Top 5 Trends in Wide-Format for 2021
This year has once more been dominated by major issues that impact every aspect of our lives: from the ongoing pandemic, to political and social issues, and environmental disasters. But through it all, the wide-format and signage community continues to operate and continues to provide the services other businesses need to keep the lights on and the doors open. But that doesn’t mean print service providers aren’t impacted by the same trends. We sat down and took a closer look at the top trends impacting the market right now that you should be aware of and planning around.
- Supply Chain
Across every segment of the printing industry, supply chain issues have been slowly gaining more attention. Marco Boer, VP, I.T. Strategies, notes that earlier in the year, the wide-format space wasn’t as impacted by supply chain challenges as other segments of the industry, but that is changing.
“As we unevenly come out of COVID, we are starting to see supply chain issues pop up,” Boer notes. “For example, shortages of oil-based substrates are starting to occur as those industries struggle with labor (in the U.S., much of the raw material is produced in Texas, which is struggling with infections). We’re also starting to see some shortages of adhesives, grommets, etc., as the supply chain from the Far East is struggling to catch up with logistical container availability and tripling costs.”
At the inaugural Wide-Format Summit this past summer, Dave Gerharter, VP of operations for Circle Graphics, noted that “it’s good to be in an industry where everybody wants to help, but there’s only so much they can do.” All of the major manufacturers, he noted, have been doing their best to help shops get the materials they need to get jobs done, but they are facing the same challenges and are finding it just as difficult in many cases to find the necessary supplies.
One tip that Elaine Scrima, VP of Operations for GSP Retail, shared was to get creative with the vendors. She noted that they would buy a two-month supply from the vendors up front, so they knew the product was sold, but then deliver it in batches once a week to try and mitigate the challenge of where to store all of that increased inventory. Working with vendor partners to buy ahead can help relieve some of the difficulties around getting the necessary substrates for jobs when its needed.
And it’s not just the pandemic impacting the supply chain, either. Dave Brewer, chief technology officer for Image Options, noted at the Wide-Format Summit that cold weather in Texas last year had a major impact on the industry, that is still being felt today.
“When things shut down in Texas,” Brewer noted, “the petroleum plant went offline, it affected many, many things we deal with every single day. That is foam — we can’t get foam — we can’t get some of the chemicals we need for glue — you think about sticky, you want to get something that sticks to something, well, it has to have glue.” He notes that everything from sticky vinyls to foamcore boards are in some cases back-ordered by six months or more. “The challenge wasn’t just COVID, it was these other things that happened environmentally that we didn’t expect. Regardless of COVID, we’d be having some issues right now.”
The earliest we could see the end of some of these supply chain headaches, notes Boer, is the end of 2022 — so wide-format printers need to start planning ahead now. “Print providers have to plan ahead more carefully than ever before, and shoulder more of the inventory carrying cost than they’d like if they want to assure their customers they will able to deliver as needed,” he says.
Staffing challenges have been on the print industry’s radar for a while now, but the pandemic has accelerated them.
“Finding and hiring staff is an ongoing industry challenge and the pandemic has intensified it,” says Lisa Cross, principal analyst, NAPCO Research. “The PRINTING United Alliance’s August 2021 Print Business Indicators research reports that all printing segments are experiencing labor shortages.”
According to Cross, 68.6% of printers in general are having trouble finding enough staff. So, what are wide-format printers doing to try and mitigate that challenge? Cross notes that “Companies are taking action to attract workers, from increasing compensation, to expanding benefits, to offering flex time, but still can’t find qualified applicants with experience. This has prompted many providers with wide-format equipment to take on training their production staff to address skill shortages. Over half of the respondents to NAPCO Research’s Powering Up Your Wide-Format Workforce study support training programs or have initiated or increased in-house training.”
Boer notes that while this is a short-term problem for many, those who find success in the coming years should look at it as an opportunity. “As an industry, we are shifting from a volume-based to value-based business, which requires different skills,” he notes. “It’s a challenging period, but as Winston Churchill noted so many decades ago: ‘never waste a good crisis.’ Many print providers are starting to conclude they don’t want more manual labor, so they have no choice but to automate more. Inevitably, automation will replace rote-type jobs, such as loading/unloading substrates, and even finishing will become more automated. The goal now is to find labor that can add value to those jobs (make it easier for customers to do versioning, variable data, etc.) rather than just going back to what we used to do.”
Automation is something that Sean Riley, senior director, Media and Industry Communications at industry association PMMI, is also watching, although he notes that it brings problems of its own on the hiring front. “While increasing automation generally tends to reduce the number of employees needed at a given facility, it paradoxically increases the level of skill required. As a result, expanding automated features and processes often creates new labor needs and requirements, even while simultaneously eliminating others.”
Riley notes that training is what he is seeing as the solution many are embracing as well, with internal technical programs being the most popular way to cross-train employees to work across different segments of the company, followed by on-the-job training programs to get new hires up to speed quickly, external training programs to bring in new knowledge bases, online education options, and even internships as great ways to make the best use out of the already existing staff. He also cites reverse mentoring as a great program as well, where younger employees mentor older colleagues on new technologies and equipment.
To add even more complexity to the situation, many long-term employees are starting to look elsewhere as well, since they feel that new hires getting paid as much as they are for years of hard work is unfair. They will look to take advantage of the same hiring demand and opportunity for larger wages.
“We have been very fortunate. We have an awesome team here at FireSprint and our turnover is very low,” notes Gene Hamzhie, co-owner of FireSprint. “Similarly to the supply chain challenges though, finding new staff isn’t impossible, it just requires more time than we used to need to put into it. We’re more proactive with the candidates we get. It’s more of a two-way conversation now. Personally, I like this better. Applicants are more likely to speak their minds quickly in an interview, which gets us to a mutual decision faster.”
While some of those pressures driving wages higher will start to ease off toward the end of 2021 and into 2022, don’t expect there to be a significant shift in this trend likely until 2023.
- Pricing Pressures
Across the board, prices have increased along with the shrinking supplies, making it not only harder to get the necessary materials to run jobs, but more costly as well. Boer notes that for paper alone, pricing has seen double-digit increases in the past 12 months, with some sectors even seeing increases of as much as 5% every month, which isn’t sustainable long term.
“Those costs are mainly being passed on to customers, as it is not sustainable for print providers to cover those increases from their profit,” he says. “The fact that those substrate cost increases impact all print providers equally gives some cover to pass them onto customers.”
“We’re seeing at least a 10% increase on everything,” notes Hamzhie. “Most increases are closer to 30-40% over the past 16 months. We have done all we can to prevent raising pricing from bringing in more inventory, to testing alternatives. We have had to pass a few price increases on, but were able to absorb many of the smaller ones. I’m still hopeful that things will level out a bit in the near future.”
One of the biggest challenges around pricing, with the market so volatile, is trying to forecast and estimate jobs that might not be produced for several months.
“Some print providers are including anticipated price increases in their quotes, and if the substrate cost is lower than expected at time of printing, they will credit a customer for future work,” Boer notes.
Another differentiator allowing wide-format and signage printers to increase prices a bit is for services like faster turn-around times — when they can. The ability to provide a job promptly hinges on having both the stock and the capacity to run a job immediately, but when those stars do align, it can be something a shop can charge a premium for, helping ease some of the pricing pressures.
- Capital Equipment Investments
It’s a hard balance to strike, making the call as to what equipment to upgrade, and when to do it. It can be tempting to push investments off in climates like the past two years, when pricing pressures are high, and work is unpredictable. But the reality is that pushing off investments too long can put a shop at a deep disadvantage when things do start to improve, allowing competitors to jump ahead, and lead to customers finding other alternatives.
Cross notes that in a recent survey, 56% of respondents plan to invest in new wide-format equipment in the next 12 months, with almost half of those specifically eyeing a UV-curable flatbed printer to offer a more versatile range of large-format products.
Boer notes that those with healthy balance sheets are also looking at this as an opportunity to invest in equipment with more automation across the board, allowing them to reduce labor costs and remove touch points where possible. He notes, “while less expensive hardware is still selling well, the larger capital equipment investments remain uneven.” Expect that trend to continue well into 2022.
Given the current state of the world, the COVID-19 pandemic is still a trend that is impacting every facet of every business. On the surprisingly positive side, Cross notes that, “61% of survey respondents that print wide-format print graphics report that the COVID-19 pandemic strengthened their customer relationships because they pivoted to new products that addressed emerging client needs.” That ability to be flexible and offer new products and services, has led to much deeper relationships that will last far beyond the pandemic, moving those shops to a trusted partner status.
- Bonus: Digital Signage
While it’s not impacting wide-format and signage producers heavily right now, one trend Boer is keeping a close eye on is digital signage.
“Unlike many document applications, there has been little pressure from electronic communication alternatives to wide-format signage,” he notes. “LED-displays have made significantly less in-roads into the signage business than some people had expected, for both economic and pragmatic reasons. Ultimately — meaning 5+ years in the future — I think what we’ll see is greater diversification of signage into fabrication, of LED-displays incorporated into fabricated signage, etc. ‘Anyone’ can print a sign, but only the skilled will be able to add value to that sign. It is those print providers who will prosper.”
At the end of the day, notes Cross, demand is returning, and buyers have repeatedly responded to surveys stressing that they want to do business with print providers who possess not only strong technical capabilities, but who also take the time to understand their unique needs and offer solutions to their problems.
“Wide-format graphics are powerful communication tools, compelling marketing vehicles, and effective décor enhancers,” Cross says. “With today’s print technologies, nearly every surface can carry a message or image. Opportunity is limited only by imagination.”