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.
So, I contend there is no problem with print demand: The problem is that our prices remain too low, and the customers are still in control.
Let's examine the components of a print-sales dollar. I'll make a pie chart. The important section in my chart is the yellow "profit" slice labeled "8 percent." An 8-percent, pretax profit printing company is doing great! I use this example because that's just about the profit Consolidated Graphics produces.
I don't want this to be an accounting lesson, but expenses like sales commissions, office salaries and phone charges are paid from the green area labeled "SG&A" (sales, general and administrative expense). The blue and red slices depict the cost of producing a printed product. Interest is spent on the debt used to finance plant equipment and, sometimes, working capital and is the small, light blue slice. The yellow "profit" slice is first used to pay federal taxes, and whatever is left flows into the equity account to finance the future growth of the company. If your company has no yellow slice, you are either breaking even or losing money. Neither result is good.