Commercial Printing Outlook : Bootstrap Time for Printers
"We have seen printers' profits improving the past few years since we bottomed out in the recession. I look for printers' margins to improve marginally. About 25 percent of printers make solid profits, and 75 percent operate basically on a break-even basis."
Davis sees the most profitable of segments being what he calls print logistics—labels, wrappers, packaging—reaping a 3 percent increase for 2014. Marketing print and promotional printing (direct marketing, direct mail and catalogs) project a 1 percent rise, while communication printing—books, magazines and newspapers—could fall between 2 percent and 3 percent.
Growth for GDP
Andy Paparozzi, vice president and chief economist of the National Association for Printing Leadership (NAPL), notes that the 2013 Blue Chip Economic Indicators consensus (through Oct. 10) expects GDP to grow 1.6 percent in 2013. The NAPL forecasts total commercial printing sales—all sources, not just printing—to grow slightly, at 0.5 percent to 1 percent for 2013, in the same neighborhood as 2012's 0.6 percent rise. Paparozzi says that level is still far shy (20 percent behind) of the pre-Great Recession level of 2007, as well as the all-time high of 22 percent in the year 2000.
Moving forward, the Blue Chip consensus expects GDP to reach 2.6 percent in 2014, which is still below the economy's average annual growth of 3.2 percent for the 10 years prior to the recession. Overall, Paparozzi doesn't expect the economy to provide any more help in 2014 than it did this year.
"Pressure on prices and margins will continue because, despite record consolidation, our industry is getting more competitive, not less competitive, as the Internet and digitization let everyone into everyone else's business," he says. "The single most important factor for everyone in our industry is not what the economy or industry at large is going to do, but rather what are you going to do to create your own recovery? What are you doing to become more competitive? More efficient? More valuable to your best clients?"