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Apr 1, 2001 12:00 AM
DO YOU WEAR ROSE-COLORED GLASSES OR DO YOU DEVELOP A STRATEGY FOR A WEAKER ECONOMY?
A couple of months ago, I was scanning one of the other industry magazines and came upon a rather disturbing editorial. The editor addressed the current economic slowdown and advised, “Even if economic conditions aren't serious, anxious voices can make them seem so.” The crux of his message seemed to be that if you have bad thoughts, a decline can become a self-fulfilling prophecy. He advised his readers to be more optimistic: “Perhaps a measure of bridled optimism and confidence all around will help make this period both shorter and shallower.”
I don't believe that presumption for a minute. I do believe in facing facts.
And the facts are fairly evident. The economy and the printing industry are in the midst of a decline. In fact, in a recent economic report earlier this year from NAPL (Paramus, NJ), in answer to the question, “What's happening to business conditions in your markets?”, only 18.1 percent of respondents thought business was picking up, while 56.4 percent said it was slowing down.
Had the aforementioned editor carefully read that same issue in which his editorial appeared, he would have seen the following headlines on the news pages of his publication: “Printers grow more cautious about future business trends,” “Manufacturing output stalled at the end of 2000,” “Moore plans deep cuts in major restructuring” and “Standard Register to shrink in renewal plan.”
If that editor had read the pages of his own magazine, he would have realized that prophesizing a general economic decline is a moot point. It's here, and the best thing to do is to face it.
The economy runs in cycles: There are good times and there are bad times. Sometimes you have to take a step back and analyze the driving forces in any economic cycle. For several years, I've suggested that the increasing use of the Internet would negatively affect the printing industry.
While I've never felt that printing would disappear, my previous columns have predicted that certain niches of our industry would definitely be adversely affected by increased use of the Internet. If you accept that premise, then I've got some more bad news. A report released a couple of months ago by the Pew Internet and American Life Project found that the number of U.S. adults with Internet access grew by 16 million during the last half of 2000.
That means that the total number of adults currently using the Internet in the U.S. is now 104 million — 56 percent of the adult population. What's more, 30 million people under the age of 18 have Internet access. The conclusion is obvious: The more people who search for information on the ’Net, the less likely they are to use printed material for their research.
That's one factor. Another is the slump in the general economy, perhaps triggered by the collapse of many dot-com companies. The significant decline in the stock market hasn't helped, especially the steep fall by the tech stocks on the NASDAQ. As earnings slump, companies are more likely to trim their personnel rosters in an effort to boost profitability.
Some leading economic indicators suggest that things may not be as bad as they appear, but there seems to be a consensus of forecasts ranging between a “soft landing” and a “hard landing” for the economy. So, as a businessperson, what do you do? Do you wear rose-colored glasses, or do you develop a strategy for a weaker economy?
And what strategy do you take? Do you hunker down, pull in your sails and wait for the storm to pass? Do you reduce staff, delay equipment purchases, lower paper inventories and slice expenses? Or do you become more aggressive?
I don't have the answers, but I can tell you that the strong companies will survive and, to some degree, register growth. They've got the systems in place that will allow them to capture additional market share. The weak companies will get weaker.
Another certainty is that what goes up usually comes down — and eventually goes up again. Before you make your decision, remember an old proverb: “In prosperity be prudent, in adversity be patient.” In today's economy, patience is a virtue and there's a great deal to consider and act on. But you definitely don't want to lull yourself into a false sense of security by ignoring the happenings around you.