EDITOR'S notebook
Predictions for 2005 And Other Ramblings
The September 11th tragedy and the growing insurgency following the U.S. invasion of Iraq have reinforced, in no uncertain terms, how difficult it is to predict the future. And while we as a collective industry cannot control world events or the state of our overall economy, I do have a few predictions about what will be in store for us in the new year.
Obviously, don't expect pricing pressure to wane in 2005.
There still will be further industry consolidation, with those weak, underperforming shops driving down prices for everyone as they grapple to keep work—albeit unprofitable—coming in before they're forced to turn off the lights for good. It's easy to see the ridiculousness in the old adage about how some printers think they can make up for their weak margins through higher volumes of jobs.
By the same token, though, I don't think there's any magic elixir that separates profit leaders from the profit challenged. Rather, it is the relentless pursuit of the little things that separate well-managed, profitable enterprises from their weaker brethren. If print has become a commodity, as many now argue, successful companies are simply better run companies. They market aggressively and have reinvented themselves as communications providers rather than just printers; they provide customers with more creative solutions and they don't miss promised deadlines—in essence they make it easier for buyers to do business with them.
Success also means developing a business plan and communicating that mission company-wide. It means constantly striving to become a more integral part of your customers' businesses, often by providing more added value in the buyer-supplier relationship. This can range from on-demand digital printing to support your traditional offset work, to mailing and fulfillment, Website hosting and other non-print services. And it means adopting the most productive equipment available while, at the same time, fostering a best practices culture that takes full advantage of high throughput coupled with quick turnarounds. Leaders realize that new technologies are meaningless without the pursuit of process automation.
Look for more mega-deals, as well as mergers of equals on a regional basis.
Last year ended with the acquisition of prepress and creative design house Seven Worldwide (formerly Applied Graphics Technologies) by Schawk Inc. for $191 million in cash and stock. Although there can't be a transaction the magnitude of Donnelley's 2004 coupling with Moore Wallace, look for at least one blockbuster deal in 2005 that pairs household names or sees an industry giant (Quebecor World, perhaps?) sell off some of its print assets.
More common, I believe, will be true mergers between competitors within regional markets—local companies that realize they can combine sales and assets whereby 1+1=3. On the M&A front, remaining industry consolidators like Consolidated Graphics and Cenveo will still pull the trigger on select deals, but they will be few and far between as they continue to maximize their existing holdings.
Debate over JDF, CIP4 and computer-integrated manufacturing will lose steam.
Eventually these protocols and operating standards will become seamless. For our industry to move forward, equipment from various manufacturers must be able to communicate information to each other, whether through the Job Definition Format (JDF), CIP4 or whatever iterations evolve from them. Likewise, printers must be able to eliminate redundancy in their operations—from inputting job specs and the generation of invoices, to automated presettings for equipment to reduce makereadies and waste while maximizing quality and productivity. It's no secret that we lag other manufacturing industries when it comes to process automation. Since pricing pressure and razor-thin margins aren't going away, the only way to still make a buck will be to continually drive human intervention, long cycle times and inept management out of the equation. You can bank on that.
Mark T. Michelson
