It’s here—that scenario you thought your business would not encounter. What do you do now? It is better to prepare for the worst than be left standing in the dust of the still-eminent Great Recession that is affecting so many in the printing industry. Our own Dr. Ronnie H. Davis, Vice President & Chief Economist, Printing Industries of America, provides today’s printers with useful resources and an action plan to assess and prepare for tough economic stretches.

Action Plan for Turbulent Times

Step I: Take stock of what is actually happening

Evaluate your business and the current print markets. Members can download 2012–2013: A Planning Guide to get an accurate report on economic trends.

Step II: Review likely economic scenarios...

The following report was compiled and written by MargolisBecker and Printing Industries of America’s Ratios Study Program.

The Great Recession of 2007–2009 was a dramatic departure from the relatively mild recessions of the past two decades. The sluggish economy and slowing print markets picked up steam and reversed their trends in 2010. As reported, the industry incurred an average profit for 2010 of 1.4% for all printers participating the in the 2011–12 Ratios Survey. This is an increase of 2.8% from last year’s average loss of 1.4% and ends the three prior years of consecutive decreases. Looking back over the last 90 year history of the Ratio Studies, an astute business person could predict the reversal of the industries recessionary trends, as it has always happened. But with the ever changing environment, even the veteran industry...

As promised in the previous blog, today we take an in depth look at Total Factory Cost of Product. In this entry we use two example printers, a profit leader and an average printer with $1.7 million in annual sales.  In future entries we will cover mid-sized and larger printers.

1. How much does it cost an average printer and a profit leading printer with $1.7 million in sales to produce their finished product?

Total Factory Cost of Product is 8.28% less for the profit leading printer than the average printer, resulting in $140,760 in savings for our $1.7 million printer. Gross profits for the average $1.7 million printer were 19.85% compared to 28.13% for the profit leader. This significant savings provides the profit leaders with additional funds to cover SG&A, interest expenses, and other expenses and achieve a profit before income taxes of 5.93% compared to a loss of 4.23% for the average $1.7...

In 2010 industry sales rebounded from the lows of 2009, increasing by 2.79% to $144.6 billion. 2009 was the first time in the 89 years that Printing Industriesof America has been tracking industry profitability via the Ratios Survey that we calculated industry losses. Losses as a percent of sales averaged 1.4% for all printers in 2009 and profit leaders (the top 25% of respondents) profit as a percentage of sales declined from 9.4% in 2008 to 7.0% in 2009. Despite the Great Recession profit leaders still earned a significant profit before taxes.

How did profit leaders earn a profit in 2009 despite declining sales and the weak economy? Taking a look at the results from the 2010-2011 Ratios Survey (fiscal year 2009 results) the most impressive difference is the total Factory Cost of Product. As a percent of sales the average printer dedicated 80% of their sales on Total Factory Cost of Product expenses, which include Factory Payroll and Factory Expenses, while profit leaders...