Print Markets Reflect Second Quarter Economic Slowdown
Monday, August 13, 2001
ALEXANDRIA, VIRGINIA (August 10, 2001) – Information appearing in the Quarterly Print Market Survey issued by the Printing Industries of America (PIA), Incorporated, reveals that the graphic arts industry mirrored the lackluster performance of the U.S. economy during the second quarter of 2001, marking a slightly greater downturn than the recession 10 years ago. The information assembled by the PIA Chief Economist Dr. Ron Davis and Research Assistant Steve Kodey will appear in the upcoming Management Portfolio and in the portal to the graphic arts industry, www.gain.net. The survey is sponsored by Heidelberg, based in Kennesaw, Georgia. According to the survey, the U.S. economy only grew .7 percent in the second quarter of 2001. Meanwhile graphic-arts industry sales crept along at .3 percent during the same period, which is less than the .6 percent rate during second quarter of 1991. Despite the gloomy economic data for the U.S. economy, as well as the graphic arts industry, Ray Roper, PIA president and chief executive officer, reminds graphic arts industry professionals to stay the course and improve their operations so they may benefit when the market turns around. "The most difficult times are now behind us and the economy should start picking up steam later this year. Most of the graphic arts executives I talk to made the adjustments needed to keep their heads above water during the slowdown," said Roper. "The companies which will end up prospering from this economic downturn will be those which make the best transition from a no-growth to a growth mode of operations when the turnaround comes. The really savvy company owners are already planning for the turnaround." Although the industry as a whole witnessed lackluster sales, PIA research indicated it was not endemic of the entire sector. Printers with 20 or fewer employees are experiencing small, but steady sales increases of 1.2 percent. Overall, though, printers experienced average second quarter sales increases of just over .25 percent over the same quarter last year. The survey also reveals that some printers experienced higher sales growth than their competitors. "Even though more than 38 percent of panelists reported sales losses, sales increased in excess of 5 percent for one third of our panelists and one fifth of the panelists reported growth over 10 percent." The second quarter panel consisted of 194 respondents. A slowing economy and gradual rebound in 2002 were predicted in PIA’s landmark study Vision 21: The Printing Industry Redefined for the 21st Century, released in July 2000. The survey also points out some positives for the graphic arts industry, despite the general slowdown in sales. Davis and Kodey write, "The cost of paper, one of the largest cost components for printers, increased only 1.6 percent over the past year. This is the lowest increase in paper prices reported by our panel since the fourth quarter of 1998." While paper prices remained in check, many graphic arts industry executives bemoaned rising energy costs. Energy and utility costs increased 9.5 percent over the last year with West Coast plants witnessing increases of 18.8 percent. Though energy costs climbed during the second quarter, the price of print products and services fell by an average of .4 percent. The Quarterly Print Market Survey also polled panelists’ perceptions on the economy and what actions they are taking to remain competitive during the slowdown. "In all, ‘economic slowdown’, ‘poor sales’, ‘cash flow problems’, and ‘excess capacity’ were mentioned by a total of 57 percent of all panelists. Labor and staffing issues, once the top priority for printers for over two years, were only mentioned by 10 percent of panelists." The survey continued, "Our panel was far more optimistic about 2002, with nearly three out of every four respondents counting on either slight growth or modest growth. Large printers (firms with more than 250 employees) are particularly optimistic, with over 71 percent awaiting modest or rapid growth in 2002." To combat the survey, "Almost 80 percent of all respondents indicated they are focused on getting new customers over the past few months. Increasing marketing and promotional efforts to attract business and reducing general expenses were tactics utilized by over 60 percent of panelists, while only 2.6 percent actually closed a plant."