Forecast van WhatTheyThink van de printer markt in Amerika
Forecast 2018 report, by Dr. Joe Webb and Richard Romano provides detailed analysis of the most recent Print Business Outlook Survey, the latest industry economic data and macroeconomic trends, as well as industry and cultural technological trends to look out for in 2018.
By Richard Romano
Published: February 5, 2018
Last fall, the Economics and Research Center (ERC) conducted its Annual Print Business Outlook Survey. Here are the highlights of that survey. For complete results, as well as macroeconomic data, industry forecast, and technological trends, see the full Printing Industry Forecast 2018 report.
In terms of revenues, business in 2017 has been perceived by our survey respondents as generally OK; 38% said that revenues had increased by six percent or more compared to 2016 (up a few percentage points from last Fall’s survey), while 19% said that they had decreased by six percent or more, although this is up five percentage points from last year.
In terms of your revenues at this location, how has 2017 compared to 2016? —All responses, Fall 2017
One-half (49%) of survey respondents expect revenues to increase by six percent or more in 2018. (Last year, in our Fall 2016 survey, 44% of respondents expected 2017 revenues to rise by six percent or more. As we just saw, that worked out in reality to 38%, so they weren’t off by that much.) Only 1% of respondents expect revenues to decrease by six percent or more. (Last year 4% expected a six percent or more decrease in revenues, which worked out to 19% in reality. So optimism does needs to be tempered to some extent.)
Overall, though, exactly one-half (50%) expect revenues to hold steady, with minimal increase or decrease.
How do you expect your 2018 revenues at this location to compare to 2017? — All responses, Fall 2017
Optimism seems to be a bit more tempered for 2018 than it has been in past years, with the largest print businesses—which had the best revenue showing in 2017—expecting the worst for 2018. Still, though, these are not gloomy expectations and even if we back out X% for over-optimism, it still doesn’t portend doom.
Jobs/orders in 2017 were up over 2016; one-third of print businesses (33%) reported that jobs increased six percent or more from 2016. (But then in our 2016 survey, 40% had reported a job/order increase of six percent or more.) Twelve percent of respondents reported that jobs/orders had decreased by six percent or more over 2016 (this is twice the percentage who said this in our 2016 survey).
The number of jobs is outstripping revenues; this is digital printing in action, specifically, short-run printing. After all, a “job” or “order” can be a single, one-off wide-format print, or it can be a 10,000-sheet offset run. Anything that generates an invoice is a job or an order. Aggregating sufficient jobs like the former (or any short-run work) has been a perennial challenge—as has been charging enough to yield enough revenue to make those short-run jobs equivalent to a longer-run job—see the next section), so it explains why things like plant productivity and pricing are top challenges for these businesses.
In terms of your jobs/orders at this location, how has 2017 compared to 2016? —All responses, Fall 2017
Generally, print businesses see jobs/orders continuing to grow; 44% expect jobs/orders to increase six percent or more in 2018, while only 2% expect them to decrease by the same amount. The majority (54%) expects jobs/orders to stay about the same or perhaps increase slightly (29%). (In 2016, 45% expected 2017 jobs to increase by six percent or more; the real number was 33%, so that offers some sense of the extent of last year’s over-optimism.)
It seems likely that job growth will continue to outstrip revenue growth.
How do you expect your 2018 jobs/orders at this location to compare to 2017? —All responses, Fall 2017
According to survey respondents, profits in 2017 were up over 2016; 38% reported that profits increased six percent or more from 2016, exactly the percentage that said this in our Fall 2016 survey (about 2016 profits compared to 2015). Seventeen percent of respondents reported that profits had decreased by six percent or more over 2016, compared to 4% who said this in our 2016 survey. So while revenues and jobs are growing favorably, compared to previous years, profits are not.
In terms of your profits at this location, how has 2017 compared to 2016? —All responses, Fall 2017
Overall, 38% expect profits to increase six percent or more in 2018, while only 2% expect them to decrease by the same amount. The majority (60%) expects profits to stay about the same (36%) or increase slightly (20%). (In 2016, 38% expected 2017 profits to increase by six percent or more, and it appears they were dead on.)
We know from Census Bureau data that printing shipments have declined substantially this year, so the generally rosy numbers we see in these business conditions data suggest that we have generally healthy respondents. Indeed, there are some very healthy businesses in this industry.
Overall, the issue is that revenues are declining, which pushes out weak companies, and the changes in revenues vs. jobs is instructive. If revenues are going down (on an after-inflation basis), while jobs are increasing at the original rate (you don’t have to adjust the number of jobs for inflation), that disparity tells us that the run lengths of the jobs are the things that are changing the most.
How do you expect your 2018 profits at this location to compare to 2017? —All responses, Fall 2017
The once-perennial number one challenge—“economic conditions”—has dropped way down the list. The new number one—“pricing”—was selected by 44% of respondents, up from 26% a year ago. As the shift to digital printing continues, how to price these items, and in a way that market will bear, becomes an ever-greater issue. This is also due to the high number of 1–9-employee shops responding to our survey; this tends to be a bigger issue for them than for other size classifications. Still, it does indicate how difficult that marketplace is.
The number two business challenge moves up from number three: “increasing plant productivity,” selected by 33% of respondents, up from 31% a year ago. Remember our earlier commentary about jobs/orders outpacing revenues and profits? Here is evidence of that issue (as is pricing). Shops have to aggregate as many shorter-run jobs as they can and get them through the workflow as quickly as possible.
So, basically, more jobs, shorter run lengths, and smaller invoice values are where the problem is.
In the next 12 months, which of the following will be your biggest business challenges? —All Respondents, Fall 2017 (multiple responses permitted)
Some unusual items have taken precedence in our opportunities list., but one of them is not “improving economic conditions”—at 41%, it again tops the list and is up from 30% last year.
Moving into the number two spot, and up one percentage point to 28% of respondents, is “helping customers integrate print and non-print marketing campaigns.” This is, after all, what we mean by “marketing services.” (The best way of effecting this is by “selling marketing automation services” which, alas, is down at 8%. So there’s still a bit of education required.)
Down two slots and down three percentage points to 27% is “customized, personalized, or variable-data printing jobs,” which is tied with “customers outsourcing more work to us,” which is up three percentage points. There is so much print and other marketing-related work that end users can do themselves (a lot of which was brought in-house years ago), so print service providers are looking to be able to take those tasks back away from them and let them focus on their core businesses. Or that’s the hope anyway.
In the next 12 months, which of the following will be your biggest business opportunities? —All Respondents, Fall 2017 (multiple responses permitted)
What are print businesses planning to buy in 2018? Well, not a great deal. The number one item is “bindery equipment for digital production” (26%, up from 22% in last year’s survey). The number two response was actually in the top spot last year: “we have no planned investments,” selected by 21%, down from 25%.
Software occupies the next two spots—“workflow automation” and “MIS,” selected by 15% (unchanged from a year ago) and 11% (up one point), respectively. Automation is one perceived solution to the productivity problem, and MIS is seen as a solution to the pricing challenge, as understanding costs is a key to understanding pricing.
Rounding out the top five is an eco-solvent wide-format printer (24 inches or greater), selected by 8% of respondents. It was at 2% a year ago.
Generally, there are few planned investments industry-wide, and that’s not a great surprise. Most substantial investments in this industry are multi-year investments, and now we’re in a cycle where they don’t need any major new equipment and there’s nothing they find compelling to buy. Back in the 90s and 00s, production software like Photoshop, Illustrator, or QuarkXPress/InDesign was always top-of-investment-list items, as shops prepared and budged for updates and new versions. In the era of Adobe Creative Cloud, where software doesn’t need to be updated the way it used to be (it’s now a subscription model and legacy non-cloud versions are no longer supported), it isn’t thought of as a specific line item.
Which of the following investment items have you budgeted for and plan to acquire in the next 12 months? —All Respondents, Fall 2017 (multiple responses permitted)
New Product Adeas
In each survey, we try to gauge the extent that print service providers are branching out into new product and service areas, such as wide-format printing and all the various applications that fall under that increasingly broad category. We sought to gauge printers’ interest in some newer product and service areas by asking if they:
Were interested in adding it, but have no timetable for it
Were actively considering and researching it
Had added it in past 18–24 months
Have specific budget plans to add it in next 12–18 months
Considered it, but found it not appropriate to their business
Will outsource this work as needed
Have never considered it/don’t know
For the chart below, we aggregated the “added it in past 18–24 months,” “have specific budget plans to add it in next 12–18 months,” “actively considering and researching it,” and “interested in adding it, but we have no timetable for it” responses.
All of these items are potentially lucrative products, applications, or services to get involved with to some degree, and many are the hottest, most-discussed technologies in the industry. For vendors, this section indicates where the opportunities (or education) lie. Likewise for print service providers. These are of course not completely unserviced or neglected applications, but for commercial printers looking for greener pastures (or greenfield projects), these are good areas to forge relationships or even focus acquisition efforts (which, as we saw, is a top opportunity).
Areas of interest in new print-related applications —All Respondents, Fall 2017
Two-thirds (65%) of respondents say they plan to hire staff in 2018. One-fifth (19%) do not—and 16% don’t know, which suggests that they are not lacking in qualified staff but may need to fill whatever vacancies crop up over the course of the year.
Are you considering hiring/adding staff in the next 12 months? —All Respondents, Fall 2017
Who do shops on the hunt for staff plan to hire? What situations are vacant? Despite all their talk about sales personnel, the top position selected by survey respondents is graphic designer (for print), chosen by 11% of those looking to hire. This is tied with marketing and market communications staff. Prepress staff are sought by 10%.
Larger printers are focused on sales reps, but smaller shops place a greater emphasis on employees whose skills allow these businesses to offer a greater portfolio of products and services—graphic design, web design, marketing communications people, and so on. They are doing more things to capture more work, and as means of providing higher levels of service.
If yes, for what positions are you looking to hire? (multiple responses permitted) —Respondents considering hiring in 2018, Fall 2017
Full survey results—and more—can be found in the special report Printing Forecast 2018.
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