australia, now we rate somewhere in the larger double
digits.
Never in the history of printing has there been such
rapid change, giving due credit to the early Chinese
printers we have a period of about 4,000 years, yes
they used wooden type while we used hot metal.
In my short 50 years I went from hot metal to all
photo chemical ending in the digital age still being
refined now.
Small printers with lots to offer in personal service
were the first to go, today only the big ones are left
and the art of typography is poorer for it.
So what! I hear you say, this has happened to all
industries in the West, maybe so, but now it's the
huge taking over the not so huge.
We have in Australia two supermarket chains who
control just about everything, no Australian today
feels this is a good thing, and the same thing has
happened in our banking industry, vale small bussiness
they kept the biggies honest.
John
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