Published Oct. 15, 2020
Printers Continue to Face Covid-19 Challenges
As They Battle to Recover Sales & Profits
By John C. Stewart, Executive Director, NPRC
It’s been seven months since Covid-19 first began impacting our industry (as well as the entire U.S. economy) and NPRC has been surveying fellow printers ever since. Some businesses have closed their doors in the past few months, while others struggle to recover lost sales.
All in all, it has clearly been a rough seven months for the printing industry and our latest survey data indicates that while there may be light at the end of the tunnel the tunnel itself extends well into 2021 and possibly into 2022.
We launched our 4th Covid-19 survey on Oct. 6, 2020 and we implemented a strict Deadline of October 12th to allow us time to analyze and report our findings back to survey participants in a timely fashion. If you would like to view July 20-21st Covid-19 Report click here, or copy and paste the following: https://printingresearch.org/resilient-industry-despite-major-sales-declines/
We received 136 responses in our shortened survey time-frame. Below is a very brief profile of the firms that participated:
|2020 Projected Sales
|2020 Projected SPE
|Staffing Jan. 1, 2020
|Staffing Proj’d Jan 1, 2021
So Where Do We Stand? – As you can see from the following (Chart #1), the industry indeed suffered a dramatic decline in quarterly sales of almost 30% between the 1st and 2nd Quarters. And while the data shows signs of a modest recover since the end of the 2nd quarter, the recovery has been far from a “full recovery,” with projected 4th quarter average sales still down almost 15%!
Although we often rely on averages as opposed to medians, it is notable that the projected drop in median sales for the 4th quarter 2020 is down 29% – clearly an indication that the road to recovery for our industry is surely a long one.
#2 Employee Staffing Report – In order to help us with various SPE calculations, we asked survey participants to tell us how many total employees (excluding all working owners & partners) were employed at the beginning of each quarter in 2020, as well as what they projected for the 1st quarter in 2021. We used this data to calculate our SPEs for those respective periods.
Chart #3 below illustrates the results of our calculations for the various periods specified. Average reported SPE dropped almost 20% between the 1st quarter and year-end projections. The median decline was almost identical at 18%.
#3 Deployment of work force? We asked employers to tell us the current status of their workforce – who was working at their main plant versus who was still working at home. According to our data, approximately 92% of employees are now back at work, with the remaining 8% still working at home.
#4 Employee Staffing – Today vs. March 1, 2020 – Survey participants reported that their overall average staffing, as compared to March 1, 2020 was down -13.4%. The median decline was down -10%. It is clear from our data that employers, have not reacted as quickly to modifying their staffing as they have to declines in sales. The failure to react to same has resulted in lower SPEs than would otherwise be expected.
Questions #5 – #8 – June/July Sales 2020 vs. 2019 – We queried survey participants to compare their monthly sales for the months of June, July, August and September against their corresponding periods in 2019.
Not a single participating firm indicated they had increased their sales during the respective months. As you can see from the graph below, average and median sales declines of 20-25% were quite common among our survey participants.
Survey Questions #9 – #11 (2020 vs. 2019 Comparative Sales) asked participants to examine various sales periods and indicate how much their sales had increased/decreased for the respective reporting periods. Suffice it to say that while a handful of firms did report sales increases in the 2-6% range, most firms indicated significant declines in sales as indicated below.
Questions #12 – #14 – Covid-19 and Its Impact on Specific Sales – These questions addressed the impact that Covid-19 has had on three categories of sales during the past seven months (March – Sept 2020).
Based upon our data, it appears that digital and offset printing sales have both been heavily impacted by the Corona virus, with digital printing possibly being hit slightly more. Brokered printing has been slightly less impacted but declines of -18% are not easily dismissed.
Note that the questions covered cumulative declines over a 7-month period of time. Just as the sales declines have occurred over an extended period of time, so too will be any recovery. There is no reason or logic that we can see that would suggest that sales of digital, offset and even brokered sales will rebound anytime soon.
“There is no reason or logic that we can
see that would suggest that sales of digital,
offset and even brokered sales will
rebound anytime soon.”
We suspect, although we have no hard evidence to support this statement, that our industry may indeed have to wait until the 3rd or 4th quarter of 2021, if not beyond that time, before we begin to see even a hint that the economy returning to the pre-Covid economy that existed in January or February 2020.
15 – Sales of Covid-19 Related Sales – Some firms indicated early on that they were turning to selling and/or promoting various Covid-19 products (gloves, masks, sanitizers, dispensers, and signs) as a way to possibly make up for sales lost to Covid-19. We asked participants to estimate the volume of sales generated over the preceding 7-months.
As you can see from the graph below, approximately 28% of our respondents indicated they had sold between $5,000 and $25,000 Covid products. An additional 12% of respondents reported sales of $25,000 or greater.
At the other end of the spectrum, approximately 50% of all survey participants indicated they had sold less than $2,500 during that 7-month period.
#16 – Cash Reserves as of Oct. 2020? We asked participants to tell us the status of their current cash reserves. We specified that taking into account steps and expenditures they had taken through Sept. 2020, we asked them to tell us how many additional weeks or months they felt they could operate under the current Covid-19 economy.
The graph below presents a far more positive picture than previous graphs we have posted due to the fact that weaker firms have already dropped by the wayside. As a general observation, firms that continue to operate today, even at a reduced capacity and at lower sales levels, are by their very nature healthier companies.
At least 73% of our participating firms indicate they are well-positioned for 2021 and whatever transpires in regard to the continuing challenges of Covid-19.
#17 – Overall Confidence Level – Question #17 of our survey asked participants to tell us that in light of everything that has transpired during the previous 7 months, how would they rate their confidence that their business will be somewhat “back to normal or better” by July 2021.
The scale we used ranged as follows: -100 (very doubtful) to 0 in the center (chances are 50/50), to +100 (extremely confident).
The collective answer? The average score was 7.2, or just slightly above the “chances are 50-50” that things will be back to normal. The median score was 0. Certainly not optimistic, but most likely as realistic considering what the industry has already gone through in the past seven months.
#18 – Prospects for the Future – We gave participants six choices to describe the impact that Covid-19 has had on their business during the March-September 2020 time frame. Below are their answers:
#19 – Efforts to Recapture Customers – We asked owners to tell us what methods they were implementing and/or employing to recapture the attention of their existing customers as well as to attract new ones. Multiple answers were allowed. We suspect that had this question been asked pre-Covid-19, the percentage of owners indicating they were using “direct mail” would have been significantly lower.
#20 – Vendor/Supplier Costs – Participants were asked to tell us by what percent, if any, had their vendor/supplier costs increased or decreased. Owners told us that they had experienced a modest average increase in pricing of 3.9%, and a median price increase of 1.0%.
#21 – Impact on Selling Prices – The vast majority (98%) of owners indicated that neither increased or decreased their selling prices during this 7-month timeframe.
#22 – Support for the President – We posed the question: “Considering everything that has transpired since Jan. 1, 2020 in regards to the Covid-19 Pandemic, how would you rate your support of President Donald J. Trump and his administration?”
The scale we used ranged from “Totally Opposed” (0) to “Fully Support” (100). The results? The average score was 55.7. The median score was 75. The distribution of answers from 0 to 100 was startling in their extremes, with 23% of owners grading the President with a “0” and 33.7% awarding the President a “100.”
It was clear from our data that our survey revealed a case of extremes. Participants either “loved the President” or they “hate” him.
Please note that this report is Copyrighted and initial distribution has been limited to those firms who participated in any one or all of the three Covid-19 Surveys conducted by NPRC. This limited distribution is being done in recognition of and out of respect for the firms who took the time and effort to complete one or more of our surveys. However, in recognition that we serve the entire industry as well, we will publicly distribute this report within the next 15 days. For right now, however, we ask that you refrain from forwarding this report on to others. Thank you for your support. Send comments or questions to firstname.lastname@example.org, 2110 Dairy Road, #102, Melbourne, FL 32904