Business Indicators to Gauge COVID-19 Effects on Commercial Printers

The economic crisis caused by COVID-19 is hurting the sales and profitability of commercial printers as large swaths of the economy have been shut down. According to a new research program initiated by NAPCO Research and the PRINTING United Alliance, nearly all commercial printers surveyed, indicated sales decreased, falling 57 %, on average, over a 30-day period (from mid-March through mid-April) and currently there are no signs as to when the upturn will begin (Figure 1). Still, many commercial print providers report taking decisive actions to be ready for when the recovery arrives.

Figure 1: Sales Change Last 30 Days

Click to enlarge.

To help printing companies navigate through the current crisis to the recovery on the other side, NAPCO Research and the PRINTING United Alliance launched the COVID-19 Print Business Indicators Research and will report the results of this ongoing survey on a continuing basis. This survey tracks key indicators across a cross-section of printing companies, including commercial printers, graphic and sign producers, apparel decorators, functional printers, and package printers/converters. Click here to download the first full report including all printing industry segments surveyed.

This article focuses on key findings from commercial printers participating in the first survey. Our second survey is now in the field and open for any commercial printers to participate. Survey participants will have an opportunity to sign on to our COVID-19 panel and receive an exclusive, in-depth report not made available to the general public. Here is a link to take the 3-5 minute survey and to sign up for the panel.

Index Reports Business Activity Falling

The research tracks current and leading business indicators. For the current period, the index of current business indicators (including sales, production, employment, prices, and pre-tax profitability) for commercial printers closed at 15.7. A reading below 50 means more printers report activity is falling than report activity is rising. This index measures the breadth of the contraction and determines when it has hit bottom.

The index of leading business indicators (including work-on-hand, quote activity, production payroll hours, and confidence) closed at 17.8. A reading below 50 means more printers report these forward-looking measures of activity are falling than report they are rising. This measure is used to identify the first signs of recovery and how recovery is likely to progress.

Results Not Surprising

According to Andrew Paparozzi, chief economist of the PRINTING United Alliance, “The numbers in our first survey are exactly what we’d expected given the sudden and swift shutdown of large sections of the U.S. economy. The bright spot is the decisive actions many we surveyed are taking to protect their companies from the coronavirus crisis and prepare for the recovery to follow.” Paparozzi is the lead analyst for the COVID-19 Print Business Indicators Research.

Great Year, Until COVID-19

The contraction of business has been deep across the commercial printing industry. According to one survey respondent, “We were having a great year until COVID-19, then sales dropped drastically.”

Adds another respondent, “Eighty percent of our customers are closed due to mandatory shelter-in-place. Many others are working from home and so are only generating mail once a week or less, where previously they were generating print and mail daily.”

Continuing to Pursue Opportunities

The positive news that the numbers don’t capture are the actions many commercial printers are taking to weather the current storm. Many of the companies surveyed are moving aggressively to protect themselves from the COVID-19 crisis and position for the future. Actions respondents are taking include pre-payment price discount programs; pivoting to growth industries, essential industries, and printing related to COVID-19 (health guidelines, updates, etc.); producing personal protection equipment; using social media to monitor client needs, how those need are changing, and how they are likely to change post-crisis; expanding e-commerce and web capabilities; and, of course, protecting the health of their employees. The prevailing attitude among survey respondents is determination, not resignation.

Some respondents are experiencing gains due to a diversified product offering, as one respondent reports, “I have seen an increase in our packaging division, but it does not make up for our commercial losses.”

“We have been able to pivot and are currently manufacturing PPE face shields. We will see what happens when this work is done,” adds another.

While others report some level of sales optimism, “We are still actively quoting quite a bit of work, but it seems that it is future projections for our customers rather than live orders. We have been quoting quite a few large jobs that are relevant to the current pandemic, i.e., signage, direct mail, and informational collateral.”

When asked to predict business conditions over the next month, respondents did not have high expectations. A little less than two-thirds expected business to either to stay the same or decline further, 15.8% expect business to improve, and 21.9% were not sure (Figure 2).

Figure 2: Business Expectations Over the Next Month

Click to enlarge.

When Will the Economy Bounce Back?

A key question on many print providers’ minds is when will the economy bounce back given recent forecasts. According to The Wall Street Journal Economic Forecasting Survey, economists and analysts believe that second quarter GDP will reflect the worst of COVID-19 effects, with GDP declining at a 25.3% annual rate, followed by upticks in the third and fourth quarters of 6.2% and 6.6%, respectively.

While this drop may seem steep, David Wilaj, an economist at the PRINTING United Alliance’s Center for Print Economics and Management, believes there is potential for a quick recovery. He says, “Although many Americans are familiar with the length of the Great Recession, it is important to note that not all recessions are the same. When many large financial institutions failed in 2008, firms were forced to close their doors for good and many jobs were lost. Now, many businesses were forced to close and furlough workers, but a majority of these jobs will be available again once virus concerns are eased.”

Participate in the COVID-19 Print Business Indicators Research

In today’s unprecedented business environment, making decisions based on facts has never been more important. In the weeks and months ahead, reliable industry business indicators will be essential for monitoring what’s happening in all printing industry segments. The COVID-19 Print Business Indicators Research is an essential resource for monitoring industry conditions and the NAPCO and PRINTING United Alliance research teams invite you to join our business panel and contribute to the research on an ongoing basis. Companies that join the panel will receive exclusive in-depth analysis reports (not made available publicly) of our COVID-19 research findings. The survey takes 3 to 5 minutes; click here to participate.

ABOUT NAPCO RESEARCH

The combined NAPCO and PRINTING United Alliance research teams develop research and economic models that solve customer business problems. Market research is valuable for making strategic business decisions, solving challenges, and pursuing opportunities and the NAPCO Media research teams survey, analyze, and monitor critical trends related to marketing, printing, packaging, nonprofit organizations, promotional products, and retailing. To learn more about how the team can leverage its research and industry subject matter experts to support your organizations needs. contact NAPCO’s Vice President of Research, Nathan Safran, at nsafran@napco.com