Book Market -- Mixed Bag May Continue
"The professional reference market continued to grow for us in 2003, but price pressures in the marketplace are making it tough for any vendor to make a profit here. General trade was down for the small- to medium-size companies that we serve. The education market, which we had hoped would be a significant growth area for us, was flat for the year."
With some customers making cuts to their respective training and technical support, Hawley feels it is imperative to continuously invest in prepress technology and support staff. "(Customers) need to rely on our expertise to make sure it all comes together and that the books get out the door."
Another area of investment for Walsworth Publishing is in plastic coil binding capabilities, which it undertook by partnering with a niche publisher. The company has the ability to produce more than 70,000 units per day.
Hawley believes the market is in its third or fourth year of what he terms "desperation pricing." He feels additional market consolidation on the printer side—two to three key printing plant closings—would help remedy the situation.
"There are too many weak players that are just holding on by the grace of low interest rates and creative financing," he says. "Competitive pricing levels have dropped to the point where companies are trying to recoup marginal overhead with minimal volume; these companies will not be able to upgrade their equipment or prepress capabilities. Even if the market turned around tomorrow, these printers would need two to five years of bumper sales and profitability just to dig themselves out of debt and be in a position to upgrade or expand their operations.
"The falling dollar has helped stem the tide of work going to Europe and we are beginning to see some European companies looking to manufacture books in the U.S., where the majority of them will be distributed," Hawley adds. "An upward adjustment in some of the Asian currencies is long overdue; even an adjustment of 15 percent would bring their product pricing within striking distance of the U.S. manufacturers."