By Dr. Joe Webb on April 3rd, 2014
February 2014 US commercial printing shipments were $5.73 billion, down -$292 million (-4.8%) compared to 2013. On an inflation-adjusted basis, they were down -$349 million (-5.7%). January 2014 shipments were revised up slightly, by +$13 million. Together, January and February shipments were $11.84 billion, -5.1% on a current dollar basis, and -6.2% on an inflation adjusted basis, compared to 2013.
February is a short month, of course, but that does not change the fact that it was the worst month since January 1992.
Of the 10 lowest shipment months since 1992, four are Februarys and four are Januarys. That is the seasonal nature of the business, not just the number of sales days. For much of the past 20 years, and probably before, Januarys and Februarys were slow, followed by a strong surge in March. Corporations on calendar fiscal years armed with fresh budgets started projects with their agencies and designers at the beginning of the year. By the time the end of February came around, those projects were ready to print. Also, printing by retailers would begin again as they got out of their post-holiday lull and began their Spring promotions. This volume pattern has dissipated in recent years. There’s no March surge. The biggest month is now May, as strange as those data from the Commerce Department seem. (May’s not really a surge, its shipment levels have just declined at a slower rate than other months).
As recent as February 2009, near the depth of the recession, the industry was still able to produce $6.67 billion in current dollars. This latest report was more than $900 billion less than that level (-14%), or -$1.63 billion on an inflation-adjusted basis (-22%). Interestingly, the second worst month since 1992 is January 1992, when shipments were $5.93 billion. In inflation-adjusted terms, January 1992’s shipments are the equivalent of $10.12 billion in today’s dollars. For the last six months, the monthly comparison to the prior year has been -5.2% and -6.3% adjusted for inflation. This has been of great concern.
Privately, I have been advising clients that 2014 will have significant downward pressures on printing shipments that will stress marginal companies, and apply new management pressures to the well-run ones.
There has been a major shift in B2B communications practice supported by numerous technology trends that are playing out this year. It’s a nearly perfect storm of downside negative factors that need to be navigated. All of the downside factors should not be resisted, but become part of print business strategies. You need good planning and a good team to do that. Troubled companies will be faced with difficult choices among bad options. Since last year, I have been concerned that some printers are looking to aggressively consolidate as a means of saving their businesses. There are also companies that are hunkering down thinking that things will get better if they cut costs and wait it out. One has to wonder whether the forward value of any current book of business is meaningful or reliable. Waiting it out only makes the cost disparities and benefits of digital media comparatively greater.
It’s time to change focus and discard much of the common wisdom that once served us well but no longer applies.
At the PICA event in Charlotte at the end of April, I will be discussing critical opportunities for print businesses and their owners in this environment.
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