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The Global Recession’s Impact on Print

December 23, 2009
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The global recession did a number on our industry, the effects of which we are only just beginning to see. Research conducted in 2006 for NPES’ sister organization, PRIMIR (Print Industries Market Information and Research organization), had originally forecast an 18% increase for the global graphic communications industry, from $610 billion in 2006 to $721 billion in 2011. Post-recession, PRIMIR’s updated data shows that the world print market is expected to grow by only half as much, 8%, between 2006 and 2011. According to the research, the global graphic communications industry will reach $725 billion by 2014—a full three years later than our forecasts had originally predicted.

While this may portend greater business challenges than first anticipated, our research also tells us that opportunities for growth and profit are available. We just need to know where to look.

The U.S. will retain its position as the world’s largest graphic communications market over the next four or five years. That’s welcome news, but it’s important to note that the U.S. print market will hold onto its No. 1 spot despite a 3% contraction between now and 2014. The U.S. printing industry was at $186 billion in 2009; it is expected to shrink to $180 billion by 2014.

Printers and their suppliers should therefore not only expect, but actively plan, to expand their business outside of the U.S. In particular, look to the developing countries of the East and South, where significant graphic communications growth is predicted between 2009 and 2014. Measured by regions, for example, growth is forecast to be on the order of 57% in Eastern Europe, 41% each in the Middle East and Latin America, and 21% in Asia—even after accounting for a 13% forecasted decline of Japan’s print market, currently the second largest in the world. The printing industries of North America, Western Europe and Australasia, by contrast, are predicted to decline between 2009 and 2014. (See pie chart, “World Print Market by Region, 2008 – 2014.”)

Consider the BRICs
If you haven’t already, consider the BRIC nations of Brazil, Russia, India and China for business opportunities. Though their rates of growth will be slower than in the early part of the decade, these countries still stand out in the post-recession world as being among the fastest, and biggest, growing graphic communications industries in the next few years.

China, in particular, is expected to grow at an astronomical rate. Indeed, all the general signs of development are there: an increasing literacy rate (almost 91% in 2003, from 78% in 1990), a growing population (1.4 billion by 2014) and a gross domestic product that is predicted to nearly double between 2008 and 2014 (from $4.4 trillion in 2008 to almost $8.5 trillion by 2014). So it’s no surprise that China’s printing industry is forecast to increase from $57 billion in 2008 to $100 billion by 2014. If forecasts hold true, China will even overtake Japan in the next five years to become the second largest print market in the world.

India and Brazil will also boast sizeable print markets in the coming years. In 2009, the graphic communications industry in India was at $16 billion. It is expected to expand to $24 billion by 2014, a growth of nearly 49%. Brazil’s print market is predicted to expand by 38% from 2009 to 2014, to nearly $21 billion.

Russia’s printing industry, though not as strong as the other BRICs, remains a viable player as well, at about $8 billion in 2009. Russia’s print market is forecast to grow to almost $14 billion by 2014.

And, two other print markets show particular promise: Mexico and Indonesia. By 2014, Mexico’s print market is expected to hit $18 billion and be the eleventh largest in the world. Indonesia’s graphic communications industry, meanwhile, is predicted to grow by almost 45% between 2008 and 2014, to a little more than $8 billion.

The promise of inkjet, digital
Drilling down through the data, a few trends begin to emerge. Inkjet is big. So is digital (also called “electrophotographic”). These print processes are so big, in fact, that they are expected to enjoy a near doubling of their market share between 2008 and 2014. While it’s true that their market share is still minimal compared to the more traditional print processes, inkjet and electrophotographic are showing their great potential for the future. (Sheetfed printing is the only other print process expected to increase its market share between 2008 and 2014.)

The promise of inkjet and electrophotographic becomes even more apparent when considering the global machinery market. In 2008, the global machinery market tells a fairly standard tale: Sheetfed presses claim a $5.6 billion market, greater than any other equipment category. By 2014, however, the sheetfed press market will have contracted by over 8%, to $5.1 billion—while inkjet sales will have shot up from $1.9 billion in 2008 to $4.8 billion in 2014, almost the same as sheetfed. (See pie chart, “Global Machinery Market, 2008 – 2014.”) The forecasted growth for inkjet, by the way, is 160%.

Other segments of the global machinery market expected to experience significant growth is, naturally, electrophotographic and also flexo and postpress. At $1.4 billion in 2008, the electrophotography market is predicted to increase by 49% between 2008 and 2014 to just more than $4.7 billion. Based on the significant growth of package printing over the study period, flexo equipment is forecast to grow a steady 12% to over $2.7 billion by 2014.

With the importance of high-end finishing to increase the value-added of print products, postpress equipment will see growth of almost 8% by 2014 to $1.75 billion. All other markets are predicted to suffer significant declines with some more than 20, 30 and 40%. (Film imagesetters, not surprisingly, will plummet by 65% between 2008 and 2014.)

Package printing, postpress stand out
Finally, for those wondering which print products and company types we can expect to see more of in the future: How about package printing? Package printing, a $203 billion market in 2008, is forecast to grow by 21% to $246.4 billion in 2014.

Demographics play an important role in this area. A growing middle class, particularly in such population-heavy developing countries as China and India, has led to millions more people in the world buying packaged goods. At the same time, a rising number of consumer households—not to mention time-poor consumers—in developed nations has created a demand for single-portion packs and other convenience-oriented formats.

Also predicted to experience marked growth (23%) in coming years is the outdoor point-of-purchase (PoP) and signage sector. (The growth of this sector, in fact, may be a contributing factor in the rise of inkjet technologies between 2008 and 2014.) At about $9 billion in 2014, it’s true that this category is well behind the traditional print categories of magazines ($69.0 billion in 2014), newspapers ($45.0 billion), books ($34.9 billion), catalogs ($33.4 billion), and brochures and pamphlets ($33.1 billion). But it’s also true that all of these “traditional” categories will undergo a decline between 2008 and 2014.

Given all these trends, it’s no surprise that package printers are expected to increase their share of the market between 2008 and 2014 by nearly 20%. Revenues from package printers will account for about $227.8 billion of the total $725 billion global graphic communications market.

Companies specializing in postpress will also fare well in the 2008 — 2014 time period. This category is forecast to grow by 12%, to $16.8 billion in 2014. Because of the growing savviness of the typical consumer and the multiple end-uses often required for products, more print clients are requiring special finishing. Those who can deliver on that, then, will profit.

The post-recessionary environment
It’s clear going forward that the way we did business even a few years ago will not cut it in the post-recessionary graphic communications environment. It’s a small (global) world out there, and success in the future will require making it smaller still, by looking beyond our borders—or even on the other side of an ocean—for the most advantageous markets, partnerships and opportunities. It’s also a changing world, in terms of the technologies and print products most important to the end client. Yes, the global recession did make quite an impact on our industry. But if we consider these trends, the future holds much promise.

Ralph Nappi
NPES President

 

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