NAPL Releases Sobering Industry Outlook for 2009
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.”
“Leaders recognized early that in an industry being redefined by structural change no risk is greater than doing nothing. They prepared themselves to participate fully in the upturn and effectively came out of the last recession stronger. We expect they’ll do the same this time around,” Paparozzi explained.
Recommendations for action steps to come out of the recession on the positive side of the ledger sheet can be found in NAPL’s State of the Industry Report, 7th edition, (product code NP363). Based on data provided by 600 companies with annual sales ranging from less than $1 million to $200 million, it is provided free to all NAPL and NAQP members as a direct member benefit. It can be purchased by nonmembers for $299. A midyear Strategic Perspective Study and subsequent Printing Business Conditions Reports comprise the comprehensive State of the Industry series and are available as expanded member benefits. The State of the Industry research is sponsored by Heidelberg (www.heidelbergusa.com).
Other NAPL economic response resources can be found at www.napl.org, or on the association’s economic blog at www.NAPLBizTrends.org. Additional action step ideas are discussed in the association’s white paper “Choosing Not to Participate in the Recession,” available free at www.napl.org/requestform.
Chartered in 1933, NAPL, the National Association for Printing Leadership, is a not-for-profit business management association representing companies in the $120 billion printing and graphic communications industry. NAPL’s comprehensive slate of business-building solutions provides company leaders with the management tools they need to make informed business decisions in an ever-changing market environment. The association also handles the administration of NAQP, the National Association of Quick Printers, which specializes in the unique concerns of small printers nationwide, and the industry’s Research and Engineering Council, which is dedicated to manufacturing technology and productivity improvement issues. For more information on NAPL or its affiliated associations, visit www.napl.org or call 800-642-6275.