Download - Economic and Print Market Trends and Outlooks Ronnie H. Davis, Ph.D. Chief Economist PIA/GATF
Economic and Print Market Trends and Outlooks
Ronnie H. Davis, Ph.D.
Chief Economist
PIA/GATF
Print Market Trends and Outlooks• A Look Back--The Print Rebound and Current
Market Dynamics• The Re-structuring of the Industry• Outlook for 2005 and 2006• Profit Picture• Global Threats and Opportunities• Keys to Success
The Print Rebound of 2004
Printing Shipments (% Increase 2004 vs 2003)
2.8%
2.3%
4.8%
3.6%
0.8%
0.2%
3.5%
2.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
Total PrintingShipments
Ink-on-Paper Toner Based Ancillary Services
2004 2003
Print Rebound of 2004 by Market Segment
Printing Shipments by Market Segment (% Change 2004 vs 2003)
-0.4% -0.4%
2.6% 2.7%
-4.4%
1.2%
-4.9%
5.5%
8.5%
5.9%
-0.2%
-3.1%
-2.4%
0.8%
-6.3%
6.6%
-8.7%
-1.8%
1.0%
3.6%
7.9%
9.2%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
Book Printing
Business Form Printing
Financial/Legal Printing
General Comm
ercial Printing
Label, Wrapper Printing
Magazine Printing
Newspaper Printing
Package Printing
PrePress Services
Quick Printing
Trade Binding
2004 2003
PIA/GATF’s Print Market Tracking Model• Based on PIA/GATF surveys, the PIA/GATF
Atlas model on printing plants by market segment and employee count, Ratios data on shipments per employee, adjustments for “survivor bias”, “size bias” and “member bias”.
• The most accurate tracking available--used by the Federal Reserve System
Final Numbers for 2004
Printing Industry 2004
Total Shipments(Increased by)
$161.1 Billion($4.4 Billion)
Printing Plants(Decreased by)
42,997 (4,386 Web Plants)(1,538 Plants)
Employment(Decreased by)
1.1 Million Employees(18,000 Employees)
Reasons for the Rebound
• Strong economic growth (over 4%)• Advertising rebound• Presidential election (a half-point kick)• Stable postage rates
Print’s Restructuring
• Over last 4 years a decline of 4,800 plants and around 150,000 employees
• In 2001 and 2003 a decline of 2.4% in sales each year
• A loss of over 11,000 printing plants since 1994
• Average size plant has increased from around 17 to over 25 employees (50% increase)
• Only larger plants are growing in number
Larger Plants Only Ones Growing in Size
16,780
14,868
12,031
10,778
7,820
6,981
6,1315,461
2,604 2,494
1,574 1,633
727 758
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
Num
ber
of P
lant
s
1-4 5-9 10-19 20-49 50-99 100-249 250+
Number of Employees
Number of Printing Plants by Size (Changes From 2000 to 2004)
Number of Plants 2000
Number of Plants 2004
Print’s Restructuring
• There are still almost 43,000 plants• Over next 10 years projections are for further
declines:–Low-a loss of 4,000-5,000–Middle-loss of 6,000-8,000–High-a loss of 8,000-10,000+
Print and the Economy
• Economy grew over 4% in 2004 and print grew 2.8% (70%)–2.8% is “real” print--printing prices declined by .2% in 2004 (PIA/GATF estimate for FRS)
–Up until mid 90s grew as fast or faster–Still opportunity (3% of $160 billion is almost $5 B)–Some processes/segments growing stronger
US Economic Growth Continues Strong• After a strong 2004 growth of over 4% the US
economy is still growing strong.• First Quarter 2005 the US Economy grew by
3.5%.• Inflation is remaining in check at 3%.• Unemployment is on the decline.• Remainder of the year we forecast the
economy growing by 3%.
First Quarter Update
Another Strong Quarter
Total Shipments Up 3.6%
Ink-on-Paper Up 4.2%
Toner Based Up 6.3%
Ancillary Services Up only 1.8% (a reversal of ink-on-paper and ancillary services)
The Economy 1st Quarter 2005Overall Economic Growth Up 3.8%
Paper Prices Up over 3%
Print Prices Up 0.3%
“Real Print” Up 3.3%
Outlook for 2005
• Stronger Growth In:- Direct Mail
- Books
- Packaging / Labels
- Periodicals
Another Strong YearTotal Shipments Up 3%
Ink-on Paper Up 2.5%
Toner Based Up 4+%
Ancillary Up 3+%
Printing Shipments From 2005 to 2003
Printing Shipments
3.6%
4.2%
6.3%
1.8%
3.0%
2.5%
4.0%
3.0%2.8%
2.3%
4.8%
3.6%
0.8%
0.2%
3.5%
2.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
Total PrintingShipments
Ink-on-Paper Toner Based AncillaryServices
1st Qtr. 2005 Outlook for 2005 Actual 2004 Actual 2003
A Five Year View of Print Markets (2005 – 2010)
• Assuming US economic growth of 3-3.5% per year over the next 5 years total printing shipments should grow around 2-3% per year or slightly less than the overall economy.
• These are “real” numbers in that the number for the economy and print markets has been adjusted for inflation.
Forecast For Average Annual Growth of Print Sales by Sector
Sector Average Annual Sales Change 2005-2010
Direct Marketing Printing 3-3.5%
Labels/Wrappers Printing 2-3%
Packaging 2-3%
Catalog Printing 2-3%
General Commercial/Quick Printing
2%
Periodical/Magazine Printing 2%
Book Printing 1-2%
Directories Printing 1%
Business Forms Printing -3 to -4%
Question Mark for 2006
• Postage Rates are going up• Postage and print relationship:
–Over 40% of $print through USPS–Past history shows “price elasticity” of mail at .50 and increasing
–PIA/GATF estimates that for every 1% increase in postage there is a .175% decline in print volume
A Postage Increase in 2006
• Much lower than anticipated (PIA/GATF led the postal reform effort)
• This could cause around a 1% decline in print volume over a 12 month period
• If the economy holds up and grows 3.5% or so in 2006, and if there is a surge of direct mail before the increase:–2006 printing shipments may edge up around 1.5-2% –2007 depends on economy and postage rates
Profit Picture
• A lagging recovery• In the 90’s --3.5% for all printers and 12% for
profit leaders• Recession--dropped to 1% for all and 8% for
profit leaders. A slow recovery but should see significant improvement this year
Profit Leaders vs. Profit Challengers
Profit as a Percentage of Sales: All Printers and Profit Leaders
2.6%2.0% 2.3% 2.5%
3.3% 3.0% 3.2% 3.3% 3.4% 3.2% 3.1%
1.0% 1.6%
8.9% 8.8% 9.2% 9.6% 9.9% 9.6% 9.8%10.2%10.9%10.5%
8.0% 8.4% 8.6%
1.7%
11.8%
0%
2%
4%
6%
8%
10%
12%
14%
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
All Printers Profit Leaders
Global Threats and Opportunities• US Printing industry still a “net exporter”• Imports growing faster than exports• Exports around 4%/Imports around 3%• Growth of China printing industry--over $700B
in 2003• Growth of global sourcing--almost 4/10
printers say their customers are looking at global print sources
• One in three US printers lost a job to a foreign competitor in 2003
Imports Growing Faster than Exports From 1998 to 2003
37.6%
1.9%
37.7%
14.5%
29.1%
-14.0%
110.6%
-30.9%
61.4%
24.4%
54.3%
13.6%
-40.0%
-20.0%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
General Comm
ercial
Magazine/Newspaper
Book Printing
Business Forms
Label, Wrapper
Greeting Card
Change in US Imports and Exports by Market Segment 1998 to 2003
Change in US Imports
Change in US Exports
Global Threats and Opportunities• Almost half of those that lost a job indicated it
was lost to a Chinese printer• China has over 92,000 printing plants and
71,000 copy shops• From 2001-2003 China imported 2,400 sheetfed
presses and 540 web presses
Bottom-Line: Import share will grow but vast majority of will print will remain domestic
Keys to Success for Printers
• Have a well developed strategy• Manufacturing efficiency• Administrative efficiency• Be a Learning Organization• Share the Wealth• Offer more ancillary services