We are facing a business environment that is very different from a year ago—indeed, it is very different from anything we’ve seen before.
The Recession Deepens
Each week another industry gets hammered with layoffs or even bankruptcy. When will the downward spiral end? The more important question is: how will it affect you and what can you do about it? The key word going forward is Reduce. Reduce debt. Reduce expenses. Expect customers to have reduced budgets. Help them reduce their costs—reduce run length, reduce basis weight. Reduce wherever possible.
Green, But Only If It’s Green
Print buyers, printers and paper merchants have all told me that sustainability will take a back burner in the recession. While this is true, the environmental drive will not go away. “Green” will remain a force where it is good business (where it produces “green” as in profits). Forest certifications, recycled paper and low VOC solvents involve cost increases, but some initiatives are cost savers: recycle everything, reduce waste, reduce energy consumption. The green train will get back on track, be ready for it.
It’s Not Just About FSC
Pira International conducted a survey with printers across North America and found that while recycled paper and forest certification continue to be the most important issues for sustainability, customers are now asking about inks, solvents, waste and carbon footprints. EcoLogo, a holistic certification, is re-establishing itself, and the Sustainable Green Print Partnership is gaining traction, with both printers and buyers seeking green printers.
Less is More
Digital print allows short runs, reducing waste and costs, but short runs need not mean less revenue for printers. Data base management for digital campaigns and other elements such as fulfillment and design for variable data print are also essential services.
The World is Flat
The best selling book, The World is Flat, by Thomas L. Friedman details how globalization, facilitated by the Internet, is changing the world. The globalization of communication through podcasts, webcasts, emails and more is both a threat and an opportunity. If your business is putting ink on paper, this is a threat, but if your business is helping customers communicate, it can be a huge opportunity to help customers expand their reach and expand your business in the process—while reducing costs.
Paper Prices Are Falling
Paper prices are determined by supply and demand, and even if demand is falling, prices can rise if supply falls faster. This happened in recent years as consolidation and rationalization of mill capacity led to a new balance. However, the paper market is global, and the picture is quite different outside of North America—print is growing, paper demand is growing and paper capacity is growing. Paper mills in Eastern Europe, Latin America and Asia have lower costs than North American mills. Ultimately, this puts a ceiling on North American paper prices. The North American market price is determined by its largest market, the U.S., and last year with a weak U.S. dollar, high energy and high transport costs the U.S. market was somewhat insulated from foreign competition. However, with cheaper oil and the U.S. dollar up this insulation has disappeared, and paper prices are backing off. We can expect this to continue.
Recycled Fiber Cost is Falling
Recycled fiber prices are also determined by supply and demand, and when China was exploding it was outreaching the capacity of recovery and recycling systems—driving prices skyward. One positive side effect of the global recession is that growth in China has slowed, demand for recovered fiber has collapsed, and the price of recovered fiber has fallen by as much as 50 percent.
Survival is Key
It goes without saying that in tough times priority number one is survival. Critical to this is helping your customers survive. Obviously, if your customer goes into bankruptcy you not only lose those receivables you also lose a customer. Also important is the print buyer you’ve worked so hard to build a relationship with—keeping his or her job secure is in your interest.
Whatever Doesn’t Kill Us Makes Us Stronger
This promises to be a tough year. Many companies will not survive. However, those that do will emerge leaner, smarter, stronger and with stronger relationships with the customers that come through it with them. You can be one of them.
Jack Miller is senior consultant North America, Pira International, a supplier of strategic, marketing and technical consulting in paper, print and packaging. email@example.com