Economic Signs Point to More Challenges Before Growth
When the economic recovery will begin is the critical question that remains in the forefront as we continue into 2002. For ink manufacturers, an economic rebound is the key to growth in the printing industry.
The signals right now are mixed, which is not good news. During the past month, Service Merchandise and Kmart, two major retailers which had significant insert business, have filed for bankruptcy. This translates into more concerns for the publication ink side.
The same story can be found on the publication gravure side. In “The Gravure Report” beginning on page 34, printing ink leaders said that the publication gravure side was adversely affected by the economy in 2001. Meanwhile, recent surveys of printers in all segments show that growth is slow at best, and more printers said their business was falling off further at the end of 2001.
Meanwhile, there appears to be more hope on the packaging ink side. The packaging gravure side showed better growth in 2001 than the publication side.
The Flexographic Technical Association (FTA) has released a business analysis of the flexo industry, which appears on page 16. FTA officials predict that flexo printing will grow somewhere between 4 percent and 5 percent. In particular, the FTA report forecasts better than average growth in the flexible film packaging and folding carton segments.
There are some other signs that we may be turning a corner. In “The Milling Report” beginning on page 28, major equipment manufacturers report that they are seeing an increase in inquiries and orders during the first quarter of 2002. While that does not mean that the economy is approaching pre-2001 levels, it is a start.
Overall, most ink and printing industry analysts tend to believe that the economy will pick up in the middle of the year. Meanwhile, companies need to determine what is the best course to follow until the economy improves.
Judging from our gravure and milling stories, perhaps the best approach is to continue to emphasize research and development. Companies that can develop improved systems, whether they are ink, raw materials or equipment, will ultimately thrive when the economy rebounds. Preparing for the future while weathering difficult times is a strong formula for growth.