Industry Consolidation A Structural Event
In a recent post “Industry Consolidation: No Panacea,” we noted that more than half (52.8%) of NAPL State of the Industry participants (the NAPL State of the Industry Series is now proudly sponsored by KBA) cited “gaining work from companies that go out of business” when asked what they were counting on to increase sales. We also noted that, fortunately, few companies (3.1%) were counting entirely on the failure of their competitors, and despite consolidation (a net loss of almost 5,000 establishments or 16.2%), the commercial printing industry is more competitive than ever.
As the chart below shows, prior to the late 1990s the number of commercial printing establishments would rebound when recession ended—if the recession reduced the count at all. As the data clearly show, this hasn’t happened for some time—not after the industry’s steep recession of 2001-2003 and certainly not after our recent historic downturn. The reason can be tracked directly to structural change—fundamental, transformational change that is independent of the business cycle. Structural change does not blow over, so we can’t wait it out. And it’s universal, so it already is or will be impacting all of us. As a result of structural change, our industry is being redefined and is evolving into something totally different than its not-too-distant root
Structural changes affecting the commercial printing industry include:
• Electronic alternatives to print.
• Digital technologies.
• The Internet and digitization.
• The growth of personalized, targeted communication.
• Clients relocating and/or consolidating.
These and other structural changes are redefining every aspect of the commercial printing industry and require new mindsets and approaches to achieve enduring success.
Andy Paparozzi Joe Vincenzino