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US Commercial Printing Shipments End 2011 on Sour Note

U.

By Dr. Joe Webb
Published: February 6, 2012

U.S. commercial printing shipments for December were $6.96 billion. This was down -$207 million compared to December 2010, a decrease of -2.9%. On an inflation-adjusted basis, shipments were down -$395 million, or -5.4%. The full year was $83.65 billion, down -$393 million, or -0.5% on a current dollar basis, and down -$3 billion, or -3.5%. (Click chart to enlarge)

The fourth quarter was especially disappointing, down -$478 million (-2.2%) in current dollars and down -$1.17 billion in inflation-adjusted dollars (-5.2%). Our forecast for 2012 will be released soon, but models range from $81 billion to $73 billion, with most forecasts in the $79 to $80 billion range. It is still generally believed that a stronger economy will raise print purchases, but the statistical relationship with GDP is still negative. This means that rises in GDP, on a statistical basis, result in decreases in print shipments. From a practical standpoint, a rising economy helps healthy print businesses, and allows them to distance themselves from weak competitors, which is one reason why printing profits have been rising despite the retrograde shipments data. The chart below shows the relationship of current dollar GDP and current dollar shipments. (Click on chart to enlarge).

Increases in GDP increase the dollars available to spend for digital communications technologies and computers. The costs of those alternative technologies are still declining, and adoption and broadening of applications continue to rise. Last week, Procter & Gamble made waves announcing 1,600 in workforce reductions, with a major shift to digital formats such as Facebook, where they have had notable success this past year. Last week, Facebook announced its long-awaited IPO, and reports indicated that the company was valued at $100 billion. To put that value and the shift in digital media in perspective, the commercial printing business generated approximately $4 billion in profits in the four quarter period of Q4-2010 to Q3-2011. At a generous 20x earnings, the entire US commercial printing would be worth $80 billion. The printing industry has about 475,000 employees, and Facebook reports its number of employees as "3000+". Recognizing the media shift, and getting out ahead of it on behalf of customer objectives, is becoming a critical strategy for commercial printing businesses.

Dr. Joe Webb is one of the graphic arts industry's best-known consultants, forecasters, and commentators. He is the director of WhatTheyThink.com's Economics and Research Center.

What do you think? Please send feedback to Dr. Joe by emailing him at drjoe@whattheythink.com.

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