Despite setbacks, the printed products industry staged a good performance.
It was another big year for the Top 100 Manufacturers as total reported revenue climbed to $4.96 billion, up $580 million from last year's $4.38 billion.
The total number of employees reported by the Top 100 in-creased by 514 to 30,945 from last year's total of 30,431. The total number of locations increased to 423 from 384 last year.
It has been a more productive year as sales per employee jumped to $160,123 from the $143,843 reported a year ago. Sales per location also increased to $11.7 million from last year's $11.4 million.
The increase in overall revenue came despite the loss of Transkrit, last year's eighth largest manufacturer, which closed its doors several months ago. Although we had expected Moore's Latitudes to step in this year, that venture does not seem to be doing well.
New to this year's list is American Forms, Plano, Texas, which purchased the assets of CST/Star and has been operating for more than a year. Also new are Sovereign Business Forms, Houston and General Data, Cincinnati.
The $4.96 billion in sales breaks down into $1.48 billion in forms (30.3 percent), $689 million in labels (13.9 percent), $1.46 billion in commercial printing (29.4 percent), $268 million in direct mail (5.4 percent) and $1.06 billion in other products (21.4 percent). The "other products" category this year consists mainly of plastic cards, promotional products and office supplies.
The Large Get Larger
The overall Top 10 Manufacturers generated $3.09 billion in total sales and employed 18,287 people at 217 locations. This represents 62 percent of the overall Top 100 sales, 59 percent of total employees and 51 percent of the locations. Last year the Top 10 accounted for $2.78 billion in sales and employed 18,563 people at 188 locations.
In terms of productivity, the Top 10 generated $168,863 in sales per employee this year, compared to $149,080 in sales per employee last year. On a sales per location basis, the Top 10 generated $1.2 million versus $14.8 million a year ago.
The Top 10 manufacturers of forms sold $713 million in forms products. The Top 10 Label and Tag Suppliers sold $462 million. The Top 10 Commercial Printers sold $1.41 billion and the Top 10 Direct Mail Suppliers sold $249 million.
If we go to the Top 25 Manufacturers, total sales reach $3.79 billion, or 76 percent of total Top 100 sales. The Top 25 reported 22,905 employees and 295 locations. The Top 25 generated $165,466 per employee and $12.8 million per location.
Renewed Activity
Once again this year there was a lot of activity among the Top 100 as 75 percent expanded manufacturing capabilities in existing plants, 19 percent purchased or acquired facilities and five percent built new plants. In addition, 25 percent reported that they consolidated operations. It is a continual give and take, as manufacturers look to expand or create profitable product lines, while struggling for efficiency in the production of other products.
In order to expand operations, the Top 100 Manufacturers are buying equipment. As you can see on the equipment status chart on page 30, the percentage of companies which now have or plan to acquire various types of equipment has increased significantly in eight of the 11 categories. For the other three categories, percentages remained consistent with last year. Computer-to-plate equipment and digital printing equipment are the categories which gained the most attention for future purchases. Nine percent of respondents said they plan to buy CTP equipment within a year and 5 percent of respondents said they plan to buy digital printing equipment within a year.
On the software and Internet side, capabilities of this year's Top 100 Manufacturers have grown tremendously compared to last year. Internet-related products are leading the way with electronic order entry, e-commerce and internet job proofing processes either in use or in companies' purchasing plans. EDI and access to production information via the Web also made significant gains.
What About Profitability?
What our numbers can not show is profitability. Because most of the Top 100 are privately held, they do not report their profits to the public. About the only thing we can do is take a large, diversified publicly held company and project some results.
Ennis Business Forms had a good second quarter, generating 12.8 percent, or $7.5 million in net profit on sales of $58.7 million. Ennis had similar results a year ago. If we project that profit margin across the Top 100's $4.96 billion in sales, the net profit would be $635 million. Although that number seems high, it should at least provide a reasonable estimate. In contrast, Moore had sales of $532.5 million for its second quarter and showed a normalized loss of $5 million and an actual loss (including restructuring and other charges) of $60.4 million. Hopefully most of the Top 100 Manufacturers fall closer to Ennis than Moore in terms of profits.
Look for more industry consolidation in the coming year, as manufacturers continue to diversify in an effort to maintain profitability.
Direct Influence
Last year we reported that direct-selling manufacturers were making inroads into the independent segment of the industry. This year it seems that just the opposite is happening. Moore seems to be pulling out of its distributor segment and Mail-Well has announced plans to divest its PrintXcel division. Other large direct-selling manufacturers, such as Standard Register and Wallace, have not as yet announced plans to enter the independent segment.
Independents are becoming ideally suited to supply larger-sized accounts. As corporations reduce their use of paper forms and order smaller quantities, it becomes more difficult for direct-selling manufacturers who depend on long runs. In addition, many corporations are cutting down on their overall number of suppliers. Independent distributors, who can offer their clients many types of products from many different suppliers, are a good resource for these corporations.
There is no sign that the independent segment of the printed products industry is slowing down. It appears that we are headed for another good year.
By Bill Drennan & Allan Kemler
Note: All numbers used for this analysis are based on the sales totals provided by the manufacturers listed on our Top 100 chart. All of the manufacturers included in the chart indicated that a significant por-tion of their products are sold through the distributor channel.