In-plants During the Recession

The in-plant printing market segment is a critical component to the overall U.S. printing industry. In 2008, InfoTrends estimated that the overall industry had a value of shipments of $143 billion. The total in-plant printing market had just over an 18 percent share of the overall market, with $26 billion in value of shipments. This figure includes not only traditional in-plant printing centers and CRDs, but also includes data centers, small in-plant copy/print sites, and converged or integrated facilities that provide a combination of both graphic-arts-related output, data output and mailing services.

According to InfoTrends’ estimates, the overall industry declined dramatically from $143 billion to $128 billion between 2008 and 2009. The losses were most severe in the commercial litho, quick printing, business forms and in-plant data center segments, which collectively experienced a 15 percent decline.

Digital printing establishments (those whose business is primarily digital and not offset) saw a modest decline, as did in-plant printing departments. This more moderate decline was due to the ability of digitally oriented establishments to benefit from some of the results of the poor economy: shorter print runs and the need for relevant communications, both favorable to print on demand. In-plant environments also benefited from commercial print plant closings and general instability of some of their print-for-pay counterparts.

The U.S. Census Bureau provides some useful data and tools that serve as indicators for the print-for-pay industry. However, that information does not account for the trends and events that occur with the in-plant printing market.

In-plant Research

InfoTrends has been researching this market since 1997 and continues to conduct research studies in this area. Our perspective on trends in the in-plant environment is derived from two major studies conducted on the in-plant market in 2004 and 2008, as well as ongoing research we conduct with both the in-plant and print-for-pay market on a quarterly basis.

In our 2008 study entitled “In-House Production Printing: Critical Trends in Corporations, Education, Government, and Non-Profits,” we learned that the adoption of digital printing hardware and software had steadily progressed in in-plant environments from where it was during 2004. One particularly compelling data point from this study was that a significant percentage of in-plants no longer offered offset printing services on-site. In 2004 nearly all (99.5 percent) of the survey respondents reported having some type of offset printing capability on-site, while in 2008 only around 57 percent said they offered it.

The survey and interviews for the 2008 study were conducted during December of 2008, shortly after the fall of Lehman Brothers and the sharp stock market declines. Although these events had some very immediate negative impact on the printing industry as a whole, the in-plant market was somewhat buffered from these short-term affects, aside from those that resided in financial services institutions. Still, we thought it would be necessary to ask our respondents about any expected budget cuts and/or declines in print as a result of economic decline.

Overall, respondents to our 2008 survey did not expect print volumes or revenues to decline much in 2009. The expectation among those respondents was that their revenues would remain relatively flat or see limited growth, with a mean of just over 1 percent. Overall, nearly 47 percent expected flat or negative growth between 0 percent to -5 percent. Another 53 percent believed that they would experience some level of growth. This resulted in an overall mean/average growth expectation among respondents of 1.1 percent for 2009.

Revisiting Survey Results

As the economy continued to erode and the printing industry experienced double digit declines during 2009, InfoTrends conducted another shorter survey in the first quarter of 2010 to learn about the impact of these events on the printing industry, including the in-plant market. This 2010 survey produced different results than the 2008 study, where the overall mean/average in in-plant revenue actually declined by -3 percent, compared to their expectations that it would remain relatively flat. In relative terms, a decline of -3 percent doesn’t sound too bad, considering that the commercial litho segment declined by around -15 percent according to Info-Trends’ estimates.

As part of this Q1 2010 survey, we also asked respondents about their projections for 2010 revenues. Altogether, they expected them to remain flat, with 66 percent of respondents expecting to see either flat or declining revenues and 34 percent expecting some level of growth. Print-for-pay respondents of the same survey also expected revenues to remain flat in 2010.

Regarding print volumes, we had a similar story where in-plants expected overall growth of print volumes in 2010. This growth would be driven by digital color print volumes as well as some stability in digital black-and-white printing. In 2009, in-plant respondents reported flat growth in digital black-and-white volumes, 3 percent growth in digital color printing volumes, while offset color volumes were flat and offset monochrome volumes declined by -3 percent. We should note in this survey, only 41 percent of the respondents said they had offset printing capabilities in-house.

On the print-for-pay side, the digital color and black-and-white volume growth was identical to that of in-plants, with 3 percent and 0 percent growth, respectively. However, print-for-pay environments reported a -7 percent decline for both offset color and monochrome volumes, which aligns with the greater level of decline that they experienced in 2009 compared to in-plants.

Furthermore, we could also infer from the data that in-plants with existing offset printing capabilities have retained those devices due to a strong demand for offset from their internal customers and therefore did not experience the same level of declines that the print-for-pay market did in 2009.

What’s Ahead in 2011?

As 2010 draws to a close there are a few points we can consider to get a sense of what 2011 will bring. U.S. Census Bureau data through September 2010 indicates a decline of roughly 1 percent for the period of January through September, compared to the same nine month period in 2009 for the print-for-pay market. InfoTrends is expecting that the economy as well as the printing industry will remain relatively stable through the last quarter of 2010 and expects the print-for-pay market to grow by around 1 percent in 2010.

The International Monetary Fund projects that the U.S. will continue on a moderate growth pattern through 2011 with a GDP rate of 2.3 percent, below the rate of 2010, but will pick up momentum in 2012 through 2014. That said, in 2011 we would expect a growth rate in the printing industry to hover around 1 percent, or possibly show a modest decline. Again, this will be mostly impacted by the commercial litho segment, which still represents a large percentage of the overall industry.

In early 2011, InfoTrends plans to launch an industry-wide study entitled “Production Print Services in North America: An Evolution in Progress.” This study will include both in-plants and commercial printers and will focus on the changes that have occurred over the past few years, as well as the requirements for success in the near future.

The in-plant market should remain relatively stable in 2011 since it is and will remain strongly invested in digital printing technology. Some of the key factors for success for in-plants are their ability to provide good quality output, at affordable prices and with quick turnaround times. In-plants need to maintain and/or increase their visibility within their respective organizations, while continuing efforts to meet or exceed the service levels that their outside competitors are offering.

Finally, it is critical that in-plant managers stay up to date with industry trends regarding business management, technology and new applications in order to maintain their relevancy and continue to be an important component of the overall printing industry. IPG