Cost Inflation and Making the Case for Print

By Andrew Paparozzi
In June 30, 2010

The two topics don’t seem related. But they are—closesly.

Nearly two-thirds (65.7%) of the NAPL Printing Business Panel report paper prices have increased so far this year and over two-fifths (43.3%) report energy prices have increased. The average increases: 5.0% and 6.7%, respectively.

That’s a bigger problem than it once was—and not just because the lingering recession continues to limit cost pass-through. As NAPL has long emphasized, competition across our industry is getting more intense and diverse despite record consolidation as the Internet and digitization break down barriers, letting everyone into everyone else’s business. Where the competition was the printer across town, it may now be the printer across the country or the printer across the ocean. Or the mailing company, fulfillment company, or office superstore that is getting into printing. Or, as representative comments from two participants in our research reinforce, the non-printer who is providing an electronic alternative to print:

“We are passing paper price increases along, of course, but no others yet. I believe that it might ‘stymie’ the slight recovery we are hopefully experiencing. How many more marketers will jump off the old print bandwagon? How many more marketing dollars will be diverted away from print? It’s still the three Ps: paper, postage, petroleum. Any two of the three rising significantly will kill print dollars—perhaps for good.”

“There were narrow margins two years ago. There are no margins now, and clients are unwilling or unable to spend more or even the same! They buy less volume and keep asking for better unit costs. We have not attempted to pass increases to clients; they’re threatening to bolt—not to other suppliers, but just to live without printed items. With three major threats to the medium of print—technology replacements and options, environmental concerns, and new mailing costs and complexities—all converging at once there is no room to pass on costs if they rise any more. This is not even considering the tough economy overall!”

What do we do? We maximize productivity and minimize costs as vigilantly during recovery as we did during recession because, for reasons discussed in the NAPL State of the Industry: Strategic Perspective 2010, http://www.napl.org, recovery no longer widens our margin for error. And we become advocates for print—not as a substitute for but as a complement to electronic media. As NAPL has also long emphasized, communication is mutually reinforcing, not mutually exclusive—we communicate this way and that way, not this way or that way. And every one of us is in the communications business, not the ink-on-paper business. Among the best resources for making our case: Sappi’s Life With Print, http://www.sappi.com, the Rochester Institute of Technology’s Print in the Mix, http://www.printinthemix.rit.edu, and the Print Council’s Print Delivers and Why Print?—Why Print is Green, http://www.theprintcouncil.org.

Andrew Paparozzi

Epicomm's Andrew Paparozzi, Vice President/Chief Economist, is well-known for his accurate and thoughtful discussions on the economy and US commercial printing industry. A foremost author and speaker on economic business trends in the printing industry, Paparozzi heads Epicomm's Printing Economic Research Center.

Leave A Comment