Improving Revenues for 2004 Printing Industry
Speakers at the Dec. 4-5 PRINT OUTLOOK 2004 conference in Washington, D.C. predicted improving revenues and profits for the printing, publishing and converting industry in 2004 after a long and difficult recession, but also warned that the industry still faces challenges.
Many of the economically advanced parts of the world will see slow economic growth in the near future, but several big emerging markets, including China and India, will grow much more quickly, said Dr. Jeffrey A. Rosensweig, associate dean for corporate relations, Goizueta Business School, Emory University.
Dr. Rosensweig, the conference’s keynote speaker, predicted that China is going to be the next big market, and noted that China’s economic power is particularly clear when the domestic buying power of its currency is taken into account.
“Digital printing will be a key engine of growth between now and 2010, with particularly healthy expansion likely in advertising, promotional and other direct mail materials,” said Frank J. Romano, the Roger K. Fawcett Distinguished Professor at the School of Print Media, Rochester Institute of Technology.
Likely changes in the print environment may include more last-minute jobs, more capabilities to make changes up to and during a press run and a greater ability to have confidence in job quality with less demand for repeated proofs.
“Commercial printers have lost roughly 5 percent of their print volume annually for the last four years,” Mr. Romano said, “but these losses weren’t easy to identify because so many printers were building revenues in ancillary service areas such as mailing and fulfillment. The generally poor economy also served to mask fundamental declines in print volume.”
Sixty percent of printers surveyed recently agreed that within two years, more than half their jobs will require 24-hour turnaround or faster. And two-thirds reported they are making more frequent updates or last-minute revisions, CAP managing director Charles A. Pesko Jr. reported. According to Mr. Pesko, the survey revealed an overall rise in demand for print, as well as the fact that document owners and print buyers rely on print service providers to deliver expertise and communications solutions.
“Between 2002 and 2007,” Mr.Pesko said, “revenue from digital printing and value added services should grow much more quickly than from printing and related services.”
The national economy is doing better than expected, and should grow by 4 percent to 4.5 percent in 2003, predicted NPES consulting economist Michael Evans of The Evans Group. “Next year will be a very strong year, but we will see a wind-down of growth to below-average rates in 2005 and 2006,” he said.
Harris DeWese, chairman and principal of Compass Capital Partners, told attendees that merger and acquisition activity in the printing industry, severely depressed in 2000 and 2001, is rising again and should continue to increase in the near future.
“When M&A activity subsides, margins are very low in the printing industry and bankruptcies tend to increase,” Mr. DeWese said. He noted that in 2001 there were fewer than 50 acquisition deals and more than 500 bankruptcies. The number of deals increased in 2002 and 2003 and will likely increase in 2004.
According to Andrew Paparozzi, vice president and chief economist at the National Association for Printing Leadership, “In 2004, for the first time in four years our industry will grow, but there will not be enough for everyone.”
Mr. Paparozzi reported real print sales are up 1.2 percent so far this year. Next year, NAPL predicts print sales will grow by between 3.2 and 4.1 percent, reaching a level of $81.4 billion to $84.2 billion.
For particular types of business, Mr. Paparozzi forecast that by 2007:
• Lithographic printing and associated prep and finishing services will decline from 81.9 percent of revenue to 68.3 percent.
• Digital printing (variable content) will rise from 6.5 percent to 13.2 percent of revenue.
• Value added services (fulfillment, database management, etc.) will rise from 7.8 percent to 14.5 percent.
“Print sales should be 2.5 percent higher in 2003 than in 2002, indicating the turnaround has finally begun,” said Printing Industries of America chief economist Ronnie H. Davis.
For 2004, Mr. Davis foresaw further growth of 3 percent to 4 percent. PIA predicts the strongest growth in direct marketing and general commercial and quick printing.
PRINT OUTLOOK proceedings are available electronically for $150 from the NPES member services department at (703) 264-7200 or e-mail firstname.lastname@example.org.