It’s official. On December 1, the National Bureau of Economic Research declared the United States has been in a recession since December 2007. In a statement, CNNMoney.com posted a report on the same day in which White House Deputy Press Secretary Tony Fratto was quoted as saying: “The most important things we can do for the economy right now are to return the financial and credit markets to normal, and to continue to make progress in housing, and that’s where we’ll continue to focus. Addressing these areas will do the most right now to return the economy to growth and job creation.”
Nonetheless, several economists said the real concern is there is no end in sight for the downturn. Some suggested that the best case scenario for the economy is that it would reach bottom in the second quarter of 2009.
But Lakshman Achuthan, managing director of Economic Cycle Research Institute, stated at this point, the only solution for the recession is time.
“All the hand waving and real cash that policy makers are throwing at the problem won’t change the fact we’re stuck in this nasty recession,” he said. “The ultimate cure of a recession is letting it run its course.”
Achuthan’s research firm tracks weekly leading economic indicators that are supposed to signal a change in direction for the economy four or five months ahead of time. Those indicators are continuing to fall at a record pace.
Still, he said he’s not worried about the current recession turning into a depression, as many Americans fear. “Even with indicators in a tailspin, this still is only a very severe recession,” he said. “There’s lots of gloom, but we don’t see doom.”
Solution oriented by nature, most industry professionals are choosing to greet 2009 with enthusiasm and confidence. Here, leading manufacturers offer insights on how they feel the industry will fare in the new year.
Sri Lala, vice president, operations (graphics), Creative Automation, a Vmark Company
Predicting the future of direct mail or direct marketing in 2009 is like shooting at a moving target.
The success of commercial graphics and print is going to depend on various factors that have a direct or indirect effect on this vertical. Rising postal, fuel and paper costs have forced customers and printers to creatively develop packages that are both effective and responsive.
At Creative Automation, our approach has been to diversify our services by adding a ‘specialty product line of business’ to our already distinct capabilities. The personnel at Creative Automation act as consultants and help clients discover new ways of reconfiguring their products that result in cost savings.
Creative Automation has the added advantage of being a full service NCOALink licensee. (NCOALink is a trademark of the United States Postal Service.) This service allows Creative Automation to scrub mailers’ customer databases and make their mailings more deliverable, thus increasing response rates.
In keeping with the recent trend of green initiatives, Creative Automation has recently been granted an FSC Chain-of-Custody Certification: SGS-COC-004929 1996 Forest Stewardship Council A.C., and a Sustainable Forestry Initiative Chain-of-Custody Certification.
Even though the economy really bottomed out in 2008, at Creative Automation we have taken a positive approach by diversifying and streamlining our processes, and are ready to take on new challenges in 2009 and beyond.
Gregg A. Emmer, vice president, chief marketing officer,Kaeser & Blair
Forecasting—in light of the volatility of the world marketplace, the fast becoming universal credit slump, a brand new administration and political party in office and high unemployment rates—is an exercise in either extreme optimism or bitter negativism. We tend to gravitate towards the positive side.
Our customers are generally buying advertising or marketing components from us rather than consumable printed products, so economic downturns have a positive effect for us because businesses want to get their marketing out in a very economical way. The decline in printing sales tied to the decline in transactional business is somewhat removed from us. We will grow (perhaps slowly) in 2009.
The broader economic forecast is a bit darker and is really guessing rather than an analysis. The traditional boost in our economy after an election did not happen. In fact, things got worse. That indicates uncertainty in all areas. Consumers drive the U.S. economy and they are afraid to spend, so the downturn will be more difficult to turn around this time. Those who provide materials that are consumed in the day-to-day transactional business of the general economy must see increases before the rest of the economy will spring back. Major purchases like dishwashers or refrigerators are being made on a need rather than want basis. Purchases where financing, even on credit cards, is involved are being delayed. And those things that we can’t avoid purchasing, like food, are increasing in cost for both legitimate reasons and in some cases simply because they can.
This all suggests to me a very tough year ahead with any real change coming in early 2010. The low energy cost boost together with much more moderate prices on consumer goods (due to large inventories and competition between the largest, strongest retailers) will be the engine to pull things back on track.
Varaz Gharakhanian, marketing manager, 4over
As 4over grows, the company expands to new locations.
In addition to its existing facilities in Ohio and Calif., 4over will have added three fully operational production facilities by the end of the 4th quarter of 2008: a 50,000 sq. ft. facility in Dallas, a 42,000 sq. ft. facility in Miami, Fla. and a 47,000 sq. ft. facility in Newark, N.J.
The upshot is, 4over will be able to better serve its existing customer base, as well as provide exceptional quality and service to new customers in surrounding states. Based on this expansion, we anticipate a healthy increase in sales in 2009. 4over continually strives to make it more cost effective for our customers to do business with us. 4over also focuses on quality and growth—not just internally, but also to help resellers grow.
Gerry Toscani, CEO, Paris Business Products
With the changes to Medicaid’s reimbursement program, the sales for security and prescription paper are expected to continue their upward trend. Many businesses are also adopting higher levels of security to help reduce fraud and protect personal information.
The demand for perforated and punched papers continues to drive the marketplace. Many businesses—including healthcare facilities, banks, insurance companies, colleges and universities, require perfed and punched applications to fill their different business uses. The customization of stocking items is also an area expected to grow due to the high cost of digital color, compared to the economies of offset printing.
Fred Antonini, president, Flexible Innovations
Savvy salespersons will create opportunities by finding clients who will measurably gain by advertising. For instance, our product is used on mobile phones and banks that want to promote mobile banking to save costs. egrips non-slip strips, printed with the bank’s URL and directory prompts, enables customers to conveniently use the service. As demand drops for new products, opportunities for sales will be to the repair, service and replacement businesses, as consumers need to make the items they own last longer. Again, promotional products that lend themselves to making websites and phone numbers readily accessible will be the products to present for advertising dollars to be spent.
James J. McGuire, president, Plastilam
I think 2009 will be a challenging year for both manufacturers and print brokers in our industry. We will likely see customers ordering smaller quantities due to cutbacks and new budget restraints. As we have seen over the years when budgets get tight, you may book as many orders as you have in the past but at a lower quantity.
In the long run, if you remain flexible and continue to work with your customers to provide the same high standards of service and quality, your customers will stay loyal to you through 2009 and beyond.
Mark Cupach, director, national sales, Business Stationery
The print industry in 2009 will continue to erode as significant economic pressures force printers to close their doors or merge with other marginal printing companies. The current tightening of credit markets will cause printers to exert enormous effort in cost reductions to accommodate cash flow requirements.
Not all news is bad news, however. As technology fuels new ways of producing ink on paper, printers will find double-digit growth continuing in the short-run digital print segment, as end-users place greater emphasis on more highly personalized direct mail programs that produce higher returns on investment. Business Stationery has positioned itself to take advantage of that growth by installing a Kodak NexPress 2100 five-color press. Additionally, the sales process for distributors will evolve further into a solutions-centric model resulting in product sales, as opposed to the traditional quote-and-hope process. More and more print revenue will be channeled through online print procurement programs reaching down into the mid-market-sized accounts.
The new year will see a continuing convergence and blurring of how print providers go to market. Large major directs that traditionally sought out large end-users will dip into the middle market accounts. Distributors who traditionally sold to mid-market accounts will project their efforts upward through their ability to deliver competitive models of e-commerce platforms.
All in all, 2009 will continue to be a year of dramatic change for the print industry as it continues to integrate itself into the new methods of communications like online social communities and the use of handheld communication devices as new paradigms in content delivery. PPR