PRIMIR Releases Mega Printers Study, Announces 2009 ResearchJanuary 28, 2009
To learn more, PRIMIR commissioned Sherburne & Associates with J Zarwan Partners to explore their business practices. Additionally, PRIMIR wanted to learn the long-term impact of this continued consolidation on the overall industry – what's driving these large-scale acquisitions, impacts on vendor companies servicing these “mega printers,” and the overall expectations for the industry at large.
According to the report, “This group of companies (with over $750 million in annual sales) represented $32.584 billion in revenue in 2007, and comprised more than 30% the commercial print market. While overall revenues for the “mega printers” declined during the study period of 1999 to 2007 by about 6%, they represent a growing share of a declining commercial print market. Thus, not only are “mega printers” themselves increasing top-line revenue, but they stand to play an ever-larger role in the rapidly changing North American commercial printing industry.”
When you 'look under the hood,' the study revealed some striking findings. While more efficient buying practices are a hallmark benefit of these large companies, in reality it appears they are neither more efficient manufacturers nor more efficient purchasers.
Additionally, many consolidation economies-of-scale are being offset by increased organizational complexity, loss of flexibility, murderous competition for shrinking sales volume and correspondingly relentless pricing pressures. The public companies have the added complexity of the pressures of Wall Street to deliver increased operating and net margins results.
The research found that each “mega printer” operates very differently, however, in most instances purchasing decisions for capital expenditures (presses and equipment) are on a schedule and planned well in advance but decisions come from corporate. Other equipment, software and supplies and consumables like paper or ink may be decided at the plant level sometimes with geographic or shipping considerations in mind (but with a limited number of suppliers on the preferred list).
With the current economy, there is no doubt that the merger and consolidation activity will continue, and the few successful/profitable “mega printers” will serve as role models for the others. Although the number of firms in the industry is declining, the research team reported that the remaining firms should demonstrate a healthier printing industry.