June 2007
Answers are outside the industry
Want to know how the industry is doing? Don
Probably the most common question I am asked by printers is “How busy is it out there?” The obvious implication is that if other printers are busy then they will all get busier—a high tide raises all boats. Years ago, back in the days of the general commercial printer, that sentiment sort of held true. If a significant portion of the industry was busy, then the entire industry got busy too. When most printers got busy, prices went up and everyone was happy.

Unfortunately, everything changed with the decline of the general commercial printer and the rise of the specialist, or niche player. That led to a splintered market. Today, the industry no longer consists of one market or even several markets and the trend toward division, not consistency, has definitely taken hold. In fact, the industry has become so fractured that one could argue it’s really a whole group of different markets.

Specialized or niche markets usually require unique equipment and selling channels, making it a lot more difficult for other printing companies to go after them. The barrier to entry to specialized printing markets is becoming a lot steeper and more difficult.

But not all niche markets perform to the same level of success. The direct mail market, for example, grew by 5% for addresses ad mail, according to Canada Post, and the likes of PLM and Yorkville Press, which specialize in the direct mail business, seem to be doing well. PLM, a public company, even declared a dividend this year. The business forms market, on the other hand, has been in the pits for years with consolidation still going on, as seen with Data’s takeover of Relizon, and NEBS’ takeover of All Trade. The variable printing market is growing at a healthy rate with years of growth still expected.

Another good example of a fractured market is package printing. There’s corrugated printing, which is flexo, and folding cartons which is offset (cereal boxes, etc.), flexible packaging, as in toothpaste, tubes, and so on, and metal decorating such as pop cans. Each market does not necessarily mirror the growth or retrenching of the other and each requires different equipment.

Other printing niches include cheque printing, which is completely dependent on how many people pay their bills with cheques, something that has been steadily declining as Internet payments rise. Davis + Henderson, the major cheque printer in the country still makes a lot of money even with a declining market.

The list goes on. There are literally hundreds of different printing markets, each with its own supply and demand dynamic, and each independent of other segments.

So the answer to the question “How busy is the printing industry?” depends on which market you’re talking about. But whatever market you’re thinking of, don’t look for the answer within the printing industry. Look for it outside. Ask yourself Which companies are driving each printing market? Are they healthy? Are they spending? The days of looking to other printers to determine whether your own fortunes will go up or down are over.
Alexander Donald is the publisher of Graphic Monthly Canada.
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