What Should We Be Thinking About?

By Andrew Paparozzi
In June 1, 2010

Our industry continues to move closer to recovery. Declines continue tomoderate—sales were down 5.4% during the three months ending in March, well below the nearly 20.0% declines common when the recession was at its deepest, please see our May 19 post “Declines in Commercial Printing Industry Sales Continue to Moderate” for further details—and key NAPL business indicators, from confidence to factory payroll hours, are moving off bottom.

But as NAPL has long emphasized, recovery can pose just as much danger to our industry as recession if we relax our guard and assume recovery will make everything right. Among the critical points we should be considering if we are to benefit from the upturn ahead:

  • Despite recordconsolidation, competition in our industry is only going to get more intense in the coming months as companies begin to move away from their recession strategies to focus on business growth and market share development. How will we distinguish ourselves from the competition? What will our value proposition be? And will it create a compelling reason for partnering with
    us or leave us looking like everyone else? 
  • Surviving recession isn’t enough anymoreWith structural change constantly redefining our industry, traditional survival strategies of hunkering down and waiting for the recovery to bring us back into profitability simply won’t work anymore—at least not for the majority of us. As NAPL has long emphasized, “we now either prepare for recovery or get left behind.” 
  • A temporary boost in activity early in recovery does not mean everything’s going to be okay.Deep recessions create a lot of pent-up demand. Don’t be fooled into believing that the release of pent-up demand early in recovery means we really don’t have to change much, afterall. 
  • Previous recoveries were about growing with the market. This recovery will be about growing at someone else’s expense. Once our recoveries were inclusive—the rising tides that lifted all boats. Now they are increasingly exclusive—increasingly reserved for companies that are prepared for what our industry is becoming and that embrace the new rules of recovery. 
  • Cost inflation is on the way.
    Now it’s paper and energy. But as recovery accelerates it will be a broad range of materials and consumables and, eventually, salaries, wages, and interest rates. How will we protect ourselves? 
  • We are heading into recovery, not expansion.They are not the same. Recovery simply means we are recouping what was lost, while expansion means we are gaining new ground beyond pre-recession levels. We are far from that: Even assuming our industry grows 2.0% this year—the high end of our forecast range—and 5.0% per year starting next year—an extremely optimistic assumption—it will take until 2014 to just regain 2007 volume. 

For more information on these issues, please consult the NAPL State of the Industry: Strategic Perspective 2010 and the May 2010 NAPL Printing Business Conditions.

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