Noting that commercial printing sales posted the weakest growth in three years in the first half of 2016 (just .3%) and that little significant economic or industry change appears to be on the horizon, Idealliance’s new State of the Industry Report 14th Edition, projects commercial printing segment sales to rise just 1% to 1.5% this year and 1.5% to 3.% next year. “Nothing suggests the performance of either our industry or the economy will change significantly, for better or worse, over the next 18 months,” said Idealliance Chief Economist and report author Andrew Paparozzi. The report is based on surveys of nearly 200 companies across the graphic communications industry. A free copy of the 40-page report will provided at no charge to all member companies of Idealliance by October 30, 2016, sponsored by Canon USA. Non-members may purchase copies of the report for $600 by contacting Tyler Keeney at email@example.com.
“Despite the fact that first half 2016 commercial printing sales were well below the 2.7% gain during the same period one year earlier, that’s not a sign our industry is sliding into stagnation or recession,” Paparozzi added. “Rather, it’s another stop in our stop-and-go upturn. And we’re in an upturn: Sales now total $82.6 billion, 6.2% above their 2011 low. “Growth hasn’t been stronger and more consistent because demand for our services is still running well behind supply,” he continued. He cited, among the reasons for this shortfall, the communications revolution created by the Internet and digitization that “has deeply depressed the demand for our core services (sales of commercial lithography declined nearly 40% between 2000 and 2014) and the economy’s inability to regain its historic 3%+ annual growth rate.”
Paparozzi pointed out, however, that “despite the weakness, sales were above year-earlier levels through mid-2016 for 62.6% of State of the Industry respondents, growing at least 5% for 46.2% and at least 10% for 30.8%. Additionally, 48.7% report pre-tax profitability is above year-earlier levels, nearly double the 26.9% who report the opposite.” Nonetheless, he added, “more than 70% of the companies we survey were concerned about their ability to increase sales.”
When survey respondents were asked why profitability was up, far more credited actions they’ve taken – such as increasing revenue and holding the line on costs (60.5%), increasing production efficiencies (41.9%), and capturing higher-margin work (37.2%) – than credited improved business conditions (20.9%), the failure of competitors (7%), or decreased price competition (4.7%). In addition, “although prices are no longer in broad decline, pricing power is still very limited,” Paparozzi added. “The numbers so far in 2016 for State of the Industry participants: Prices are above last year’s levels for 22.8%, below for 7.6%, and unchanged for 69.6%. Just 20.7% have increased prices 2% or more and just 12% have increased prices 3% or more.”