Analysts have called the current state of the U.S. economy the country's worst slump in 70 years. Despite a slight return to growth in the latter part of this year, the unemployment rate still soared to 10.2 percent (the highest U.S. jobless level in more than 25 years), the flow of credit remains constrained and economic activity is weak.
Unfortunately, nobody really knows what to expect in 2010 but probably a continued uphill battle. In fact, in late November, President Obama's National Economic Council director Lawrence Summers noted that the jobless rate may worsen before it improves. Nevertheless, in a recent speech at the Economic Club of New York, Federal Reserve chairman Ben S. Bernanke stressed the need to restore and rebuild the battered economy.
"The stabilization of financial markets and the gradual restoration of confidence are in turn helping to provide a necessary foundation for economic recovery. We are seeing early evidence of that recovery: Real gross domestic product in the United States rose an estimated 3.5 percent at an annual rate in the third quarter, following four consecutive quarters of decline. Most forecasters anticipate another moderate gain in the fourth quarter.
"My own view is that the recent pickup reflects more than purely temporary factors and that continued growth next year is likely. However, some important headwinds—in particular, constrained bank lending and a weak job market—likely will prevent the expansion from being as robust as we would hope."
Many industry leaders are trying to stay positive, but are approaching the next year cautiously. Only time will truly tell what the future will hold.
Here, leading manufacturers offer their predictions for the new year.
Mark Cupach, director, national sales, Business Stationery, Cleveland
Late 2008 and all of 2009 was a transition from a growth economy to a period of recession; 2010 will represent another transitional phase from recession to slow growth. With unemployment rates forecasted to remain at or around the 10 percent level, business growth will be controlled in a slow upward curve. End-users will continue to rely on distributor and print reseller partners to bring them efficiencies in hard product cost savings and productivity gains via e-commerce and other value-added solutions. A closer relationship between trade manufacturers and software as service providers to improve interoperability challenges will benefit the distributor population.
Gerry Toscani, CEO, Paris Business Products, Westampton, N.J.
We feel the recession, environmental concerns about paper and generational shifts in the workforce will accelerate the rate of decline or paper consumption in most segments of the forms and paper business. Therefore, there will be continued capacity reduction as well as increased mergers and acquisitions activity as the market reacts to lower demand. We also feel that paper pricing will be stable to slightly higher in 2010 as the major producers continue to shrink mill capacity to reflect demand.
Dale Jacoby, vice president/ general manager, Badger Tag & Label Corporation, Random Lake, Wis.
As in every sector [of] the economy, printing has been affected by the struggling economy. With those challenges also come opportunities. At Badger, we used both to purchase new equipment to better serve our existing customers and grow into a new area. In the second quarter 2009, we purchased a six-color UV digital press and plotter cutter. Today, they are running continuously so this was a great business decision.
Our core offset tag and label business has been enhanced by the addition of these machines. We look forward with optimism to 2010 and beyond.
Zarik Megerdichian, CEO, 4over, Inc., Glendale, Calif.
According to industry experts, the print market will be steady, moving toward a recovery and even a small growth of about 4 percent in 2011. This is the general census among market analysts.
Here at 4over, however, we have constantly skewed the industry goals with tremendous growth. We confidently can say that we will continue offering the best trade printing service to our resellers and work on additional automation and efficiencies to grow our business while keeping the costs down. We have a very strong base of loyal customers who are effectively and actively selling print service and we are committed to support them by not only fulfilling their print jobs, but also exceeding their expectations and those of their customers.
In addition, we are always testing and introducing new products and convenient services to help our resellers grow their market share by becoming a one-stop shop print provider of their choice. Our eight production facilities in five states are equipped to complete any print job with the highest quality, fastest turnaround and most competitive prices.
Tim Flynn, president, Continental Datalabel, Elgin, Ill.
The label industry will rebound modestly in 2010 as the economy aims to recover. However, the industry faces additional challenges as we move closer to becoming a paperless and "labelless" society. Continental Datalabel will continue to focus on innovations in the personalization market. One of the most exciting things we're doing right now is creating products to personalize just about anything you can think of—beverage and container labels and wraps, writing instrument wraps and labels, custom-created boxes and skins for electronic devices. In 2010, look for iaPeel, our exclusive line of photo-quality, inkjet-printable skins that enable individuals to personalize their iPods and iPhones using our software and their imaginations.
Brian Fritsche, president/CEO, DemandBridge, Norcross, Ga.
While many in the print and brand-management markets are beginning to see material evidence of a recovery, or perhaps better stated as a loosening of the "spending clamp-down" as evidenced in the fourth quarter of 2008, few believe that a full economic recovery should be expected in 2010.
And while we're optimistic that the 2010 business climate will be an improvement over the past 12 months, we believe that organizations will largely continue to try to do with fewer marketing and procurement employees, and turnover in these positions will continue at some heightened level over years past. Therefore, as spending increases for marketing materials, outreach campaigns and other products within this sphere, we believe these organizations will rely heavily on outsource partners to help them offset the lack of manpower. This represents a tremendous opportunity for those companies prepared to go on the hunt.
In our opinion, this coming year should be viewed as a "gold rush" to offer valuable, integrated services to the many organizations needing to redesign processes and workflows to leverage the strengths of their top partners. This represents a real opportunity to break the chain of commoditization that is occurring in our market, where there are many companies with many names and images all essentially able to provide the same basic product and service mix.
Those who can sell and deliver solutions that create real value in these areas will win, and technology is absolutely the key. Such accounts are complex, and a platform choice that not only brings the power and flexibility required, but also the team that knows how to sell, implement and support such accounts will put you in front of your competition. And once you've established your company as the partner, the opportunities rise as we all know, as do the barriers to exit through events such as economic downturns, employee turnover and M&A transactions. In our words, the relationship is very "sticky."
In a similar way, DemandBridge is a truly integrated partner with our customers. We provide the necessary expertise in selling, creating, implementing and operating these highly complicated accounts. Together, and with our innovative products and experienced staff we can bridge the gap between challenge and solution in the coming year, and help you capitalize on this opportunity.
Gregg A. Emmer, vice president, chief marketing officer, Kaeser & Blair, Batavia, Ohio
Some early predictors of future economic conditions are suggesting that the economy will see modest growth in 2010. It may actually be a bit stronger growth than predicted. Because unemployment will not go down very quickly and financial markets are still focused on their own needs rather than what is good for the greater economic condition, some economists feel these two situations are likely to hold back growth.
There is not full agreement, however. But as businesses try to gain as much as possible before "unfriendly" new regulations for health coverage and other taxes kick in, that drive will generate growth by placing more money in circulation. If the eventual new laws and taxes are too oppressive to business, things may change quickly and growth will stop abruptly. Until that point, however, business should be rebounding throughout 2010.
Michael Magill, executive vice president, Ennis, Midlothian, Texas
The upcoming year will be interesting. Given the recent actions of International Paper in reducing the supply of paper, material prices will most likely go up early next year. The weakness in this recessionary market will put pressure on manufacturers and distributors alike to make a choice of passing this cost along or absorbing some portion of the increase.
Although some vertical markets like the healthcare industry may see some firming up in their sector, many other sectors of the economy will continue to stay weak. Cost controls throughout the supply chain will be essential for maintaining profitability in these difficult times, as the stronger players in this industry ride out the economic tsunami and build for the future.
Mardra Sikora, president, Folder Express, Omaha, Neb.
Printing in 2010 will not be for the weak-spirited. We expect the road to remain rough for printers of all sizes this year. Print business people who understand what items are most profitable and focus on these as part of their business plan, have been and will continue to be on the positive side of the profit equation. As the industry reshapes itself, the primary value of our contribution is enabling our clients to enhance their bottom line with a quality product that is easy to order and easy to sell.
We understand the print buyer environment has shifted, and do not see a quick rebound. That said, print is not dead. Understanding the print avenues that allow for unique branding and multi-sense marketing will allow printers to stay alive and sell the power of print. We anticipate being a part of that process with this year's priorities being: arming our distributor base with unique products and product options, continuing to outpace the industry on turnaround times and better utilizing our website as a tool within distributor partnerships.
Jim Maggio, vice president/CFO, Maggio Data Forms
Cautious optimism best describes our position for the upcoming year. We are challenged not only by the weak economy, but also by the continued lack of focus on forms on the part of many distributors. [We believe] under capitalized manufacturers will have trouble surviving.
Basic business forms that support companies' transactional activities, despite technological changes, still remain necessary for most of their operations. Because of the uncertainty of the economy, customers remain cautious and both delay and reduce order quantities.
So we have to expand our marketing and sales efforts and continue to invest where we recognize new product opportunities. In other words, we have to grow with new customers, new channels, additional market share and added value products. In 2010, we will not be able to rely on our traditional business to start to stabilize until later in the year.
On the other hand, we feel that direct mail, color for rolls and cut sheets as well as digital imaging will offer us new opportunities. The industry must continue to watch expenses to survive, but companies must also be sure to position themselves to enjoy renewed volume as the economy improves over the next few years.
Rick Heinl, president, Repacorp, Tipp City, Ohio
So much for my prediction of an upturn in 2009, and I'm glad it is behind us. I think 2010 is going to be another tough year. I really don't see much improvement until the third quarter. Without jobs, the consumer is not going to start buying—and without retail, so goes the label industry. We are having success in the RFID arena. Our growth in digital labels will continue and that is also where we are investing. We are in this for the long run and we hope you all prove me wrong because your success is our success.
Bill Doehler, executive vice president, Prodigital Printing, Edison, N.J.
The best and worst of times will continue depending on which segment of the industry you are in. Run lengths and overall volume will continue to decline as print buyers look to minimize inventory exposure, and marketing professionals abandon print-based projects that do not carry a measurable return on investment. The above, coupled with the inevitable impact of electronic media on print, will continue to present daunting challenges to those companies heavily invested in traditional, long-run equipment.
The best of times will be had by independent distributors who embrace the changes in the marketplace, position themselves as marketing services providers and are the first to introduce new technologies and processes to their target audience.
Daniel Kay, vice president of sales, Kay ToledoTag, Toledo, Ohio
Kay Toledo Tag/SSP have a positive outlook for the 2010 business year. Both locations have seen a major increase of manufacturing in the last few months.
Our business structure has changed to meet new industry standards to help increase sales. Currently, we are operating at maximum capacity and are looking to invest in new machinery to keep up with customers' demand. Kay Toledo Tag/SSP are looking to gain market share in the short-run tag sector.
We hold 57 percent of the short run market and are looking to increase our market share by 12 percent. This market consists of quantity's ranging from 250 to 10,000 tags. Sizes range from number one through eight. Visit www.kaytag.com.