Commercial Printing: From Gutenberg to Consolidation

Originally printed in Media Inc. Issue Four 2007
- By Rich Lancaster

On September 30, 1452, Johann Gutenberg printed the Gutenberg Bible, the first book to be printed using movable type. Since that first print run, the printing industry has been in rapid, relentless change.

The first printing press arrived in the American Colonies from England in 1638 and was run by the first pressman, Stephen Day. His first publication was the "Bay Psalm Book." Ever since then the American printing industry has been tremendously important to this country and the economy.

Until 1999 the printing industry grew almost every year for 350 years--reaching over 55,000 printing businesses in the U.S. But since then the industry has been in evolutionary mode and has begun to rapidly consolidate. Many smaller printers have gone out of business, and family-owned, mid sized companies have been bought by national consolidators.

So why is this happening and what trends are occurring that are driving consolidation?

I spend much of my day online, so I started Googling for an answer, below is some of what I discovered:

During the Dot Com Revolution we were all told that the future would deliver us a "paperless office." Well it never came to pass, and in fact, ironically, during the revolution more money was spent on printing than at any time before or since. The Dot Bomb Implosion took out many local high-tech start-ups, but it also signaled the decline of the printing industry. Revenues began to fall almost immediately and the good times stopped rolling suddenly for many printing companies.

However, in the aftermath of the Implosion, it is now apparent that the Internet has indeed taken a permanent bite out of commercial printing revenues. E-commerce has taken the biggest piece, as we've either shifted a large volume of printing to the home, which formerly arrived in the mail, or we've simply moved to viewing products online without the need for printed material at all.

We've all heard so much about outsourcing and globalization that it is redundant to dwell on it too long. Of course a lot of printing is now being done in China, and most recently there has been a shift to India. Clearly American companies cannot compete with Chinese labor costs, so revenues on larger projects have been shifting overseas for the past five or so years. This trend continues, and has definitely caused many printers to downsize or consider consolidation.

Gas prices have been rising now for the past several years and are biting into profit margins. The higher price of gas drives inflation across the board--higher paper prices follow right behind. Smaller printers begin to struggle as they try to fight the rising costs they have to cope with, while their customers push back on their prices going up. This is a classic squeeze, and the printer is often the entity that takes the hit. Those that can negotiate through the price squeeze survive and prosper.

Another recognizable trend impacting the industry, and helping drive consolidation, is the emergence of digital printing as a very viable alternative to offset printing. End users can now opt for short run, high quality, personalized, digitally produced pieces that in the past were impossible to produce on traditional offset equipment. The cost of a high-end digital press is prohibitive to the smaller print shop, but the appeal to the marketplace is apparent, and digital printing is now the fastest growing segment in the industry--and is rapidly evolving. Quite simply, if an independent print shop can't make the capital investment needed to be competitive with digital or, for that matter, new offset equipment, then they will seek and alternative strategy for survival.

These are some of the trends my research highlighted on why consolidation is occurring. In the local marketplace consolidation is continuing at a fast pace, and there is no end in sight. But it's not all bad news. The newly consolidated company can become a much stronger partner to their clients, offering far more services through their parent organization. New investments in equipment are often made, financial security can be almost guaranteed and the long-term jobs of remaining employees can be secured.