The Supply Chain Crisis: How Deep, How Printers Are Responding, and Who Is Going to Win
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The supply chain crisis has affected the printing industry as deeply as any recession. Consequences range from rampant cost inflation to clients moving from print to electronic alternatives. How are printing companies responding? And how effective have their responses been?
To find out we asked the PRINTING United Alliance/NAPCO Research State of the Industry (SOI) Panel. The panel’s more than 300 members are located across the United States and Canada and include commercial printers, graphic and sign producers, apparel decorators, functional printers, and package printers/converters. Annual sales range from less than $250,000 to more than $250 million. Readers can join the State of the Industry Panel here: https://www.research.net/r/CV19PRUP3.
One member speaks for many when he says, “I’ve been doing this for nearly 40 years and business conditions are as difficult as I can remember. It’s just ugly.” Shortages of “components, materials, equipment, and almost everything” are forcing reliance on untested substitutes: “We do a lot of banners and need grommets. The manufacturer can’t get brass. We’re going to try to substitute aluminum, but that’s sketchy at best.” Jobs are lost: “No envelopes, no mailings!” Price increases are met with resistance: “The price increases we have managed to pass along are now being questioned by our customers. They have seen enough!” And margins are taking a hit: While 64.3% of the panel expect to increase sales during the first half of 2022, just 37.5% expect to increase profitability. Equally disturbing, 47.6% expect operating cost inflation to rise at least as fast as sales through midyear.
No relief is expected. Nearly 93.0% of companies surveyed expect material shortages to continue through year end, and 85.5% expect additional increases in material prices. Majorities expect further inflation in labor (71.4%), transportation (70.3%), ink/toner (59.9%), and energy (50.2%) costs. Nearly 55.0% are very concerned about maintaining profitability, and nearly as many are very concerned about increasing sales. Losing clients to print alternatives is a major concern for 39.1% of all surveyed and for 46.7% of the commercial printers.
SOI Panel members are responding to the crisis by taking the actions summarized below. Each action carries costs, tradeoffs, and limits, and all agree that they have lessened the effects of the crisis but not eliminated them ‒ i.e., there are no silver bullets.
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Andy Paparozzi is the Chief Economist at PRINTING United Alliance, the most comprehensive member-based printing and graphic arts association in the United States, comprised of the vast communities which it represents. The Alliance serves industry professionals across market segments with pertinent education, training, workshops, events, research, government and legislative representation, safety, and environmental sustainability guidance, as well as resources from the leading media company in the industry – NAPCO Media. Now a division of PRINTING United Alliance, Idealliance is the global leader in standards training and certification for printing and graphic arts operations across the entire industry supply chain.
In this article, Paparozzi addresses the supply chain crisis and how printers are responding. More information about this issue can be found at https://www.printing.org/library/supply-chain-resources, or readers may reach out to Paparozzi should you have additional questions specific to how these issues may affect your business: apaparozzi@printing.org.
To become a member of PRINTING United Alliance and learn more about how PRINTING United Alliance subject matter experts can assist your company with services and resources such as those mentioned in this article, please contact the Alliance membership team: 888-385-3588 / membership@printing.org.
Andrew D. Paparozzi joined PRINTING United Alliance as Chief Economist in 2018. He analyzes and reports on economic, technological, social and demographic trends that will define the printing industry’s future. His most important responsibility, however, is being an observer of the industry by listening to the issues and concerns of company owners, executives and managers.Previously, he worked 31 years at the National Association for Printing Leadership. He has also taught mathematics, statistics and economics at various colleges.Andrew holds a Bachelor’s degree in economics f rom Boston College and a Master’s degree in economics — with concentrations in econometrics and public finance — from Columbia University.
