PRINTER-FRIENDLY FORECAST?
Printers See Some Bright Signs After Tough 2001
The 30 largest commercial printers in Orange County had a tough 2001, as an already slowing economy hit bottom after Sept. 11 and just now is starting to show signs of a slight recovery.
After two years of single-digit sales increases, the companies on this week’s Business Journal list saw 2001 revenue fall 3% to $464.3 million compared to a year earlier. Employment was also off 3% to 2,583 workers. The Business Journal’s list ranks commercial printers by OC revenue and includes estimates for four companies that refused to disclose numbers.
For analysis purposes, No. 3 Santa Ana-based Webtrend Inc. was excluded from the figures above. The onetime San Diego-based printer was bought last year by Workflow Management Inc., the parent of Irvine-based Hunter Pacific Inc. The companies consolidated their operations at a bigger facility in Santa Ana.
Including Webtrend’s results,a quadrupling of revenue and 174% jump in workers to 178,the list saw a 4% jump in revenue to $507.8 million and a slight 1% increase in OC employees to 2,761.
Following National Trend
Excluding Webtrend shows that the dropoff at OC’s printers was in line with the national trend. U.S. print sales fell 3.7% in 2001, according to Paramus, N.J.-based National Association for Printing Leadership, a trade group for commercial printers.
“In general, business was very difficult in the printing industry last year,” said Bruce Carson, president of No. 4 Irvine-based The Dot Printer Inc., which dropped a spot this year. “The market was already soft and then Sept. 11 hit and people pulled back on their marketing budgets, which had an impact on what we print.”
There’s a lot of doom-and-gloom in the industry, says Todd Nelson, president of No. 1 Los Alamitos-based Trend Offset Printing Services Inc.
“A lot of customers are being much more critical that they don’t print too much of anything,” he said. “They’re reducing their page counts and being much more cautious about the dollars they’re spending on printing.”
But there were some bright spots.
According to Nelson, paper prices went down and printers could pass on the savings to customers. Plus, he said, Trend “battened down the hatches and is much more efficient in operations.”
The company is breaking ground on a 30,000-square-foot addition to house its corporate offices and expects 2002 “to be its best year ever,” Nelson said.
The Dot Printer’s Carson said he also is encouraged about the second half.
“There’s some indication that there’s more work available, as measured by the number of quotation requests that we’ve seen and just talking to clients,” he said.
The printing trade group is painting a rosier picture for 2002 (see related story, page 23). Sales are projected to grow as much as 5% from July through December, and as much as 7.5% next year.
Most companies were glad to put last year behind them.
Some Positive Signs
The two largest printers, No. 1 Trend and No. 2 Wallace Computer Services Inc.’s La Palma print operations, held their positions.
Trend saw an 8% jump in OC employees mainly because it added more corporate staff to oversee its three plants in OC, Texas and Florida, according to Nelson.
Wallace’s revenue was steady at $47.3 million for the year, and saw a slight 1% dip in workers to 186.
Newcomer Webtrend slid into the No. 3 spot, and bumped The Dot Printer and No. 5 Costa Mesa-based Creel Printing Co. down a notch.
The Dot Printer saw an 18% dip in revenue to $24.9 million and a 15% reduction in workers to 158. But Carson said through “cost controls and cost cutting we were able to protect our bottom line.
“The two biggest factors that are impacting our business right now are the general economic slowdown, which has yet to experience a clear recovery in the printing industry,” Carson said. “And there’s an unmeasured impact” on how Internet use will effect the demand for print.
Creel Printing saw a 2% drop in revenue to $23.5 million, No. 6 Tustin-based ColorGraphics Inc. held its spot with a 7% increase in sales to $20.4 million and No. 7 Anaheim-based Creative Press Inc. slid two spots with a 7% decline in revenue to $18.7 million.
Overall, two companies held flat in 2001, 10 showed single-digit decreases in sales, and seven reported double-digit drops.
No. 11 Brea-based Dual Graphics, which slipped from No. 8 last year, reported a 13% drop in revenue to $13.5 million and a 4% decrease in employees through attrition. President Jeff Joyce said though the company was down in volume “we didn’t lose any customers.”
“Their business was down so they weren’t able to spend as much money,” he said.
Incentives to Boost Sales
But Joyce said he’s starting to “see a pick up.” And to encourage customers to spend, Joyce says he’s adding incentives, such as warehousing and fulfillment services.
“We’ve been growing about 20% to 25% for the past five to 10 years,” he said. “It was really an adjustment for us.”
There were two new companies on the list, No. 12 Irvine-based Prime Mover and No. 29 Lake Forest-based International Color Posters. Two companies, Tustin-based Smith Lithographic Arts and Irvine-based L.T. Litho & Printing Co., dropped from the list because they didn’t make the revenue cutoff of $4.3 million.
The highlight: six companies on the list reported sales increases, including No. 26 Orange-based We Do Graph-ics Inc., with a 32% revenue increase to $6.7 million, and No. 19 Orange-based K & D; Graph ics, Printing & Packaging Inc., which saw a 13% jump in revenue to $8.1 million.
Montri Chew, K & D; Graphics’ chief financial officer, said the printer had been making a comeback early last year, recovering business it had lost in 2000 from the dot-com burst. Then Sept. 11 happened. But Chew said after a few months business came back.
“We’re poised for a pretty good year,” he said. Chew expects the company to post a 5% to 10% increase in revenue for 2002.
Last year, K & D; Graphics also added staff, though earlier in the year and in 2000 it went through some layoffs. The staff is now at 40,a 5% increase compared to 2000.
No. 24 Irvine-based Meridian Graphics also had a good year. The company’s revenue jumped 11% to $7.2 million and its worker count was up 29% to 45.
President Steve Ard said the printer opened new acc-ounts and hired some new sales staff.
“We’ve been able to keep quality up and prices aggressive,” he said. “We’ve been fortunate. People are using us and giving us repeat business.
“We don’t show any real signs of it letting up.”
Meridan is looking to add another press and expand to a larger office. Ard said he’s scouting space in Irvine, and possibly in Santa Ana and Costa Mesa.
“We don’t want to grow foolishly,” Ard said. “But on the other hand we don’t want to turn any business away either.”
His timing could be good.
Index Rises
The industry is holding on gains it made since the first of the year, according to the National Asso-ciation for Printing Leadership’s Printing Business Index, which hit 53.4 in April, up from its low reading of 33.4 in October (for more on the index, see page 23).
For the first time since fall 2000, the index has held above the 50 mark for two consecutive months. A reading above 50 means more printers report that business is picking up than say it is going down.
Locally, though, the jury is still out.
“We haven’t yet seen clear signs of a recovery,” Carson said. “We’re optimistic.”
