Pitfalls for the Private Sector
No business sector is more representative of small business than printers. There are approximately 36,000 commercial printers (not including neighborhood print shops) in the United States. However, this number is falling dramatically as more and more printers fail due to the recession, an increase in bulk mail rates by the U.S. Postal Service (USPS), and the government's ongoing unwritten policy of manufacturing print in-house rather than reliance on the private sector.
Not too long ago, 51 percent of everything printed ended up going through the mail. When the bulk mail rate went up, direct mail volumes went down in favor of online advertising and other less expensive forms of marketing. This changed print business dynamics. Not only did the USPS get itself into deeper financial trouble by reducing this major source of contribution to its overhead, but it hurt the print industry. Now, instead of printers utilizing 70 percent of their capacity on a day-by-day basis, the utilization figure dropped like a rock. In some cases, the capacity utilization is now 20 percent or less.
According to the Printing Industries of America (PIA), the print industry consists of nearly a million small business people. In fact, the average commercial printer had 27 employees and revenues of about $4.5 million. This is no longer true, as many of these printers have been hit hard by the economy and are desperate for work.
Approximately 10,000 of these print companies are registered to do work for the United States Government Printing Office (GPO), and of those 400 historically have been active, depending on workflow from the GPO to remain viable businesses. The GPO sends work valued at about $400 million a year to the private sector. A few years back, that number was more than $500 million.
Last year, total GPO work to the private sector was $440 million. There has been roughly a 27 percent drop in GPO derived income by private sector printers over the last 12 years. Factor in inflation and the drop is even more dramatic. The reason for the drop is not better management, more efficiency or even less print. The reason for the drop is the uncontrolled growth of the in-house print plant operated by the GPO, the granting of waivers by the government for the operating of thousands of other in-house print plants and the active efforts by many government agencies to circumvent the rules. This does not bode well for the print industry—especially now that the sky may be falling for many printers.