DeWese--Surprising Facts in an Industry Study

This column will celebrate the outstanding performance of America's print salespeople or at least most of America's 100,000-plus print salespeople. About 20 percent of the 100,000 are mediocre underachievers who, while possessing some sales ability, never seem to realize their potential. Another 15 percent are woeful laggards who, like the infamous Marvelle Stump, never earn their draws—but never fail to cash their payroll checks.

In one sense, the under-performing 35 percent are good for the achievers, because their failure to sell creates extra sales and commissions for the achievers. The slackers also serve a useful purpose by making the contributors look even better.

I decided to dedicate this column to the sales winners as a result of some new industry information that we have developed. It turns out that the printing industry is performing very well at this time. I didn't realize how well until I read the research.

This special research came about one day when my partner, Gabe Nagy, and I were commiserating about the printing industry in the lunch room of our company, Compass Capital Partners. Gabe and I have precious little time to commiserate, but we were having lunch and it was a good time to talk. Gabe, as I recall, was eating one of those wrapped veggie sandwiches and I had a light repast consisting of a foot-long meatball and provolone sandwich, a large bowl of minestrone, two bags of potato chips and a piece of chocolate pie.

As we talked, the subject of the tragically low stock prices of publicly traded printing companies came up, and I observed that the Wall Street analysts and the institutional investors, like mutual funds and insurance companies, don't really understand or know much about the printing industry. Gabe is a Princeton University graduate and a Harvard Law School attorney who specializes in company valuations. So when it comes to Wall Street and the stock market, Gabe knows his stuff.

I was wiping some Marinara sauce off my shirt as Gabe agreed with me that, "the stocks of most of the public printing companies are undervalued because, in part at least, the merits and achievements of the industry are hidden under a bushel basket."

Well, right then and there, Gabe and I decided to invest some of our excess cash in a research project to see just how well the printing industry is performing. The results of our project are in, and the findings will be published and circulated to all the 60-plus Wall Street analysts who follow our industry. I, however, am going to leak some of the results right here in this column because they make print salespeople look very good. And, as you know, I believe in acknowledging good performance.

These impressive results will also enable you super-star salespeople to pass on the information to your customers.

Did you know, for example, that our industry is the fifth largest employer among all manufacturing industries, with more than 1.56 million employees? It only slightly trails "industrial machinery and equipment" (things like printing presses, lathes and smelters), "transportation equipment" (autos, trucks and buses), "electronics" and the food industry.

Or, how about this? The following statistics relate publicly traded printers to all other publicly traded companies, but our findings demonstrate that privately held printing companies perform better than the big, public companies. Printing is financially stronger and better managed than all the industries as a whole. How can I make this conclusion? Our 36-month revenue growth is 15.7 percent versus all industries at 10 percent. Our 36-month net income (after tax profit) is 15 percent versus 9.5 percent for all other companies as a whole.

Furthermore, printing companies have far less debt than all other companies as a whole. Our total debt-to-equity ratio is 0.84 versus 1.39 for all other companies.

So far, printing is growing faster, is more profitable and has less debt. And, some have said that print is dying and is an old, smoke stack, dirty business.

On the other hand, printing is becoming more and more productive, thanks to great people and automation through our conversion to digital throughput. We produced more printing to the tune of 17.84 percent for the years 1996 through 1999 with 5 percent fewer companies. Some of those 5 percent were acquired in the printing industry consolidation wave of 1996-1998; others simply shut down when the owners decided to retire, and a few went bankrupt and closed. Meanwhile, however, "all commercial printing" alone grew from sales of $88.1 billion in 1996 to $102.7 billion in 1999.

By the way, we paid our fair share of state, local and federal taxes. I'll bet you would have never guessed that this year—2000—the printing industry will pay taxes in excess of $3 billion.

Here are some other general findings in our unpublished report.

Fact: You salespeople have done a good job gradually raising prices.

Fact: Printing industry employees work harder and more hours than other private-sector companies. The average printing company employee works 38.1 hours per week versus 34.5 for all other private-sector companies. Printing employees, on the other hand, earn 13.3 percent more than employees in the private sector.

Here's one that will knock your socks off! The printing industry is adding employees faster than all but two of all the 20 manufacturing sector industries.

Finally, PIA has just reported in its quarterly Print Market Survey, that printers in both the U.S. and Canada have reported sales growth of 7.3 percent for the first quarter (three months ended March 31) of 2000.

If you salespeople will close your eyes and listen real hard, it will be my cheers and applause that you hear. You are ferreting out new opportunities and it appears you are raising prices. Price increases, as you know, are part of the selling price and, hence, part of the sales growth our industry is experiencing.

Now, for goodness sake, don't e-mail me or leave me voice mails asking questions about our research. Gabe and I are working on all the data and we will get it in publishable form soon. Gabe will do his part quickly and the Mañana Man will do his part, er, well, mañana.

Meanwhile, you salespeople do the smart thing: Hold your head up high, brag on the printing industry, stick out your chests, keep this growth going and get out there and sell something!

—Harris DeWese

About the Author
Harris DeWese is the author of Now Get Out There and Sell Something! published by Nonpareil Books. He is a principal at Compass Capital Partners and is an author of the annual "Compass Report," the definitive source of information regarding printing industry merger and acquisition activity. DeWese specializes in investment banking, mergers and acquisitions, sales, marketing, planning and management services to printing companies.