Transcript Printing Plants

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)
2004
2003
6.0%
4.8%
5.0%
4.0%
3.5%
3.6%
2.8%
3.0%
2.3%
2.0%
2.0%
1.0%
0.8%
0.2%
0.0%
Total Printing
Shipments
Ink-on-Paper
Toner Based
Ancillary Services
Print Rebound of 2004 by Market Segment
Printing Shipments by Market Segment
(% Change 2004 vs 2003)
2004
2003
12.0%
10.0%
9.2%
8.5%
7.9%
8.0%
6.6%
5.9%
6.0%
5.5%
3.6%
4.0%
2.7%
2.6%
2.0%
1.2%
0.8%
1.0%
0.0%
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-3.1%
-0.2%
-0.4%
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-0.4%
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
$161.1 Billion
(Increased by)
($4.4 Billion)
Printing Plants
42,997 (4,386 Web Plants)
(Decreased by)
(1,538 Plants)
Employment
1.1 Million Employees
(Decreased by)
(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
Number of Printing Plants by Size
(Changes From 2000 to 2004)
18,000
Number of Plants 2000
Number of Plants 2004
16,780
14,868
16,000
14,000
Number of Plants
12,031
12,000
10,778
10,000
7,820
8,000
6,981
6,131
5,461
6,000
4,000
2,604
2,494
1,574 1,633
2,000
727
0
1-4
5-9
10-19
20-49
50-99
Number of Employees
100-249
250+
758
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 2005
Overall Economic Growth
Up 3.8%
Paper Prices
Up over 3%
Print Prices
Up 0.3%
“Real Print”
Up 3.3%
Outlook for 2005
Another Strong Year
Total Shipments
Up 3%
Ink-on Paper
Up 2.5%
Toner Based
Up 4+%
Ancillary
Up 3+%
• Stronger Growth In:
- Direct Mail
- Books
- Packaging / Labels
- Periodicals
Printing Shipments From 2005 to 2003
Printing Shipments
1st Qtr. 2005
Outlook for 2005
Actual 2004
Actual 2003
7.0%
6.3%
6.0%
5.0%
4.8%
4.2%
4.0%
3.0%
4.0%
3.6%
3.6%
3.5%
3.0%
2.8%
3.0%
2.5%
2.3%
2.0%
1.0%
1.8%
2.0%
0.8%
0.2%
0.0%
Total Printing
Shipments
Ink-on-Paper
Toner Based
Ancillary
Services
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
Directories Printing
Business Forms Printing
1-2%
1%
-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
14%
12%
Profit as a Percentage of Sales: All
Printers and Profit Leaders
11.8%
10%
10.9%10.5%
10.2%
9.9%
9.8%
9.6%
9.6%
8.9% 8.8% 9.2%
8.6%
8.0% 8.4%
8%
6%
4%2.6%
2.5%
2.0% 2.3%
3.3% 3.0% 3.2% 3.3% 3.4% 3.2% 3.1%
1.0%
2%
1.6% 1.7%
19
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19
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19
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20
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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
Change in US Imports and Exports by Market Segment
1998 to 2003
Change in US Imports
Change in US Exports
110.6%
120.0%
100.0%
80.0%
60.0%
61.4%
37.7%
37.6%
40.0%
20.0%
29.1%
54.3%
24.4%
14.5%
13.6%
1.9%
0.0%
-14.0%
-20.0%
-30.9%
-40.0%
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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