A Drop in In-plant Confidence Levels

Between November and December, in-plant confidence levels dipped at higher-ed and school district in-plants. The second IPG In-plant Confidence Index found that overall confidence was down about three points from December, resulting in a confidence score of 122.9.

These results came from the second in a series of monthly reports launched by IPG and NAPCO Research to measure confidence levels in the in-plant industry. We are tracking how confident in-plant managers are that they will reach their sales goals, add new business and add new services in the months ahead. We have focused on higher-ed and school district in-plants.

We conducted the second of our monthly surveys in December and early January, and plugged the responses into a proprietary scoring algorithm, which weights each factor based on market significance and outputs an overall confidence score that educational in-plants will meet their sales goals and add new services. Each month we will compare the new score with the previous ones to show you trends in the confidence level of in-plants. Having this knowledge on a monthly basis will give you a benchmark against how your in-plant colleagues expect to perform in the coming month. (To participate in this ongoing confidence survey and be eligible for prizes, email us.)

In our initial report, we revealed that higher-ed and school district in-plant managers expected their overall sales volume in December to be slightly higher than their sales during December 2015. On a scale of one to 10, with 10 being significantly higher than last year, the average response was 5.71.

In our most recent survey, that number jumped very slightly to 5.73, with the majority (30.6%) staying right in the middle by picking 5 (i.e., "about the same") on the scale to characterize their expected sales volume in January 2017 versus January 2016. The largest percentage of respondents (73.5%) picked 5, 6 or 7 to indicate their level of confidence.

Among those who expected flat growth, some noted that the overall budget for each department has remained the same for the last three years, so no additional business was expected. Others pointed out that they have not added equipment or services, so didn't expect more business. The closing of most schools for the holidays also had an impact on business expectations. Some noted a balance between shrinking business and new opportunity.

"With budget cuts, I see revenue down slightly but new business will make up for the difference," said one.

Those expecting sales increases credited a variety of signs, including a growing university population, a more aggressive marketing plan at the school, more customer inquiries, data showing that revenue has been rising, the addition of wide-format printing and other services, more variable data printing orders, more Common Core work in the upper grades and more insourcing from outside organizations.

"We are printing for a larger number of schools than last year," pointed out one respondent.

"We have averaged an 8% increase in sales over last year since July 2016, when our fiscal year starts," noted another.

"We use target or score cards posted and we match or grow our business from month to month and previous year," explained a third.

Those expecting less business pointed to the digitization of content, fewer NCR forms, customers outsourcing instead of using the in-plant, and reductions in print volume for student practice tests and other assessment tools.

"Low enrollment means fewer students to sell to," said one. "Budgets are tight and our new governor has said he is cutting the old governor's budget by $30 million." Sobering news indeed.

Less Optimism in Ability to Drive New Business

The survey also asked in-plants how confident they were in their ability to add customers and bring in new business this month. On a scale of one to 10, with 10 being extremely confident, the average response was 5.51, a 5.5% drop in confidence from November's average of 5.83. Still, the largest percentage of respondents (59.2%) picked 6, 7 or 8 to indicate their level of confidence.

When asked how confident they were that their in-plant would add a new service or capability in the next three months, managers were less confident than last month. On a scale of one to 10, with 10 being extremely confident, the average was 4.8, compared with 5 last month. Interestingly, 14.3% of managers said they were “extremely confident” by ranking their confidence level at 9 or 10.

One improvement over last month came in actual sales volume over the past month compared with sales volume for the same month last year. With 5 meaning “about the same,” the average score was 5.94, slightly higher than the 5.69 tracked in last month's survey. Almost 31% of respondents selected 5 for this question, while nearly 43% picked either 6 or 7 to indicate a slight rise in sales versus last year.

Some of the changes in-plants have made over the past year that they feel have positively impacted sales are improved large-format capabilities, improved service and turnaround times, increased student enrollment, more insourced work, price increases and a new large customer.

"The school district added curriculum, which needed printing by Print Services," explained one manager.

"Our department is reporting to a new division — procurement — and the director of procurement has been touting our services to other divisions in the university," chimed in another.

We will continue tracking monthly in-plant confidence levels as 2017 progresses. If you are an in-plant manager at a college, university or school district and would like to participate on our in-plant confidence survey panel, please email us.