If you read "[the] printing sector is suffering from overcapacity and lack of a common vision, leaving it vulnerable to competition from low-cost countries such as China," you'd assume that it was about the U.S. market, since you've heard this for years. You could substitute "automobile industry" for "printing sector" and "Japan" for "China" and you'd be harkening back to a time when leisure suits were fashionable, around 1975. In fact, you can pick any industry and insert it in that sentence, and pick Japan, or China, or "emerging countries" and you will make a statement that sounds plausible. The pattern has been repeated in a report about Europe's printing industry titled "Competitiveness of the European Printing Industry," which was prepared by Ernst & Young for the European Commission.

Below is a list of selected strategic challenges as identified in the report; they will sound familiar. My comments are included.

To mutate from a commodity industry to a value-added industry

In a world of swiftly rise in commodity prices, it would seem that printing as a commodity would be an advantage. A commodity is an ingredient used in a value-creation process. It usually cannot be consumed in its base form, but rather is a component of some final product. Print is a means of storing and communicating information.  It is not a commodity in the true sense of the word. Continuing to refer to "commoditizing" print only serves to distract from the fact that real market differentiation comes from having a capital base that produces goods that are uniquely valued by clients. If you look at all of the fortunes that have been built up in commodity businesses, one would think that the idea of commoditizing what you do would be a good idea. I hate to bring up VistaPrint again, but this is a company that has commoditized business cards and other mundane printed goods, and has significantly higher profit rates than other print businesses.

To anticipate and prepare for the transfer of small and family-owned enterprises.

The marketplace usually takes care of this all by itself. In the report, the definition of "small" is actually 50 to 250 employees, what would be in the range of $6 million to $30 million in annual sales in the U.S. (Shops with less than 50 employees are called "very small" in the report.) The problem in this group is that their size and capital investment abilities are limited, and there is great concern about global competition.

Strangely, history tells us there is a benefit to being small. Digital technologies now make it possible to operate production with far fewer employees, and with greater ability to nimbly service clients. As I read the report, I kept wondering what they would have written in the 1980s, when the digital color prepress revolution allowed small and mid-sized printing companies to expand at a rapid rate because of the dramatic shift from black & white to process color. Or in the 1990s with the introduction of the Xerox DocuTech that allowed many entrepreneurs to build their businesses into very impressive operations.  The cynic in me says that reports like this one are the result of some of the biggest companies in the industry having been less than proactive, and certainly not innovative, but with enough political clout to get funding for a study on the subject. It is the smaller companies that drive real change.

It was small typographers, through phototypesetting, that killed the big union trade typographers; it was small color separators, using something called "color scanners" costing $300,000 in the late 1970s and early 1980s that caused the big color shops to crumble. Desktop publishing used by freelance designers robbed the printing industry of its value-added prepress services. It's hard to think of a single trend in the past twenty years or so that has not started in small establishments—with resistance from larger firms—and then bubbled up to the top of the industry, creating havoc along the way. Smaller businesses in most industries are known for their innovation because that is the way that they enter the marketplace. They do not have established bureaucracies that have to transition (or unravel) to adjust to new market conditions. Larger companies set entry barriers for smaller businesses, and then they adopt their innovative practices once they are proven in the market. This pattern is common in many industries, yet studies of industries in trouble almost always focus on large firms, and not the emerging smaller ones who bring the disruptive ideas, who if encouraged, have insights and new business models that have more effective in the new conditions.

To rationalize investment strategies in the printing industry to prevent the acceleration of vicious cycle of overinvestment.

Overinvestment? How about malinvestment? The printing industry worldwide has had a long history of underinvestment, actually, and slow adoption of technologies outside the press. That is, all of the money is spent in the pressroom, with little spent in management systems, marketing, and other areas. First of all, if there were truly overinvestment, that would be punished quickly and severely by companies having to shut down due to overextending themselves. Secondly, there is a high statistical correlation between capital expenditures and sales. As sales rise, capex goes up at about the same rate. The problem is that capital goods last a long time, so when demand unexpectedly drops, you're stuck with overhead and equipment that does not match the demand. It looks like "overinvestment," but it's actually bad planning and bad forecasting. It's a symptom of a problem, it's not the actual problem. It's not an accident that the recent Graph Expo was so good when you consider the large number of equipment leases that are expiring, for equipment purchased when the "big idea" was that the Internet would stimulate print demand forever, despite forecasts by some (ahem… pardon me as I clear my throat) that it would not and could not do so.

To enforce the printing industry position in an evolving value chain, which includes brokers and new media in particular.

Okay, something is lost in the translation, and instead of "enforce," I assume they mean "promote" or "emphasize" or something like that (unless Tony Soprano's guys are involved, in which case "enforce" would be correct). This is one of those situations where the cow is already out of the barn. Printers in the U.S. have relied on brokers for years, especially in our biggest cities, where some printers have never had a sales force of their own, using brokers and other printers for their revenue generation.

Interestingly, the report has the word "Internet" in it only 37 times in its 148 pages, according to my Acrobat search, and it's usually mentioned as a threat. I usually have that many mentions of the Internet in just one column! Well, the threat part is gone: the Internet has done its dirty work to our industry already. It ceased being a threat $30 billion ago. It's almost like calling the police to report a robbery that occurred months ago, claiming it just happened.

These are just a few items from the report, and as I finished reading it, it gave me an eerie déjà vu reminder of the 1976 McKinsey report about the industry which promulgated both simplistic and bad strategic advice to the industry for the better part of three decades.  I discussed this report in a previous column.

In spite of the criticisms above, I actually do recommend downloading this European report, and reading it critically. I was not able to present the fullness of the report here, nor to dissect its analysis and recommendations. It does have problems. The authors accept recent history as brand-new trends, not recognizing that many of those trends are quite old or typical of industry behavior in many scenarios. There is little in the report to spur an urgency for entrepreneurial innovation and the creative destruction that our industry, globally, needs so badly. It seeks instead to identify tired solutions that protect existing businesses and industry structures.

There is one thing the report identifies that clearly separates the U.S. from our European counterparts. In Europe, there is a constant grinding of daily business decisions against government regulations that might be similar from country to country, but are not always applied equally when crossing borders. While there are differences in laws and regulations from state to state in the U.S. , the differences from country to country in Europe since its economic unification started in 1992 still seem to present some annoyances that have yet to be ironed out.

The biggest value of the report is its generous helping of data about the printing industries of China and Europe. For that reason alone, it is worth referring to regularly. It also has some handy presentations of industry structure and flows that might be good when working with those who are new to the industry and need a quick briefing of the issues.

Other than that, the report is a reminder of the low expectations and sense of powerlessness that many unfortunately continue to display in our industry, creating a myopia that blinds us to the opportunities that a new globally connected communications marketplace holds for those who desire to take the risk and break away. There are lots of companies demonstrating every day that this is not only possible, but profitable.  The industry rarely needs the communal action that this report advocates. It's always amusing that when an industry is riding an economic or technological upturn, the companies are just fine on their own, but when a downturn comes, so comes the great interest in communal actions. The industry was shaped by entrepreneurs, and those are the executives who will disprove common preconceived notions about our future by creating a future of their own making, with all of the risks and rewards that has, wherever that may lead.