Thank you for your interest in Dr. Joe Webb's Economic Outlook for the Printing Industry Webinar!

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Questions and Answers

The following are answers to questions we were unable to get to during the June 29th, 2005, economic outlook webinar, plus some additional detail on questions that were answered during the session.

Please note that the PDF of the webinar slides includes live links to URLs referenced during the program for easy access.

Q: What do you think will happen with employee salaries over the next three years?

A: This has been a big problem for the industry. Salaries will not keep up with GDP, with one of the reasons being that benefit costs are increasing faster, as well as our profitability problems. Additionally, as I indicated during the webinar session, we are no longer using as many highly skilled, highly paid prepress professionals, which brings down the overall average salary levels as well.

Q: How many Quick Printers are there in the U.S.? How does this compare to before 9/11?

A: I can’t provide a great deal of detail here as the most current data I have is the result of some proprietary work in this area that I can’t share, as well as the fact that the definition of quick printers can vary so much. You can review the Census data which indicates that the figure is 7,500, which it is, based on the way they define it. There are many Commercial Lithographic printers who are actually quick printers. That report shows 9,500 establishments with less than 10 employees, and the bulk of those would be considered by many to be quick printers. These are 2002 figures, and between them it’s probably about 1,000 fewer establishments now.

Q: What is the "next technology" in the Quick Printing industry? Is it variable data...or is something else in line to be the future "sweet spot?"

A: There is no such things as a “sweet spot.” Business people who look for “sweet spots” usually find that they last for only a short period of time. The “sweet spot” is to offer compelling services that attract and delight clients, and those are always changing because clients needs are always changing. And they are different from printer to printer and from region to region.

Q: With profits being as low as they are and automation not affecting the bottom line like we had hoped...

A: It’s not that automation isn’t having an effect. We know from careful study of the PIA Financial Ratios that printers who spend more money on computing resources are profit leaders. But sometimes there are other factors that overwhelm those benefits.

Q: Could you elaborate a little bit more on the "value-added" aspects of printing? What will hybrid (traditional and electronic) media providers look for from printers now that they have potentially more effective multimedia advertising-revenue alternatives?

A: I strongly recommend Heidi Tolliver-Nigro’s book as a beginning discussion of value-added services. My concern with value-added services is that too often they are the printing version of “can I supersize that for you?” and rather, they should be treated as strategic core-changing initiatives. Value added services should often be looked at as whether or not they could stand alone as separate businesses, and not be just extra tasks.

It’s not an issue of what media providers look for from printers, but whether printers are proactive enough to create new services themselves that can identify, create, and satisfy those new needs.

Q: Do you expect the investment in capital equipment that the large printers have announced will put further downward pressure on prices.

A: I hope it does. We need to be more competitive with new media. Our industry’s prices are way too high compared to what can be done with electronic alternatives. That’s probably not the answer you wanted.

Q: What is the outlook for variable data printing for the rest of 2005-2006?

A: It’s growing, but it’s still small. A lot is done on color copiers in quick print shops, and is never counted. It’s a lot bigger outside the commercial printing business, among statement printers and others.

Q: How about getting printing done in India/China and shipping back to the U.S.? Is it feasible?

A: It’s being done every day, with total costs lower by jobs 20-40%, including shipping, for many mid-run length printing jobs (2,000-10,000).

Q: What impact do you see the current international paper mill lockouts having on the publication and commercial print markets? Who's going to be hit, when and how hard?

A: The Finnish paper strike was settled just before we started the webinar.

Anything that doesn’t lower the cost of paper hurts us in relation to media alternatives. From a macroeconomic perspective, we need more productivity that results in comparatively lower prices from the paper industry, and it seems slow in coming. If that doesn’t happen, lower costs have to come from somewhere else. This is one reason why offshore printing looks attractive: labor costs are a far lower percentage of the job costs. Most of the other costs are the same.

Q: What factors will positively impact the printers business in the upcoming months?

A: I don’t know if there are any, but perhaps if there are, it’s that more printers are realizing they have to sell more than just printing to their clients, such as what I refer to as communications logistics. Maybe there’s a growing realization that print, especially direct mail, is a more important part of the media mix, but I haven’t seen that documented to my satisfaction yet.

NOTE: Click here to view the recent interview with Dr. Webb and Vince Naselli regarding their offshore outsourcing research.

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