Every company across the world has been impacted in some way by the COVID-19 pandemic. Whether revenue is up or down, whether businesses have had to close or stay open, or whether companies have had to pivot or risk collapse, everyone has felt the ramifications of this event. The graphic arts industry is no different and has faced significant challenges brought on by the pandemic.
In a recent Printing Industry Midwest (PIM) Financial Executives Council webinar, a panel of CEOs from several Minnesota printers got together to discuss surviving the adversity, the state of the graphic arts industry, how it’s been impacted, and where to go from here.
The panelists included veterans and stars of the industry including Brian Turbeville – President of Wallace Carlson Printing, Mike Lane – CEO/President of Meyer’s Printing Co., Gary Garner – President/CEO of GLS Companies, and Tom Moe – CEO of Daily Printing. The perspectives from this cross-section of industry professionals gives us a comprehensive look at the impacts of the pandemic on the graphic arts industry in Minnesota.
Topics ranged from revenue impact, forecasting, internal management challenges, managing the workforce, to future growth prospects. Highlights from the webinar, which was facilitated by Mel Enger and Rick Riesgraf from LB Carlson, are as follows.
Impact of the pandemic on graphic arts industry revenue – The first 6 months
The consensus from the printing industry panelists was the first few months of the pandemic resulted in lower-than-expected revenues. For some, previous-year acquisitions or new business secured at the beginning of the year allowed them to stay steady or grow a few percentage points despite the negative impacts on the economy and the industry. The panelists agreed that the graphic arts industry had to tighten budgets, right-size workforces, and make more conservative spending decisions than they would have in a normal year.
Some printers have been hit harder than others, according to the panelists, often impacted by customer verticals. For example, printers with customers concentrated in the travel industry and retail markets saw significant dips as the pandemic more heavily impacted those niches.
As retail stores begin to reopen and domestic travel slowly increases, the panelists indicated that printers are starting to see a rebound in business. However, the pandemic is likely causing a reset to a new normal, and these niches will continue to lag.
Another significant concern for the graphic arts industry at the start of the pandemic was whether customers were going to be able to pay. The panelists on the call said that, thankfully, that didn’t turn out to be much of an issue, and they were able to get payments in on time. The panelists believe that the Paycheck Protection Program (PPP) loans helped not only the graphic arts industry but also their customers to be able to make payroll and pay bills. However, that could change as the economy moves into the final quarter of the year and a second wave of the pandemic impacts the economy.
Impact of the pandemic on graphic arts industry revenue – Fourth quarter outlook
Once the first three-to-six months of the pandemic had passed, the panelists said they started to see a stabilization in their business with the help of PPP loans and clients increasing their orders after coming back online. The panelists agreed that one area still struggling was the printing of tangible promotional materials for events and tradeshows, as these events have not restarted, and people are more hesitant to pick up public brochures. There is confidence among the panelists that some of those verticals and that related revenue would return eventually, although it may look different than before.
Moving forward, the main concern from the panelists was that cash flow will need to support operations as PPP loan funds run out. Any investments in new products or technology will need to be viable long-term or the investment could be a bust. The industry will need to find balance in adapting to client needs to stay relevant while preserving revenue and continuing to provide value.
While not discussed in the panel, at LB Carlson, we have long seen salaries be one of the largest budget items and believe this will continue to be a concern as companies look into 2021. The 2020 Wage and Salary Report released by Print Industries and sponsored by our firm will be a helpful resource to help the graphic arts industry plan for their staffing expenses next year.
The perspective from this panel of industry veterans is that the final quarter of the year will be a different challenge than the last six months, but the group credited making the right decisions early for arriving in the fourth quarter with a positive outlook. Many COVID-19 constraints will remain in place at least in the near-term, but there is growing confidence in the industry to close out the year.
The long-term impact of the pandemic on the graphic arts industry is yet to be determined, but business leaders have found ways to pivot to meet the changing needs of clients in order to stay viable. We will cover those industry shifts and the growth outlook through the lens of our panelists’ experiences in the following articles of this series. The next article will address how COVID-19 has impacted the management of the business including staffing fluctuations, social distancing, and remote workers. In the meantime, if you have questions about how to adjust your business to help you survive the COVID-19–influenced economy, please call us today.