2019 state of the industry report napim... · 2019 state of the industry report *all of the...

2019 STATE OF THE INDUSTRY REPORT

*ALL OF THE INFORMATION PRESENTED HERE IS A SNAPSHOT OF 2019 LOOKING TOWARDS 2020

1

MANAGEMENT INFORMATION COMMITTEE

• BRYCE KRISTO INX, INTERNATIONAL

• JIM LEITCH WIKOFF COLOR CORP.

• DARLENE RADOMSKI SUN CHEMICAL

• JAMES GOLEMATIS FLINT GROUP

• JANE KRASNER TOYO INK AMERICA

• DARYL COLLINS WIKOFF COLOR CORP.

• BRAD STOELB SUN CHEMICAL

• JOHN JILEK, JR. INKSOLUTIONS

• JOHN SERGEANT MODERN PRINTING COLORS

• BILL MCDERMOTT INGEVITY

• DAVE GRABACKI KEIM-ADDITEC

• PENELOPE HOLLAND SUN CHEMICAL

• SAORI NGUYEN INX, INTERNATIONAL

• GEORGE FUCHS NAPIM

• JOHN COPELAND NAPIM2

SOURCE DATA FOR REPORTNAPIM OUTLOOK SURVEY

• COLLECTED ONCE A YEAR IN JANUARY FROM MEMBERS

U.S. COMMERCE DEPT., BUREAU OF LABOR STATISTICS, OSHA

NAM – NATIONAL ASSOCIATION OF MANUFACTURERS

PIA -- PRINTING INDUSTRIES OF AMERICA

YAHOO FINANCE

BUREAU OF ECONOMIC ANALYSIS

KFF EMPLOYER HEALTH BENEFITS SURVEY, 2019

NAPIM

3

4

The professionals in the Center for Print Economics and Management department offer a variety of products and services that help our members enhance their growth, efficiency, and profitability through up-to-date industry information, articles, advisories, and statistics addressing important industry issues.

REPORT ELEMENTS GLOBAL AND INDUSTRY ISSUES REVENUE AND GROWTH PROFIT END USE MARKETS FOREIGN TRADE EMERGING ISSUES GOVERNMENT QUESTIONS AND COMMENTS

5

GLOBAL AND INDUSTRY ISSUES

6

7

Source: IHS Markit, U.S. Bureau of Economic Analysis

EXPECTED GROWTH OF MANUFACTURING ACTIVITY

FIRST QUARTER 2018-FIRST QUARTER 2020

8

Source: National Association of Manufacturers

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

2018:1 2018:2 2018:3 2018:4 2019:1 2019:2 2019:3 2019:4 2020:1

Sales Exports Capital Investments Full-Time Employment

Avg. 12-Month Growth Rates Sales: ↑ 2.9%

Exports: ↑ 0.5%Capital Investments: ↑ 1.9%

Full-Time Employment: ↑ 1.1%

REAL GROSS DOMESTIC PRODUCT

9

Source: Printing Industries of America

GDP EXPANSION

10


11Source: National Association of Manufacturers

12Source: Printing Industries of America

MANUFACTURING BUSINESS OUTLOOK BY QUARTER,

(1ST QUARTER 2018-1ST QUARTER 2020)

13


93.5% 95.1%

92.5%

88.7% 89.5%

79.8%

67.9% 67.6%

75.6%

2018:1 2018:2 2018:3 2018:4 2019:1 2019:2 2019:3 2019:4 2020:1

Note: Percentage of respondents who characterized the current business outlook as somewhat or very positive.

14


-1.2%

-1.0%

-0.8%

-0.6%

-0.4%

-0.2%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

1.8%

2.0%

2.2%

Jan-19 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-20 Feb

Percentage Changes in Manufacturing Production(January 2019 – February 2020)

Manufacturing Durable Goods Nondurable Goods

15


-2.5%

-2.0%

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

Jan-19 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-20 Feb

Year-Over-Year Industrial Production Growth(January 2019 – February 2020)

Industrial Production Manufacturing Durable Goods Nondurable Goods

16


73.0%

73.4%

73.8%

74.2%

74.6%

75.0%

75.4%

75.8%

76.2%

76.6%

77.0%

77.4%

77.8%

100

101

102

103

104

105

106

107

2015 2016 2017 2018 2019 2020

Manufacturing Production and Capacity Utilization (January 2015 to February 2020)

Manufacturing Production Manufacturing Capacity Utilization

Manufacturing Production (SIC)(2012=100)

Manufacturing Capacity

Utilization (SIC)

PRIMARY CURRENT BUSINESS CHALLENGES, FIRST QUARTER 2020

17

Source: National Association of Manufacturers Outlook Survey

5.5%

16.7%

19.5%

21.1%

26.9%

26.9%

37.3%

47.7%

56.2%

67.1%

Challenges with access to capital

Unfavorable business climate (e.g., taxes, regulations)

Strengthened U.S. dollar relative to other currencies

Transportation and logistics costs

Increased raw material costs

Weaker global growth and slower export sales

Weaker domestic economy and sales for our products

Trade uncertainties

Rising health care/insurance costs

Attracting and retaining a quality workforce

6.566.285 6.271 6.12 6.26 6.5

6.876.33

6.77.14

¥5.00

¥5.50

¥6.00

¥6.50

¥7.00

¥7.50

¥8.00

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Chinese Yuan vs U.S. Dollar

18

0.763 0.757 0.775 0.730.912 0.909 0.94

0.82 0.88 0.91

€ 0.50

€ 0.70

€ 0.90

€ 1.10

€ 1.30

€ 1.50

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Euro vs U.S. Dollar

Currencies

Source: Yahoo Finance

79.71 79.7697.56 105.86 111.38 108.36 112.12 107.15 111.85 109.69

¥0.00¥30.00¥60.00¥90.00

¥120.00¥150.00¥180.00

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Yen vs Dollar

19

12.44 13.15 12.77 13.31 13.91

19.03 19.8 18.82 19.33

24.7

MXN 5.00

MXN 10.00

MXN 15.00

MXN 20.00

MXN 25.00

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Peso vs Dollar

Currencies

Source: Yahoo Finance

OUTLOOK SURVEY RESPONSESurvey Response

Ink Resin/Varnishes Pigments General (All Other)

20

Source – NAPIM Outlook Survey

Top Current Concerns• Ink Companies concerns heading into 2020:

General Economy - 2020 2019

1. Overall Economic Activity 12. Customer Consolidations/Closings 23. Imports 3

External - 2020 2019

1. Raw Material Cost 1

2. Raw Material Availability 2

3. Market Competition 4


Internal - 2020 2019

1. Experienced Workers 3

2. Transportation Costs 2

3. Health Care Costs 1

21

Top Current Concerns• TAM Companies concerns heading into 2020:

Overall 2019

1. Customer Consolidations/Closings 2

2. Overall Economic Activity 1

3. Imports 3Market 2019

1. Raw Material Costs 1

2. Raw Material Availability 2

3. Market Dynamics 3

Internal 2019

1. Experienced Workers 1

2. Transportation Costs 23. Unskilled Labor 3

Source – NAPIM Outlook Survey22

Ink Companies say Printers Value2020 2019

1. Consistent Product Quality 1

2. Price 2

3. Quick Delivery 4


TAM Companies say Ink Companies Value2020 2019

1. Consistent Product Quality 2

2. Price 1

3. Technical Support 3

23

**Only NAPIM members reporting


24

0

2

4

6

8

10

12

14

16

18

Add manufacturingequipment

Replace equipment Increase employees Expand plant(s) oradd

new branch(es)

Add in-plant(s)

Is your company planning to INCREASE its current capacity in 2020?

2019 2020

**Only NAPIM members reporting


25

0

1

2

3

4

5

6

7

Decrease employees Close branches Remove manufacturing equipment

Is your company planning to DECREASE its current capacity in 2020?

2019 2020

PROFITABILITY AND SALES FOR BOTH SUPPLIERS AND INK

COMPANIES

26

2019 compared to 2018Sales Profitability

- 5% or more 19.0% 23.8%- 1-5% 19.0% 19.0%+/- 1% 14.3% 9.5%+ 1-5% 19.0% 47.6%

+ 5% or more 28.6% 9.5%

Expectations for 2020 Sales Profitability- 5% or more 0.0% 0.0%

- 1-5% 17.4% 13.0%+/- 1% 21.7% 21.7%+ 1-5% 43.5% 39.1%

+ 5% or more 17.4% 26.1%

Source: NAPIM Outlook Survey

SOCIAL MEDIA

74.00%

26.00%

77.30%

22.70%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

Yes No

2018 2019


27

Is your company engaged in Social Media?

COMPANY PAID PORTION OF HEALTH CARE COSTS

Percent covered by employer

100% 96.50% 85% 80% 75% 70% 65% 60% 50% 40%

28


HEALTHCARE COSTS

$3,515.00 $4,823.00 $6,015.00

$9,860.00

$12,011.00

$14,561.00

0

5000

10000

15000

20000

25000

2009 2014 2019

Average Annual Worker & Employer Premium Contributions

Worker Contribution Employer Contribution29

Source – KFF Employer Health Benefits Survey, 2019

0

2

4

6

8

10

12

14

16

Temp Agency Websites Social Media EmploymentServices

How does your company find qualified workers?

Source – NAPIM Outlook Survey30

HIRING PRACTICES

REVENUE AND GROWTH

31

INFORM & COMMUNICATE

• MAGAZINES & PERIODICAL

• NEWSPAPER PRINTING

• BOOK PRINTING

• FINANCIAL & LEGAL PRINTING

• BUSINESS FORMS PRINTING

• GREETING CARD PRINTING

PRODUCT LOGISTICS

• CONVERTERS, LABEL, & WRAPPER PRINTING

• PACKAGE PRINTING

32

Market & Promote

General Commercial Printing

Quick Printer

Direct Mail Printer

Signs & Signage

Source: PIA, Economic and Market Research Department

33

Source: PIA, Economic and Market Research Dept

PRINT MARKETS

34

Source: PIA, Center for Print Economics and ManagementFigures represent sales growth % for survey respondents

2.65

2.59

2.51

2.48

2.47

2.42

2.4

2.38

2.33

2.29

2.1 2.2 2.3 2.4 2.5 2.6 2.7

Signs

Packaging/envelopes

Specialty printing

Pharmaceutical/cosmetic labels

Point of purchase

Direct Mail

Private label convert.

Food, beverage labels

Quick printing

Posters

Hot Print Markets: Top 10

35

Source: PIA, Center for Print Economics and ManagementFigures represent sales growth % for survey respondents

2.24

2.18

2.16

2.11

2.09

2.03

1.97

1.93

1.91

1.91

1.7 1.8 1.9 2 2.1 2.2 2.3

GraphicFinishing

Brochure

PersonalCareLabels

BusinessCards

HouseholdLabels

Pamphlet

Inserts

TradeBinding

GreetingCards

BookPrinting

Warm Print Markets

36

Source: PIA, Center for Print Economics and Management Figures represent sales growth % for survey respondents

1.88

1.87

1.83

1.82

1.82

1.71

1.62

1.43

0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2

Circulars

Magazine

Catalog

Finance & legal

Newspaper

Loose-leaf

Stationery

Business forms

Print Market Laggards

UNITED STATES COMMERCIAL PRINTING ESTABLISHMENTS

37

Source: U.S. Bureau of Labor Statistics

Please note 2019 data is for Q1-Q3NAICS 323 – Printing and related support activities

33796

32114

30979

3027129815 29546

2909328729 28474 28320 28195

25000

26000

27000

28000

29000

30000

31000

32000

33000

34000

35000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019No. of Establishments

SUSTAINABILITY

45%

20%

35%

Has the emphasis on "sustainability" and "environmentally friendly ink" by print buyers required you to reformulate your products?

Somewhat Major Minor


38

PROFITABILITY

39

40

PIA


41

PIA


42

PIA


43

PIA


44

PIA


45

PIA


46

PIA


GAME PLAN FOR SUCCESSEXAMPLE OF A TOO LOW: A PRICE HIKE CAN

SUPERCHARGE PROFITS

47

Source: PIA, Center for Print Economics and Management

Source: Printing Industries of America 48

END USE MARKETS

49

50

PIA


51

6 Drivers To Strong Print Demand


52


53Source: Printing Industries of America

Source: Printing Industries of America 54

FOREIGN TRADE

55

FOREIGN TRADENAICS 32591

56

0

20000

40000

60000

80000

100000

Kilo

s in

Tho

usan

ds ImportsExports

Source: U.S. Census Bureau

MAJOR INK EXPORTSNAICS 32591

57

1

6

11

16

21

26

31

36

41

46

51

Kilo

s in

Mill

ions

2016201720182019

Source: U.S. Census Bureau

0

2

4

6

8

10

12

Japan

Canad

a

German

yIndia

Netherl

ands

United

Kingdo

mChin

a

Switzerl

and

South K

orea

Mexico

Kilo

s in

Mill

ions

20152016201720182019

MAJOR INK IMPORTSNAICS 32591

58

Source – U.S. Census Bureau

EMERGING ISSUES

59

COVID-19KEY POINTS:

• THE OUTBREAK OF THE NOVEL CORONAVIRUS (COVID-19) IS FOR THE TIME BEING THE MOST SIGNIFICANT BLACK SWAN OF 2020 AND POSSIBLY THE LARGEST SINCE THE END OF THE SECOND WORLD WAR FOR MOST OF THE WORLD ECONOMIES

• THE IMPACT OF COVID-19 IS BY NOW SIGNIFICANTLY LARGER THAN SARS IN 2002-2003 AND THUS CANNOT AT THIS STAGE NO LONGER BE COMPARED TO IT; THE NUMBER OF CONFIRMED CASES BY MARCH 25 EXCEEDED 414,000 GLOBALLY WITH FEW COUNTRIES UNAFFECTED; THE NUMBER OF CASES IN EUROPE EXCEEDS 220,500 AND NUMBER OF DEATHS HAS REACHED 12,000

• THE DISTURBANCE TO INDUSTRIAL PRODUCTION AND GLOBAL TRADE FLOWS AND GLOBAL LOGISTIC NETWORKS COULD BE MORE SEVERE DUE TO A DRAG CAUSED BY THE PROLONGED PRODUCTION SHUTDOWNS

• THE CENTER OF THE COVID-19 PANDEMIC ACCORDING TO THE WHO IS IN EUROPE WITH ITALY (ESPECIALLY LOMBARDIA) AND SPAIN THE MOST AFFECTED STATES WITH HEALTH SYSTEMS UNDER EXTREME PRESSURE

• THE GLOBAL SPREAD OF THE COVID-19 EPIDEMIC IS THE SINGLE BIGGEST RISK FACING THE WORLD ECONOMY IN EARLY 2020; FROM AN ECONOMIC POINT OF VIEW Q1 IS LOST, Q2 IS UNLIKELY TO BRING A MAJOR IMPROVEMENT

• IHS MARKIT ESTIMATES THAT GLOBAL GROWTH IN 2020 WILL BE 1.7% AND 2.7% IN 2021 AND ARE SIGNIFICANTLY LOWER THAN PRIOR ESTIMATES; THE FORECASTS FOR GLOBAL TRADE HAVE ALSO BEEN CUT BY GTA FORECASTING TO 1.5% IN 2020 AND 3.8% IN 2021

• IN CONTRAST TO THE GLOBAL FINANCIAL CRISIS OF 2008-2009, WE ARE NOW DEALING WITH THE REAL-SIDE CRISIS WITH ACTUAL IMPACT ON PRODUCTION, GLOBAL VALUE AND LOGISTIC CHAINS IN ADDITION ADVERSELY AFFECTING GLOBAL DEMAND AND HAVING A POTENTIAL OF LEADING TO A MAJOR FINANCIAL CRISIS

60

Source: IHS Markit

TRADE COMMISSION REVIEW

• THE USMCA WAS APPROVED BY THE US CONGRESS AND ENTERED INTO FORCE ON JAN. 16, 2020.

• THE US-JAPAN TRADE AGREEMENT WAS SIGNED BY BOTH COUNTRIES ON OCT. 7, 2019.

• THE US-CHINA PHASE ONE AGREEMENT WAS SIGNED ON JAN. 15, 2020. A PARTIAL ROLLBACK OF TARIFFS HAS ALSO BEEN ANNOUNCED. THE US-CHINA PHASE ONE AGREEMENT WILL NOT REQUIRE CONGRESSIONAL APPROVAL TO ENTER INTO FORCE.

61

https://ustr.gov/trade-agreements/free-trade-agreements/united-states-mexico-canada-agreement/agreement-between

https://ustr.gov/countries-regions/japan-korea-apec/japan/us-japan-trade-agreement-negotiations/us-japan-digital-trade-agreement-text

https://ustr.gov/countries-regions/china-mongolia-taiwan/peoples-republic-china/phase-one-trade-agreement

BREXIT

• THE UK LEFT THE EU ON 31 JANUARY 2020 AND HAS NOW ENTERED AN 11-MONTH TRANSITION PERIOD.

62

CHINA TRADE ISSUE

63

EMPLOYMENT SHORTAGE

64

Source: Bureau of Labor Statistics

65


66


67


GOVERNMENT

68

NAM MANUFACTURERS’ OUTLOOK SURVEY: HOW FIRMS ARE ADDRESSING THE SKILLS

SHORTAGE (FOURTH QUARTER 2018)

69


LEGISLATIVE AND REGULATORY IMPACTS

70


THANK YOU

2019 state of the industry report napim... · 2019 state of the industry report *all of the...

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