by Vincent Mallardi, C.M.C.
Energy price hikes are tanking economic energy. Real GDP, net of fuel and power, is zero, which means any growth in '05 will be in the second half. Printing sales are up at a nominal 6 percent pace, but with less value-added because of energy-related inflation in paper, electricity and freight costs.
Most benefitting from the present 4.3 percent inflation rate at the consumer level is banking/insurance ($2.68T, +5 percent; with $14B to print). Commercial banking ($>9B to print, +21 percent) is cashing in on the tougher federal bankruptcy law and lesser restrictions for charge card issuance. Bank on more direct mail, especially from sub-prime lenders. Property/casualty insurers ($2.8B to print, +6 percent) are repairing tarnished images, as at AIG, and reigning in increased coverage premiums, both print-intensive.
Non-newspaper publishing ($103B, 0 percent; with $13.9B to print, -17 percent) continues to lose share to the Internet and electronic publishing. Periodicals ($49B, -4 percent; with $2B to print, +13 percent) and adult trades ($8B to print, +7 percent), are best-sellers for integrated specialty book manufacturers.
At Number 3, medical products/pharmaceuticals ($339B, +4 percent; with $11.4B to print, +6 percent) will return to health in the second half-year. Pharmaceuticals and wellness ($154B; +9 percent; with $6.4B to print, +10 percent) will double print spends in ROP and bind-in placements, POP and packaging. Medical products ($140B, 0 percent; with $3.4B to print, 0 percent) and biotechnology ($45B, +5 percent; with $0.8B to print, +6 percent) are lagging.
At Number 16 is healthcare ($1.87T, +5 percent; with $ 5.3B to print, +7 percent). Health insurance ($328B, +6 percent) and third-party administration ($251B, +5 percent) could admit $3B in printing invoices, about 15 percent or more than in 2004. Hospitals ($663B, +5 percent) are energetically consolidating, with branding and marketing that will release a $2B print spend in the New Year. Non-hospital care ($161B, +4 percent) will emerge as a big print media spender for imaging centers, endoscopy suites, home care, and other outpatient and ambulatory providers.
Number 4-ranked computer software ($315B, +2 percent; with $10B to print, -2 percent) will boot up in packaged software ($52B, -7 percent) as Microsoft launches its biggest ad campaign—not for the "Longhorn" product to debut next year, but to defend Windows 2000. Meanwhile, network and mainframe computing ($112B, +10 percent) is outperforming all forecasts, as with Juniper Networks doubling revenues in Q1 '05. Hosting and memories and storage ($130B, 0 percent) are stalled except for Yahoo and Google.
At Number 5, real estate ($1.36T, +7 percent; with $9.9B to print, +13 percent) is slowing, but not in print buys. Commercial real estate ($368B, +12 percent ) is building in front of inflation, especially in the big cities. Former new home buyers are increasingly opting for rental housing ($149B, +5 percent) and residential resale ($382B, +10 percent), promoting through digital, sheetfed and coldset web printing.
Residential/new housing ($388B, 0 percent ) is flat. The U.S. Congress, calling for portfolio limits at the two federal mortgage underwriters, will diminish the number of fixed rate home mortgages and cause volatility in residential real estate. Bad for consumers; good for printers. This will also bring more print from mortgage lenders ($64B, +20 percent)
The Call for Telecom
Dialing Number 6 for telecommunications ($942B, +1 percent; with $9.9B in print, -8 percent) will go to "no-mail" as print sales continue to disconnect. Busy signals from wireless, including equipment ($184B, +12 percent ) are mostly offshore, with some $2B in POP and support collateral print. Because access to radio spectrum frequencies is difficult in the United States, extended Wi-Fi and Wi-Max will be deployed in Canada, Mexico and elsewhere before here. However, U.S. companies like Texas Instruments will continue to clip at double digits as the principal worldwide supplier of wireless phone processors.
For print sales in the wireless space, look for providers of novel applications in sideband radio frequency leases, such as for sensor networks along highways. Hundreds of startups are realizing that independent commercial broadcasters hold an extremely leveragable wireless franchise.
All other "lines" (long distance, local wire, fibre optic and cable) are at saturation, including directories ($15B, 0 percent). AT&T, SBC and other conventional providers are in negative or zero growth. Local governments are in the way of cable/telephone crossovers as the Federal Communications Commission (FCC) ruled that only voice-over-Internet-protocols (VoIPs) are not subject to state regulation. Telecom equipment ($103B, -10 percent) is declining in fierce price competition. In high growth will be personal digital assistants (PDAs) and VoIP connection hardware.
Number 7-ranked automotive ($1.69T, -2 percent; with $8.4B to print, +4 percent) is stalled in new and used vehicles ($700B, -3 percent) and rentals/leases ($237B, -12 percent). Consumer spending on durables, impaired by high debt and low savings, will cause the biggest brand and dealership shakeout in 50 years. Print promotional spending, in turn, will be driven up at the retail level.
Sector growth will be confined to parts/repairs ($351B, +5 percent) and finance/insurance ($284B, +5 percent). Tires and other replacement items will rev up demands for folding cartons, outdoor advertising and POP printing. Auto insurance rate hikes will pressure carriers to better brand and support agents and brokers with more co-op and print media spending.
Mouthful of Opportunity
Packaged foods ($625B, +5 percent; with $8.5B to print, +8 percent) at Number 8 is the most appetizing category for wide-format flexo and litho packaging plants. Pet foods ($10B, +18 percent), fresh packaged products ($212B, +9 percent) and dry foods, snacks and confections ($155B, +5 percent) are leading the way with brand extensions like M'azing (M&Ms in a chocolate bar) from Masterfoods USA.
At Number 9 is beverages ($307B, +2 percent; with $8.3B to print, +3 percent). Waters ($21B, +10 percent) and coffees, other prepared drinks ($119B, +6 percent) are pouring well with increased POP. Consolidation has begun in wines and spirits ($20B, +2 percent) and beer/malts ($45B, +5 percent), led by the Molson-Coors merger and the acquisition of Allied Domecq by Pernod and Fortune Brands. More than $3B in packaging and promotional print are flowing. Soft drinks ($37B, -8 percent), dairy ($35B, -7 percent) and juices ($30B, -2 percent) trail, but the print spend is up 10 percent, mostly in outdoor and point-of-purchase.
Food service ($545B, +9 percent; with $3.9B to print, +12 percent), ranked Number 21, is led by full-service restaurants ($363B, +11 percent) and a healthier fast-foods ($94B, +6 percent) segment. Institutional food service ($59B, -1 percent) is recovering.
Security ($436B, +31 percent; with $8.1B to print, +270 percent) is Number 10 with product/personal identification at $20B, with 15 percent to print. Radio frequency identification (RFID) is the reason. Tamper-proof and smart documents, labels and packaging, some with nanotech and biometric features, are at the verge of changing print profoundly.
A casualty of reduced discretionary income is Number 11 fashion ($419B, +3 percent; with $7.5B to print, 0 percent), a drop from the forecast. Jewelry ($19B, +14 percent), footwear/hose ($67B, +3 percent), accessories ($88B, +4 percent) and intimate apparel ($ 7B, +4 percent) are over two-thirds of sector printing.
Investment brokerage/management ($663B, +12 percent; with $7.4B to print, +10 percent) is accelerating in print buys as a battle for brand share continues. More foreign investment into the U.S. and surprises such as Lazard's IPO and post-scandal consolidations are adding to demand. Inflation-caused higher stock prices and inflation-hedged borrowing by governments and business are supporting personalized digital printing of trading proposals, view books and direct mail, plus publication ROP directed at the 50-plus "boomers" heading toward retirement, will bring big returns to on-demand, lettershop and open full- and half-web printers.
With slowdowns in real estate and home equity borrowing, so also is home improvements ($678B, +3 percent; with $
- People:
- Vincent Mallardi
- Places:
- United States