DeWese--Trouble Brewing
February 2000
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I am writing this on January 1, 2000, and there's trouble brewing in the old print shop. Yep, Joe Davis, chairman and CEO of Consolidated Graphics, announced in a press release that he "believes lower-than-expected sales volume is attributable to general industry conditions."
Davis believes this statement because Andrew Paparozzi, chief economist for the National Association of Printing Leadership (NAPL), published a report that said, for the first time in 15 years, real print sales (RPS) is lagging behind gross domestic product (GDP) growth. According to Paparozzi, printing industry sales growth will slow to 3 percent to 3.5 percent from the 4 percent to 5 percent for the year 2000. This means that for print sales to keep up with GDP growth, if 1999 was $100, then 2000 would have to be $105. Instead, alas, it's only going to be $103, or if we're lucky, $103.50.
You have to ask, "What's all the worry over a lousy buck-fifty?" It's not as if print sales will be down 20 percent this year. So, excuuuuse me if I dare to disagree with these esteemed gentlemen.
I think the real reason for the slower print growth is that some of you didn't work hard enough to sell more profitable business. I believe that many print salespeople have allowed profit margins to erode rather than improve. If you all had added just a teensy 5 percent to every job during 1999, Andy Paparozzi's base dollar would have been $1.05 plus the 1.5 percent real growth in print demand. Since that didn't happen in 1999, if you would just please add 5 percent to every job in 2000, it would result in real print growth actually outpacing the GDP. A more modest 2.5-percent price increase would put print growth on the same level as GDP.
By the way, since all 65 of Joe Davis' printing plants serve local or regional general commercial sheetfed customers, I assume he was limiting his observation to that segment. For all we know, labels, publications, books, folding cartons and direct mail are going through the roof.
And, since most of NAPL's members are general commercial companies, I assume that Andy's forecast is limited to that segment. You just cannot generalize about the printing industry because it consists of many, I said many, segments. Each segment behaves differently because it serves specific groups of customers with its own technology, i.e., gravure, intaglio, flexo, heatset web, non-heatset web, digital, etc.
The general commercial printing segment has always had a pricing problem. There's less customer loyalty, and you've got a multitude of salespeople chasing almost every job. It is also the largest printing segment, by far, and it remains—after all the consolidation of the '90s—the most fragmented.
Davis believes this statement because Andrew Paparozzi, chief economist for the National Association of Printing Leadership (NAPL), published a report that said, for the first time in 15 years, real print sales (RPS) is lagging behind gross domestic product (GDP) growth. According to Paparozzi, printing industry sales growth will slow to 3 percent to 3.5 percent from the 4 percent to 5 percent for the year 2000. This means that for print sales to keep up with GDP growth, if 1999 was $100, then 2000 would have to be $105. Instead, alas, it's only going to be $103, or if we're lucky, $103.50.
You have to ask, "What's all the worry over a lousy buck-fifty?" It's not as if print sales will be down 20 percent this year. So, excuuuuse me if I dare to disagree with these esteemed gentlemen.
I think the real reason for the slower print growth is that some of you didn't work hard enough to sell more profitable business. I believe that many print salespeople have allowed profit margins to erode rather than improve. If you all had added just a teensy 5 percent to every job during 1999, Andy Paparozzi's base dollar would have been $1.05 plus the 1.5 percent real growth in print demand. Since that didn't happen in 1999, if you would just please add 5 percent to every job in 2000, it would result in real print growth actually outpacing the GDP. A more modest 2.5-percent price increase would put print growth on the same level as GDP.
By the way, since all 65 of Joe Davis' printing plants serve local or regional general commercial sheetfed customers, I assume he was limiting his observation to that segment. For all we know, labels, publications, books, folding cartons and direct mail are going through the roof.
And, since most of NAPL's members are general commercial companies, I assume that Andy's forecast is limited to that segment. You just cannot generalize about the printing industry because it consists of many, I said many, segments. Each segment behaves differently because it serves specific groups of customers with its own technology, i.e., gravure, intaglio, flexo, heatset web, non-heatset web, digital, etc.
The general commercial printing segment has always had a pricing problem. There's less customer loyalty, and you've got a multitude of salespeople chasing almost every job. It is also the largest printing segment, by far, and it remains—after all the consolidation of the '90s—the most fragmented.
Companies Mentioned:
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Cracking the QR Code
Glossary of Graphic Communications, Fourth Edition
