CEO's Area
Q4 Questionnaire Analysis - Oct 2009To more accurately reflect this informal review we have decided to rename it a Questionnaire.
Another quarter, a drop in respondents indicating profitability showing the ups and downs of the recovery. The quarter started weak but July and August showed increasing strength in most areas. The stimulus seemed to have had an impact but the responses seem to indicate that September ended on a decidedly weaker note. It was nice to see a positive GDP number come from this past quarter but we suspect a downward revision and are increasingly concerned for the last quarter. I know that the reported GDP strength was not uniform countrywide with the Northeast showing another 1.1% decline.
Lets get into the numbers-
Profitability: 46% profitable 54% unprofitable clearly a down quarter overall. The question relating to business over the last 2 weeks showed the concern we mentioned above. Things seem to be softening demand wise with less reporting a pick up or decrease and staying the same winning the majority. The question addressing how you felt about the next quarter highlights the feeling that things are not rebounding in a strong V shape but rather very up and down as sales expectations showed a decidedly average leaning.
There was mention on Bloomberg News that the American Staffing Association had indicated that the use of flex staffing was up in September for the first time since the downturn started. They mentioned an inflection point had been hit, signaling that within three to six months we will start to see a rebound in hiring full time people. The rule of thumb is flex staffing recovers a quarter ahead of the economy in general since most companies will use flex labor when they start to get busy rather then hire directly. Sensibly, since they are unsure if the recovery is sustainable. The question focused on hiring indicates companies are trying to stay the same at this point trying to get a hard feel if this recovery has any legs.
With the huge debates on healthcare nationally and locally, the question addressing highest labor costs focuses again on healthcare concerns with a full 70% indicating being concerned. When we asked what area of revenue was under the most pressure Offset still takes a high 46% of the total. Seems that for the last five quarters this area has been under significant duress pricing wise.
The last area I would bring up from the questionnaire regards the concerns area. I took a look at "other," the largest category, representing 30% of the responses. An interesting component of the responses addresses the lack of demand in general. For example "Lack of qualified buyers," "Sales" or "printing budgets have not yet recovered from the economic downturn." Clearly the fear is that budgets will never return and normal demand will not either. As this wise person states "A changing marketplace is requiring us to either broaden our product line to meet new media needs, or commoditize our product by cutting prices to the bone" there are things we can do to survive and create demand. I do believe that even with demand changing, the drop in current demand in printing and in almost every other industry is so severe that the issue is less about printing and more about the wider economy.
We have enclosed the entire Questionnaire results below; if you have questions or would like to see additional areas explored please let me know. If you wish to be added to the survey please email us daver@semperllc.com Semper
Click here to view the Survey, PDF Format
Q3 Survey Analysis - July 2009
Another quarter, this one shows an increasing number of establishments becoming profitable! I understand June was as usual an iffy month for many but not as bad as expected. Seems like all the positive talk and the increase in the stock markets just maybe having a positive impact. With GDP contracting for 4 consecutive quarters, the saying only the strong survive has an entirely new meaning. More than strength is required, foresight and a solid conservative bent are also needed. I suspect that keeping EQUITY within a company, enabling it to weather tough times, will have an entirely reinforced band of supporters. The practice of distributions to owners at all costs being the loser.
The first draft of the GDP numbers came out indicating the contraction was 1% in the 2nd quarter. The second and third drafts will likely show that is a conservative number. The latter part of July appears to be showing promise however!
Lets get into the numbers-
Profitability: 59% profitable definitely an improvement from the 53% profitable we reported last survey. We suspect intelligent cost cutting and controls have had an impact- those that use labor and other resources wisely win in this environment. The question regarding business increasing or decreasing over the last two weeks reflects the Independence Day holiday. From our vantage point, we suspect the reduction in sales was normal or less than normal - a positive.
One sign companies are very cautious is the caution in sales expectations- with a 4% drop in the numbers of companies expecting sales to increase this coming quarter. Time will tell if we are at the bottom or even starting the recovery of this recession, but one sign that is positive is the hiring expectations of companies has increased. Considering also the source of this hiring is referrals from internal staff, we suspect rehires are happening as demand warrants.
With all the talk on health care federally, we see for the first time in several surveys a reduction in concern for healthcare costs (in several cases we are hearing of reduced premiums per worker this renewal season!). Base pay, workers comp and state requirements all show hefty increase in concerns. When will the powers that be understand to DECREASE costs in labor will INCREASE hiring rates? Seems very simple for most to understand. For additional results please download the survey results provided-
We have enclosed the entire Survey results below, if you have questions or would like to see additional areas explored please let me know.
daver@semperllc.com Semper
Click here to view the Survey, PDF Format
Q2 Survey Analysis - May 2009
I believe those that have survived thus far have sighed in relief but it is clear we have some tough times ahead- so much for an Obama Bounce! It would seem contrary to the March statements from the politicos about things getting better, most of us have not seen anything of the sort. In fact, we would estimate 15% or more of establishments in existence January 08 are no longer around. Even the very solid, well-run companies are experiencing severe financial issues. The longer this "contraction" lasts the more harm it is causing. The plus side is those that survive will enjoy a much less competitive market.
The first draft of the GDP numbers came out indicating the contraction was 6.2 in the first quarter. The second and third drafts will likely show that is a conservative number; even with the two week busy period many indicate happened in January.
An area I would like to look at in this summary is the question that looks at your concerns. The answers to this area have changed so significantly over the last two years and even in the last few quarters. The largest area of concern is now the OTHER area.
Upon investigation, OTHER is not several types of concerns but rather the need for a new category to be added - The economy. Ninety percent of the respondents who chose OTHER to question 8 indicate the current economic contraction is their primary concern. Looking back over the last four surveys this constituency has been increasing to the point we will now add a new category "Economy" to this area.
As you can imagine the shift from profitable to unprofitable was rather striking and the most severe since we started the survey. 52% say they were profitable this past quarter and 47 % indicate they lost monies- a huge shift. The question regarding business the last two weeks seems to indicate some improvement with 38% indicating some improvement and 42% staying the same. We noticed a 2 and a half week increase starting early April but a fall off as the month ended (hopefully short term).
The full-time hiring situation still seems tough with the vast majority staying the same or laying off. We have been privy to many different and creative types of hiring arrangements being used: furloughs, reduced work weeks, reduced pay rates, using the unemployment office's Work Share program and utilizing Flex staffers after heavy lay offs.
We have enclosed the entire Survey results below, if you have questions or would like to see additional areas explored please let me know.
daver@semperllc.com Semper
Click here to view the Survey, PDF Format
Q1 Survey Analysis - January 2009
Thank You again for your responses - this was the first time we posted on twitter and other Social Networks and the response was trebled.
Let us get right to it- WOW. Glad the fourth quarter is over, but the first could be just as interesting.
The highlights:
Profitability seems to have increased again- clearly this indicates the cost cutting measures and the reduced costs of raw materials and fuel are helping.
The question regarding how you find employees was interesting. Notice that many more of you are using online resources like printworkers.com or Gain's job bank than help wanted ads in newspapers. I wonder about the reasoning behind that fact, considering the parallel decision our clients must face between print and new media expenditures.
The hiring section - the Staying the same percentage is continually dropping, with laying off increasing but hiring actually started to show an increase. This would indicate that companies top lines are still being squeezed; they lay off but then find they are unable to meet demand when it comes in. So they have to rehire- A shameless plug but this is a classic temp staffing utilization situation.
Again, we suspect the GDP numbers to be released on Jan 30th 09 will have to be revised even in six weeks lower than even the shocking contraction they first indicated. We are glad to see many of you understood the severity of the situation and took the steps needed to reduce costs last quarter. All the doom and gloom from Davos aside, we feel that the upturn will start sooner than later. The speed of its improvement is the question. It seems that most responded that business was stable the last two weeks and expected things to stay the same for the quarter. Lets hope we start to see improvement top line wise shortly there after.
The number one concern of respondents was the economy and it's impact on clients budgets followed by predatory competition for those budgets. The Fed calls that deflation. Let us all hope that trend and fear is fleeting.
We have enclosed the entire Survey results below, if you have questions or would like to see additional areas explored please let me know.
daver@semperllc.com Semper
Click here to view the Survey, PDF Format
Q4 Survey Analysis - November 2008
First, Thank You again for your responses - we understand you are likely having to work twice as hard of late and your time is precious.
Funny, I look back at previous commentary and think how we felt glad the 1st quarter was over - In hindsight, I suspect many of us would be delighted with those sales levels now.
Profitability seems to have increased a bit - we suspect the reductions in staff and other expenses has had that intended consequence, an increase in profit which is the first increase in five quarters. Seems like the sales numbers are reflecting what other industries are seeing - a continued decrease (hopefully the cuts made are sufficent), but also a possible stabilization as the rate of those reporting a decrease seems to have slowed markedly.
The hiring section appears to be on hold, with the vast majority of companies reporting STAYING THE SAME. The next weeks will really be the time of decision. Will the steps taken be enough to restart the economy (and therefore will hiring restart again) or will additional steps be needed? Keep in mind, in order for change to happen a large majority need to be motivated for it - I think we are seeing that the majority are motivated for change ( Similar to the first Bush administration's end of term). One way or another we can hope that a new administration will, by default, help raise consumer confidence as the steps already taken take hold and reinforce that. The longer-term impact of a new administration will be another story. Remember even when employee counts are held static the turnover rates are about 33%, so if you have 100 employees you will be needing to hire 33 people on a yearly basis (on average).
When Hiring status and demand are weak, the focus on costs tends to be fierce. With companies trying to maintain employee count, material and supply costs are the focus. Understand that if the situation deteriorates further, labor costs will again be sharply in focus. We suspect that companies have wrung a lot of costs savings from vendors already and are really hoping for a status quo or increase in sales as a savior this quarter.
The recent release of the preliminary GDP numbers will be revised lower and sharply as the slow down or freeze occurred mostly in the second part of the quarter- be aware of the impact of that information on clients, workers and the markets when the revised numbers are released.
The answers to the special question we asked by a far margin are very similar. We had some suggestions for preparing for the current economic conditions we would like to pass on for consideration. One company discusses the advantages of keeping core staff cross-trained: "[We] cross trained employees to work in multiple departments depending on demand." Another relates to our next paragraph "Maintain open communication with our employees. Relay 401k messages and offer resources for counseling” and illustrates the implied understanding that a company is it's people, good management takes that into account. The last example is one we all are likely paying close attention to; "Applying a more aggressive approach to debt collection in order to improve cash flow." Funny, we used to just worry about our clients health, now our vendors, and worse our banks are a concern!"
Over the last months many people have asked me, in particular our internal staff, for some reassurance and guidance about the economy and various current events related to the economy. It is important to be open and honest with your team, these times are very unusual and the stress of that can be reduced by your openness. As a recent Business Week article by Jack Walsh states, now more the ever it is important to be available, open and direct with people - your reputation matters as does your example.
We have enclosed the Survey results below - if you have questions or would like to see additional areas explored please let me know.
We hope the next survey shows a vast improvement in the economy as we approach the coming year-end.
daver@semperllc.com Semper
Click here to view the Survey, PDF Format
Q3 Survey Analysis - August 2008
First, Thank You all for the huge number of responses. We honestly use this survey as a benefit for the industry in general and not for commercial reasons.
If you recall the line from last quarter "I think we all can be glad the first quarter is over; except for the fact that the second quarter, so far, seems to be even worse then the first." I think most of the respondents would say this was exactly true. Lets look at the numbers:
Profitability continued it's drop for the fourth quarter in a row. Sales in the previous weeks before the survey showed a marked decrease for two quarters now. Companies currently hiring has dropped six straight quarters, the longest streak since we started the survey process.
As Sales decrease, expenses increase; with what appears little ability to pass on the increased costs. We see that supply costs have become the number one concern of respondents by a much higher margin then ever with nearly 60% of respondents claiming it is their number one concern.
The relentless negativity of the last months continues after a brief break the first two weeks of July (causing a nice rebound in consumer confidence) but the negative message returned full throttle the last weeks of July. One can only hope the Olympics will cause another respite from the relentless drone. Remember, negativity is part of the downward spiral, if the majority feel things are ok or improving then things will start to improve. The sooner we get back to a positive media message, the better for all of us. In that vein, even with all the negativity 57% of respondents indicate they had a profitable quarter: still a solid majority.
With the third and fourth quarters yet to come we still have time for the year to recover, the fed rate cuts, the presidential election and the residual effects of the stimulus package could well force a more positive bias in the news. Take a close look at the actual results and feel free to ask questions or give feedback - daver@semperllc.com
Click here to view the Survey, PDF Format
Q2 Survey Analysis - April 2008
First, Thank You all for the huge number of responses. We honestly use this survey as a benefit for the industry in general and not for commercial reasons.
I think we all can be glad the first quarter is over; except for the fact that the second quarter, so far, seems to be even worse then the first. The last 2 months have seen a severe contraction in most areas of the economy and in all geographic areas. The Fed's actions last Summer came several sessions too late to avoid this contraction. The relentless negativity from the media over the last two years reached a crescendo of hysteria in August that has scarcely abated till just recently. We all are grateful for the news media's recent more positive bias!!
A Big question now is have the stock markets hit bottom? If so, then the recovery will be approximately six months from that bottom. If you look at the current stock charts for Apple, the Dow and the NASDAQ over the last two years, It appears that we have hit the bottom and are on the upturn (barring another terrorist shock). If the charts are correct, then we should start to see improvements as early as September - October. Flex Staffing tends to be a leading indicator, like the stock market, so we at Semper should see improvement three to four months after the bottom. We will let you know.
Another BIG change in the Industry this year was the demise of Annual report printing. One manager I spoke to, mentioned that last year they printed 100 Annual reports- this season only four. The result of the SEC allowing companies to post the reports "online." This single change has had a huge negative impact in that segment of the industry. I think of what will happen to Blockbuster and the movie theatre chains once the movie studios release first run movies directly online. It will likely be a similar issue- MAYBE I should sell any holdings.
Now to the survey results:
As you recall, the results are in the new easier to read and understand format which reduces the need for commentary.
The question on profitability I am sure is high on everyone's list. The trend line is clearly indicative of the stress we would expect to see ; this is a MACRO issue not just your firm.
The question on profitability I am sure is high on everyone's list. The trend line is clearly indicative of the stress we would expect to see ; this is a MACRO issue not just your firm.
The hiring question reinforces the above two responses. Hiring has dropped off, but it seems staying at the same staffing level is the course most firms are going with. Maybe others agree that things will improve sooner than later. (br>
Clearly, keeping expenses limited is on everyone's mind, with base pay and benefit costs showing big jumps in concern from respondents. Supply costs in general are now the largest percent concern of firms as opposed to technology issues.
In closing, we see positive news here in the expectations of sales for this quarter. Take a close look at the actual results and feel free to ask questions or give feedback - daver@semperllc.com
Click here to view the Survey, PDF Format
Q1 Survey Analysis - January 2008
We have reorganized the survey for this quarter. The new format makes it easier for you to track the changes historically, allowing you to spot trends. It also reduces the need for our commentary.
The feds surprise reaction today is exactly the tonic that appears to be needed based on this survey-
This survey shows several distinct trends:
-This is now the third quarter in a row with a significant drop in companies reporting profitability.
-The expectations for the coming quarter has dropped now for the second survey.
-The decrease in hiring and the number of layoffs have both increased over the last survey - Both have accelerated.
On a positive note- Companies are reporting a strong increase in orders over the last two weeks and this is the first survey in a while that Technology is less feared.
The Quebcor news has many pluses and minuses for the industry as clients potentially shift vendors.
If you have questions or would like us to add a question or topic please feel free to contact me directly - daver@semperllc.com
Click here to view the Survey, PDF Format
Q4 Survey Analysis - November 2007
We have reorganized the survey for this quarter. The new format makes it easier for you to track the changes historically, allowing you to spot trends. It also reduces the need for our commentary.
This survey has a few notable items: This is the second quarter in a row with a significant drop in companies reporting profitability. Keep in mind our industry is not alone so watch your AR closely.
The question relating to labor costs again highlights base pay increases causing concern. This type of pricing pressure is significant for its inflationary implications.
Many respondents indicated they expect business to decrease or stay the same, with a full 19% indicating they did not expect increases. The last quarter of the year traditionally is a busy time. We noticed last year for the first time in many years, that the busy-time failed to occur. We wonder if others noticed and suspect a trend?
If you have questions or would like us to add a question or topic please feel free to contact me directly - daver@semperllc.com
Click here to view the Survey, PDF Format
Q3 Survey Analysis - August 2007
The second quarter responses are now in and they indicate a large drop in profitability last quarter. Respondents reported a 17% drop from the previous period. If your firm experienced a similar situation, you're not alone. Printing Impressions reports RR Donnelley with a 69.4 million dollar loss for the time period.
The question related to sales volume the two weeks before the survey showed a 7% drop in respondents with increased sales. 31% indicated an increase in sales while 49% indicated sales held as is and 21% showing a decrease in sales. Respondents reporting a decrease also dropped significantly.
For the 3rd Quarter a full 72 % of companies feel sales will increase, 23% feel sales will stay the same and 5% are expecting a decrease. This is an overall improvement over the last quarter's responses. Employers are staying the same regarding hiring, hedging their bet that business will pick up in the coming quarter. We see some changes in investing in new plant and equipment. Most areas are either staying at the same level or increasing capacity. Under the current economic environment we question the wisdom of this. We understand investing to meet client requirements but the overall capacity of the industry has been growing compared to demand for many quarters now. Several respondents even feel "Too much capacity in this competitive industry" is the biggest concern facing their business. We feel this is part of the reason the consolidations are hitting with such force.
Last quarter we started asking what business segment had the most pricing pressure from clients. Offset had the heaviest pressure at 47%. Strangely this survey shows a drop for offset to 37% and an increase in the copy segment from 18% to 45%. This could be a seasonal variation. As we continue to collect data, we will see trends more clearly.
Two more areas of interest include the question regarding labor costs and hiring issues. Labor costs showed a much higher rate of concern on health insurance costs than the last quarter. We feel that this is due to the time of year, renewals typically hit mid-year so respondents are more aware of the pricing. The second highlight is that hiring issues jumped to the forefront of concerns facing businesses. Please note that labor costs have a separate area, so this section shows an increase in the scarcity of qualified labor. We have recently written an article that may be of interest to companies facing this type of issue: http://semperllc.wordpress.com/2007/08/02/can-the-graphic-arts-industry-pay-enough/
In summary, we feel this quarter will likely be a trying one for our industry (55% chance of downturn) as well as the economy in general. Some positives would be a surprise rate reduction by the Fed, or at least an improvement of the bias from inflation to growth. A continued reduction in the price of fuel would also have a positive impact. We feel the current debt scare is actually causing a serious hesitancy in the economy. People are truly concerned and aware that the shake out will take quarters, not weeks, to correct. We feel flexible costs and production planning are the way to go over the next quarters to help ride out this period. We do hope our prediction is incorrect or that external events act in a very positive manner countering the hesitancy we see. May your quarter be a good one!
Housekeeping issue: we remind all, this quarter's survey comes at the peak of the vacation season so the pool of responses is at it's worst. We ask that each quarter you help all of us by immediately responding when you see the survey email. We are always looking for more people interested in taking the survey - referrals are welcome!
Click here to view the Survey, PDF Format
Q2 Survey Analysis - April 2007
It seems the quarter ended much stronger than it began - thankfully. We have heard that January was one of the worst on record for many respondents. However we have stabilized during the quarter, the results of the survey show a single percentage point drop in clients reporting a profitable quarter. Sales expectations indicate a weariness in our respondents with 64% indicating they expects a sales increase, 24 % think sales will stay the same, down 2% from last survey. Looking at how sales have been over the preceding two weeks we see a wide spread of responses with 5% indicating an increase and 6% registering a decrease..
When we asked about hiring we found a drop in the number of companies hiring full-time from 66% last survey to 48% now. The lion's share indicating staying the same. We are seeing more companies turn to the flexible staffing option here.
The new pricing pressure question showed a fairly competitive result with Copy, Offset and Prepress all showing high pressure. Overall we would suggest that under cutting is detrimental to any market. This is the second survey with the question regarding labor costs and the responses have changed. Maybe it is renewal time- Health Insurance costs are cited as the biggest area of concern followed closely by base pay. Oddly no respondents expressed concern over the state and federal requirements. We suggest you take a look at these areas, as you will be surprised. You may be under stating costs when it comes to pricing.
We asked if companies are planning to purchase new equipment we found that 63 % indicated they are purchasing. This represents a fairly sharp pull back from the previous survey's results of 71% purchasing. We also ask for the top sources companies have for internal staff and this survey's response shows online ads as the number one way followed by internal staff referrals. This is a big shift from the old times when Newspaper ads would have dominated. This is not surprising as the online communities grow in strength and how people use them. Many feel job boards were the first real Web 2.0 services.
It does seem that the unprofitable respondents appear in general very intimidated by technology. Please take a look at the actual survey, as this is a brief summary
A good Quarter ahead!
Click here to view the Survey, PDF Format
Q1 Survey Analysis - January 2007
Looking at the survey results it would seem we hit bottom in the last quarter and now show a slight improvement. Profitability is up from 82% to 84 % which is the second survey in a row with improvement. However, when asked how business was the two weeks before the survey, the response showed an overall decrease in volume. The question relating to sales expectations this quarter, we again see an overall negative response. This fact taken with the previous information, lends credence to the fact the slow down continues though not as slow as previously anticipated.
The question regarding hiring is finally showing some change with a slight improvement in companies hiring from 42 to 45%. Again the overall take from the question is negative with an increase in companies laying off.
We added a few new questions to this survey. One addresses pricing pressure by area of business or service: if clients are complaining about the cost of paper or bindery services or prepress. It seems far and away the two largest areas of complaint are for offset services and material costs. What was very interesting was that pre press and bindery prices had the fewest complaints. This indicates that companies maybe under-pricing those services.
Another new question relates to labor costs and its components. Unfortunately the various components to the cost of labor are the most misunderstood factors of overall labor cost. Many managers are not clear on the true costs of the labor and feel hourly pay rate is the only cost of concern. Others feel hourly rate and medical insurance costs are the concern. In our survey this issues is made clearer- 29 % feel the increase in base pay rates is an issue and 55% think the costs for health insurance is the issue. This leaves 6% concerned with other benefit costs, 4 % with State required employee costs (Unemployment and state disability for example) and a further 6% indicate workman's comp is a concern. ZERO are concerned with or aware of the 15% match employers make on the federal tax level and the 15% match the workers must make on that same level. So most respondents had no concern with one of the largest non-base rate costs: the federal contributions. Let's hope that when calculating costs for a project all of us are taking into consideration the true costs of labor. In some states that cost can approach 50% or better of the base hourly wage.
A third new question asked if your company was planning to purchase new equipment in the coming year. In all regions, with the exception of the southwest, the majority indicated plans to purchase. It seems when given a choice the underlying thought is for expansion.
When asked what competitive threat causes the most concern 14% responded OTHER. Note the following responses: "It would be our failure to creatively sell into new markets or not being proactive in gaining new business opportunities"
"Supply AND Labor costs, competition from Asia."
"Lowballing prices"
"Asian competition"
"Too much capacity in the market. As a result, many printers sell work at or below cost just to get work."
"Other printers selling for less than we can."
"Print media moving to other formats."
I thought it strange that the majority of respondents wanted to purchase new equipment and expand; yet these OTHER responses suggest too much capacity and competition from lower cost suppliers.
As a reminder: Keep a sharp eye on the credit worthiness of your clients and continue to scrutinize the economic road ahead. We are looking forward to the impact of the lower gas prices and increased consumer confidence on the next quarter's survey!
I would like to close again by asking you to keep participating in the survey - the more respondents the more accurate our data. With the industry going through such wrenching changes, the more hands-on information the better for all of us. Thank you for your participation and we look forward to your participation next quarter. If you would like to add a person to the survey please let us know.
Click here to view the Survey, PDF Format
Q4 Survey Analysis - November 2006
Based on the survey results, it appears that the economic slowdown has, in fact, arrived. This downturn is not just the normal summer doldrums. The previous line was taken from our August survey analysis. The current results show how valuable a tool this survey is becoming.
We are in the thick of the fall busy season, but from the survey results and other feedback, things appear to be either holding steady or getting worse. The busy season is NOT turning out to be as strong as forecasted (72% of respondents indicated sales to increase in the 4th Qtr). Many companies now indicate a marked downturn in volume. The Hiring expectation question clearly indicates the continued hedging of respondents to the increased volatility of the marketplace. The expected sales the respondents predict may not be a reality. A further drop in companies' hiring expectations shows this: a 10% drop on top of the 34% drop in the previous survey. The number of companies staying the same (neither hiring or laying off) is the largest increase. We suspect that the next survey will show a larger percentage of companies actually laying off.
The question relating to economic conditions over the previous two weeks showed an improvement from the previous survey. 44% indicate volume had increased. This question lends support to forecast for the coming months- If sales are increasing now and the 4th Qtr is usually busy; it is reasonable to assume demand will likely increase. However, we remind readers that the economy never moves in straight lines, but rather in weekly and daily ups and downs. A general trend is visible over time. We believe the Fed's rate increases are doing their job and the economy is trending slower.
Two important economic indicators that are not on the survey have recently come out. They both impact this discussion: The first is the ISM survey for the first time in five years shows manufacturing contracting. The second is the overall productivity numbers for the US economy dropping to a very low level. The impact of these indicators, coupled with the survey results, paint an increasingly negative economic picture for the coming quarters. On the positive side, the impact of decreasing energy prices and the end of midterm elections may have some countering effect. With current economic indicators showing the economy slowing, the pressure on the Fed to drop rates will increase. The indication of a slower economy helps explain the stock market's recent rise (it is a forward indicator).
Interesting, as usual, is the question related to concerns facing your business. The results clearly indicate technological change is the main threat perceived by the industry. Finding SKILLED workers is also an area of serious concern. One area to illustrate here is that the labor costs concern has dropped slightly from the previous survey. One would expect that if hiring issues were a concern then the cost of labor would be a concern as well. This is an interesting disconnect. It is likely to be reflective of a problem we have seen for several years: the lack of newly trained skilled technicians entering the field. If companies cannot or will not pay competitive rates for labor, hiring concerns will surely be an increasing concern - Long Term. We suspect with increased productivity that labor costs can be somewhat contained, but only in the short run.
The bottom line is of course, whether the industry is profitable or not. The question relating to profitability shows a clear deterioration of profitability compared to the previous quarter. The previous survey showed 86% or respondents profitable but the more recent survey shows only 82% are profitable. This number indicates that close to1 in 5 companies are under financial pressure, we suspect the next survey will show this negative trend increasing.
As a reminder: Keep a sharp eye on the credit worthiness of your clients and continue to scrutinize the economic road ahead. If the 4th Qtr numbers come in as we suspect, 2006 may not be a great or even good year at all.
We appreciate your support. Thank you for your participation in our survey and we look forward to your participation next quarter.
Click here to view the Survey, PDF Format
Q3 Survey Analysis - August 2006
Based on the survey results it appears that the economic slowdown has in fact arrived and not just the normal summer doldrums.
The summer months for many are a slower time, but late spring and early summer this year seemed to be different. The effect of 17 consecutive rate interest rate increases and extremely high fuel prices appears to be taking the wind out of the economy's sails. Many companies are deferring capital equipment purchases, holding off on new hires and generally cutting back. Some businesses are now actively laying off workers as they begin to realize that this slow down is, in fact, unusual. In our survey, we are seeing strong indicators of this slow down with a sharp decrease in companies reporting a profitable quarter, a 12% drop from the previous survey.
Considering this survey was taken a few weeks after the 4th of July holiday, we would expect to see a decrease in companies reporting an increase in the two weeks before the survey. I suspect respondents assumed that the flow would be light so the number indicating a lighter than usual decrease was not as significant as it might have been.
I do believe the vast majority of respondents are not ready to believe the slow-down is actually here. The respondents indicating sales increasing in the current quarter increased compared to the previous survey from 64% to 72 %. People are hedging their bets by minimizing new expenses and trimming fat while waiting to see if the slow down will be soft or hard.
Two important economic indicators that are not on the survey have recently come out that impacts this discussion: One relates to the shipping industry, IE FedEx and UPS, and another the flexible staffing industry. UPS and FedEx both indicated a slow down in volume and issued warnings for the current quarter. Flexible staffing as a whole has indicated clients reducing full-time hiring and trimming flex staffing numbers. Companies try to preserve core positions at the expense of flexible staff as a buffer for the ups and downs in the business flow.
The survey question dealing with hiring full-time people showed an extremely sharp swing; respondents who are hiring dropped from 66% to 32%. The vast majority of the change is attributed to companies maintaining the same staffing levels. A word of advice here - look sharply at internal staff and target the people who are not as productive as you would like and consider starting to let some of the marginal performers go at this point.
Another indicator of change is the number of respondents comfortable with their own forecasts. The number of those comfortable dropped sharply from 74% to 61%. A positive in all this is respondents found it hard to increase productivity with existing staff. Last quarter 66 % were able to increase productivity compared to the current 59% when the market slow down started. This indicates strongly that the Fed's moves and timing is correct. We again suggest that they stop the upward trend as rate increases take nine or more months to impact the economy. We have several moves made by the Fed yet to be felt. With the slow down being measurable, now I am concerned they may have over tightened. Overall they seem to have made the correct call.
Interesting, as usual, is the question related to concerns facing your business. Over the last quarters we have really started to see respondents become concerned with how technology is impacting the market. In particular, how people's buying habits are being impacted by having the ability to cheaply produce product directly; either in-house or with other competitive methods such as Internet, PDF, Intranets, etc. It seems very clear that the decentralization of the industry from an area facility to one's own desk is happening at a rapid pace, which raises some questions. How will our industry evolve? What steps are being taken to enter growth areas? What product mix does that look like? As expected with an increase in costs, there is also concern about expense both for labor and materials. Concern about materials cost is overtaking labor by a few percentage points.
You will by now have noticed we have changed our name, this came about as part of our stratergy to deal with the changes to the industry. The name change to Semper (Always) indicates our commitment to our clients' needs and to the frequent requests we receive to help out our clients in other areas besides production, customer service and management. Often large clients would compare our performance versus the generalists they had been using. They would request our help in the areas the generalists had been working in. We intend to limit this to high skilled positions to minimize the impact to our core strength while also allowing us to evolve and grow areas in our core industry IE: database, front end and other data management type positions, as the print media itself is morphing.
The next survey will be very interesting as the ups and downs of a changing economy always is. Keep a sharp eye on the credit worthiness of your clients and continue to scrutinize the economic road ahead. Traditionally the late summer and fall are very busy and I hope the soft landing will not impact that too much.
We appreciate your support. Thank you for your participation in our survey and we look forward to your participation next quarter.
Click here to view the Survey, PDF Format
Q2 Survey Analysis - April 2006
This survey indicates that 64% of respondents forecast an increase in sales for the second quarter of 2006. This high level of confidence matches the previous survey's expectations. We noticed that the stress level within the expectations results decreased. The decrease was shown by only 10 % of respondents indicating a decrease in sales, compared to the 12% who predicted a decrease in the last survey. We thought things could not get much better on the profit front: a new record 87% of our respondents reported a profitable first quarter, up from last survey's 86%. We like this kind of error!.
As we conducted this survey, our country was again experiencing some of the highest gas prices in recent memory. With the current geopolitical uncertainty (i.e., Iran, Russia, Venezuela and Nigeria impacting gas prices again), we are continually looking for any impact on the economy. At this point, we are beginning to see some impact based on the number of firms indicating a slow down in sales over the previous two weeks. The number of respondents indicating an increase dropped 16% while those indicating the same level of sales rose by 22%. As time goes on we hope the number of respondents indicating a decrease in sales doesn't increase from the current 2%.
We again asked respondents about the biggest concerns facing their companies. SURPRISE! A new answer, inflation concerns, in the form of increasing supply costs, came in as number one. Inflation rose from 23% of respondents concerned to 25%. Hiring issues increased from 11% to 19% (large jump) and labor costs from 10% to 12%. Taken in total, the increasing costs of doing business is a concern to 56% of all respondents. Let's hope the Fed's hikes will start tempering this pressure. The single biggest threat for the previous few surveys, technology, decreased from 25% to 18% of all respondents. It is interesting how fast this shift to cost pressures has occurred and is clearly a rising source of alarm.
It appears that the Fed is close to halting its interest rate increases. If they are able to dampen the increasing inflation pressure without damaging the economy, our new Fed chief would be elevated in the market's eyes.
This quarter, we saw a surprising drop from 82% of the respondents to 74% feeling comfortable with their internal forecasts. This could be an indicator that people are concerned with the impact of the rate increases vs the inflation tiger. If the Fed is able to navigate this situation to a positive ie: low inflation vs reasonable growth, we all will be applauding.
As a last note, the decrease in companies being able to increase productivity vs the increase in hiring needs is a sign we have long been looking for. Those who heeded our previous cautions on treating workers with respect and working with them to find solutions will be well served.
We hope this survey was of assistance, thank you for your participation, and look forward to your responses to our next survey. A happy and rewarding Quarter to all!
Click here to view the Survey, PDF Format
Q1 Survey Analysis - January 2006 Responses have increased substantially from our last survey, which provides a much better snapshot for all of us. We are pleased with the sample size and the results from them. I briefly reviewed the results, and then chewed on them a bit before returning and closely examining them. Our question concerning hiring was answered pessimistically, with more companies maintaining the status quo and considering less hiring compared to our last survey. With business so robust and projections looking so encouraging, it's unclear why this question evoked the response it did, unless you note that many companies are increasing productivity without hiring.
Well, to start the analysis:
This survey indicates that 64% of respondents forecast an increase in sales for the first quarter of 2006. This is similar to last survey's response of 61%; but we notice in the current survey that the remaining 36% shifted: a 4-percentage point rise of those expecting a decrease in sales. This can be a sign of increased stress overall, and a foreshadowing of problems down the road. However, it seems that things couldn't get much better: a record 86% of our respondents reported a profitable fourth quarter, up from last survey's 82%.
Just before we conducted the previous survey, our country had experienced the twin hurricane shocks and the highest gas prices in recent memory. With the current geopolitical uncertainty (i.e., Iran, Iraq, Venezuela and Nigeria impacting gas prices again), we are continually looking to notice any impact upon the economy. At this point, it appears our country is getting accustomed to the frequent economic shocks. However, when we asked respondents about the biggest concerns facing their companies, the price of supplies continues to be a significant issue, rising from 21% of respondents concerned to 23%. The single biggest threat continues to be technology, increasing from last surveyís 23% to 25% of all respondents. The technology threat is one that needs further discussion, but based on the responses it appears people are afraid of continued loss of clients' business to other, non-print formats.
On a positive note, it appears that the Fed is close to halting its interest rate increases (keeping in mind that, with Alan gone, they may feel compelled to prove themselves and respond to the market's inflation).
Again this quarter, a lofty 82% of the respondents are still comfortable with their internal forecasts. With consumer confidence recently rebounding in other surveys, the correlation is clear. However, we are again concerned with the recent run up in fuel prices close to the September 20 year highs - affecting the short-term economy.
What factors appear to make a company profitable or unprofitable? According to our survey, it appears a major difference is the ability of the profitable ones to adopt and deploy productivity improvements. In this same area, it appears that unprofitable companies have a greater fear of new technologies impacting their business. In this survey, there appears to be some correlation between those companies that are profitable and their openness to adopt new ideas.
We hope this survey was of assistance, thank you for your participation, and look forward to your responses to our next survey.
A happy and rewarding New Year to all!
Click here to view the Survey, PDF Format
Hiring and Retaining Peak Performers - November 2005
Finding top notch staff in the current economic environment is becoming increasingly difficult.
Read the Full Article as printed in the October 2005 IPA Bulletin , PDF Format
Q4 Survey Analysis - November 2005
This survey indicates another large increase in business expectations for all areas of the country looking ahead to the next quarter. The only segment of the industry reporting difficulties are the companies with 10-20 person operations. The survey does reflect a higher level of unprofitability for the southeast region of the country compared to all other areas. However, the southeast region with it's weaker results still indicate a good quarter. Overall 82% of all respondents reported a profitable quarter vs. 81% last survey. An area of note is the marked increase in respondents indicating their business activity had picked up in the two weeks before the survey was taken.
With the increase in gas prices and the impact of the hurricanes during the two weeks before the survey one would have expected a decrease in activity. As this survey and other economic indicators are showing, the fears of a slow down have been correct. However, the relentless increase in interest rates will start to have an impact on business as it has begun to on the housing markets. From the survey results, it is clear that companies are expecting the economic activities to continue to increase in the last quarter of '05. The results indicate a much stronger expectation of increased activity then we have seen in a while. It appears that the trend of maintaining current head count is finally beginning to change. This quarter saw a spike in companies indicating they cannot increase productivity without hiring, a drop in companies staying the same size and thus an increase in companies hiring. In the last survey, 41% of companies were hiring and this survey the results show an increase of 52%. Overall, the Fed's rate increases seem to reinforce infallibility of their crystal ball regarding inflation control. The rate increases are aimed at keeping inflation at bay and this marked spike in our labor markets shows that the increases are needed.
Over the last five years, it appears the economy has become less susceptible to the frequent shocks that can and do occur. Growth has become stronger in spite of terrorist attacks, war, high energy prices and the effects of weather events. The economy is better able to resist shocks as the years go by as opposed to the ups and downs of the past decades.
An area of the survey that has been fairly consistent over the last quarters is the question regarding how comfortable respondents are with their own economic forecasts. We have noticed a slight correlation between an increase in doubt shown in the survey question regarding forecasts and the consumer confidence rates announced by ABC or the Michigan surveys. It is possible this area could be used as an indicator of difficulties ahead. The current comparison between this survey and last shows a slight increase in companies uncomfortable with their forecasts.
Another area of interest is the question relating to the biggest concern or threat. Technology shows up again in first place but supply costs area has increased from 13% to 21%, and a catch-all area labeled "other" has shown a large increase. "Other" is in 2nd place with 22% from 2% in the previous survey. Upon investigation, some of the "other" responses could fall into technological threat i.e.: "Customers acquiring the same copy equipment," "ability of our customers to do their own work with their own software and hardware," "Media other than print being used for my customer's communication with their customer" and "Other Buying decisions by customers." Other concerns include government regulations, benefit costs, pricing pressure from other printers, customers not understanding print buying and an overall increase in non-supply costs to do business i.e.: Insurance, worker's compensation, etc. This overall survey results indicate a very positive result for the printing industry with some concerns, but concerns that are typical in any expansion phase. It is important to remember that during an expansion one needs to take good care of their workers i.e.: such as reviews, bonus and compensation, benefits and consistent feedback. Care for one's workers engenders loyalty and ensures the extra hours needed are willingly given. Let's hope this forecast is accurate when we look back at the survey results in the beginning of 2006.
We appreciate your support. Thank you for your participation in our survey and we look forward to your participation next quarter.
Survey Q4 2005, PDF Format
Q3 Survey - August 2005
This survey indicated a marked increase in business expectations for all areas of the country looking ahead to the next quarter. This is the first time since we started this survey in February 2003 that we have seen an across the board increase like this. The trend is a nice change from the last quarter and could reflect an increasing comfort level with the new higher energy prices. We have noticed that when energy prices increase, we see a slowdown across the economic spectrum. It seems that our survey is reflecting the current macro acceptance seen in the news of late.
The current survey indicates that a majority of companies in all areas of our survey had a profitable first quarter. Last survey's laggard, the southeast, bounced back nicely. The second quarter had a nice increase in profitability reported, as compared to the previous survey, with 19% unprofitable now vs. 22% last quarter. From the survey results it is clear that companies are anticipating a fairly significant upturn in the third quarter. It is important to note that the expectations going into the second quarter were much more pessimistic, yet the quarter turned out markedly better. It would seem that the trend over the last years regarding hiring is that "staying the same" employee size continues to be the normal course of action. Since our last survey, the events in London appear to have not had any serious impact in people's expectations or their profitability. We find this surprising, but caution that a shock on London's level in the US would likely cause a much larger disruption.
Not surprisingly, the number of companies reporting a decrease in sales for the last two weeks was at a high level but the July Fourth Holiday has historically made this the case. We are again surprised by the ability for companies to continue to be able to increase productivity of their facilities without hiring. Long term this trend will help companies compete more effectively but we are becoming concerned that this trend is a reflection of the shift of printing from centralized locations to people and companies in-house capabilities. We continue to be concerned about the ability of our industry to attract and retain a skilled workforce. Over the last quarter we have seen many cases of people being pul ed from the industry into other industries that offer better compensation. Increasingly this will lead to problems when companies cannot find the skilled workforce they need. In some regions of the country we are already experiencing a marked shortage of some skill sets i.e.: Digital Printing, Skilled Bindery etc. We understand the competitive constraints that are forcing companies to keep labor costs low but fear for the long-term impact.
We appreciate your support. Thank you for your participation in our survey and we look forward to your participation next quarter.
Survey Q3 2005, PDF Format
Q2 Survey - May 2005
This survey indicated a decrease in business expectations for most areas of the country looking ahead to the second quarter. The South Central region is the only area expecting an increase. This trend is a marked change from the last several quarters. We have noticed that when energy prices increase we see a slowdown across the economic spectrum and it would seem the survey respondents agree. The current survey indicates that a majority of companies in all areas but the Southeast had a profitable first quarter. The first quarter had a slight reduction of profitability reported from the previous survey with 28% unprofitable now vs 24% at year end. From the survey results it is clear that companies are bracing for a fairly significant slowdown in the second quarter. It would seem it would not be to the extent where layoffs would increase, but "staying the same" employee size is the normal course of action. In our last survey we predicted additional consolidation. The prediction seems to have been right on target, but we did not foresee the recent increase in out-right abandonment of the market i.e. Ikon and Quebecor's recent announcements. We feel that the impact on the printing industry of technology and the shifting of printing from a central location to individual desktop's is having a greater impact then expected.
Surprisingly, the number of companies reporting an increase in sales for the last two weeks stayed at a high level. Another surprise is the ability for companies to continue to be able to increase productivity of their facilities without hiring. Long term this trend will help companies compete more effectively.
We are becoming increasingly concerned about the ability of our industry to attract and retain a skilled workforce. The next survey we will look into pay-rates by skill set and region. Our fear is that companies are not able to compete with other non-printing sectors for the skilled labor they require.
We also performed a survey of job-seekers and found that there has been a marked trend in employees leaving the industry altogether. Another area of note is the use of illegal labor in semi- and unskilled areas of the plant. We believe the increased focus of the government on establishing a national ID card will make the use of this labor resource increasingly unattractive. We appreciate your support. Thank you for your participation in our survey and we look forward to your participation next quarter.
Survey Q2 2005, PDF Format
Q1 Survey - February 2005
The fourth quarter survey indicates an increase in business for most areas of the country, with the Atlanta and San Francisco areas not rebounding as much as the rest of the country. This upward trend has been ongoing for the last three quarters. The current survey indicates that the increase in business was a ross the spectrum, in all types and sizes of businesses. However, I am particularly concerned with the pause we are seeing in the San Francisco Bay Area.
We have seen stabilization in companies looking to hire; 39% plan to hire compared to 43% last survey (we feel the San Francisco and Atlanta markets are causing the overall stabilization). The labor market in general has become increasingly tight with help wanted ads increasing nationally. The current political situation helps, particularly the positive boost from US elections, successful elections in Iraq and Afghanistan, and promising developments in the Israeli situation. We are however, still concerned with the continued hike in fuel prices. Which are, in part, responsible for the slowed growth in the San Francisco Bay area, as they lead the nation in price per gallon. We are pleased that the industry, in general, appears not to have been as heavily impacted by gas prices as worst case scenarios predicted.
The sales forecast for the current quarter indicates very positive response, so it is likely we will see a repeat of the last few quarters' positive bottom line results. Sales over the past two weeks also increased positively, with a three-point gain over last quarter's survey result. We believe the holiday season and its typical cyclical impact is at play. The largest concern facing businesses again shows sales are the number one concern, as a percentage there is a slight increase from 44% to the current 47% concerned with sales. The areas that are increasingly concerning are: hiring (increased its share by a percent), cost of sales, and increasing productivity. The concern about the negative impact of new technology had the greatest percentage increase over last quarter. Additionally, as compared to last quarter, the number of requests for flexible, and full time placements have increased substantially as well as the time required to fill that need. The labor market is clearly becoming tighter.
The level of profitability industry-wide took a slight dip from the previous survey, with Chicago and San Francisco areas leading the drop in profits.
We added two questions to the recent survey, the first asks which position does your company have the hardest time filling, the second, is your company considering expansion and or acquisitions in the coming year. The first question shows two distinct areas of difficulty, press help and sales, with CSR staffing a close third. It appears that the concern for sales is reflected acutely throughout the survey and accentuated further by the difficulty in finding a Sales person with a pre-existing book of business and who is willing to move for a minimum amount of salary and time considerations. In regards to press help t e last 10 years has seen a marked shift in the graphic arts schools away from producing press help towards pre-press education. As less and less students enter the trade more companies are encountering difficulties securing qualified operators. Nearly half of all respondents indicated an interest in expansion and/or acquisition, which may reflect the need to reduce capacity in the industry via consolidation. This would allow greater pricing power by the winners. I suspect this year we will see an upward trend in small and mid-sized companies on the leading edge of the consolidation trend that larger players have been following for the last years.
We appreciate your support. Thank you for your participation in our survey and we look forward to your participation next quarter.
Survey Q1 2005, PDF Format
Q4 Survey - November 2004
The third quarter clearly has been very positive as our last survey predicted. The current survey indicates that the increase in business was across the spectrum, in both geographic and client size. I cannot say enough about the fact that it is about time, and a pleasure to see.
We have seen a huge jump in companies looking to hire (43% plan to hire vs. 24% last survey) a sign this recovery might be finding its legs. The current political situation and it's negativity would imply, economically speaking, that the world is ending, but it appears from the survey and our own performance this is not the case. We are however, concerned with the recent hike in fuel prices as this spring's soft patch appeared to be connected to the rise in fuel prices then, and it is possible that they could impact demand again now.
The question concerning the sales forecast for the current quarter again received a very positive response, so it is likely we will see a repeat of the last quarter's positive bottom line results. The question concerning sales over the past two weeks being positive overall, does reflect a reduction from the previous survey. This reduction could be linked to both the negativity regarding the economy and the fuel price issue.
The question regarding the largest concern facing your business again comes out with sales being the number one concern, although as a percentage there is a continued decrease from 55% to 51% to the current 44% concerned. The areas that are becoming increasingly concerning are hiring, cost of sales, and increasing productivity. We are increasingly hearing clients ask us that since the labor picture is so bad why can they not find anyone. The answer is two fold, unemployment of 5.4% is historically very l w (the economy is not as bad as the political picture would paint it) and that many workers have left the industry during the recent economic downturn (they had bills to pay etc). In fact, we are seeing a rapid tightening of the labor pool that is reminiscent of the late 1990's.
Overall we see some uncertainty in the economy with the elections and the fuel issue but feel very positive for the fourth quarter (barring any shock/attack). It appears that many of you will be having to start tax preparations early this year, with an eye on who wins the election, and how that might impact taxes owed.
Over the last few surveys the participation has increased significantly. The larger the sample the more accurate the results. Thank you for your participation in our survey and we look forward to your participation next quarter.
Survey Q4 2004, PDF Format
Q3 Survey - Aug 2004
The overall downward blip in economic activity, recently mentioned by the national media, appears to be just that, a blip, with the vast majority of respondents indicating sales have been increasing over the last two weeks. Each category of company size indicated an increase in both profitability and productivity over the previous quarter. Many more companies are starting to consider hiring based on a comparison between the the current and previous survey. We consider this a significant sign that companies are finally trusting that demand will continue to improve over the next period.
The question regarding the largest concern facing your business again comes out with sales being the number one concern. Although as a percentage there is a decrease from 55% to 51%, it continues to be the major concern. The areas that are becoming increasingly concerning are New Technology, Cost of Sales and The Economy. This last category is likely reflecting an increase concern raised by the current elections and the need for one party to highlight the negative in the current economic situation.
Overall we see a continued brightening of the economy and expect the 3rd and 4th quarters (barring any shock/attack) to really begin to show strong growth.
Thank You for your participation in our survey and we look forward to your participation next quarter.
Survey Q3 2004,
We suspect the next survey to show some satisfaction to this sales need both from continued industry consolidation and increased organic growth. Barring any macro economic shocks, this current quarter will likely show that the industry is continuing on the path of improvement and we look forward to the increase in hiring that would underpin this recovery.
Thank You for your participation in our survey and we look forward to your participation next quarter.
Survey Q2 2004, PDF Format
Q1 Survey - January 2004
The results of our Survey this past quarter indicate a mild improvement over the previous survey. The percentage of Companies indicating that they are hiring or staying the same has increased to 96% with 28 % of all respondents indicating they will be adding staff. The percentage of companies laying off dropped significantly from 13 % last survey to 4% currently.
The fourth quarter also showed an increase in the percentage of companies reporting a profitable period over the previous survey. This increase underscores the hiring question results indicated above where 68% of companies indicated they intended to stay the same employment wise, up from 59% last survey.
As the economic situation stabilizes the survey question asking if companies are comfortable with their internal future forecasts continues to firm up with a full 70% of respondents feeling comfortable with their internal forecasts up from 66% last survey.
The question on our survey relating to increasing productivity from existing workers has continued on it's multi-month increase, with 70 % of companies indicating they have been able to increase productivity from existing workers (subsequently, not hiring new workers) up from 52% of respondents last survey. This increase in productivity indicates a continued pressure on companies to keep costs low, a hesitancy on whether the recovery will last long term, and continued implied increase in capacity utilization rate.
We suspect in the near future the need for new workers will begin to outstrip companies abilities to meet demand via productivity improvements.
The number of companies reporting an increase in s les over the last two weeks before the survey, increased from 46% to 53% with another increase from 20% to 32% of respondents indicating business was staying the same. A nice surprise was the percentage of companies (15%) indicating a reduction in sales over the last two weeks dropping from 34% in the last survey.
In summary, the responses seem to indicate a continued increase of revenue, profitability and an overall positive outlook for this current quarter. We would not say that the industry has resolved its over-capacity issues but seem well on the way to doing so. We suspect the next quarter numbers to reflect an increase in the positive inflections. We are waiting for the time respondents indicate hiring is becoming a significant requirement for companies to meet demand. In order for the economy and confidence to improve the job market must stabilize which will indicate to companies and workers that a more lasting turnaround is here.
Thank You for your participation in our survey and we look forward to your help next quarter.
Survey Q1 2004, PDF Format
Q4 Survey - October 2003
The survey responses continue to show an increase in optimism.
We continue to see a much higher percentage of companies profitable last quarter than during the previous quarter. Many more companies are reporting increasing sales, while the amount of responses for staying the same are dropping. However the amount of clients with sales decreasing increased a few percentage points as well. The clear majority of the responses again project an increase of sales for the next quarter, which may reflect the sales increase the majority saw this past quarter and the improvement in the net profits as well.
Hiring plans are accelerating in much broader swath of companies then in the last survey with just 16% laying off and the balance either staying the same or hiring. The stimulus package and the continued positive sales numbers seem to be sending signals to the industry that we are in fact heading away from the bad times. We suspect th t i an ther quarter or two the productivity gains companies have been able to extract from their capital will reach a limit. Once companies are unable to meet demand from existing capital we will see a rapid increase in hiring and purchases of capital equipment.
Overall, it seems that the trend we saw in the last quarter is increasing lead by the increase in net profit and sales. We hope this positive quarter will continue the upward trend from the past years difficult economic period.
Thank you for your interest. Individual company information is not disclosed.
Survey Q4 2003, PDF Format
Q3 Survey - July 2003
The 2003 Q3 Survey results are far more optimistic than the last survey.
We see a much higher percentage of companies profitable last quarter than during the previous quarter. Most have reported business increasing or staying the same over the last weeks. The clear majority of the responses project an increase of sales for the next quarter, which may reflect the increasing confidence Americans feel due to the recent tax cuts and other economic positives of late.
Hiring plans are increasing in the larger companies as the busy season approaches and likely due to the increase in demand of late. The recent stimulus package and the positive outcome of the war seem to be sending the right signals to companies of a high likelihood of increased demand.
Overall, it seems that the industry has recovered from it's negative sentiment displayed in the previous quarter. We hope this positive quarter will start the upward trend from this rather difficult economic period. Thank you for your interest. Individual company information is not disclosed.
Survey Q3 2003, PDF Format
Q2 Survey - April 2003
The 2003 Q2 Survey results are far less optimistic than the last survey. Fewer companies were profitable last quarter than during 2002 (down 10%). Most have reported no recent increase in business. Less than half of the responses project an increase of sales for the next quarter, which may reflect the slipping confidence Americans felt during the first weeks of the war.
Hiring plans shifted less dramatically, about 5% of the responses shifted from hiring or staying the same size last quarter, to laying off workers this quarter (14% reported lay offs). Two questions related to respondent's outlook were added to the Q2 survey. Interestingly, the level of comfort respondents have with their short-term business forecasts seem to drop by their position. An overwhelming majority of HR/Salespeople (and to a lesser extent, Operations Managers) report confidence but CEO/Owners and Controllers are split. About half of the respondents reported no disruption in business because of the war, while 25% are unsure.
Overall, it seems that the industry has been affected by negative war sentiment. We hope the impact will be as short lived as the actual heavy fighting, but only time will tell.
Thank you for your interest. Individual company information is not disclosed.
Survey Q2 2003, PDF Format
Q1 Survey - February 2003
The 2003 Q1 Survey yielded mixed results.
Some results seem to run counter to current macro-economic trends, particularly the high percentage (87%) of companies expecting an increase in sales during the first quarter of this year. It is encouraging, however, that 54% of companies have already seen an increase in business, compared with only 17% that have reported a decrease.
Comments ranged from "We have actually broken our sales records in August, which is traditionally slow." and "We are planning for the possibility of an additional employee for the first time in 18 months." to "One or two big orders changes everything." and "It is relative because December was dreadful." The ratio of unprofitable to profitable companies seems much higher than in normal economic times, indicating a market under extreme duress. Reduced demand across the market reinforces the need to focus on effective cost containment practices. It is interesting that only 38% of respondents identified Q1 as a traditionally busy time, yet 91% of companies are retaining the same number of employees or hiring mo e. It seems that a closer match between actual sales and labor costs must be made to promote overall profitability.
Generally, respondents seemed optimistic. We will post updated survey results quarterly. It will be interesting to see if predictions of increased sales come true. Thank you for your interest and participation.
Survey Q1 2003, PDF Format
A New Year! January 2003
This past year has certainly been a difficult one for most of us. Many companies either closed or significantly downsized. With the most current economic data pointing to continued uncertainty for the next few months (at least), it seems clear that the use of our services will become even more important to our clients. Many of you have found that using flexible staffing helps you to survive the ups and downs in demand that this economy has been producing. The ability to have skilled labor available when the need is there but not when you are slow has saved many companies valuable expense dollars over the course of the past few years.
We continue to strive to increase our quality and availability of workers to better help you meet the demands of your clients. In that vein, o er the past year we have partnered with several companies to help train our staff with the most cutting edge skills available. We have also taken advantage of this down turn to aggressively recruit the best workers, people who are available for either flex (temporary) or direct hire (permanent) positions. Our skill sets have expanded even further, including industry specific executives, sales, mid level production and customer support, pre press, press, Digital production, bindery, web design and delivery.
To better help our clients deal with the current environment we have also teamed with local PIA chapters and offer their members a discount on the flex hourly rates. We encourage and support the PIA affiliates in their efforts to serve our industry. We expect to continue this support for the foreseeable future.
We understand how a portion of our clients have had some difficulty understanding our pricing structure since our hourly rates are higher than the labor you can purchase on your own. The savings comes not hourly but over time, when compared to hiring a full time worker and the costs associated involved. Getting our message out is time consuming but is effective. The concept of saving money monthly vs. hourly is somewhat foreign to people who are used to keeping the fixed input per hour always low as opposed to having a fixed input (labor) be variable.
Since staffing tends to be a leading indicator, we have a feeling that (barring a major shock) business should start a sustained period of demand by the second quarter. In the mean time we are here when you need us and will try to help in anyway we can.
A unique perspective. May 2001
The last six months or so have really been a ride and predictions indicate at least another six months to go. Six months ago we all were scrambling to increase capacity to meet a seemingly endless need for demand. Most of us during this time were still buying equipment, desperate for skilled labor and where otherwise trying to meet our client's needs. Six months now seems like years ago. Within a two week period demand dried up. For the following weeks, the feeling for many was that this was a short-term issue. Companies failed to take steps to reduce demand or slow production capacity increases. This was understandable in the case of labor since finding skilled people had become increasingly difficult in the last few years. By mid February, it became clearer that this slowdown was not a short-term event. The layoffs and decline in machine orders started to occur as about this time. Still, many companies were hesitant to reduce staff for fear of being unable to rehire once the economy came back. All sources indicated this slowdown would be V-shaped (short-term). Well, it is now Mid May and the V is looking more U-shaped everyday. The current best guesses are that we will not see any increases in demand for at least six more months. If that is the case, many companies will be under serious pressure. The speed of the slow down from the previous high growth rates coupled with forecasts indicating a short-term demand decline left many not realizing the returns required on the investments made. For the fortunate who had strong balance sheets and invested in capacity from a cash position, the present situation offers opportunities. For the majority who financed growth from cash flow, the problems are much more severe. The question now is what to do. Most have started.
Layoff's, hiring freezes, payrolling valued workers, elimination of capitol spending and even selling off equipment (the Bay Area is particularly hard hit), streamlining operations etc. If the return of demand is still in fact six month's off, even more radical steps may need to be taken. Look at your operations and try to automat as much as possible using existing machines but in new ways. Reduce waste in production (a possible 20-30 percent savings in per unit costs).
How can we help?
For our closest clients we are offering outplacement services. The benefits are many - improved moral for the remaining staff, lower unemployment rates, faster return to work of laid off workers, less threat of worker suits to name a few. We also have been payrolling key skilled workers. Payrolling allows you to retain the production of the worker but reduce the total costs to the company. Once things pick up the worker can be transferred back to your payroll for no fees. Some clients have sent workers to us to be placed part time out to other clients as temps while remaining on the original clients payroll for the hours needed.
We have been asked by many clients to help find quality sales staff. In fact the most requested skill set is sales. We have honed our skills and started to really find very qualified candidates. However, the cost to do this is high so we are only doing this under retained search rules. Some clients have realized that flexible staffing is in fact a serious tool in their day to day operations and have reduced their core staff to a level that allows them to meet on average a 50% capacity utilization rate (about 1/2 -2/3 of usual demand time). We staff their operations when demand hits above that mark. The cost savings have enabled them to lower prices and become more dominant in the market place. The next six months will likely be difficult for many. We will continue to do our best to help our clients through this period. Hopefully ,we are at the low point or on the upward leg of the recovery but one thing is clear, no one has that answer for sure. Please feel free to send me an email with any feedback you have or if there is some way we can be of assistance.
The Future of the Printing Industry: 1999
Dear Printing Professional:
PrintStaff is in a unique position to view the impact of technology on the printing industry. By working with both clients looking for flexible staff and direct hire, and qualified printing professionals looking for work, I am seeing a number of trends forming in the industry. In this letter I hope to highlight some of those major trends.
In general the printing industry is in the process of a major restructuring. This restructuring is taking place in several areas. I see the most imp rtant as:
Employees - The increasing number of lawsuits brought against employers is forcing companies to continue to automate and find ways of reducing their potential exposure. Companies are finding it more efficient to focus on meeting the demands of their clients through automation rather than handling the continual demands of employees and employees’ interests.
Technology - In a word, the Internet. The fact is that 40% of all printing is from financial clients. What would happen if the SEC decided to allow our financial clients the option to email important information instead of mailing it? Another 20-30% of all printing is done for the catalog industry. I foresee a time when large catalog producers will receive more of their business from the web then from direct mail.
Faster Service - Customers are demanding increasingly faster service, and you have to deliver. With the speed of business today, customers are sending out large and complex jobs they are expecting to be done in hours not days. This forces printers to offer faster methods of production and delivery, which can be very costly. The most expensive component in all of this is labor.
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