For Area Printers, the Issues Are Supply and Demands
Print may be a static medium, but the printing business shouldnt be, says Kevin Kervick.
Thats why, when he spoke with BusinessWest recently about the state of the printing industry in Western Mass., Kervick, president of Bassette Printers in Springfield, spent most of his time talking about what happens to a product after it rolls off the press.
Weve greatly expanded our services beyond ink on paper into the latest generation of digital printing and complete inventory-fulfillment programs, he said, most notably a mailing service that, he said, gives Bassette an edge over other companies.
Its a very complicated business to be in the domestic mail manual is as thick as the IRS regulations and understanding postage is a daunting process; youre in it with both feet, or youre not in it at all, and were in it with both feet, he explained. But the upside is the ability to save clients significant dollars on postage, which can be a large percentage of a projects cost.
Often, the postage can far exceed the cost of the printing itself, Kervick explained, noting that he recently lowered a customers cost for a single mailing from $56,000 to $22,000. Some of the requirements for low-cost, pre-sort bulk mail, such as where the address must be placed and how much room to leave for bar coding, can be worked into the graphic design of a marketing piece itself.
The customer can avoid paying huge penalties in terms of postage, so he can save much more than working with someone who charges 5% less for printing, he added. Thats part of providing an integrated base of service to the marketplace, connecting the dots for customers.
Its a story being told in different ways by area printers: the need to provide something extra in a market that has gradually tightened over the past decade or so, but has not yet been dramatically affected by the general economic bloodletting of recent months.
We havent seen a slowdown yet, although Im not overly optimistic that we wont see one, said Susan Goldsmith, president of Marcus Printing in Holyoke. It is a concern going forward. This market is so volatile and so fast-moving that it might be upon us before we can anticipate its coming.
Part of the reason for that has to do with customer demands regarding turnaround time, which has made it more difficult for printers to spread work out and plan for the long term.
The average turnaround used to be two weeks, and now its four days, said Goldsmith. Your backlog is completely different, and it makes it harder to know what business will be like over the next several weeks. You dont know whos going to want what.
While the news in the industry hasnt been bad, exactly, local printers arent taking anything for granted. In this issue, BusinessWest rolls off the press with a look at why players are concerned, and why there is also plenty of optimism for those who keep up with the latest trends.
Dont Stop the Presses
Steve Lang has heard the bad news on TV before.
Ive been in business a long time, and I remember a recession back in the 80s, said Lang, president of Curry Printing in West Springfield. Im not an economist, and I try to ignore the fact that theres a recession. I tell people, Im not participating in whatever recession you might be having; Im too busy getting things done.
Thats a relative term, Lang admitted, noting that when it comes to the drop in business that followed 9/11 a phenomenon that affected many U.S. industries his volume of business never rebounded fully, although it has gradually improved since then, a report echoed over the years by other area printers who have spoken with BusinessWest. I havent noticed any drastic changes recently with the talk of a recession.
The recession, most analysts say, has become more than just talk. Andrew Paparozzi, an economist with the National Assoc. of Printing Leadership, noted that U.S. gross domestic product, after adjusting for inflation, fell at an annualized rate of 0.3% in the third quarter, with deep cuts in consumer spending, while the latest consensus from Blue Chip Economic Indicators shows GDP declining another 1.1% in the fourth quarter, all of which will eventually impact printers.
The first quarter of 2009 is expected to be essentially flat, declining 0.1%, he said. According to the consensus, the economy begins to edge higher in subsequent quarters, but growth remains subpar. Given current conditions, this is probably the best we can hope for.
Still, said Kervick, in terms of the general economy, we havent seen any slowdown. Were fairly busy, and we have been right through the summer up to now.
However, printing tends to be a lagging indicator in the marketplace, he added. Corporations tend to set their budgets a year in advance. Were coming to the end of the year, and from what we can see from our large corporate client base, they havent gone into any kind of emergency budget reserve. We havent seen any kind of change in the marketplace. Now, what comes down in 2009 in terms of corporate budgets remains to be seen. Ive had a few conversations with customers who arent looking to make major cuts, but I havent had that conversation very deeply into our account base.
Even if economic recovery is around the corner, said Paparozzi, the ongoing economic turmoil in the U.S. cant help but affect the printing business, even if the hit arrives later than for other industries due to that lagging indicator factor. And, indeed, national figures are already highlighting a slowdown.
This year, sales of the commercial printing industry will record their first decline since 2003, with a drop somewhere in the vicinity of 2% to approximately $88 billion, Paparozzi said, adding that prospects for next year are not shaping up to be any better.
Meanwhile, Joe Webb, co-founder of PrintForecast.com, noted recently that, even in good economic times, the 10-year trend has been a downward one in printing, with those companies that continue to invest in the newest technology having a decided advantage in a tightening market.
The biggest pressure in the industry is on small shops; many new technologies have high price tags that are beyond their reach, Webb noted. Office superstores are strong competitors because of their superior retail locations and brand recognition, even though service is less personal and interactive than dealing with small commercial printers. Digital-printing companies will do well if they fully exploit the new way of doing business that sector requires.
Thats a lesson that Lang, like other area companies, has taken to heart. In order to stay competitive, he said, Curry has diversified its offerings over the years.
Our meat and potatoes, printing of invoices and things like that, if we had stuck with only those things, wed be in serious trouble, he told BusinessWest. But we diversified into different aspects of digital printing. We added on a sign business. So in that way, weve been growing.
Goldsmith, too, understands the importance of offering more than just traditional printing services to an ever-more-demanding customer base.
The new thing is digital printing, variable printing, one-to-one communications, she said. Instead of doing a mass mailing to 10,000 customers, we can personalize it so that each one coming off the press can be completely different and targeted directly at each customer.
Its one example, she said, of the fact that print marketing still offers solid business opportunities advertising hasnt all gone the way of the Internet and broadcast media but that printers who want to take advantage need to offer something extra, such as individualized direct mail. Thats a new technology weve really embraced in the last year and a half, Goldsmith said, and I think its helping to drive business in the door, and is one of the reasons we havent seen as much of the slowdown as we might expect.
One thing printers also havent seen is relief from high materials costs, which soared along record oil prices earlier this year but have stubbornly refused to come back down a story being repeated in other industries, such as grocery stores.
Because of the price of gas, weve seen steady increases in the cost of paper, Lang said. The funny thing is, now gas prices are coming down, but the paper prices are staying the same. Im sure thats a trend that plenty of other businesses are seeing, with whatever supplies theyre purchasing.
But at the end of the day, he said, its just another hassle in an industry that continues to see plenty of opportunities along with the challenges.
When things get really slow here, when the pipeline starts to dry up, we might start to worry, Lang said. But things always seem to pick up.
Joseph Bednar can be reached at[email protected]