Equipment Sales are Expected to Move Into High Gear

Readiness to buy, new legislation and a healing economy support equipment growth.

Distributors seeking manufacturers with the latest up-to-date equipment may be pleased to hear that the future looks bright.

While 2002 was dampened by a soft economy and conservative business, it seems for the first time in quite a while, there might be some light at the end of the long and dark tunnel in which equipment manufacturers have been dwelling.

This is partly based on information found in Printing Impressions magazine, which stated that the organizers of the Graphics Arts Show Company (GASC), reported a total of nearly 38,000 attendees representing more than 9,600 companies over the four days of the Graph Expo show held in Chicago's McCormick Place South Hall in the fall of 2002.

In Mark Michelson's, editor-in-chief of Printing Impressions, report it was indicated that there was not only a large quantity of visitors and exhibitors, but the quality of attendees and the level of purchasing interest shown by buyers was impressive; leading to the notion that business, at least in the graphic arts industry, is rebounding.

William Maguire, president of Peninsular Printing, Daytona, Fla., agreed with the projection stating that the increase of business he is witnessing should prompt new equipment purchases for the forms industry as well. "Business appears to be picking up just a bit," said Maguire. "Not a lot, but it looks a heck of a lot better than it did a year ago."

Having spent about $35,000 on new film output devices in 2001, and about $15,000 to $20,000 on equipment upgrades in 2002, Maguire predicted he will spend more in 2003 for post-press equipment.

He added that Peninsular Printing has not had to invest as much in press equipment recently because the company was an early innovator in the development of U.V. inking and drying technology. This U.V. system has allowed Peninsular to produce high-quality, four-color process printing on both coated and uncoated papers on its web press. Capabilities that have enabled Peninsular and its distributor customers to stay ahead of the competition.

He also noted that there has been a lot of progress of computer-to-plate and prepress technology adding, "Significant staff cutbacks on labor resulted in this advancement. In fact, there are not nearly as many people in prepress as there used to be."

While increased business and a healing economy may be why more manufacturers are ready to pull out their wallets for new equipment, a new act written in-to law by the Bush Administration may be another.

New Law Brings Relief

According to a press release from NPES—a United States national trade association representing manufacturers and distributors of equipment and supplies used in all segments of printing, publishing and converting—the Job Creation and Worker Assistance Act of 2002, offers tax incentives enabling manufacturers to, in the act's first year, write off 30 percent of equipment purchases, in addition to the current depreciation schedules covering the remaining 70 percent.

This new expensing provision means that NPES, National Association for Printing leadership (NAPL) and Printing Industries of America (PIA) members can now write off 40 percent of equipment purchases in the first year and 57 percent in the first two years for equipment currently depreciated over a period of seven years. This compares with 14 percent in the first year and 39 percent in the first two years under current law.

This temporary tax relief applies to equipment ordered between Sept. 11, 2001 and Sept. 11, 2004, and placed into service before Jan. 1, 2005. The depreciation preference will be removed from the Alternative Minimum Tax through 2004. The business tax cuts are estimated to have a value of $43 billion this year.

By Sharon R. Cole