Strategies to Combat Doldrums of Downturn —Michelson
AN OLD line goes that if you put three economists in a room, show them the same data and ask them for their predictions, you’ll get three different answers. But that was not the case at the recent NPES 2008 Industry Summit in New York, which comprised the association’s annual Print Outlook conference followed by a quarterly PRIMIR market research group meeting. Former President’s Council of Economic Advisors senior economist Dr. Sung Won Sohn forecast the outlook for the U.S. economy in general, followed by industry-specific prognostications from the chief economists representing the NAPL and PIA/GATF, Andrew Paparozzi and Ronnie Davis, respectively.
Sohn pulled no punches, describing the current state of the U.S. economy as dismal. He contends the United States entered a recession early this year or late last year, and anticipates GDP growth of only 0.7 percent in 2008. Paparozzi believes the feeble economy will limit commercial printing industry sales growth to 1.5 percent for 2008, and perhaps even cause industry sales to decline for the first time in five years. Davis predicts that a second half rebound may lift industry growth to 1.5 percent for 2008, with printing sales growth recovering to approximately 3 percent next year.
One thing is for sure, though: Despite losing 7,000 U.S. printing establishments since 1998, the graphic arts industry is more competitive than ever. In response, Paparozzi and Davis both suggested ways for printers to take the offensive during hard times and, conversely, prepare their companies for the eventual upturn that will follow. Candid discussion with your employees about the slowdown, Paparozzi says, reassures them that management is aware of the situation and, with everyone’s help, is taking action.
Just as important is maintaining a steady dialogue with buyers and prospects. As one NAPL “State of the Industry: 2008 Strategic Perspective” participant put it, “While others are cutting back on customer visits, communication, advertising and public relations, we’re taking every opportunity to make sure our company is perceived as progressive, financially stable and reliable.” Reinforcing that you’re there to help also goes a long way with cost-conscious clients, Paparozzi told the Print Outlook attendees. Show them ways to save time and money through shorter press runs and inventory reduction, design changes that reap postal and paper savings, and higher ROIs through target marketing. (And, as revealed in the “Hot Markets” update, targeting the right industries can also be fruitful.)
Ongoing capital investment to improve productivity and workflow efficiency and reduce labor costs is also paramount, NAPL “State of the Industry” research confirms. Despite concern over the economy, 83 percent of NAPL survey respondents plan to increase or maintain the percent of revenue they invest in capital equipment during the next three years. (Also “Economic Stimulus Package — Time to Act: Now” for info on provisions within the 2008 Economic Stimulus Act recently passed by Congress that encourage capital investment through tax incentives.)
PIA/GATF’s Davis discussed the benefits to printers that have embraced ancillary services. Whereas ancillary services comprised 11 percent of printers’ total sales in 2007, that percentage is expected to nearly double by 2020. (See our special report on mailing and fulfillment.) Profit leaders, Davis points out, typically target vertical markets/customers through specialized diversification to justify higher prices and achieve lower costs. Integrate capabilities and services that satisfy a broader range of clients’ communication needs. Clearly, some sound advice—for good times and bad.
—Mark T. Michelson
