2008 Executive Forecast
On November 29, the White House lowered its forecast for next year’s economic growth, saying unemployment would rise as the housing slump and credit crunch weigh on national economic activity.
Under the administration’s new forecast, gross domestic product will grow by 2.7 percent next year. The previous projection called for a stronger, 3.1 percent increase. The unemployment rate, meanwhile, is projected to shift to 4.9 percent—the previously forecasted jobless rate was 4.7 percent. Inflation, however, is expected to improve. In addition, the White House anticipates consumer prices will increase by 2.1 percent next year, a moderation from a previous forecast of a 2.5 percent rise. The odds of a recession have grown this year. But, the Bush administration, Federal Reserve officials and others remain hopeful that one can be avoided.
Of course, the big worry for economists is that consumers and businesses will cut back on spending and investing, sending financial growth into a tailspin. With the entire nation facing economic uncertainties and more consumers tightening their belts, how will the already challenged printing industry fare next year? Here, some of the leading industry executives gaze into the crystal ball and offer their insights for 2008.
Keith Walters, President, CEO, Ennis
The upcoming year will see the consolidation trend continue. Companies that do not understand their true costs will continue to struggle, while those that are financially stable will be able to move into new product and market directions.
The market will favor distributors who focus on building relationships with manufacturer partners and selling programs—not individual orders based on price alone. Last year, Ennis developed two non-branded sales programs with the Enfusion and Uncompromised Check Solutions product lines, and will continue this approach in 2008. Our goal is to offer distributors products with high margins and growth potential to offset the shrinking market for traditional forms.
Richard Ghelerter, President, Apex Color
The print outlook for 2008 is a tough call considering the country’s housing and mortgage mess, [as well as] escalating fuel cost[s]. I believe our industry will struggle without a healthy economy. But, accepting that growth may be slight; I still see opportunity in commercial printing, as well as business forms. Both segments of printing are moving toward shorter runs, faster delivery cycles and non-printing value-added services, such as kit building and pick-and-pack services, along with warehousing and distribution.
At Apex Color we have positioned our company to help customers take advantage of these changing trends by investing in new technology that automates workflows and significantly reduces the time required for soft proofs and front-end processing. Our new prepress workflow will accept a certified PDF file from a customer, preflight, RIP, trap and bounce back a proof on the fly. Faster font-end response time[s] will allow our customers to provide the personal attention their customers demand, and in turn enable them to cash in on more print opportunities in 2008.
Vaughn Gordon, Vice President, National Sales, Continental Datalabel
Forecasting for the 2008 pressure-sensitive label (PSL) market is based upon past growth. A key factor driving demand for the total label market is our national gross domestic product (GDP).
Label growth in 2006 was slightly [more than] 2 percent, and forecasted the same in 2007. GDP for 2008 is forecasted at 3 percent. Label growth has historically been one to two-and-a-half times the GDP for the overall industry. These GDP factors would indicate a PSL growth between 3 percent [and] 7.5 percent for the overall label market.
This prediction depends on the continuation of U.S. GDP growth. The 2008 label industry will grow if the GDP reaches the 3 percent forecast.
James R. Schulty, CEO, AmeriPrint Corporation
I expect to see our industry consolidate throughout 2008. Mergers and acquisitions will greatly reduce the playing field, as traditional forms-related business evaporates.
Manufacturers and distributors alike will be forced to look at new products, technologies and business practices. We will need to offer more services while reducing our overheads and increasing efficiency.
Offering environmentally friendly products will be a must in 2008. Ecological issues are politically charged and receiving vast coverage in the media. AmeriPrint will be offering an environmentally friendly paper called AmeriLaser. AmeriLaser is manufactured using a high-yield mechanical pulping process that is completely chlorine-free. In addition to reducing environmental impact, AmeriLaser offers significant cost savings.
Document security is another area where we expect to see substantial growth. The new CMS regulation requiring all non-electronic prescriptions to be produced on tamper-resistant pads is already causing a ruckus in the medical field. The rapid increase in fraud and identity theft has created a need for more effective security practices. We have invested in several new security products to help distributors protect their customers. We even offer on-demand document security to protect sensitive documents produced on plain paper.
Dennis Kopp, Vice President of Sales and Marketing, Printing and Carbonless Papers Division, Glatfelter
Glatfelter feels the business forms industry is still a vibrant business, and both carbonless papers and business information papers (such as laser MOCR) continue to be central to the company’s continued financial success. Despite carbonless being a mature product line, we still see tremendous promise for a healthy business environment.
With the push everywhere for “green” solutions, we are educating customers about our NatureSolv capsule technology, which is Glatfelter’s environmentally responsible carbonless capsule system. We believe the industry will move more toward “greener” solutions, and customers throughout the value chain will be requesting environmentally responsible technologies.
Additionally, the federal regulations surrounding Medicare prescription pads will spark increased needs for education around our Defensa Security Papers line of products. More documents now require security features, and our Defensa line has three different levels of security—including one with a multi-language void feature—to prevent document fraud.
Overall, we still see tremendous opportunity in the forms industry for strategic growth, and are excited for the year 2008!
Andy Harnett, Treasurer, New Jersey Business Forms
Tomorrow’s weather forecast? Sunny, with rain likely! In other words, our industry forecast [includes] continued uncertainty.
[There will be] continued regional forms and printing plant consolidation[s] with small, long-established manufacturers closing or selling off. [In addition, there will be] continued turmoil in the large directs, with their closing and relocating manufacturing facilities and downsizing their sales and sales support staffs. The opportunity for a manufacturer is to support the resellers as they build sales at the expense of the large, national direct sellers.
The challenge for a manufacturer in 2008 [will be] to continue to offer relevant, worthwhile printed products.
Greg Trebnick, CEO, Trebnick Systems
Consolidations and mergers will highlight the industry. [Also,] China is taking production away from the United States.
This means [the] production of labels and tags, [as well as] usage, will continue to decrease. New equipment is more expensive, and sales and manufacturing efficiencies and effectiveness will have to increase. In a decreasing market, desperate companies do desperate things, such as give orders away at no margin, and cross ethical supplier, distributor and manufacturing lines.
We are currently picking up new sales in China and Japan. Worldwide exposure decreases regional scrutiny, [which] is why ethical lines are blurred. [T]he lowest-cost producer with the highest quality and [best] ethics will survive. History has proven this over and over.
So, if you’re not effective, merge; if you are not efficient, sell.
Joe Foley, President, Corporate Disk Company
Electronic media has joined forces with traditional printing. Corporate Disk expects 2008 to be a huge year for those savvy print professionals who take advantage of the explosive growth opportunities in electronic media as a complement to traditional print. While traditional print carries the message, a CD or DVD addition will engage the imagination with audio and moving images. While some still prefer traditional print, all agree that adding electronic media gives the prospective customer a video or audio alternative that adds value to the project.
Picture a child looking over a brochure for the zoo. The child is naturally excited by the two-dimensional images of the lion and many colorful words used to describe this ferocious beast. Add a CD or DVD to this brochure, and the child now sees the way the lion moves and hears the lion’s roar, and he cannot wait to go to the zoo to see this incredible [animal].
Corporate Disk Company has noticed that more customers are adding CDs and DVDs to their print projects. I believe this is because it is such a cost-effective way to add power to the message you are sending to your target audience. People still need print, but having an [alternate] version at their disposal has proven to be a wise marketing decision.
Enrico Ruta, President, FME-Forms Manufacturing Equipment
As a manufacturer of everyday supply items and equipment to the business forms industry since 1970, FME-Forms Manufacturers Equipment will be ending 2007 with an increase in sales over the previous year. In addition, my outlook for 2008 is very positive. I attribute this to the service we offer and the quality and versatility of the equipment we sell.
Some of our hot products for 2008 will be our Starcut Sheeter/Batcher Stacker for both tight- and loose-web applications, card and label applicators, equipment for the production of integrated products, pack-to-sheet electronic cutters for laser cut sheets and quick-release perf bars, [among other products].
Also in 2008, FME will be entering the digital print world by introducing a GP Stratum Coater to run inline with digital printers. These digital printers generate a high amount of heat to fuse the ink to the paper and, in doing so, a high percentage of humidity is taken out of the substrate. With FME’s GP Stratum Coater, the paper will be cooled down, humidity reapplied and then sealed with a controllable system.
We are projecting a high volume of sales for this product and—perhaps along with the rest of the line of equipment and supplies—[it] will [help] make 2008 the best year in FME’s history.
Gregg Emmer, Vice President and Chief Marketing Officer, Kaeser & Blair
The real problem with industry forecasts is that everyone will know if you are right or wrong by the end of the year! So, the trick of the trade is to put a lot of “wiggle room” into the forecast and leave a lot to the variables we can’t control. I’ll try not to do that.
While most readers are focused on the print[ing] and forms industr[ies], a growing number are enjoying promotional products as a growing profit center. My comments are about that segment of the business. ... Eighty percent of supplier companies and 75 percent of distributors [anticipate] nice increases in 2008. Our distributing company expects fairly strong growth to continue for 2008. We are reinvesting in new order processing systems and improving the management systems our national dealer network uses to manage their businesses, in order to handle [growth].
2008 will be a good year to add promotional products to [product lines], or to put a bit more emphasis on that profit center if [a company] already sell[s] promotional products. The grand majority of our 3,000-plus national dealer group expects business growth in 2008.
Bob McAleavey, GM, Specialized Printed Forms, a Div. of Ennis
Here’s the short-term outlook from Specialized Printed Forms: We’re expecting an increase in four-color process work, as direct mail and promotional printing continues to replace many “traditional” business forms production. Business[es] [are] aware of the importance of transmitting their image[s] through print, especially as their options increase.
We’ve ramped up our production to meet those demands, both in prepress systems and in press equipment. Though the transcendence of the Internet had been looked on with fear [by] printers and distributors, it appears to have added to the demand for quality print[ed] products to secure sales. Distributors align[ing] themselves with the marketing and sales efforts of their customers will continue to see possibilities, even as communications methods change or are enhanced.
Based on recent experience, we see steady sales of some “traditional” products where paper-based transactions are efficient and cheap. Our bindery was inundated with work last year. We expect that to continue next year, as we offer the convenience of managing products from prepress to final binding or hand assembly.
On the good side of the declining U.S. dollar, we’re seeing an increase in orders from Canada, and look for new opportunities with the pendulum swinging the other way after [more than] 30 years!
Jerry Wertz, President and CEO, Data Papers
As we approach 2008, the focus at Data Papers will be to help our distributors provide additional products and services to their customers.
Our new catchphrase is: “investing in your future.” We believe that investing in equipment and technology that makes it easy for our distributors is the way to prosperity for Data Papers, our distributors and their customers. To this end, we have made major investments in the past year to participate in two growing markets. Two new presses—an eight-color UV press to address the high-color promotional market, and an Indigo 5500 digital press to handle short-run on-demand products—were added to our pressroom this year.
Additionally, the purchase of a Duplo 5000 has given us the ability to provide our distributors with long- and short-run booklets.
Our capital investments are key, but not the total solution. The growing promotional and digital markets are a challenge to many of our distributors, so we must assist them in other ways. Data Papers will partner with distributors by making joint sales calls to provide technical support, offering a unified manufacturing [and] sales presence to the end-user.
Rich Lippmann, Owner, Lippmann Printing & Graphics
As 2007 draws to a close and we look ahead to 2008, many challenges lie before us as printing professionals.
The increased costs associated with fuel, energy, paper and healthcare will make it hard for manufacturers not to pass on price increases in 2008. These rising costs over the past couple [of] years have been offset by production efficiencies and negotiations with vendors. I believe only those companies that pass on these increases will thrive and survive in 2008 and beyond. That being said, I anticipate Lippmann Printing to grow at a 20 percent rate in 2008, as it has each of the last four years.
Luis Campos, Vice President of Sales, Vijuk Equipment
Vijuk Equipment revolutionized pharmaceutical packaging with its patented outsert units in the ’80s and ’90s. Now, the Vijuk MV-2001 and MV-2005 Outsert Systems are answering the industry’s changing needs. At new high speeds, Vijuk systems can produce larger outserts with greater compression, keeping finished outserts small and compact [and] necessitating little changes in the packaging.
The FDA’s June 2006 rulings increased the demand for leaflets and larger outsert formats, making miniature-leaflet printing and folding positive ways to diversify and expand printing operations. Outsert system sales have expanded worldwide due to globalization and companies opening plants where labor costs are lower. However, countries exporting to the United States must comply with FDA regulations.
To serve our existing MV Outsert customers and assist with new sales and distribution, Vijuk has employed Dr. Bernfried Moosmann as vice president, international operations, based in Leonberg, Germany.
In the future, we must be concerned with the global market, as well as the U.S. market. Future growth will be accomplished by expanding our territory—which is now the world.
Bob Maggio, President, Maggio Data Systems
We are optimistic that with careful planning and working closely with our distributors, our growth will continue. The principal concerns are continued consolidation and the march of technology. This can be a threat or [create] new areas of growth if we are prepared. We will continue to be open to acquiring companies that complement Maggio and offer new opportunities we can bring to our distributors.
We will focus on growing market share and identifying the products, market segments and niches where we can continue to grow. For example, direct mail continues to grow as do other transactional applications that expand opportunities for roll production and color printing requiring dryers. Transpromo communications, where advertising messages are added to transactional documents, will expand this market.
Maggio will celebrate 30 years in business next year. We continue as a “family” business dedicated to serving distributors exclusively. Thanks to our distributors, we have continued to grow the business in spite of downturns in the economy and a general weakness in forms.