Doing More with Less—Not Nearly Enough
NAPL estimates that sales in the commercial printing industry (all sources, not just printing) declined 0.2% in the first quarter compared to a year ago—a disappointing result, especially following gains in the previous three quarters of 0.8%, 0.7%, and 0.6%, respectively. This lends further evidence to the fact that the business environment remains highly inconsistent. So does the fact that sales increased in the first quarter for just 42.2% of our survey group, down sharply from 53.0% the previous quarter. For more detail on the sales distribution, see the recently released NAPL Printing Business Conditions. This report is part of the NAPL State of the Industry Series, which is sponsored by KBA.
With commercial printing industry sales continuing to disappoint, profitability has remained under pressure. Only one-third (34.3%) of State of the Industry participants reported pre-tax profitability moving higher in April—down from 42.0% that did so in January and below the 39.2% for whom profitability decreased. Thus, for two out of three companies in our research, profitability is declining or staying the same. And for many of the companies, it wasn’t good to begin with. Thus, it’s not surprising that when we asked—What actions will be most important to your company’s success over the next two to three years?—seven out of ten companies (71.1%) cited “being as lean as possible/controlling costs/doing more with less.” This was second only to “marketing more effectively,” which was cited by 73.9% of the companies. Almost half of the companies (47.2%) cited “getting faster and more efficient by streamlining our workflow/reducing steps/reducing touches.
Evidence that companies are doing more with less and becoming more efficient is supported by sales per employee data, which show, on average, an increase of 4.0% in 2012 for NAPL participants. The increase since the depths of the Great Recession is more than 11.0%. While bolstering profitability, going forward, increasing efficiency is not going to be enough, especially if we’re striving to get on the right side of market redistribution. Getting better at what we’ve always done doesn’t guarantee coming out on the right side. It’s going to require new mindsets and approaches to our business. Fortunately, many companies in our research group have come to that realization. We’ll be discussing this topic in more detail in the upcoming NAPL State of the Industry Report to be published this September.
Andy Paparozzi Joe Vincenzino