It is not too early to start thinking about manufacturing increases for 2012 budgets. There are some interesting trends in the industry that have occurred over the summer that may help publishers in their planning process.
Printers are reporting that business is slightly better than 2010. Advertising sales were up during the first half of the year and they look to be leveling off going into Q4. Page counts and print runs continue to fall from previous levels and that is contributing to additional capacity on the print side. It is still a buyer’s market for those publishers considering going out for bid. There is competition for new business and holding existing accounts is a priority for incumbent printers.
Many printers continue to diversify their portfolios by adding non-print services. Several printers have partnered with companies that provide digital solutions. This allows printers to become full service partners as more publishers move to an outsourcing model. Printers with membership or association titles are looking to offer services that will enable them to learn more about their publisher’s customers by providing additional value.
Commercial printers are providing more digital offerings particularly on the direct marketing side of the business with personal URLs and one-to-one campaigns. They are also looking to upgrade their IT departments with the new focus on software technology solutions and digital products.
All printers are finding ways to be more efficient at a lower cost through workflow changes, new equipment purchases and diversification.
Paper prices stayed flat or increased by a small amount in July. The third quarter is usually a strong time for paper purchases due to the fall and holiday season catalogues; this is not the trend this year due to tighter planning on page counts and print runs. The market is soft and should remain that way for the balance of the year.
It is a little harder to predict the paper market in 2012 as there may be capacity challenges if some of the mills that have been shut down do not come back on line. There is still talk about additional mill consolidation as well that will impact the capacity levels.
The good news for 2012 budgets is that the USPS did not pursue the exigent (higher than inflation) rate case. The January 2012 increase will be based on the CPI and is expected to be slightly higher than 2%.