Key Takeaways from The Alliance's State of the Industry Report

Andy Paparozzi, Chief Economist, PRINTING United Alliance

Participants in the most recent PRINTING United Alliance State of the Industry (SOI) Survey expect a challenging business environment in 2025 layered with uncertainty about where inflation and interest rates are headed and what the Trump administration has in store, particularly for tariffs. Priorities include “leading on digital integration with clients, online solutions, and workflow automation,” “investing heavily in marketing, sustainability, and client-facing automation,” “continuous improvement (Lean manufacturing),” and marketing the value created for clients rather than following price cutters in a “business-killing race to the bottom.” Concerning the printing industry’s future, consensus is forming around two points: Artificial intelligence will create unprecedented opportunity by redefining conventional business practices and “those who learn fastest” will capture the lion’s share of that opportunity.

A total of 294 companies participated in the survey. Annual sales range from less than $1 million to more than $300 million. The majority define themselves as commercial printers, apparel decorators, or graphic and sign (wide-format) printers. Representative of the industry at large, nearly three-quarters have diversified beyond their primary printing business.

Among all companies surveyed, 46.2% expect business conditions to be better in 2025 than they were in 2024, 26.5% expect conditions to be about the same, and 21.9% say there is so much uncertainty they don’t know what to expect. Just 5.4% expect conditions to be worse.

Expected Business Conditions 2025

Q: How do you expect overall business conditions in 2025 to compare with conditions in 2024?

Reasons for optimism include a “business-friendly administration” that will stimulate the economy by lowering corporate and personal income tax rates, eliminating high-cost, low-benefit regulations, and reducing energy prices by increasing energy production. Reasons for pessimism include tariffs ‒ “If Trump’s tariffs are enacted business conditions will be much worse” ‒ a reacceleration of inflation ‒ “I think inflation will keep rising, affecting the total economy” ‒and the effects of restrictive immigration policies on key markets ‒ “I expect the loss of the immigrant workforce to negatively impact construction, fast food, and the farm businesses, resulting in a local downturn.”

SOI participants’ priorities for 2025 focus squarely on fundamentals that support profitable growth in all business environments. Here are a few of those priorities and the percentage citing each:

· Increase productivity (73.5%). Cited far most often, it’s no longer nice to do but rather necessary to protect profit margins from persistent cost inflation and chronic labor shortages. Automation, a driver of productivity, is clearly gaining traction ‒ 36.6% of companies surveyed report automation has reduced the number of employees needed ‒ and so is the idea, as a senior executive we surveyed puts it, of “manufacturing time from efficiencies and automation” that can be dedicated to innovation, embracing transformational technologies, better serving customers, and advancing business development – i.e., building and maintaining competitive advantage.

· Strengthening core services (66.2%). With so much emphasis on diversification, it’s easy to neglect the services that are the foundation of a company’s value proposition.

· Improving the customer experience (48.3%). “Easy, fast, and responsible mean higher prices and profits,” explains one SOI participant. Actions include reducing customer service response times and extending automation to the customer by updating websites, strengthening web-to-print capabilities, and "adding as many web portals as possible.”

· Artificial intelligence (33.8%). Companies of all types and sizes are recognizing that AI algorithms can strengthen mission-critical functions from estimating to invoicing and boost productivity by automating low-value, time-consuming tasks, freeing resources for activities that create the most value for clients, employees, and the company. Among the advice our research panel shared: “Encourage people not to fear AI but embrace it. It is not going to replace jobs ‒ it is going to enhance job performance and better serve our customers.”

Setting priorities is one thing; reaching them is something else. So we asked SOI participants what they must do to achieve their 2025 priorities. Throughout the discussion three words came up most often:

· Focus. Block out the disruptions, distractions, and “shiny objects that pop up along the way” and concentrate on “initiatives that bring the highest value to our clients and company.”

· Accountability. Hold everyone, including senior management, responsible for advancing the company’s priorities and “have the entire team perform at their best and own their specific functional area.”

· Execution. Shoddy execution can undermine the most carefully crafted plans and practices. Recommendations from the SOI research panel include defining three or four vital priorities and defining how progress toward them will be measured, developing contingency plans for each, communicating the vital few companywide so all employees understand their importance, monitoring progress, and adjusting quickly as results come in guided by robust contingency plans.

The State of the Industry Update, Fourth Quarter 2024 presents the full results of our survey. In addition to the topics discussed, the report covers how sales, cost inflation, prices, profitability, and employment are trending, biggest concerns, capital investment plans, the use of dashboards and cloud services, and must-do’s such as calculating customer effort scores and following a readiness checklist.

PRINTING United Alliance members can download the full report at printing.org. Everyone can download an Executive Summary at csa.canon.com. All reports in the State of the Industry Series are generously sponsored by Canon U.S.A., Inc. For more information please contact me at apaparozzi@printing.org or my colleague, Onamica Dhar, odhar@printing.org.