The State of the Graphics Industry Right Now

On March 30, Andy Paparozzi, chief economist for PRINTING United Alliance, hosted a webinar taking a closer look at the current state of the graphics production industry, based on the results from the most recent Printing Business Indicators Survey, covering the first quarter of 2021.

Unsurprisingly, he led with the elephant in the room that sales in 2020 were down an average 17.8% when compared to 2019, with a staggering 73.6% of all printers surveyed noting that their numbers were down for the year. That said, sales did grow for a small minority — 21.2% of those surveyed noted that their 2020 numbers were up compared to 2019. The difference? Those who were able to adapt and quickly pivot were able to capture new markets, noted Paparozzi, including PPE, special events helping schools and companies reopen, social distancing graphics, and the booming recreational vehicle space, just to name a few.

The Rising Tide …

But what about the first quarter of this year? There are encouraging signs of “movement off bottom,” said Paparozzi. For 2021, double the number of print shops are expecting to see higher sales — 40.5% — with another 4.8% expecting to see numbers stabilize and stay about the same as they were for 2020. Only 42.9% are expecting to see those sales continue to decline in 2021, which is still a significant amount, but compared to the previous 12 months, Paparozzi noted that this is actually a good sign, as it signals the beginning of the recovery. There is still a long way to go, he stressed, but it is a start.

He gave a few reasons for this change. First, that with a vaccine now rolling out, we’ve “reached a tipping point controlling COVID-19,” he said. Second, clarity of knowing what’s to come — 78% of respondents noted that the single biggest challenge of the pandemic wasn’t decreased sales, shutdowns or supply disruptions. It was uncertainty and simply not knowing what was coming next, and so being unable to effectively plan ahead. “Clarity — knowing what the rules are — is good for individual businesses and the economy at large,” said Paparozzi. However, he cautioned, “herd immunity will not mean a quick return to normal, but should mean the rules will no longer change from month to month.”

On the bigger scale, the economy itself is showing signs of robust improvement in 2021. So much, that leading economists have revised their forecast of 3.6% growth for the year to a whopping 5.9% growth in 2021 — that is the fastest growth the economy will have seen since 1984. And, he said, “if one thing hasn’t changed about our industry, it’s our dependence on the economy.”

To put that in perspective, the average growth from 2010 to 2019 was around 2.3%, and a growth of 5.9% will mean $1.1 trillion — with a “t” — of final goods and services added to the economy this year alone. That is more than the shipments of all computer and electronic products ($333.6 billion), beverage manufacturers ($104.7 billion), and paper/paperboard manufacturers ($193.7 billion) combined. For the print industry, this means an acceleration as well. Paparozzi expects to see a total increase in sales of 2.5% to 4% this year, after a decrease of 16%-18% last year. That growth, he said, should really start in the next quarter, and accelerate during the second half of the year.

… Will NOT Lift All Boats

While it is encouraging news that the economy in general and the print industry specifically are poised to see explosive growth in the coming year to make up for the lost demand and sales of 2020, the danger, Paparozzi said, is expecting the rising tide to lift all boats. The reality, he stressed, is that there will be winners — and losers.

“This recovery will be robust,” he said. “But it will be exclusive — not inclusive — leaving many behind. To participate, we must be prepared for ongoing change in business and consumer behavior in the aftermath of COVID-19, and challenges such as cost inflation and labor shortages.”

No one knows exactly what those changes will be, he said, but the big winners in the coming year will be those who figure it out quicker than the competition. They will also be the ones to successfully navigate which changes are temporary, and which changes need to be built into a more long-term business plan.

How can companies ensure they are on the winning side of that equation? Paparozzi gave a series of “must-dos” that every shop should be thinking about and acting on right now.

1. Temporary or Permanent? While no one can know which changes will vanish as the pandemic loosens its grip, and which will become a permanent part of our day-to-day lives, that doesn’t mean PSPs can’t use simple processes to try and stay ahead of the game. Paparozzi noted that shops need to evaluate if the change in question was wholly a response to the pandemic (PPE, social distancing signage), or if it is just an acceleration of a trend that was already occurring (e-commerce).
2. Prepare for the five new truths that will impact everyone. The COVID-19 crisis has forever changed the way we experience being a customer, an employee, and a human, he said. “Simply put, we are never going to be the same.” What are those truths that PSPs will need to contend with?

• Confidence and trust will be more important than ever before. Shops need to invest in building trust, and treat it as seriously as they would a major capital investment.
• Anything that can be done virtually, will be. That is not going away. e-commerce, augmented reality, etc. will all continue to play a major role in day-to-day activities. PSPs need to develop virtual capabilities that connect clients and prospects with products and services.
• Every business is now in the health business. COVID-19 has made cleanliness and sanitation an “everyday preoccupation” and customers won’t easily let that go. Offer products like germ filters, hand sanitizers, and antibacterial coatings so clients can feel safe, and promote their own role in the “health economy.”
• More activities, including business activities, will continue to take place inside homes. While many will return to the office, the work-from-home movement isn’t going to disappear. Think about how that will impact your company, and how you can serve that market. Local sourcing is likely to carry a comfort factor, Paparozzi noted, saying products created closer to home can feel safer.
• Finally, there will be a “reinvention of authority,” Paparozzi said. While factors such as state-of-the-art capabilities, production expertise, and high quality will all continue to be important, additional factors such as a company’s “purpose,” how it contributes to the well-being of customers and employees, and the role it plays in the wider community will all carry equal weight moving forward. A word of caution, however. Statements of purpose need to be genuine and backed up with action — boilerplate or empty statements will be more damaging than not having one at all.

A Few More Takeaways

Paparozzi ended the webinar with a few additional things PSPs should be thinking about and working on improving in their businesses to ensure they are one of the winners in the coming days.

First, he noted, don’t settle for “satisfied” customers. “Never assume a relationship with a client is strong if it is anything less than ‘completely satisfied,’” Paparozzi said. Even if customer satisfaction scores are currently better than the competition, they aren’t good enough unless your top customers are all totally satisfied with everything you produce. Anything less and they are “up for grabs.”

However, that doesn’t mean never making mistakes. Rather, Paparozzi said, it means having an effective procedure in place for making things right to the customer’s complete satisfaction when something inevitably does go wrong. It is far more worthwhile to work on moving your most profitable customers into the “completely satisfied” category than it is to focus on improving relations with those in the neutral or low satisfaction buckets.

Second, practice good “social listening,” which can give you a good overall picture in real time of how customer and prospect behavior, mood, and preferences are shifting. This is one way to stay ahead of those shifting changes mentioned earlier. The practice of social listening is monitoring and then analyzing online conversations about your brand, a specific topic, you competitors, or even keywords related to your business. Track how often those keywords are mentioned, how it is used, and how both change over time.

Third, maintain a sense of urgency. “Opportunity is expanding, but the margin for error is shrinking,” said Paparozzi. “We must remember that as business picks up for the next year and memories of the COVID recession fade, you can celebrate beating the recession, but also practice what Matthew Swyers, in the article Is Your Business Suffering From This Silent Killer, calls ‘reasonable paranoia,’ or the reality that ‘someone is always coming for you. Someone is always figuring out a better way to do what you do.’”

Paparozzi noted that to counter that, regularly remind employees and yourself that to participate in the recovery, the shop has to be at the top of its game. Use every channel possible to connect and communicate that message, and never fall into the trap of thinking complacency is “the other guy’s problem.”

Finally, Paparozzi stresses a need for print shops to build not just their company’s professional brand, but their employer brand as well. Shops, he said, are competing for quality employees across not only our own industry, but with other markets as well. “We have an employer brand, whether we know it or not, and whether it’s the brand we want or not,” he said. Current and former employees are talking about your business, job applicants and competitors are talking about what it’s like to work for you, and shops need to ensure they are part of that conversation, not just letting it happen.

Have an informative and easy-to-navigate career page that is more than just a list of job openings. Make the case for why a person should work for you, present your vision and mission statement, and include all the “employee value propositions,” or things like unique policies, reward programs, or other benefits you offer your staff.

Beyond that, consider adding content like blogs, video presentations, articles, podcasts, or anything else that educates prospects about the print industry. Show who we are as an industry, what we value, what kinds of employees work best, and help them answer questions such as “why is this job appealing.” Encourage your employees to contribute to that content, and further, empower them to find ways to improve their jobs, make suggestions, and take on new responsibilities. Offer mentorship programs that help ease new hires into the company and the industry, and help them make valuable connections with how you can be part of their future.

“The bottom line,” said Paparozzi, “is that our employer brand should distinguish us in the minds of the most desirable job candidates, just as our company brand should distinguish us in the minds of the most desirable clients and prospects.”

At the end of the day, the webinar was one of hope — there is a proverbial light at the end of the tunnel when it comes to the state of the industry, and the state of the world at large. But for shops to fully be part of the recovery and all it has to offer, simply waiting it out isn’t an option. Being proactive about growth and change, and cultivating a willingness to change and pivot as the situation shifts isn’t just a luxury anymore — it will be the deciding factor between who continues to operate successful businesses and who become casualties of COVID-19.