Forget about yesterday
In this new reality, market focus will separate the winners from the losers
The last couple of years have been fairly rough in the Canadian printing industry, though in recent years the low Canadian dollar had helped ease some of the pain. (Canada has been running a surplus on printing products with the U.S.) That changed recently and the rise of the Canadian dollar over the last year has brought home some of the problems the U.S. is facing. Talk to most people from coast to coast and you get the impression that things are not great; they may even be downright lousy.
But the Canadian industry hasn’t suffered the devastation the U.S. has endured. One in five printers in the States has closed or merged with another company. The effects have been felt throughout the industry with suppliers cutting back, declining paper prices and unbelievable pressure being put on printing prices. Margins have shrunk to an all-time low.
And yet, there seems to be an attitude that if you can hang on long enough, the other guy will go out of business and everything will return to normal. We are just experiencing the bottom end of the cycle that the industry goes through every so often, the reasoning goes.
The bad news is that the bad times are here to stay. This is not the bottom end of a cyclical downturn. Everything has changed; it’s not business as usual. The pressure on pricing is permanent and the demand for printing has changed. No pick-up in the economy will bring back some printing volumes. The Internet, shorter runs, digital printing, shorter product life cycles and the decline in mass marketing have all negatively impacted printing volumes.
Printing prices are not set by other printers, but by the market. Partly because of cost squeezes in the business world at large and the Wal-Mart effect, everyone seems to want more for less. Printing costs are being compared to alternatives and the pressure is on. To make matters worse, the cost of equipment is jumping in leaps and bounds and its life expectancy is dropping.
This may seem like a bleak picture but it’s the new reality. Should you sell your equipment and get out of the industry? No. But it is time to rethink your business strategy. The old plans are not going to work anymore. You have to find ways to drive costs out of your business. Continual cost savings has to become a way of life.
In this new reality, market focus will separate the winners from the losers. The specialists will stand out from the crowd. Not only will they have cost advantages, but more important they will have brand recognition. If you are not known for something, then you will not be known at all. Branding will become king in the industry.
Probably the most difficult adjustment will be the ability to sell the value of print to customers and prospects. Unfortunately, as an industry we are not very good at selling the value of print. As printers, we have always been reactive, waiting for customers to bring us their printing projects. The competitor of the future is not the printer down the road or across town, it’s companies in other communications media—the Internet, specialty channels, radio, and so on.
Is the printing industry dying? No. It has just become a lot tougher and the rules have changed. Those who play by the new rules will prosper and grow. But the reality is that you can forget yesterday; it’s a new day.
Alexander Donald is the publisher of Graphic Monthly Canada.