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COMMERCIAL PRINTING -- Running Lean and Mean

December 2003
BY MARK SMITH

Technology Editor

Optimistic is the one word most often used to describe the outlook for commercial printing in 2004. And yet, as the last strains of "Auld Lang Syne" fade away, it's unlikely many printers will feel like breaking into a rousing chorus of "Happy Days Are Here Again."

The bursting of the "irrational exuberance" bubble has led to a time of lowered expectations. Also, the recent performance of the printing industry means year-to-year comparisons are being made against a very weak base.

If the economy tracks as expected—growing by around 3.5 percent next year—print markets should continue to gain momentum in 2004, says Ronnie H. Davis, Ph.D., chief economist at Printing Industries of America (PIA). Adding to the pull of the growing economy will be media spending related to the presidential elections and summer Olympic games, he points out. Those events alone could add half a point or so to print market growth next year.

"Our forecast calls for overall shipment growth of around 3 percent above 2003 levels for approximately $165 billion in total shipments," the economist reports. Davis says shipments should rise around 2.4 percent (year to year) in the first quarter, then gradually increase each quarter by about 0.2 percent to close out the year up around 3 percent in the fourth quarter.

According to the PIA economist, the 2004 outlook by print sector calls for most of the major industry segments to grow with the economy. Projected sales increases for some specific sectors include:

* Direct Marketing (direct mail, catalogs and inserts)—3 to 4 percent;

* General Commercial/Quick Printing—3 to 3.5 percent;

* Books—2.5 to 3 percent;

* Magazines and Periodicals—2 to 3 percent; and

* Directories—1 to 2 percent.

Barring a setback in the war on terror, the economy—and the printing industry by extension—will continue to accelerate through 2004, agrees Andrew Paparozzi, vice president and chief economist of the National Association for Printing Leadership (NAPL). "We expect industry sales to grow between 3.2 and 4.1 percent next year." It will mark the first year of industry sales growth since 2002, he points out.

Basis of Projection

Paparozzi's industry outlook is based on a Blue Chip Economic Indicators' consensus projection for the overall economy to grow 3.9 percent next year. That rate is up significantly from the projected 2.6 percent growth in 2003 and the actual numbers for 2002 (2.4 percent) and 2001 (0.3 percent).

"Economic recovery had been limited to the consumer and housing sectors, but now has expanded to business activity and exports," the NAPL exec says. "Every sector is contributing." Adding to this will be the boosts in spending associated with an Olympics year and the presidential/federal elections cycle.
 

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