Printing Industries of America’s Center for Print Economics and Management sees good things ahead for the print industry, with the packaging segment leading the way. Sales are expected to increase at a relatively robust pace in 2018 and economic-minded tax reforms come laced with opportunity.
Dr. Ronnie H. Davis, senior vice president and chief economist, and Tai McNaughton, senior economist, jointly declare, “Corporate tax reform is just what the doctor ordered to add some bounce to an already accelerating economy, as demonstrated in the jump in growth over the last three quarters of 2017.”
Elaborating on the point, they say, “For the most part, we believe the added zip in 2017 came from two major sources—deregulation and the added strength of the global economy. Given the ongoing regulatory relief and tax reform, the most likely path is accelerated growth.”
2018 Economic OutlookData courtesy of Printing Industries of America’s Center for Print Economics and Management
Ronnie and Tai further maintain, “The triple forces of tax reform, deregulation and global tailwinds should keep the American economy robust over the next 12 months. Our projection for 2018 is for real or inflation-adjusted growth to equal or exceed 3 percent for each quarter—a performance not seen in 17 years.”
The pair of industry economists expects overall print sales to increase at a relatively robust pace in the range of 1.5 percent to 2.5 percent and says, “This velocity would align with print’s tendency to perform best in a mature recovery phase of the business cycle. If the economy continues to grow in the vicinity of 3 percent, print should do well, growing by around 2 percent in total shipments.”
Describing print as a mature, stable industry, they note, “Print processes that will grow fastest over the next 12 months include inkjet—both wide format and production—wide-format digital and inkjet, and digital toner-based. Print also has some fast-growth market segments that will likely grow at relatively higher rates than other sectors, namely: packaging/specialty packaging, labels and wrappers, signage, direct mail and point of purchase.”
The suggestion put forth to printers is, “Integrating these processes and market segments—for example inkjet packaging—could turbocharge the impact and provide even more sales and profit growth.”
Ronnie and Tai are confident the 2018 economic and print market setting will be full of opportunities, yet ripe with challenges. “Success will not come by chance but by proper planning and focus.” Specifically, they offer six steps to success for 2018 and beyond.
“Studies show that business managers who take the time to think strategically outperform those who don’t. For printers, this includes addressing the dual issues of product/service focus and value-added ancillary services,” the economists explain.
“Financial performance typically correlates with specialization by a printed product or vertical market. Also, diversification into various ancillary services usually correlates with higher profits.”
Percent Changes in GDP and Print, 2017-2018Data courtesy of Printing Industries of America’s Center for Print Economics and Management
Cost, Customer, Competition
“Execute the three Cs of pricing—cost, customer and competition,” they stress. “Profits result from some combination of lower costs, higher prices and/or increased sales. Too often, printers focus on costs and sales, and ignore pricing and utilization rates. Profit leaders have higher earnings for two core reasons—lower costs or higher prices. Develop a more nuanced and complete view of the relationships between costs, price and utilization rates.”