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The financial outlook for the graphic producers who participate in SGIA’s business-growth and financial-outlook surveys doesn’t seem quite as grim as economic gloom-and-doom reports on other fronts. The specialty graphics industry appears comparatively healthy, and forecasts for trends in advertising, retailing, and consumer behavior seem to indicate opportunities for growth to continue in the future. These were the primary themes conveyed by SGIA President and CEO Mike Robertson and Business Information Associate Katy Lellelid during the SGIA’s Mid-Year Marketplace Outlook webinar on July 17.

Business Growth Trends: During the webinar, Robertson and Lelliled presented the results of a May 2008 SGIA survey that showed that most high-or mid-volume graphics producers expected that their business-growth for Q2 of 2008 would be about the same or higher than the amount of growth they had projected at the beginning of 2008. Overall, more than 50% of the participants expect their businesses their businesses to grow between 4% and 29% in 2008.

Lower: 36% of high-volume graphic producers (those with annual sales of $20 million or more) expected Q2 results to be lower than previously projected. And 24% of mid-volume producers (those with sales between $5 and $20 million) expected their Q2 results to be lower.

About the Same: 54.5% of high-volume graphic producers and 57.8% of mid-volume graphic producers expected their Q2 growth to be about the same as they had originally forecast.

Higher: 9.1% of high-volume producers and 17.8% of mid-volume graphic producers expected their Q2 growth to be higher than they had previously forecast.

(The financial outlook for low-volume graphics producers, those with sales under $5 million annually, isn’t included here because they include a mix of part-time businesses and garment decorators.)  

Other findings include…

Amount of Work In House: Except for high-volume graphics producers with major contracts, most graphic providers generally have about two weeks worth of work currently in-house.

Equipment Capacity: Among mid-volume graphic producers, 35% are using 61 to 80% of their equipment capacity, and 26.7% are using between 81 to 100% of their equipment capacity. 

Several possible reasons were cited for the optimistic outlook and continuing growth:

Graphic producers are diversifying into wider range of markets, making them less susceptible to downturns within one business sector. The top three markets for graphic producers continue to be retail stores (65%), corporate branding (65%), and ad agencies (64%). But, the number of graphic producers selling to consumers jumped from 9% in 2007 to 44.7% in 2008. And there was at least a 10% increase in the number of graphic producers selling to 11 other key markets, including:

Non-profits, associations, organizations (from 37.9% in 2007 to 52.6% in 2008)

Educational institutions (from 35.3% in 2007 to 49.9% in 2008)

For the trade (from 35% in 2007 to 49.1% in 2008)

Hospitality services such as hotels, nightclubs, resorts, and cruises (from 24.3% in 2007 to 42% in 2008)

Food services such as restaurants, bars, and cafes (from 34.5% in 2007 to 48.9% in 2008)

Interior decorators and designers (from 32.3% in 2007 to 42.7% in 2008) 

Graphic producers are increasing their Internet presence at a time when more people are using the Internet to research products and make buying decisions. Of the survey participants, 91% use the Internet to attract customers and 19% now have online storefronts.

In retailing, consumers are making their buying decisions closer to the product. P.O.P. advertising

will continue to increase in importance as a battlefield for the consumer’s attention. P.O.P. is one of the fastest-growing sectors in the printing industry. 

Other forecasts from studies such as TNS Retail Forward and Retailing 2015: New Frontiers suggest that there will be an ongoing need for more localized and customized graphics. For example, there will be a shift from big-box stores to smaller retail outlets. Faster product cycle times will create new opportunities, and retailers will increasingly define themselves by the customers they serve rather than the products they sell.   

Retailing is “a fast and complex market that’s going to get even faster and more complex,” said Robertson. 

During the webinar, Robertson and Lellelid talked about graphic producers’ equipment-purchase plans, noting some disparities between the types of equipment survey respondents said they planned to buy in 2007 and the types of equipment they actually bought.

For example, 38.3% of respondents said they planned to buy a UV-curable flatbed printer in 2007. Follow-up surveys showed that only 18.3% of the respondents actually purchased one. Nevertheless, a UV-curable flatbed inkjet continues to be the product that the highest number of respondents (41.7%) to SGIA’s Business Growth Survey plan to buy.  Other planned purchases include roll-to-roll solvent inkjet less than 96-in. (18.3%) and roll-to-roll UV-curable less than 96 in. (13.3%).

Robertson noted that there will be a substantial increase in the Section 179 tax deduction that businesses can claim for manufacturing equipment placed in service in 2008. For more information about Section 179 and the tax benefits of buying capital equipment in 2008, click here.

On the SGIA website, you can read more about the three survey reports SGIA has issued this year:

Market Strategies Report, Business Growth Plans Report, and Financial Outlook Report.