Commentary & Analysis
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By Dr. Joe Webb
Published: September 23, 2005
Well, Dr. Joe, Put Up or Shut Up: Would You Tell Your Son to Choose the Printing Industry as a Career?
That was the thrust of a simpler but direct question at my Print05 presentation. The question was quite clear, and I gave a long answer, for which Cary Sherburne, moderator, and editor of this column, playfully chided me.
The answer to this simple and direct question is “yes,” although there is great temptation to say “no.” My son is fifteen, and he'll do what he wants based on his interests in college and his desire to find something he loves to do. But if he asked for my advice about our industry, this is what I would say:
There is not a single perfect industry. All industries have problems. All industries have opportunities. All industries have their slow times. Nor are there any perfect companies. Some companies are just survivors, others seem to change the world and then expire. There are no perfect co-workers, either. Regardless of where you land, problems and opportunities ebb and flow over periods that are measured in years, not days or weeks. And we create both our own problems and opportunities.
I’m telling you what I used to tell my students: don’t be afraid of working for companies in trouble (as long as they were not doing anything illegal, of course). In a distressed company, you have the opportunity to get your hands dirty by making tough management decisions that you may not have to make in larger, more successful companies. Sometimes learning what not to do is worth more than learning what to do. You learn to prioritize. As others bail out, you have the opportunity to move up faster and learn and do things you would not be able to learn and do otherwise. The same holds true for “distressed” industries.
The printing industry is undergoing massive change, with established companies still trying to play by the rules they knew in the “good old days” as they attempt to hold onto what they have. Change is difficult, and change is created by people who see needs where others don’t. More often than not, those “change agents” are able to profit from driving innovative approaches and they get things done that others don’t even comprehend are possible.
You may have heard that the printing industry resists change. Don’t believe it. We’ve gone from a strictly manual craft business to an implementer of high technology in the last 30 years, and the changes are astounding.
When I see what you do with computers and the projects you work on, I can’t help but think you’d be great in our industry. As we move into the future, we need highly skilled people who are visionaries and can cope with, create, and lead change, and don’t take “can’t” for an answer. Coming into the industry with fresh vision, you will spend a few years learning and then get restless, like all employees should, and personally facilitate and accelerate change.
We’re entering a world where geography is becoming irrelevant. Some in our industry are resisting the thought, but even the simple things you know about communications technology can go a long way here. Someone has to manage the complex logistics that are required to deliver multichannel communications and a global creation and production process. Heck, someone has to build the capability so that it's transparent to everyone involved. There's always room for the leadership that will get things done while others are whining and complaining.
Look beyond the headlines that lead some to think of our industry as a dead, declining business, devoid of dynamism. It's not. This year, the printing industry will be bigger than many manufacturing businesses that are much better known, like auto manufacturing, dairy products, semiconductors, iron and steel mills, beverages, textiles, industrial machinery, ships and boats, household appliances, and many others. This is the industry that went from moveable type to hot type to phototypesetting to desktop publishing to XML. It is the industry that went from letterpress to offset to digital to e-documents. It is the industry that migrated distribution from horses to trains to trucks to networks. And this is the industry that will ultimately take advantage of numerous opportunities to use the latest technologies in ways that would have been unimaginable just a couple of years ago. Sounds pretty exciting to me! This industry is being reborn—again. And thirty years from now, things will have changed so much that we may not call it the printing industry anymore, but you'll probably be giving this same pep talk to someone else who thinks things are collapsing when they are simply changing in new and challenging ways.
Now, go finish your homework.
The economic effects of Katrina are still being debated, and unfortunately, all of the usual suspects are taking advantage of the opportunity to politically charge the process. The truth is that the costs incurred by Katrina could be covered quite well by freezing spending, even with all the pork currently in the oven. The chart below shows how the tax cuts implemented in August of 2003 have been creating tax revenues, especially corporate tax revenue, faster than the increases in the Federal budget.
The politicization of the process creates uncertainty, and that uncertainty is not good for the economy. Alan Greenspan, who is still orchestrating this economic slowdown, has long recommended to Congress that taxes on capital gains be eliminated to stimulate investment, a request with which most economists would agree. The purpose of capital is to create income, and capital is best when it is at risk, not when it is shielded from it. In a climate of uncertainty, such as we are seeing today, even the risk-takers become risk-averse.
Yet offering incentives to invest in the Gulf Coast region, especially through the establishment of tax-free zones, is not the way to go either. These types of programs are giveaways that very often support projects that may not have any economic benefit at all, other than contrived tax consequences, much like real estate investments prior to the 1986 tax reform. Tax loopholes for those armed with the best tax advisors do little to create a resilient and robust economy. It would be better to reduce everyone's taxes, regardless of geography. As a result, resources would naturally flow to that region because of its great opportunities for modernization. Instead, interest rates will be raised, tax rates are likely to be raised to “pay” for Katrina, and tax revenues will decline after a brief spike up for a very short time that will cause an initial euphoria and claims of victory.
As expected, the Federal Reserve raised rates again this week, and in discussing Hurricane Katrina stated, "While these unfortunate developments have increased uncertainty about near-term economic performance, it is the Committee's view that they do not pose a more persistent threat." That is, Katrina is just a blip in a very strong economy that is considered as having inflation risk.
The Fed is increasing rates, which decreases the money supply.
- Increasing taxes decreases the incentives to produce and invest.
- The lack of desire to produce decreases the need to invest in more efficient production capabilities.
- The lack of new production capabilities means that productivity will not improve.
- The costs of goods will increase because unit costs will not decrease.
And that's the danger of slowing the economy down too much, especially if net tax rates are raised by letting various tax laws expire and not addressing the problems created by the alternative minimum tax. So far, greater productivity has increased personal income to the point where the spike in energy prices has been absorbed by the economy. Anything that decreases investment will cause that resiliency to disappear. I don't like the way things are playing out here; I hope I'm wrong.