Reprographics 101

(more than you ever wanted to know about the reprographics industry)

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  • WHAT IS GOING ON WITH THE US LABOR MARKET….. UNEMPLOYMENT, JOBLESS CLAIMS, RE-HIRINGS, ETC.? IS THERE A DISCONNECT? IS THERE ANY REASON TO BE REJOICING THE STATISTICS? I DON’T THINK SO!

    First, I’m going to refer you to part of an article that appeared on CNBC on July 1, 2020 (article was updated on July 2, 2020)
    Title of that article:

    “Stocks rise after better-than-expected jobs report to close out winning week”

    “Record jobs gain
    Wall Street started the session with sharp gains after the government reported that a record 4.8 million jobs were created in June. Economists were expecting 2.9 million jobs were created. The unemployment rate fell to 11.1% from 13.3% in May. Economists were expecting a rate of 12.4%, according to Dow Jones. 

    “Another major surprise here in terms of market expectations,” said Christian Scherrmann, U.S. economist at DWS. “What we’ve seen in May and June is a blueprint for a fast recovery, but only once the virus situation is under control.”
    Last month, economists forecast a loss of 8 million jobs in May and the economy gained 2.5 million payrolls instead.

    The Labor Department also said, however, that initial jobless claims rose by 1.427 million in the week ending June 27. Economists polled by Dow Jones expected initial U.S. jobless claims to rise by another 1.38 million, down from 1.48 million the week earlier. The data also showed the number of continuing claims — the number of people receiving unemployment benefits for consecutive weeks — rose to 19.29 million, an increase of about 59,000. 

    “There’s a disconnect there, when you look at the two numbers,” said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors, referring to the jobs report and the unemployment claims data. “It does show you there is some distortion in the data … I don’t think the true underlying picture of the labor market will be clear for several months.””
    For those of you who want to read the full article that appeared on CNBC, here’s a link to the full article:

    https://www.cnbc.com/2020/07/01/stock-market-futures-open-to-close-news.html

    Now, my comments:
    Beginning in mid-March, we saw the beginning of huge numbers of weekly jobless claims (claims being filed for unemployment compensation.)  Now, through June, we’ve seen huge numbers for 15 straight weeks. 
    To the opposite, the Fed Gov is reporting record numbers of hiring, which has reduced the unemployment rate (supposedly.)  Many business “pundits” are saying that these record number of hirings show that the US is swiftly recovering from the dismal unemployment situation.   
    I call B.S. on that.
    And, I call B.S. on that because of the following.  
    Beginning in mid-March, many companies around the U.S. began to layoff workers.  That drove workers to the unemployment office – and it increased the unemployment rate.
    Later, Congress passed the Cares Act, which included a provision for PPP Loans.  In order for companies to get their PPP loans FORGIVEN, they have to spend a major portion of their PPP loan proceeds on payroll. This caused companies to rehire employees that they had previously laid off.  Many companies, mind you, did not (and still do not) actually NEED these employees…. because their revenues are below, and, in many cases, still well below, where their revenues were before COVID-19 hit.  So, to me, a lot of the “re-hiring” (the record “job gains” being reported) is artificial.  What do you think is going to happen to those jobs after companies run out of PPP money? They are going to right-size their businesses and cut jobs to match what their operations actually need.
    Our economy isn’t going anywhere until we get COVID-19 under control.  It is still out of control throughout most of the country. It hasn’t gone on vacation, it has not agreed to take a break so we can get businesses up and running again, and it is not going to “disappear”.

    And, if our economy cannot go back to work, then the question remains, what’s the jobs situation going to be?  If there isn’t a second round of PPP loans, don’t expect companies to keep on their payrolls employees that are not needed.  Most businesses cannot afford to sustain losses for an extended period of time. The unemployment rate is likely to rise again, not continue to go down.

  • "What Will the Full Impact (of the COVID-19 crisis) Be?”

    [Richard Romano has been in the printing industry since before birth. He is currently Managing Editor of WhatTheyThink | Printing News & Wide-Format & Signage. He curates the Wide Format section on WhatTheyThink.com. He has been writing about the graphic communications industry for more years than you’ve had hot dinners. He is the author, coauthor, or ghost author of more than half a dozen books on printing technology and business. His most recent book is “Beyond Paper: An Interactive Guide to Wide-Format and Specialty Printing.” He lives in Saratoga Springs, N.Y., where he mostly shovels snow.] 
    In May, Richard Romano and Elizabeth Gooding co-authored this article, which appeared in “Printing News” on May 11, 2020………
    “What Will the Full Impact be?”
    (Link to the article):
    https://www.printingnews.com/trade-services/article/21127064/printing-pulse-aside-from-that-mrs-lincoln-how-did-you-like-the-play
    After I read the article, I sent an email to Richard with my thoughts on the Impact of the COVID-19 crisis on the reprographics industry.
    Hi Richard,
    I’m looking forward to the “next” article you write about the impact Covid-19 is having on the Print & Graphics industry.
    I’ve been a reader of your articles for many, many years.  Although I’ve been retired from “active duty” from the “reprographics” business since late 2007, I’ve continued to be involved in the industry – as a consultant – since then.  And, I’ve continued to maintain relationships with key players in the reprographics industry – most are in business in the U.S., but some are in business in Europe.  The “reprographics” industry was my career, but, after retiring from active duty, it became my hobby. 
    I read the article you published on May 10th, “What Will The Full Impact Be?”….
    –“The impact of the COVID-19 crisis on the economy was so swift and intense that presenting any chart of pre-March data will be the equivalent of printing pictures of puppies—calming, consoling and heartwarming.”
    –“In mid-March, we launched a quick survey to get a sense of what the expected impact will be on the printing industry, and while all precincts haven’t yet reported in, two-thirds of respondents thus far are expecting 2020 revenues to be down more than 10% from 2019, and 70% expect jobs/orders to be down more than 10%.”
    And, today, I read this press release from Fujifilm….
    –“Hanover Park, Ill. – FUJIFILM North America Corporation, Graphic Systems Division, announced results from qualitative interviews with more than 1,100 customers indicating an encouraging outlook for print service providers despite the recent COVID-19 impact on many commercial businesses.”

    –“Encouragingly, the highest number of responses (32%) projected a return to normal business conditions in the July/August 2020 time frame and 24% projected a return to normal business conditions in September/October 2020. Overall, a combined total of 72% of the customers expressed optimism about a return to normal business conditions by October.”

    Richard, since I do not follow sales trends in the broader Print & Graphics Industry, I can only comment on sales trends in the “Reprographics” Industry.  
    What sets the “Reprographics” industry apart from others – firms in my industry, still today, generate most of their sales revenues from the A/E/C industry (Architects, Engineers, Construction firms, Real Estate Development firms.)  However, A/E/C reprographics is not the only segment of my industry, for, nowadays, virtually every reprographer offers “large-format display graphics color” digital print services.  [Years ago, there were several unique “sub-industries” that all fell under the broader “Print & Graphics” Industry umbrella, but, because of developments in “digital” imaging over the past 20 years, there’s now quite a bit of overlap – in terms of services offered – among the sub-industries.  For example, firms in the “reprographics” industry were (around 1991) the first to offer “large-format display graphics color” digital print services.  Nowadays, virtually every firm involved in the Print & Graphics Industry offers at least some level of “large-format display graphics color” digital print services. Back in 1995, it would have been quite rare to find an offset printing company offering large-format color digital printing services.]  Anyway, when I talk, below, about reprographer revenues, I’m talking about revenues that are a mix of A/E/C reprographics services revenues and large-format color display graphics digital print revenues.
    Okay, all that said:
    ·      No reason to discuss anything that happened in March.
    ·      April began to show the full impact of the pandemic.  Larger reprographers on the East and West coasts experienced sales declines of MORE THAN 50% (compared to 2019.)
    ·      May also showed the full impact of the pandemic.  Larger reprographers on the East and West coasts experienced sales declines of MORE THAN 40% (compared to 2019.)
    ·      June looks like it might be a somewhat better than May, but it is too early to say much about June 2020 vs. June 2019.)
    ·      Imaging firms who deal mostly with companies and organizations tied to events, conferences, expo’s, conventions, trade shows, meetings, etc – their sales revenues fell off a cliff in April, stayed off the cliff in May, are still off the cliff in June….. and it is going to take months before their business begins to resume anywhere close to “normality.”  (One of the largest imaging firms in the US, a well-established old-line company) reported that sales were off 80% in April (vs. April of 2019.) 
    ·      There is only one publicly-held company in the reprographics industry – ARC Document Solutions (NYSE: ARC).  Based on actual sales numbers I’ve received from larger players in my industry for April and May and what I’m now hearing about June, I’m estimating that ARC’s Q2 2020 Sales will come in at around 40% off ARC’s Q2 2019 Sales.
    ·      Reprographers in more rural areas are being impacted less than reprographers in major market areas.  East coast reprographers are being impacted more than West coast reprographers.
    Conclusions:

    a)      When reprographics firms finish 2020, it will, in my opinion, be extremely rare to find larger reprographers who experienced 2020 sales that were only 10% or less off 2019 sales.  I think we are looking at a range of 10% to 30% off 2019 sales.
    b)     As to Fuji’s conclusion, I think there’s less than a 20% chance that firms in the Print & Graphics industry will see normal business conditions return by October 2020.

    I’m a firm believer in “the power of positive thinking” (I loved that book.)  But, that said, until we have a cure for Covid-19, the virus isn’t going to go away.  And, until the virus goes away, it is going to continue to negatively impact firms in the Print & Graphics Industry.  There is absolutely no way “to return to normalcy” until we are rid of Covid-19.  
    Best regards,
    Joel Salus
    Publisher, Reprographics 101 Blog

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    –>

    [and a former Managing Director of the IRgA (now APDSP)]

  • Printing United 2020 Cancelled

    PRINTING United, originally scheduled to take place at 
    the Georgia World Congress Center in Atlanta on 
    October 21-23, 2020, will now move to a powerful online 
    experience this fall due to constraints surrounding the 
    COVID-19 pandemic.

  • PrintPlanet – “Printing’s On-line Networking Community”

    This website is a great resource for printers and reprographers….

    PrintPlanet
    “Discuss, Debate, Lead”
    “Printing’s On-line Networking Community”
    Featuring…..
    ·     Forums
    ·     What’s New
    ·     Articles
    ·     Editorials / White Papers


    https://printplanet.com

  • AIA ABI Index for May 2020

    AIA ABI Index – May 2020

    Architecture firms report steep decline in billings for third consecutive month

    Link to report:

  • SGIA and PIA Merge

    The “new name” of the combined association:  
    PRINTING United Alliance
    SGIA/PIA Merger Explained:  The much-anticipated merger of SGIA and PIA has finally occurred. In this interview with Ford Bowers, President and CEO of the combined organization, by Senior Editor Cary Sherburne, many of the behind-the-scenes details are revealed.
    https://www.printingnews.com/business-and-operations-management/article/21132722/sgiapia-merger-explained
    Blog Publisher’s Comment:
    For older folks (like me), this is a “historical event” in the Print & Graphics Industry, for this merger is a perfect example of how advances in imaging technology – over the past 25 years – have blurred the lines that used to exist between the sub-industries that operate under the larger Print & Graphics Industry umbrella.
    Specialty Graphic Imaging Association (SGIA) is the trade association of choice for professionals in the industrial, graphic, garment, textile, electronics, packaging and commercial printing communities looking to grow their business into new market segments through the incorporation of the latest printing technologies. SGIA membership comprises these diverse segments, all of which are moving rapidly towards digital adoption. As long-time champions of digital technologies and techniques, SGIA is the community of peers you are looking for to help navigate the challenges of this process.
    Although I am a veteran of the “Reprographics” Industry, I did attend an SGIA expo/trade show back in 1991.  At that time, I was the COO of one of the country’s then largest “contract” textile screenprinting companies (plants in GA, AL and CA.) Back then, the SGIA was attended by two types of firms – those involved in textile printing (T-shirts, sweatshirts, cut pieces) and those involved in screen printing parts and paper (like posters.) Back then, you would not have found a reprographer at an SGIA expo….. that came later.
    We all know the PIA as the association that used to cater specifically to firms in the offset printing business.  Years ago, very few “offset” printing companies had digital printing equipment, nor did very many offer any sort of wide or grand-format print services.
    Anyway, due to the “lines blurring” and overlapping, the PIA and SGIA have now come together, forming one association that serves offset printers, screen printers, and digital printing companies of all types.  (For now, the APDSP remains a separate association serving the “Reprographics” Industry.)

  • Ennis, Inc. Reports Results for the Quarter Ended May 31, 2020

    Ennis, Inc., has a nationwide footprint with 55 facilities across the United States engaging in the print and manufacture of business forms and commercial print for the wholesale trade.
    “Our plants have been deemed essential to the supply chain and are currently operating at reduced capacities.”
    JUNE 23, 2020
    Ennis, Inc. (the “Company”), today reported financial results for the first quarter ended May 31, 2020. Highlights include:
    • Revenues decreased $19.0 million, or 17.6% for the comparative quarter.
    • Earnings per diluted share for the current quarter were $0.16 compared to $0.37 for the comparative quarter last year.
    • Our plants have been deemed essential to the supply chain and are currently operating at reduced capacities.
    Financial Overview The Company’s revenues for the first quarter ended May 31, 2020 were $89.0 million compared to $108.0 million for the same quarter last year, a decrease of 17.6%. 
    Gross profit margin (“margin”) was $23.9 million for the quarter, or 26.9%, as compared to $32.7 million, or 30.3% for the first quarter last year. 
    Net earnings for the quarter were $4.2 million, or $0.16 per diluted share, compared to $9.6 million, or $0.37 per diluted share, for the first quarter last year.
    ______________________
    Blog Publisher’s Comment:

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    –>

    Ennis isn’t in the reprographics business, but, that said, it is a publicly-held “printing” company and I’m looking for articles and press releases that reveal the impact of COVID-19 on firms in the broader “Print and Graphics” Industry spectrum.  The Quarter Ennis is reporting on includes the months of March, April and May.  Most print/reprographics firms around the US were not affected by COVID 19 until mid-March. It is my opinion that Ennis’ Quarterly results would have been worse (down a larger percentage than 17.6%) if the quarter had reported April, May and June rather than March, April and May (or if the COVID-19 “impact” had begun March 1strather than mid-March.)

  • "Digitization" VERSUS "Digitalization"

    “When it comes to adopting digital transformation in construction, there is often confusion about what that exactly means, according to the roundtable participants.
    First and foremost, there’s an important difference between “digitization” and “digitalization.” 
    “Digitization is just taking what you have and making it digital; digitalization is changing the process so that it’s better,” said Vicki Reynolds, head of digital for I3PT and CertCentral, during the roundtable conversation.
    The greater the awareness of how digitalization is the clients’ goal—rather than the mere digitization of data or designs—can be instrumental in driving digital transformation. Clients have a vested interest in the ongoing lifecycle of their building and the total cost of ownership (TCO); they should be the first to buy into a digital approach to garner the longest-term benefits of increased productivity, efficiency and more intelligent designs.”

  • The Economy Is A Mess, So Why Isn’t The Stock Market?

    Well written article, definitely worth reading:
    https://fivethirtyeight.com/features/the-economy-is-a-mess-so-why-isnt-the-stock-market/

  • Get Ready: 10 Reasons a Second Stock Market Crash Is Coming

    Equities have had a ferocious rebound from the March 23 lows, but a bounty of negative catalysts remains.
    Link to article on Motley Fool:
    https://www.fool.com/investing/2020/06/20/get-ready-10-reasons-a-second-stock-market-crash-i.aspx