STATE OF THE INDUSTRY ON THE OFFENSIVE
March 2002
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In an uncertain economy, package printers should stay in aggressive pursuit of profit-generating capabilities and growth markets.
NEWS FROM THE NPES 2002 Print Outlook® conference was predictably somber. Printing Industries Association (PIA) Chief Economist Ron Davis related before the terrorist attacks of September 11, projections forecast print industry sales to grow to $169 billion in the following year, a meager 3 percent annual gain. Post-September 11 predictions for 2002 were scaled back to $166 billion. NPES Consulting Economist Michael Evans also had dismal tidings for equipment manufacturers: total printing equipment shipments had dropped approximately 18 percent from last year's levels in both the third and fourth quarter of 2001, and were expected to fall further through the first half of 2002.
Fortunately, most package and label printing appears on the brighter side of the spectrum. According to PIA's recent report, "Package Printing 2001-2005," both the flexible packaging and label sectors are charted for a compound annual growth rate of 4.5 percent between 2000 and 2005. (A 2.5 percent growth rate is anticipated for the folding carton industry; corrugated will grow 3.5 percent.)
The havoc wrought by the digital revolution on commercial printing hasn't and won't affect package print businesses in the same way—digital formats don't directly compete with packaging as they do in advertising, publications, etc. But a tight fiscal market and heavy M&A activity have contributed to the emergence of two distinct prototypes of successful package printers: the fully integrated, "do-it-all," large converter; and the smaller, niche-oriented printer.
The PIA study found package printers' largest challenge to be the adoption of "direct-to" technologies and a fully digital workflow—investment dedication to such equipment/processes may determine the longevity of firms in future. For the present, a renewed focus on core competencies, paired with an investigation of under-exploited markets, seems to be a key strategy in weathering the economic downturn.
—Jessica Millward, Associate Editor
Tag and Label: Raring to Grow
New areas of growth and profitability are still very much up for grabs in the tag and label market. "During 2002, the growth of the U.S. label market should outpace the performance of the Gross Domestic Product," says Richard Gasper, president of NorthStar Print Group, a producer of glue-applied, in-mold and pressure-sensitive labels. "While the days of double-digit gains are behind us, we expect to see solid growth in both revenues and profits."
After a flat first quarter, Mike Dowling, president of CL&D Graphics, a converter of prime labels for consumer product companies, is "cautiously optimistic" about the second and third quarters of 2002. "Capital equipment manufacturers are seeing an uptick in activity," he reports, "and more customers are giving the go-ahead for work than even a month ago."
NEWS FROM THE NPES 2002 Print Outlook® conference was predictably somber. Printing Industries Association (PIA) Chief Economist Ron Davis related before the terrorist attacks of September 11, projections forecast print industry sales to grow to $169 billion in the following year, a meager 3 percent annual gain. Post-September 11 predictions for 2002 were scaled back to $166 billion. NPES Consulting Economist Michael Evans also had dismal tidings for equipment manufacturers: total printing equipment shipments had dropped approximately 18 percent from last year's levels in both the third and fourth quarter of 2001, and were expected to fall further through the first half of 2002.
Fortunately, most package and label printing appears on the brighter side of the spectrum. According to PIA's recent report, "Package Printing 2001-2005," both the flexible packaging and label sectors are charted for a compound annual growth rate of 4.5 percent between 2000 and 2005. (A 2.5 percent growth rate is anticipated for the folding carton industry; corrugated will grow 3.5 percent.)
The havoc wrought by the digital revolution on commercial printing hasn't and won't affect package print businesses in the same way—digital formats don't directly compete with packaging as they do in advertising, publications, etc. But a tight fiscal market and heavy M&A activity have contributed to the emergence of two distinct prototypes of successful package printers: the fully integrated, "do-it-all," large converter; and the smaller, niche-oriented printer.
The PIA study found package printers' largest challenge to be the adoption of "direct-to" technologies and a fully digital workflow—investment dedication to such equipment/processes may determine the longevity of firms in future. For the present, a renewed focus on core competencies, paired with an investigation of under-exploited markets, seems to be a key strategy in weathering the economic downturn.
—Jessica Millward, Associate Editor
Tag and Label: Raring to Grow
New areas of growth and profitability are still very much up for grabs in the tag and label market. "During 2002, the growth of the U.S. label market should outpace the performance of the Gross Domestic Product," says Richard Gasper, president of NorthStar Print Group, a producer of glue-applied, in-mold and pressure-sensitive labels. "While the days of double-digit gains are behind us, we expect to see solid growth in both revenues and profits."
After a flat first quarter, Mike Dowling, president of CL&D Graphics, a converter of prime labels for consumer product companies, is "cautiously optimistic" about the second and third quarters of 2002. "Capital equipment manufacturers are seeing an uptick in activity," he reports, "and more customers are giving the go-ahead for work than even a month ago."
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