Growth Stalls in a Tight Economy
The printed products industry mirrored the economy with a slight drop in revenue.
Although revenue for the Top 100 Manufacturers and Suppliers declined by 2 percent, or $900,000 to $4.87 billion this year, it is still quite a bit higher than the $4.38 billion reported two years ago.
The total number of employees reported by the Top 100 decreased by 283 to 30,662 this year. The total number of locations decreased dramatically to 369 from last year's 423.
Productivity, as measured by sales per employee, dropped a bit this year to $158,805 from the $160,123 reported last year. However, sales per location jumped to $13.2 million from last year's $11.7 million.
There are several reasons for these shifts: There is no common experience among the Top 100 Manufacturers and sales increases may have been caused by an increased share of market or by acquisition, while declining revenue may have been the result of consolidation. In addition, the makeup of the Top 100 has shifted slightly as CFC and Datagraphic merged to form Printegra, Wise acquired EPX and Crabar Paper/Witt LLC split from its parent company. Next year's list has already changed, as Ennis has signed an intent to acquire the $40 million Calibrated Forms.
The $4.87 billion in sales broke down into $1.51 billion in commercial printing (31 percent), $1.36 billion in forms (27.9 percent), $697 million in labels and tags (14.3 percent), $276 million in direct mail (5.7 percent) and $170 million in promotional products (3.5 percent). The "other products" category, which had $855 million in sales (17.6 percent of the total) this year, consisted mainly of plastic cards, services and office supplies.
Top 10 Manufacturers
The overall Top 10 Manufacturers generated $3.17 billion in total sales and employed 18,885 people at 179 locations. This represents 65.1 percent of the overall Top 100 sales, 61.6 percent of total employees and 48.2 percent of total locations. Last year the Top 10 accounted for $3.09 billion in sales and employed 18,287 people at 217 locations.
In terms of productivity, the Top 10 generated $168,072 in sales per employee this year compared to $168,863 last year. For sales per location, the Top 10 generated $17.8 million versus $14.2 million a year ago.
As seen on the accompanying charts, the Top 10 forms manufacturers sold $695 million in forms products compared to $713 million last year. The Top 10 label and tag suppliers sold $376 million compared to $462 million a year ago. This drop in reported label sales is mainly due to Nashua Label ($115 million in sales last year) not participating in this year's report. The Top 10 commercial printers sold $1.47 billion compared to $1.41 billion last year and the Top 10 direct mail suppliers sold $243 million compared to $249 million a year ago.
For the Top 25 Manufacturers, total sales reached $3.8 billion, or 78 percent of total Top 100 sales. The Top 25 reported 23,032 employees and 233 locations. Last year these numbers were 22,905 employees and 295 locations. The Top 25 generated $165,205 sales per employee and $16.3 million per location, while last year these numbers were $165,466 and $12.8 million respectively.
Business activity declined among the Top 100 Manufacturers, as 70 percent reported expanding manufacturing capabilities in existing plants, 18 percent purchased or acquired facilities and 4 percent built new plants. This compares with last year's 75 percent, 19 percent and 5 percent respectively.
Although companies are reporting product line expansions, they are relying on current equipment capabilities to accomplish this. Only six companies out of the Top 100 Manufacturers are planning any significant equipment purchases.
Layoffs were an issue this year as 38 percent of the Top 100 Manufacturers reported them. On a brighter note, only 3 percent of the Top 100 say they will require additional layoffs in the coming year. The reasons for layoffs included slowdowns in orders (23 percent), company consolidation (14 percent), new technology requiring fewer workers (6 percent) and the discontinuation of one or more product lines (5 percent).
Because most of the Top 100 Manufacturers are privately held companies, they are not required to publicly report their profits. As such, reporting on profitability is an inexact science at best. However, to provide an idea of what the Top 100 Manufacturers experienced this year, we can look at a prominent, publicly held independent manufacturer—Ennis Business Forms.
Over the past year, the stock price of Ennis has risen from a little more than $8 per share to more than $12 per share as of this writing. The company reported net profits of 6.3 percent for its most recent fiscal year and 6.7 percent for its most recent quarterly period. Moore, a direct-selling publicly held industry manufacturer, reported net earnings of 2.6 percent for its most recent fiscal quarter, which is a marked improvement over recent years.
The hope is that despite a shaky economy, most of the independent manufacturers are profitable this year. If the economy begins to expand again soon, the industry should emerge stronger than ever.
By Bill Drennan & Sarah Lerow
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 portion of their products are sold through the distributor channel.