How much will the nation's economy cool, and when will the slowdown be over? Those are the key factors influencing the outlook for printing, publishing and converting in 2001, according to the 20th anniversary edition of PRINT OUTLOOK, held on December 4-5 in Washington, DC. Apart from the impact of national economic conditions, the industry can probably look forward to a strong 2001 and to continued growth for the next several years, but some specific industry segments face a harder future. PRINT OUTLOOK 2001 was presented by NPES The Association for Suppliers of Printing, Publishing and Converting Technologies. It brought together economists, political observers, and other industry experts to explore the theme "Balancing the Challenges and Opportunities of Changing Times." Professor Frank Romano, Chairman of the School of Printing Management and Sciences at Rochester Institute of Technology kicked off the conference by describing findings of a new study on behalf of the Electronic Document Systems Foundation, assessing future prospects for 13 different print categories. Overall, Romano said, "the printing industry is alive and well and will continue to grow at 1-2 percent over the next 20 years. But, he warned' "one or two percent growth will have great difficulty sustaining the industry the way it is now. We're going to see major changes in industry structure," including reduction of today's 49,000 printing companies by at least half and more larger companies. The outlook is more difficult for newspapers, which are losing their advantage in both news reporting and classified advertising, as well as for directories. NPES Consulting Economist Michael K. Evans predicted that "the economy has slowed down but is not headed into the tank." By early in 2001 most of the bad news will be over, he said, and "by the end of next year we'll see real GDP rebounding to above average rates again." Real economic growth in 2001 will be in the 2.5 to 3.0 percent range, Evans predicted. He noted that productivity growth has continued and "will remain rapid not only next year but into the future." Noting that the surplus is expected to reach $230 billion, he forecast 4 percent growth for the next decade, adding that at that rate "there never will be a Social Security crisis," and there would still be a sufficient surplus to retire the national debt by 2010 even if the expenses of Medicare grew 12 percent. Andrew D. Paparozzi, Chief Economist and Director of the Printing Economic Research Center at the National Association for Printing Leadership (NAPL), noted that 2000 "has been a good year." Commercial printing sales will rise 5.5 to 6.0 percent for 2001, "one of the fastest growth rates we've seen in a while," Paparozzi said. Printers are responding to these pressures by diversifying, adding new services and pursuing opportunities in emerging markets, preparing for transition from "just printer" to "communications solution provider," he said, noting that the transition will require substantial resources, both human and capital. But, he added that he is convinced that as redefining of the industry occurs, sales will once again reach a level equaling GDP growth. While such services as digital printing, database management, and CD services will all provide larger shares of revenue for printers by 2002, the majority of revenues in that year will still come from "core" commercial litho and related operations, he added. An expert panel on industry consolidation, the broad wave of mergers and acquisitions that has swept the printing and publishing business in the 1990s, predicted this trend will continue in the future, even though many leading "acquirers" have retrenched recently and some have had serious financial difficulties. Robert Diehl, former CEO of Master Graphics, also insisted "the industry is ripe for consolidation," with between 25,000 and 50,000 different enterprises in operation. "That's an incredible number of businesses in a capital intensive industry of the magnitude of printing," he said. "Every year the industry grows printing capacity faster than the economy grows print demand." Ron Davis, chief economist at the Printing Industries of America, summed up the panel by predicting "the consolidation model will continue, though it will be refined. Over the longer run we will continue to see concentration in the industry, a decline in the number of plants and an increase in the size of plants." Shipments of printing equipment and supplies are likely to be six percent higher in 2001, according to information from the NPES Market Data Program, presented at the conference by Analyst Neil Richards. The NPES program projects that shipments of printing equipment and supplies are likely to rise two percent in 2000 and six percent in 2001, despite sharply reduced sales in several supply categories. Print, Internet in Tandem The internet is emerging as a major competitor for consumers' attention and a powerful advertising medium, but chiefly at the expense of television, not print, said Jonathan LaConti, manager of Eastern advertising sales at Women.com. In fact, print, and particularly magazines, are benefiting from the Internet's growth as advertisers use the media in tandem to build brand awareness and improve their marketing. "Print media continue to thrive," he added. New "cross media" strategies will enable marketers to build brand awareness with "a franchise across multiple platforms." Implementation of E-Commerce by Print Buyers A panel on print buyers and e-commerce predicted this trend will continue to expand, but more slowly than in the recent past, as many enterprises plod through awkward and difficult implementation processes. Tom Colaprico, Director of Print Production at Time, Inc., noted that Time, Inc. contracts printing of its 60 magazines through direct negotiation with seven web printers and bids out spot work including such projects as holograms and insert cards to a larger vendor base. The parent company Time Warner is in the process of implementing a PrintCafe-based workflow to handle its $440 million annual commercial print spending. Having moved five of its divisions to PrintCafe by December, Time Warner expects to have all 10 of its publishing units linked to vendors via the third-party e-commerce service by March 2001. Blankley, former press secretary to former House Speaker Newt Gingrich, speculated that from the very beginning "all eyes in Congress will be on the 2002 election." It will be extremely hard to pass legislation, he said, although there may be bipartisan support for changes in the estate tax and marriage penalty, which were passed by the current Congress but vetoed by President Clinton. Research and the information industries are also possible areas for bipartisan activity, he added. Complete PRINT OUTLOOK proceedings will be made available to non-attendees of the conference in print and interactive CD-ROM formats after January 1. The CD will contain speaker handouts and slides encompassing more than 250 pages of data, an invaluable source of information for business planning. For pricing information, contact the NPES Publications Department at 703/264-7200 or e-mail [email protected].