Renewed business activity will spur increased demand in the short term
Los Angeles, CA (PRWEB) November 20, 2012
Reading this report from a computer screen, rather than paper or stationery, effectively illustrates the primary challenge that the Office Stationery Manufacturing industry faces. The rising use of electronic communication has reduced demand for traditional paper stationery products, such as envelopes, letters and file folders. As a result, industry revenue contracted at an annualized rate of 2.1% to $7.8 billion from 2007 to 2012. Revenue declines were substantial at the height of the recession, with reduced business activity hampering demand for paper in the workplace. Furthermore, per capita income declined during the recession, which reduced consumer purchases, meaning businesses bought fewer paper rolls for cash registers. Combined with ever-increasing internet use, industry operators faced considerably curtailed demand during the recession. Revenue, however, has begun to increase over the last two years, as rising business activity and household incomes spur increased spending on paper products. During 2012, revenue is expected to rise 3.0%. Even with some renewed demand, profit margins are expected to fall. According to IBISWorld industry analyst Dale Schmidt, unstable demand conditions, growing input prices and difficulty in passing rising costs on to customers have led to volatile profitability for the average industry operator. Companies have been forced to shut down, consolidate, merge or be acquired over the five years to 2012. As such, the total number of enterprises declined at an average rate of 2.2% per year to 411 companies over the period. Not surprisingly, many producers have moved operations offshore to take advantage of cheaper labor and operating costs.
Market share concentration in the Office Stationery Manufacturing industry is low. The top producers are Cenveo Inc., MeadWestvaco Corporation and National Envelope Corporation. Increased merger and acquisition activity by major companies has increased the industry's market share concentration, says Schmidt. Cenveo Inc., in particular, increased its market share substantially with the acquisition of Rx Technology Corporation in 2006 and the purchase of Nashua Corporation in 2009. Furthermore, in February 2011, Cenveo acquired MeadWestvaco Corporation's envelope product group. Due to falling demand for office supplies and rising cost pressures, the industry has experienced significant consolidation over the five years to 2012, which has increased the size of the average industry operator.
The outlook for office stationery is bleak: over the five years to 2017, IBISWorld expects revenue to decrease. Low profitability and further downsizing and consolidation are expected over the coming years. Stationery will not completely disappear, however, because it is a complementary product to many electronics. In addition, while consumer use of paper products will steadily decline, offices still rely on industry products for daily tasks. As the economy recovers and businesses expand, corporate demand for paper products will increase marginally in the short term. To offset declines, companies will increasingly explore offshore markets for exports and develop higher-quality niche products. For more information, visit IBISWorld’s Office Stationery Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
Operators in this industry process purchased, uncoated paper and paperboard. Companies produce a variety of stationery products that are used for writing, printing, filing, artwork and similar applications. Industry products are sold to stationery wholesalers and retailers and directly to large enterprises. End users include businesses, students, home offices and households.
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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