Enduring The Economy -- Staying AfloatJanuary 2009 By Erik Cagle
Sorry...with the economy being what it is, the editors at Printing Impressions can’t even afford to go out on a limb. And, when it comes to forecasting the fortunes of printers for the final year of the millennium’s first decade, it hardly takes Nostradamus to tell us that economic pressures will cast a heavy burden on printers in 2009. One estimate predicts as many as 2,000 U.S. printers falling by the wayside this year (according to the PrintCom Consulting Group). The NAPL sees print sales declining by upwards of 3 percent.
Unfortunately, the 2009 outlook won’t spin, and we’re not going to try to paint a happy face on it, either. What we can offer, however, are some tips and a blueprint on how to emerge from the calendar year as a stronger, ongoing concern.
Andrew Paparozzi, vice president and chief economist for the NAPL, senses that the current slump will likely extend into 2010. It will take time to undo the past 10 years’ worth of leveraging credit and creating debt, both on Wall Street and Main Street. Unfortunately, we may not have bottomed out as of yet.
“We created these monumental, colossal excesses and imbalances,” he says. “In a market economy, excesses and imbalances have to be corrected. The correction can either be orderly or extremely disruptive. Because excesses were so great, in terms of institutional, corporate and household balance sheets, the correction was exceptionally disruptive this time.
“Fundamentally, we created these huge excesses across the economy—not just in subprime mortgages and financial institutions. We’re now seeing the extremely painful correction of those excesses.”
With print sales down around 2 percent last year, and projected by NAPL to be down in the 2.5 to 3 percent range for 2009, Paparozzi doesn’t anticipate a meaningful upturn until the end of the calendar year. Still, he warns that circling the wagons and hunkering down until the economy improves can be a fatal mistake. Why?
A recent NAPL economic report indicated that the gap between industry leaders and the rest of the pack widened during the 2001-2003 recession. The leaders, Paparozzi explains, were willing to make the moves during the recession that would enable them to capitalize better than most when the economic clouds parted. And, with our industry undergoing structural changes—such as shifting trends in how clients choose to market and advertise via electronic sources—Paparozzi’s old adage of a rising tide lifting all boats no longer holds true.