Business Indicators to Gauge COVID-19 Effects on Graphic and Sign Producers
COVID-19 has led to large shutdowns across the country, which of course has led to an unprecedented economic downturn. Social distancing guidelines that have forced many retail spaces to close their doors and many events to cancel have drastically reduced business for graphic and sign producers. According to a new research program initiated by NAPCO Research and the PRINTING United Alliance, sales fell 52.3%, on average, over a 30-day period (from mid-March through mid-April) for graphic and sign producers. While a few firms reported an increase in business, more than 87% saw their sales decrease in the last 30 days. Business in this segment will improve as the economy reopens, but the only thing these firms can do is wait, as it will most likely be a slow and calculated process.
To help printing companies navigate through the current crisis to the recovery on the other side, NAPCO Research and the PRINTING United Alliance launched the COVID-19 Print Business Indicators Research, and will report the results of this ongoing survey on a continuing basis. This survey tracks key indicators across a cross section of printing companies, including commercial printers, graphic and sign producers, apparel decorators, functional printers, and package printers/converters. Click here to download the first full report including all printing industry segments surveyed.
This article focuses on key findings from graphic and sign producers participating in the first survey. Our second survey is now in the field and open for any graphic and sign producers to participate. Here is a link to take the 3-5 minute survey.
Index Reports Business Activity Falling
The research tracks current and leading business indicators. For the current period, the index of current business indicators (including sales, production, employment, prices, and pre-tax profitability) for graphic and sign producers closed at 20.3. A reading below 50.0 means more printers report activity is falling than report activity is rising. This index measures the breadth of the contraction, and determines when it has hit bottom.
The index of leading business indicators (including work-on-hand, quote activity, production payroll hours, and confidence) closed at 22.3. A reading below 50.0 means more printers report these forward-looking measures of activity are falling than report they are rising. This measure is used to identify the first signs of recovery and how recovery is likely to progress.
It is not shocking to see that graphic and sign producers - many of whom who serve the event and retail sectors - have lost much of their volume due social distancing guidelines. “We are in the event and retail-space business, so most of that spigot shut off,” stated one respondent.
Another has lost all retail related business, but has maintained production elsewhere, “Retail decreased to zero. Interior decor has stayed the same,” the respondent noted.
While many graphic and sign producers lost production volume from their typical clientele, some have added COVID-19 related work to fill the void. One respondent who has managed to replace most of his lost work said, “We have lost about 25% of our event and trade show graphics, but have replaced that work with COVID-19 related signage.”
While some are able to maintain current sales levels, others who have had to adapt have only recovered a portion of their business. “The current crisis has had a huge impact on our business. We have added some COVID-19 work, but not enough to replace what was lost,” mentioned one respondent.
Business Was Solid Before COVID-19
Plenty of firms were on good footing before the social distancing restrictions forced much of the nation into shutdown. “Not only have we decreased, but we were on a huge upward trend before this,” mentioned one respondent.
Another added, “Work has been steady, but we are noticing fewer calls and emails. When the shutdown started, we had enough work to last four weeks. Concerned about next month.”
For others, work is still there, but it is a matter of time before jobs can actually be completed. “We are quoting a lot of work. But we are unable to install much of the graphics we are producing, so the invoicing is delayed,” voiced one respondent.
Some firms are not letting COVID-19 stand in the way of their operations, while still maintaining a safe and responsible work environment as one respondent reports, “We have expanded COVID-19 response kits, special zone distancing shields, and PPE equipment that allowed us to continue our operations, as well as increase sales and profitability.”
Those Invested in Events and Retail Among Hardest Hit
Many respondents were not optimistic when asked to predict business conditions over the next month. More than 58.0% expect business to stay the same (25.3%) or decline further (32.9%), while a mere 15.2% believe their situation will improve. Nearly 27.0% aren’t sure what to expect.
As the economy continues to reel with the effects of COVID-19, there are many more questions than answers when it comes to figuring out when the U.S. will begin to see its recovery period. According to The Wall Street Journal Economic Forecasting Survey, economists and analysts believe second quarter GDP will reflect the worst of COVID-19 effects, with GDP declining at a 25.3% annual rate, followed by upticks in the third and fourth quarters of 6.2% and 6.6% respectively.
While the drop may seem steep, there is potential for a quick recovery. Although many Americans are familiar with the length of the Great Recession, it is important to note that not all recessions are the same. When many large financial institutions failed in 2008, firms were forced to close their doors for good, and many jobs were lost. Now, many businesses were forced to close and furlough workers, but a majority of these jobs will be available again once virus concerns are eased.
Participate in the COVID-19 Print Business Indicators Research
In today’s unprecedented business environment, making decisions based on facts has never been more important. In the weeks and months ahead, reliable industry business indicators will be essential for monitoring what’s happening in all printing industry segments. The COVID-19 Print Business Indicators Research is an essential resource for monitoring industry conditions and the NAPCO Research and PRINTING United Alliance research teams invite you to join our business panel and contribute to the research on an ongoing basis. Companies that join the panel will receive exclusive in-depth analysis reports (not made available publicly) of our COVID-19 research findings.
David Wilaj reports on economic and industry trends which aim to help printers navigate an ever-changing business environment
He joins the Printing United Alliance research team after beginning his career at Printing Industries of America where he analyzed, reported and spoke on key trends in commercial print and aided in the revitalization of the historic Performance Ratios program.