Cited first-half 2016 sales growth of just 0.3%, well below 2015 levels, the industry survey-based report sees little significant change over the next 18 months.
Alexandria, Va. - Noting that commercial printing sales posted the weakest growth in three years in the first half of 2016—just 0.3%—and that little significant economic or industry change appears to be on the horizon, Idealliance’s new State of the Industry Report, 14th Edition, projects commercial printing segment sales to rise just 1.0%-1.5% this year and up 1.5%-3.0% next year.
“Nothing suggests the performance of either our industry or the economy will change significantly, for better or worse, over the next 18 months,” writes Idealliance Chief Economist and report author Andrew Paparozzi, who released the report’s findings during several events at this week’s GRAPH EXPO 2016 in Orlando, Fla., including two presentations at the booth of report sponsor, Canon, U.S.A. The report is based on surveys of nearly 200 companies across the graphic communications industry spectrum.
A free copy of the 40-page annual report will provided as a complimentary benefit of membership to all member companies of Idealliance by October 30, 2016, sponsored by Canon USA. Non-members may purchase copies of the report for $600 by contacting Tyler Keeney at (703) 837-1075 or [email protected]
, or register at idealliance.org/SOI14.
“Despite the fact that first half 2016 commercial printing sales were well below the 2.7% gain during the same period one year earlier, that is not a sign our industry is sliding into stagnation or recession,” says Paparozzi. “Rather it is another stop in our stop-and-go upturn. And we are in an upturn: Sales now total $82.6 billion, 6.2% above their 2011 low.
“Growth hasn’t been stronger and more consistent because demand for our services is still running well behind supply,” he continues, citing among the reasons for this shortfall the communications revolution created by the Internet and digitization that has “deeply depressed the demand for our core services—sales of commercial lithography declined nearly 40.0% between 2000 and 2014—and the economy’s inability to regain its historic 3.0%+ annual growth rate.”
And he cites statistics from the Census Bureau's Annual Survey of Manufactures showing that although sales of commercial digital printing increased nearly ninefold, from $1.0 billion to $8.7 billion between 2000 and 2014, sales of commercial lithographic printing declined by $23.5 billion, from $59.3 billion to $35.8 billion — a loss of about three times the increase in digital.
Paparozzi points out, however, that, “despite the weakness, sales were above year-earlier levels through mid-2016 for 62.6% of State of the Industry
participants, growing at least 5.0% for 46.2% and at least 10.0% for 30.8%. Additionally, 48.7% report pre-tax profitability is above year-earlier levels, nearly double the 26.9% who report the opposite.” Nonetheless, he adds, “more than 70% of the companies we survey are concerned about their ability to increase sales.”
When survey respondents were asked why profitability is up, far more credited actions they’ve taken, such as increasing revenue and holding the line on costs (60.5%), increasing production efficiencies (41.9%), and capturing higher-margin work (37.2%), than credited improved business conditions (20.9%), the failure of competitors (7.0%), or decreased price competition (4.7%).
In addition, “although prices are no longer in broad decline, pricing power is still very limited,” adds Paparozzi. “The numbers so far in 2016 for State of the Industry
participants: Prices are above last year’s levels for 22.8%, below for 7.6%, and unchanged for 69.6%. Just 20.7% have increased prices 2.0% or more and just 12.0% have increased prices 3.0% or more.”
The State of the Industry Report
, 14th Edition
, also reports on what respondents consider the keys to profitable growth and the internal barriers to growth, as well as what they see as business opportunities and which services and products they expect to grow fastest.
To help report readers prioritize potential opportunities, Paparozzi includes an “Opportunity Evaluation Matrix,” and, to head them off from false starts, provides a chapter on “Learning from Our Mistakes,” which offers insights of industry peers on their missteps in management, personnel, technology, and customer relations, among other areas.
The report concludes with a chapter outlining seven “Must-Dos,” actions industry executives can put into practice in their companies immediately to help them leverage their capacity for uncovering, evaluating, and profiting from new opportunities for growth and profitability in current industry and economic conditions.
The Idealliance State of the Industry Report
, 14th Edition
, is part of the State of the Industry Series
, sponsored by Canon, U.S.A., which includes a series of survey-based reports and updates on industry economic developments and trends. For information, contact Paparozzi at (703) 837-1062 or [email protected]