Printing industry profits increased slightly the past year, according to the 2004 PIA/GATF ratios survey. Profits are still not back to the rates of the mid- to late 1990s, but continue to improve. The before-tax profit for the average printer was 1.7 percent, using the figure for the typical ratios participant. While this represents a modest increase, overall profits are still lower than the 1.9 percent achieved during the 1990-1991 recession. Profit leaders, printers in the top 25 percent of profitability, continue to experience significantly better results than other printers – their profits increased to 8.7 percent of sales. These profits, while encouraging, are still modest when compared to profits of8.9 percent during the 1990-1991 recession and 10 percent during 1999-2001.
An analysis of the reasons for the striking differences between profit leaders and other printers conducted last year indicated that there were six major reasons for the success of profit leaders:
• Profit leaders have a clearly defined strategy.
• Profit leaders are more efficient in manufacturing the printed product.
• Profit leaders are more efficient in administrative, marketing and management functions.
• Profit leaders invest more in educationand training of their employees.
• Profit leaders “share the wealth” with their employees through bonus and incentive programs.
• Profit leaders are exploiting opportunities in ancillary services.
These finding were detailed in a special ratios report, “Keys to Profitability.” Overall, costs decreased in the past year. All major expense categories, except administrative expenses, saw decreases over the previous year. Materials accounted for the largest single cost category for the typical U.S. printer; paper alone consumed more than 1 in 5 sales dollars. Lower direct wage costs (16.41 percent of sales versus 16.36 percent in 2004) constituted most of the decrease seen in the factory expense category. Productivity improvements helped increase the sales per employee for all printers to $124,759, up from $120,532 last year. Profit leaders demonstrate better numbers as sales per employee for the most profitable companies increases from $126,676 to $129,156.
Printers use the Ratios reports to evaluate their performance against industry profit leaders. Specific reports are available for a variety of firm profiles – size of firm, printing process and print market segments. To order the reports go to the PIA/GATF online bookstore at www.gain.net or call (800) 910-4283 ext. 310.
Printers’ Use of Energy Curable Inks Expected to Increase
According to TrendWatch Graphic Arts’ (TWGA) July 2004 edition of Graphic Directions: Charting the Course of the Design and Production Community, printers’ use of energy curable (EC) inks is expected to rise. In spring 2004, 15 percent of all print and prepress firms expected their use of energy-curable inks to increase in the next 12 months, up from 12 percent six months earlier.
TWGA attributes this expected increase to the efficiencies that can be found from using EC inks. Being able to dry inks on the spot and immediately print the other side of a sheet might be the efficiency boost printers need, the TWGA noted.
TrendWatch Graphic Arts specializes in the assessment of trends and changes in graphic communications markets by providing timely and strategic information, market analysis and expert opinion. TrendWatch Graphic Arts now offers Graphic Directions, an online monthly newsletter. For more information, go to TWGA’s web site, www.trendwatchgraphicarts.com or call (866) 873-6310.