Doing More With Less: Getting Harder

By Andrew Paparozzi
In December 2, 2013

The Bureau of Labor Statistics recently released labor productivity data for the third quarter of 2013. On the surface, the data were positive, as output per hour in the nonfarm business sector rose at an annual rate of 1.9% in the third quarter. However, when measured on a year-over-year basis, productivity was flat. In other words: Output and hours increased at the same rate 1.8%. This is in sharp contrast with the third quarter of 2012, when, on a similar basis, the increase in output (4.1%) was double the increase in hours (2.1%). In a relatively sub-par economy, companies are still striving to do more with less. But, as these data suggest, that might be getting harder to accomplish.

The manufacturing sector fared somewhat better, as total hours were virtually flat—up just 0.1% in the third quarter on a year-over-year basis. Total output for the period rose 2.3%. As for commercial printing, our research group continues to reduce hours. Among State of the Industry participants, 34.7% indicated that total payroll hours were lower. While this is more than the 31.3% of companies reporting higher payroll hours, the gap is narrowing. A year ago, only 23.9% reported that hours were rising compared to 33.5% reporting declines. There’s a limit to cuts companies can make in order to boost profitability.

As discussed in the latest NAPL Printing Business Conditions: Vol.14, No. 4 (sponsored by KBA), increasing profitability will become more dependent on growing revenue. As a State of the Industry participant noted, “We can only cut so much.” Fortunately, it appears that a majority of the companies we survey agree with that statement. They realize that they must do more than focus on cost control. Among the initiatives being taken: Almost 83.0% are attempting to stimulate sales by taking a new approach to marketing (71.9%), increasing marketing (59.5%), or both; almost 69.0% have upgraded capabilities in key areas such as the digital pressroom, workflow, e-commerce, and digital infrastructure; and 57.0% have added products and services. Whether satisfied with performance or not, the overwhelming majority of our survey group are focused on improvement, accepting, as one member of the group says so well, that in our increasingly competitive, complex industry “we have to improve every hour of every day.”

Andy Paparozzi                      Joe Vincenzino

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.

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