Commentary & Analysis
Wide-Format: Equipment & Financial Takeaways
Dan provides a summary and his take on some of the results from a recently conducted SGIA Survey. The full survey results will be published in the SGIA report " Equipment & Financial Outlook Benchmarking Report".
By Dan Marx
Published: May 22, 2013
Just a couple of months ago, SGIA conducted a survey to ask sign and graphics producers what equipment they had in place in their businesses, what equipment they planned to purchase, and how they viewed both this year and next year, in financial terms. The results, which will be published in full in SGIA’s soon-to-be-released Equipment & Financial Outlook Benchmarking Report, provide a broad view. Below you will find a summary—the high points—of the report, coupled with my “take” on them.
As a community, graphics and sign producers overwhelmingly serve business-to-business clients.
Nearly three-fourths of companies report that they are either entirely digital or multi-technology, but mostly digital. This can be compared to the less than nine percent reporting themselves as either analog or mostly analog. Nearly 100 percent use digital printing in some way, while slightly less than half use screen printing. Roughly one-quarter use offset/litho technologies.
My take: If you’ve read this column in the past, you will know how dramatic the changeover from analog to digital technologies has been in this segment, and how profoundly it has changed what we do. The less than 10 percent of companies who are still fully or primarily analog are either far behind the curve, or are in profitable niches where digital is not the leader. In either case, time will change this reality.
Equipment purchases, both planned and actual, are strong in the sign and graphics segment. Three-fourths of companies purchased production equipment during 2012, and more than 80 percent plan to purchase production equipment during 2013. When companies in this segment purchase equipment, purchase price and range of capabilities are of highest concern. Regarding existing equipment used for production, roll-to-roll inkjet (less than 69 inches in width) and software (RIP, creative, etc.) are in place in more than three-fourths of companies.
My take: The rate of equipment purchase in the sign and graphics segment speaks to ongoing technology adoption/replacement among printing devices and the acquisition of finishing technologies to promote successful market/product access. In the equipment they purchase, companies are looking for what most of the “99%” (me included) look for when they purchase a car: a good price and the fulfillment of expectations. Here’s an observation: wide-format devices are much more like cars (limited lifespan) than are the heavy-iron presses of the analog printing world. They’re more like houses (long lifespan).
The most purchased items (2012) were production software, flatbed inkjet printers (print area greater than 4x8 feet), and solvent inkjet printers (less than 96 inches in width). The equipment most intended for purchase (2013) are cutting/trimming equipment, production tools (color measurement, etc.) and flatbed inkjet printers (print area greater than 4x8 feet). In terms of the number of presses used in production, roll-to-roll inkjet units are the most widely held.
My take: Flatbeds are hot in wide-format, and while there are more roll-to-roll units being used in production, the print durability and media variability of flatbeds makes them “must have” technologies for most sign and graphics producers. Cutting/trimming equipment, particularly in the form of CNC router/cutters, goes hand-in-hand with inkjet workflow: Design to print to cut to done, all in an integrated system that maximizes productivity, minimizes waste and reduces labor costs.
Growth & Financials
Sales growth in the graphics and sign segment continues to be strong. For calendar year 2012, companies in this segment reported a median sales growth of 16 percent, stronger than their expected 11.2 percent rate reported earlier that same year Asked to choose from a list of factors that may serve as barriers to company growth, nearly 60 percent of companies reported downward pressure on prices to be of particular concern, followed by finding new customers, and rising costs, which were selected—respectively—by roughly 45 percent of those responding. Nearly three-fourths of companies are expanding into existing markets as a way to achieve growth, while slightly more than 55 percent seek to develop new markets.
My Take: Double-digit growth—16% for 2012!—speaks to the strength of the wide-format industry, and particularly that of the market and product areas served by sign and graphics producers. And the outlook for 2013 is just as strong. That said, those serving this segment are not without concerns. The 60 percent expressing concern over downward price pressure surely speaks to the rise in competition in most of the industry and even nascent commoditization in certain areas. Like sharks, however, sign and graphics producers need to keep moving. Many are currently seeking new market and product opportunities—finding the niche, being first to market, making the good money early—as a way of keeping their companies competitive.
Staying competitive in the wide-format graphics industry, while once a ride on the bleeding edge of the printing industry, is no longer such an adventure. The technologies are reliable, the footholds of “selling digital” have been set. But this segment is in no way sitting still. The rules of the game—what you can make, the limitations of the technology, where the machines “top out”—have yet to be set. Those who excel in graphics and sign are those who can accept ongoing change and continue to “gamble” on new directions This is not “Commodity World,” because it’s still an adventure.
For those who want to see and learn all of what wide-format inkjet technology has to offer, I heartily recommend this year’s SGIA Expo in Orlando, October 23–25. No wide-format pavilions here—because wide-format is what SGIA is. See it all. See you there!