Jeopardy 2002: A Tougher Year Ahead?

This is the year that just might do it, that may set off the long-predicted and much-anticipated double-digit shrinkage in the number of operating companies comprising the printing industry. A deadly combination of factors, with their very serious effects, looks like it's in place to wreak havoc on our small-business industry that functions as both a manufacturing and a service business.

In the last decade, we've probably all attended an industry conference at which a presenter predicted that one enterprise in three soon would surely be gone from the industry. A popular ploy was for the speaker to first ask audience members to shake hands with the person to their right and to their left, first to personalize the exercise, and second to drive home the sobering point that printing by its nature is fiercely competitive at its core, more about survival than anything else these days.

In many ways, it seems to me, the new year could be even tougher on printers than 2001 was, even after all the cost-cutting, employee-shedding, and rate-squeezing steps that managers took during the year and were then forced to intensify in the aftermath of September 11. Only a startlingly rapid and broad-based economic recovery—which virtually no one today is banking on—could possibly ease the burdens of business people; the more likely scenario of a longer, more gradual recovery is certain to put into jeopardy those companies that are already weakened and struggling.

From a business perspective, all printers, the weak as well as the not-so-weak ones, face a grinding double whammy that doesn't look like it's going away anytime soon. First, there's swooning demand attributable to another combination of factors: the host of obvious economic cutbacks, the impossible-to-gauge psychological pullbacks among buyers, technological changes that put printing capabilities in the hands of many outside the industry, and so on.

The second whammy is the resultant production overcapacity in the industry, which burdens operating companies, pushes down selling prices, and freezes notions of reinvestment in the business, which in turn badly hurts vendors.

But, you ask, shouldn't such shrinkage ultimately be healthy for the industry at large? The quick and easy answer to this rhetorical question is yes, of course, although obviously the response overlooks the suffering of the people losing their jobs.

It stands to reason that an industry with fewer print providers can't help but be healthier, busier, and more efficient. Yet what about the legendary resilience of printers? Will this be healthy, too, or will it just prolong the inevitable and necessary downsizing process? Only time will tell on this point.

In the meantime, I'm encouraged to hear about printers that are doing better than the norm, by specializing, stepping up customer service, or coming up with better ideas.

On a different but very much related note, I'm pleased to announce that GAM readers at the small-shop end of the business can look forward to expanded coverage of subjects of particular interest to them. We're enhancing GAM with editorial coverage previously provided by Quick Print Products, a sister publication, which makes sense considering that technology and other factors continue to blend the various printing processes.

So while we may not be seeing convergence per se, we definitely are seeing a blending and hope that it will serve to benefit the industry in this difficult period.