Consolidation: Not The Whole Story
The commercial printing industry continues to show significant consolidation. Based on the latest establishment data from the Bureau of the Census and NAPL estimates, the number of establishments in the commercial printing industry declined by almost 12,500 or 33.0% between 2012 and 1998—using 2007 as the base, the decline amounts to 5,500 establishments or almost 18%. These numbers provide information on the industry’s overall consolidation in terms of companies, and significantly fewer companies should translate into more business for survivors.
But establishment counts are just part of the story, they represent the net result of company births and deaths, so they do not provide information on the number of companies entering the industry. While the total number of companies continues to decline because the industry death rate is almost double the annual birth rate—see the chart below—we should not simply focus on the net result.
In the last several years, the industry has seen an average of almost 1,300 start-ups annually. This is important because establishment counts not only don’t provide information on the number of new companies; they don’t give information on the types of companies entering the industry. Remember, the companies that are entering the commercial printing industry every year are starting with a clean slate—i.e., without the legacy equipment, work habits, and mindsets that can limit flexibility. They’re coming in with a different workforce, with a different, more relevant set of skills. They don’t have the troublesome issue of long-term, loyal employees whose skill sets don’t quite match the direction on which the company is embarking—new entrants are hiring the skills they need at the start.
Thus, while we may pick up business from the printer that as shut its doors, don’t ignore the rest of the story—a new breed of nimble and tough competitors are entering the industry. Furthermore, don’t be lulled into a false sense of security because new entrants tend to be smaller companies. Smaller companies grow—and the good ones grow rapidly.
Andy Paparozzi Joe Vincenzino