NAPL Releases Sobering Industry Outlook for 2009
December 2008
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PARAMUS, NJ—Dec. 22, 2008—According to NAPL’s Printing Economic Research Center, the commercial printing business is not likely to experience any meaningful improvement until well into the second half of 2009 at the earliest. This economic downturn is different than previous recessions, because the industry is changing structurally as well as cyclically and, therefore, stronger and more creative responses are required by today’s business owners.
Specifically, NAPL projects:
• Industry sales will decline by as much as 3% in 2009, after having declined by approximately 2% in 2008.
• Profits are expected to remain under severe pressure. Pre-tax profitability fell for 54.9% of the Printing Business Panel in October 2008, the highest reading in over six years.
• The gap between industry leaders and all others will continue to widen. For example, from 2000 to 2008 NAPL Leaders’ sales grew a total of 71.6%, nearly nine times the industry’s 8.2% growth, with the gap widening dramatically after the deep recession of 2001-2003.
• Cost inflation will recede in 2009, but so will pricing power.
NAPL’s projections are based on data collected by the association’s Printing Economics Research Center led by Chief Economist Andrew Paparozzi. Under Paparozzi’s direction, NAPL tracks data monthly from a select Printing Business Panel as well as annually through landmark studies such as NAPL’s annual State of the Industry Report. The Center monitors all available business and financial data to determine current industry status and emerging trends for the entire commercial printing industry in North America and is considered the most comprehensive and accurate resource on industry data.
Factors adding to the industry’s current economic challenges are confidence levels and a classic profit squeeze. Notably:
• Confidence continues to decline. Industry confidence is the lowest level on record, even lower than post- 9/11.
• Declining revenues and accelerating costs caught the industry in a classic profit squeeze.
“As an industry, we find ourselves at a unique point in history,” noted Paparozzi. “The commercial printing industry is changing structurally as well as cyclically. This means that in addition to nationwide economic pressures, the industry is undergoing structural change in the form of redefined markets, clients, competition, labor force, critical skills, and value propositions. As a result, the recession has created an historic opportunity for the prepared and a profound threat for the unprepared.”
Specifically, NAPL projects:
• Industry sales will decline by as much as 3% in 2009, after having declined by approximately 2% in 2008.
• Profits are expected to remain under severe pressure. Pre-tax profitability fell for 54.9% of the Printing Business Panel in October 2008, the highest reading in over six years.
• The gap between industry leaders and all others will continue to widen. For example, from 2000 to 2008 NAPL Leaders’ sales grew a total of 71.6%, nearly nine times the industry’s 8.2% growth, with the gap widening dramatically after the deep recession of 2001-2003.
• Cost inflation will recede in 2009, but so will pricing power.
NAPL’s projections are based on data collected by the association’s Printing Economics Research Center led by Chief Economist Andrew Paparozzi. Under Paparozzi’s direction, NAPL tracks data monthly from a select Printing Business Panel as well as annually through landmark studies such as NAPL’s annual State of the Industry Report. The Center monitors all available business and financial data to determine current industry status and emerging trends for the entire commercial printing industry in North America and is considered the most comprehensive and accurate resource on industry data.
Factors adding to the industry’s current economic challenges are confidence levels and a classic profit squeeze. Notably:
• Confidence continues to decline. Industry confidence is the lowest level on record, even lower than post- 9/11.
• Declining revenues and accelerating costs caught the industry in a classic profit squeeze.
“As an industry, we find ourselves at a unique point in history,” noted Paparozzi. “The commercial printing industry is changing structurally as well as cyclically. This means that in addition to nationwide economic pressures, the industry is undergoing structural change in the form of redefined markets, clients, competition, labor force, critical skills, and value propositions. As a result, the recession has created an historic opportunity for the prepared and a profound threat for the unprepared.”
Companies Mentioned:
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