Margie Dana

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Ron Davis is one of the very few US economists who specialize in printing and the graphic arts. He is the Chief Economist for PIA/GATF. He has held this position since 1988.

By the way, PIA stands for Printing Industries of America, while GATF stands for Graphic Arts Technical Foundation. The two trade groups joined forces in 1999, resulting in the world's largest graphic arts trade association. (Not to confuse you, but their web site is www.gain.net. Go figure.)

When I heard that Ron Davis was speaking at a recent PINE event about the US print market forecast, I had to go. PINE stands for the Printing Industries of New England, a local PIA/GATF affiliate, of which I am a member. So many acronyms, so little time. Write this stuff down. There could be a test.

For my money, getting Davis' regularly issued "Flash Reports" about the status of the print industry is a top benefit for PIA/GATF members, so I took copious notes during his presentation. Allow me to share some highlights in today's column. Part 2 will run next week.

A Market Overview

Davis and Ed Gleeson (an economic and market research analyst for PIA/GATF) authored a market overview report entitled, "Navigating Print Markets in 2007-2008."* This report was the basis of Davis' recent presentation.

PIA/GATF tracks the dollar shipments in the printing industry in these three major categories:

• Ink-on-paper

• Digital/toner printing

• Ancillary services (such as graphic design, binding/finishing, database management, mailing and fulfillment)

Ink-on-paper is what you'd expect: offset printing. Sheetfed offset printing is #1 in this country. It remains the most common form of printing in the US, accounting for 40% (or $70 billion) of all US printing shipments at the end of 2005. Web offset printing accounted for nearly 30% of all US printing ($46.1 billion) for the same time period.

There are currently about 40,000 printing plants in the US. More than 25,000 of them produced some sort of sheetfed offset printing. About 4,100 plants produced some form of web offset printing.

US ink-on-paper sales (sheetfed and web offset combined) represent about 70% of the total dollar volume.

At the end of 2005, more than 11,500 US plants produced digital printing, which represented less than 10% (nearly $12 billion) of total US printing shipments.

The third category, ancillary services, represented approximately 23% of the US total for the same period, or $37.1 billion in shipments.

Halt, Who Grows There

The most popular form of printing - ink-on-paper - is experiencing slow growth, which will continue. Digital printing is experiencing strong growth. Davis predicts it will grow at twice the rate of ink-on-paper.

Go back and read this last sentence again. Are any of you surprised? You shouldn't be. In all of the surveys I've conducted, digital color printing is the one type of printing that every print buyer purchases.

The print industry tracks the US economy, so if our economy enters a period of slow growth, so will printing. A slowdown in the growth rate of both is expected over the next 12-24 months, and Davis advised printers to plan their businesses accordingly.

He then listed four different reasons for recovery in the industry:

1. Strong economic growth

2. Presidential elections

3. The rebound of advertising

4. Stable postage rates

Key Market Segments

Davis highlighted specific print market segments in terms of economic projections. The four top segments in terms of 2007 growth potential, according to PIA/GATF, are as follows:

1. Direct Marketing (1.5% - 2.5%)

2. Labels/Wrappers Printing (1.5% - 2%)

3. Packaging (1.5% - 2%)

4. Catalog Printing (1% - 1.5%)

General Commercial Printing, Periodicals/Magazines, and Book printing all weighed in at a projected 1% growth this year, while the last two categories show negative growth (Directories at 0% to -0.5% and Business Forms at -3% to -4%).

The US print industry loses about 1000 printing companies each year. From a high of 54,000 in 1994, we are now down to 40,000 US printing plants. Interestingly, the average plant size is growing, because the companies that cease operating tend to be the smaller ones. Today, said Davis, the average US print facility employs 27 people.

Davis predicts that the overall sales in printing for 2006 will be up 2.5%, as compared to the GDP growth of 3.3%.

Next week, we'll take a peek at what lies ahead for US printers. What major opportunities are available to them? What about key threats?

To be continued.

*This report is free to PIA/GATF members. It is available for sale to nonmembers. Please visit www.gain.net.. Go to Research & Consulting, then to Economics and Market Research, then to Advisories and Reports.

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