Alternative media will continue to siphon consumers away from industry operators.
New York, NY (PRWEB) March 09, 2014
The Printing industry, which includes large commercial printers and local print shops, endured a variety of challenges over the past five years. According to IBISWorld Industry Analyst Omar Khedr “Consumers are increasingly favoring digital alternatives, such as online media, over printed materials.” For many media products, printed text has become too slow and costly to produce. Moreover, during the past five years, demand for print advertisements, a key demand driver for this industry, has consistently fallen. As a result, newer forms of media, such as digital, have been siphoning demand away from this industry. Consequently, the printing industry is in decline with revenue expected to decrease at an average annual rate of 2.1% in the five years to 2014. In 2014, revenue is expected to decrease 2.4% during the year to an estimated $77.6 billion, hindered by an increase in the price of paper.
Decreasing sales volumes and downward pressure on unit selling prices have also hampered industry profit during the past five years. Printing requires substantial capital investment in new technology to remain competitive in times of excess capacity. Since there have not been enough customer orders, overcapacity has contributed to the long-term trend of industry consolidation. In the five years to 2014, the number of commercial printing companies is expected to fall at an average annual rate of 3.2% to 22,946 operators. Industry consolidation has allowed larger printers that have economies of scale and access to strong financing to adopt more efficient equipment, while simultaneously slashing employment and wages. Additionally, plant closures and staff consolidations have caused industry employment to decline at an average annual rate of 4.2% to 413,164 workers in the five years to 2014.
In the five years to 2019, the printing industry is anticipated to continue its decline, albeit at a slightly slower pace. In addition to these projected declines, industry operators will also need to contend with the higher cost of materials. “For example, the price of paper is expected to increase during this period,” says Khedr. Furthermore, substitutes to commercially printed material, such as online media, will continue to adversely affect industry activity. In order to adapt to declining demand, printers will need to diversify into cross-media products, including multimedia layout and design.
The Printing industry is highly fragmented, with the four largest printing companies accounting for less than 25.0% of the industry's revenue. The majority of commercial printers in the United States are privately owned and generate less than $35.0 million in revenue on average. Furthermore, more than 70.0% of firms operating in this industry have fewer than 10 employees. The majority of these smaller firms are struggling to capture new customers. According to the Printing Industries of America, firms that have 1 to 19 employees only account for 12.0% of industry revenue, while firms with more than 100 employees account for 62.0% of industry sales. Throughout the past three decades, there has been an increase in market share concentration due to mergers and acquisitions. One such acquisition occurred in July 2010, when Quad/Graphics acquired World Color Press, the second-largest provider of print, digital and related services in the Americas. In the five years to 2014, IBISWorld estimates that the number of industry firms will decline at an average annual rate of 3.2% to 22,946 companies.
For more information, visit IBISWorld’s Printing in the US industry report page.
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Companies in the Printing industry are primarily engaged in printing on paper, textile products, metal, glass, plastic and other materials, with the exception of fabric. Industry operators engage a variety of printing processes including lithographic, gravure, screen, flexographic, digital and letterpress. This industry does not include publishers that also perform printing, nor does it comprise companies that perform prepress or postpress services without traditional printing.
IBISWorld industry Report Key Topics
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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