To get the facts on the supply chain crisis, PRINTING United Alliance recently launched the Printing Industry Supply Chain Conditions Survey. Nearly 200 companies, including commercial printers, graphic and sign producers, apparel decorators, functional printers, and package printers/converters, have participated to date.
Our survey confirms that the crisis is getting worse. For every substrate covered, reports that availability has decreased over the past 60 days far exceed reports of the opposite, with the highest percentages reporting declines in the availability of coated paper (84.8%), uncoated paper (79.2%), vinyl (62.6%), and plastics other than vinyl (55.7%). Moreover, majorities ranging from 96.7% for coated paper to 74.4% for textiles/fabrics and newsprint report prices continue to rise (see Figure 1).
For every consumable covered, majorities report supply has not diminished during the past two months, but is still tight enough to push prices higher. The most widely reported increases are for coatings (84.4%), plates (78.1%), and ink (77.6%) (see Figure 2).
Finally, 69.3% report overall supply chain conditions are deteriorating, while just 12.4% report they are improving. (Slightly more than 18% report conditions are not changing.) The “randomness” and “unpredictability” of supply chains — not knowing from week to week what will be available, when, and at what price — tops a long list of challenges, which includes the following:
As with all market upheavals, the effects of the supply chain crisis vary dramatically from company to company. Among companies we surveyed, 26.5% report revenue has increased so far in 2022 because of the crisis, 43.5% report revenue has decreased, and 30% report no effect on revenue. The average year-to-date increase in revenue is 14.2%, while the average decrease is 13.2% (see Figure 3.)
Who finishes on the right side of the market redistribution will depend as much on actions prior to the crisis as on actions taken during it.
Has a company built the healthy margins and cash flow required to maintain large inventories? Has it established strong relationships with diverse suppliers? Does it have pricing power? As resistance to price increases stiffens, can it offset operating cost inflation with productivity gains? Has it built a productive, flexible workforce that minimizes the effects of labor shortages?
As one company owner explained to us, “How we are protecting ourselves from the supply-chain crisis is not so much about what we are doing, but how we managed our company in the past years. Because we focused so much on financial stability by reducing or eliminating debt and building supplier relationships, we positioned ourselves to weather these types of scenarios.”
We closed our survey by asking when supply chain conditions are expected to improve meaningfully. As Figure 4 shows, 59.8% expect improvement in 2023 (nearly evenly split between the first half of the year and the second half), 18% by the end of 2022, 4.2% in 2024 or later, and 15.6% are not sure when to expect improvement. Less than 3% say conditions are already improving.
We will conduct the Printing Industry Supply Chain Conditions Survey every other month to monitor how conditions are changing, and to capture the full effects of the crisis on our industry, including how much print will be lost to electronic alternatives, and how many companies we are likely to lose.
For the most recent survey results, check the PRINTING United Alliance Supply Chain Resources page at printing.org/library/supply-chain-resources.
Andrew D. Paparozzi joined PRINTING United Alliance as Chief Economist in 2018. He analyzes and reports on economic, technological, social and demographic trends that will define the printing industry’s future. His most important responsibility, however, is being an observer of the industry by listening to the issues and concerns of company owners, executives and managers.Previously, he worked 31 years at the National Association for Printing Leadership. He has also taught mathematics, statistics and economics at various colleges.Andrew holds a Bachelor’s degree in economics f rom Boston College and a Master’s degree in economics — with concentrations in econometrics and public finance — from Columbia University.
In these unprecedented and uncertain times, PRINTING United Alliance and NAPCO Media are committed to providing the printing and visual communications industries with the most up-to-date resources on the ongoing COVID-19 situation. The staff is here to help you as we all weather this storm together.
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