Commercial Print, an Industry in Decline Robert Ehnat Business 110 The commercial printing industry, once the dominant communication medium of the United States has been changing constantly for the last 65 years. Since the end of the Second World War, the commercial printing industry has lost market share for a number of reasons. Unimagined technological advances brought continuous innovations, new media challenges, a changing culture and increased domestic and foreign competition. The result of these changes is an industry that’s been forever altered and is facing an uncertain future.
Commercial Print, an Industry in Decline I have been employed in the printing industry for the last 20 years, most recently as a project manager. During that time I have worked for six different companies. I didn’t always change firms by choice. Four of the six times I sought a new position was due to the company I worked for failing or being absorbed by a larger firm. Though the management of the failed companies played a part in their end, I came to see that their demise was a reflection of greater forces at work in the market place.
The industry in which I worked was and is in a state of decline. The numbers from the last census “show that from 1997 to 2002 the total number of printing establishments closed rose to 17 percent, from 30,416 to 25,412”. (Graphic Arts Monthly, 2004) The decline has persisted, “U. S. corporate profits, an indicator for corporate demand for printing services fell 7 percent in the second quarter of 2008 compared to the same period a year ago. ”(First Research, 2009) Technological Changes “Printers have long been considered the epitome of the skilled blue collar craftsmen. (Wallace & Kalleberg, 1982) The job of putting ink on paper was once the domain of highly skilled individuals possessing a broad base of knowledge that covered all aspects of the print production process. Job functions were complex and the technology of printing required a craftsman’s knowledge of the processes and materials in order to produce quality printed materials. All of that changed at the end of WWII. As profit margins began to shrink, printing businesses began heavily investing in new processes and technology. Wallace & Kalleberg, 1982) Over the next 60 years, developments in offset printing, electronic prepress and laser technology continuously shortened the print production cycle and increased production capacity. The introduction of the Xerox copier made the ability to produce a printed page available to anyone. The use of computers altered the workflow. Word processing programs eliminated the need for typesetting. Documents could be stored digitally and then sent directly into the printers prepress operations.
Previously, “the printer controlled the metal and later the film: the printer essentially “owned: the job. Today the customer owns the job. ” (Romano, 2004) The development of stand alone digital printers allowed individuals and industries that formerly had to outsource their printing needs to now produce them themselves. As commercial printers embraced these technological advances to improve their production systems, the increased efficiencies have led to the need for fewer plants and thusly fewer workers. (Esier, Cross, Bolte, Mason & Carli, 2005) New Media
The development of the internet has had a marked effect on commercial print both as a technological development that’s further altered the printing market but also as a medium in it self that’s drawn advertising dollars from tradition print to the new media of web sites and search engines. It is no longer necessary to save a document created on a computer to a disc for transportation. Now a manuscript is transferred electronically from the creator to the output medium of their choice via an internet connection. Not only does this have the effect of again shortening the workflow but of disseminating work over a wider competitive market.
Distance is no longer a factor in the production of print. The removal of geographic barriers has flattened the market and enables consumers to either print the material themselves or send it electronically to a printer or printers of their choosing. Additionally individuals and organizations have the ability to skip the printing process completely and disseminate their publications and newsletters in digital form directly across the World Wide Web. One clear impact of computers and internet usage can been in the market of business form printing.
Forms printers have seen a significant decline in revenues with the development of computers and the advent of the internet. In 1987 business forms generated 15. 6 billion in revenues. “By 2002, the business forms segment was generating only $8. 5 billion in revenues which was $2. 1 billion less than the real value of the industry’s shipments in 1977”. (Kelley & Rockler, 2006) Advertising dollars fund a large portion of commercial print revenues. (First Research, 2009) Newspapers and periodicals have been severely impacted by the development of the internet as a mass media channel in its own right.
Drawn by it’s lower cost, immediacy, usability and availability advertisers’ have shifted their budgets from print advertising to the internet. Periodicals, especially in the business to business arena, have increasing had to abandoned their printed versions and go completely to publishing on the web as their advertisers deserted them. (Wilson, 2009) The current economic down turn has only exacerbated the situation. 2008, was the worst year ever for the US newspaper industry. Total newspaper advertising revenue fell 14% in the first quarter of 2008. This was the eighth consecutive annual decline in revenues. Silver, 2008) The end result has been papers and periodical being forced to downsize their staffs or shutter their operations all together. Cultural Changes Cultural changes in American society have also had an affect on print consumption. Americans read less today. The result of both an aging population and increased media competition for their attention, newspapers and periodicals has seen a steady decline in readership. Baby boomers are reading a third less than their parents and Gen-xers a third less than them. Further, it appears that no new readers are on the horizon.
Research conducted in 2006 showed that a majority of children preferred math over reading and that the older they got the more their interest in reading declined. (Gable, 2007) Finally, all media channels, new and old are in ever increasing competition for readers’ attention. Television, computers, the internet, print and developing cellular social networking programs like Twitter all compete for a share of consumers’ limited time. The most notable affects of this competition are with Gen-yers who have grown up learning to multi-task, completely used to using two or more media at a time.
While the effects of this cultural change have yet to be determined in the area of comprehension, what is certain is that with new media’s ever increasing demands for attention, readership of newspapers and periodicals will continue to decline. (Gable, 2007, Fine, 2008). The newest cultural change that confronts the print industry is the environmental movement. Printers today are challenged to become green manufacturers and practice sustainability. Highly visible as an industry, printing is one of the larger industrial users of energy in the world.
U. S. publishers also consume large quantities of paper and oil based products while generating huge amounts of waste and green house emissions. As consumers become more demanding for products that are environmentally friendly and sustainable, businesses are demanding the same from their print suppliers. “As a result the world largest corporations are scrutinizing the corporate social responsibility performance of their operational practices…including what they print, how they print and how print-related products and services are valued. (Carli, 2007) Already confronted with shrinking markets and revenues this can only be seen as another pressure for the industry to contend with. Larger printers have been able to respond to this new market demand with capital improvements to infrastructure. However, medium and small size printers may not have the resource to follow suit. How they respond to this new pressure remains to be seen. Market Pressures Additional market pressures confront printers in their efforts to remain competitive. The price of oil price and other commodities directly affects printer’s bottom line.
The rise in oil prices and the merging of a number of paper suppliers have combined to increase the cost of materials. Publishers are dealing with a steep increase in paper prices, an item that represents their greatest non-labor expense. (Fine, 2008) Despite the current economic conditions and increasing domestic and foreign competition printers have been able to pass these costs along, but at the expense of being able to increase revenue. Domestically, offset printers continue to be challenged by advances in digital technology.
Digital printers are the only industry segment to have increased their market share in recent years. “Digital technology is changing the competitive landscape of the commercial printing market. Prices for digital color pages are falling below offset printing prices and companies who fall behind in the shift to digital printing are at risk. ”(First Research, 2009) Foreign competition has been an ever increasing problem for American printers. Until 1986 U. S. printers had been shielded by a little known international trade law that shielded them from foreign competition. Greenhouse, 1986) The sun setting of that law opened the door for foreign presses to compete for printing business in the U. S. The impact has had severe repercussions on American companies. Foreign presses, most notably in China, easily beat US publishers on price. With incredibly low labor costs, favorable exchange rates and a lack of governmental safety regulation with which to comply, Chinese presses are able to deliver finished products at costs not approachable by presses here at home. American printers have responded by shifting to ever leaner production methods. Nason, 2005) Conclusion The last 20 years have seen incredible changes in the printing industry. Numerous technological changes have brought economies to printing production but at the same time reduced the market’s dependence on commercial printers, opened the door for competing media and increased domestic and foreign competition. “The commercial printing industry has become a highly competitive market that effectively leverages technology to reduce prices to customers and increase value to business owners. (Infotrends, 2009) Despite that it’s projected that the market for offset printing will continue to decline for the foreseeable future while the demand for digital print increases. And while the need for commercial print will continue to have a place in the economy it will be with a different and substantially reduced role. References Carli, Don Graphic Arts Monthly, 2007, August, p 22-33 Great Print Sustained Esier, B. , Cross, L. ,Bolte, C. , Mason, D. , Carli, D. Graphic Arts Monthly; Jan2005, Vol. 77 Issue 1, p22-26 Forecast 2005: Technology Outlook In the Year of Print.
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