Tuesday, September 14, 2010

What's the future look like for Reprographers and for the Reprographics Industry?

Your thoughts and comments are invited.

One of the websites I frequent is www.whatheythink.com. Although that website is not devoted to the "reprographics" industry (it is devoted to the "printing" industry), many of the articles on that website (and the discussions provoked by various articles) do touch on issues that are important to the reprographics industry.

About 3 weeks ago, one of the articles that appeared on whattheythink.com was this one:

Ramblings, Whinings, and Admonitions
By Dr. Joe Webb on August 25th, 2010

In one of the paragraphs in that article, Dr Webb said this:
"This is why focusing on economic conditions as the catalyst for improvement in print volumes is misplaced. We’re having a communications revolution playing out in handheld devices that is in many ways more powerful that the introduction of the telegraph, radio, and television. Technology is stronger than the effects of any general economic upturn or downturn."

On July 12th, I posted the most recent "A/E/C Repro PPoP Index" (an index that attempts to track sales of "plans printed on paper". Comparing the index-readings, Q2 2010 vs. Q2 2007, the index-reading "says that" sales of plans-printed-on-paper are down by almost 50% (index-reading .60 vs. index-reading of 1.18). If that index reading is even remotely close to what's really happened to revenues from plans-printed-on-paper, that's a very, very scary situation for reprographers, and I don't think that any reprographer would disagree with that statement.

Many of the articles I've posted over the last two years have been directed towards "what's going on in the AEC industry" (factors affecting the health of that industry, such as the availability of financing for real estate development projects, etc), good news, bad news, etc. Some of the articles I've posted over the last two years have been directed towards changes in technology that have, or will have (or may have), an effect on "recovery" from a reprographer's perspective.

During past recessions that negatively impacted the AEC Industry and the Reprographics Industry, A/E firms got hurt and Reprographers got hurt. But, when those recessions went by the wayside, A/E firms recovered and Reprographers recovered. "Recovery", back then, was "simply" a matter of Owners and Developers getting back to business, creating projects, getting financing commitments, hiring A/E firms .... and, yes, Reprographers' printing revenues increased as our customers' project-related activities increased. In other words, "recovery" for reprographers was a foregone conclusion - when the AEC industry got healthy, so did we. And, based on my experience (or, I should say, due to my age and exposure), after the recovery was in full swing, we (reprographers) always grew larger (I'm speaking about our sales revenues from printing plans and specs) than we were before "the last recession" started. In other words, it was almost a given that reprographers, who managed to make it through a recession, experienced excellent sales and profits at some later point in time (after a recession was done and over with and a recovery was well underway.)

Over the past year, many reprographers I've spoken to (or have heard from by e-mail) appear to be very concerned that, after this current recession (which I've referred to as a depression) in the AEC Industry is done and over with, the reprographics business will not recover the same way it has after past recessions. The term "paradigm" shift comes to mind. Some reprographers are saying that, because this recession has been so hard and deep, customers have changed their ordering habits; customers are ordering far fewer "printed" sets of plans and specs and are ordering more sets of CD's (or, worse yet, are bypassing reprographers and simply distributing files on their own - to project participants, GC's, Subs, etc.) And, technological advancements, such as paperless permitting (check out the City of Atlanta) and further developments in software targeted at project documentation and collaboration .... and BIM, are continuing to peck away at "the customer's need or desire to print". I find it difficult not to imagine, at some not-so-distant point in the future, an environment where plans and specs (and other documents related to projects) are hosted on a "project document collaboration site" and made accessible to (or are distributed, at the click of a mouse, to) PC's, MAC's and to jumbo-sized iPAD's (or similar display hardware) and where participants will use electronic pencils for mark-ups and comments, and where bidders will use software for take-offs (estimating.) "Some say" that we are (or are mostly) already there!

Simply my own personal opinion, but I do think that reprographers will recover from the current depression. But, I don't think that revenues from "printing plans on paper" will recover like they've recovered in the past. Technological advancements in hardware and software (and communications technology vis a vis anything that has to do with the Internet) are moving more quickly than at any time in the past, even in spite of the current recession. Customers are looking for faster, easier ways to communicate .... and faster and easier ways to communicate "information"; customers are looking at anything that will make their team members more productive, enable their team members to accomplish more work in less time.

Some in the reprographics industry say that this (what I said in the previous paragraph) points to an opportunity for reprographers. Reprographers have long been relied on (by customers in the AEC community and by customers in the RED community) to "manage information" and "distribute" information. Meaning, we do have "relationships" and that we have earned at least some measure of "trust." I do agree that this is an opportunity for reprographers.

However, as I said very recently to a friend (who has been involved in the reprographics industry for nearly as long as I have):

"Reprographers were all about printing and distribution of documents; even though we (reprographers) say we're in the document management and document logistics and "technology" business, reprographers, at their very heart, are printers. You are aware, I'm sure, that, even nowadays, over 85% of "a typical reprographer's" revenues are generated by "printing" and "finishing". When customers, for whatever reason or reasons, decide to print less (or, worse yet, stop printing), the reprographics industry becomes less relevant (or, worse yet, irrelevant), at least from a "reprographics" perspective. 5 years from now (perhaps less, who really knows), a reprographer who, years before, had 3 branches in a market and employed 100 people [e.g., back in the mid 1980's (when business was hot and heavy) or back in the middle of the 2000-2010 decade (when things were equally hot and heavy)], could easily wind up needing only 50 (or less) employees...... if printing continues to diminish as quickly as its been diminishing and if "all" that a reprographer is (mostly) doing (in the "new times") is providing and charging for document management, document oversight, and document distribution/logistics. Which kind of provokes the larger question; if "printing revenues" (the profit from those is what paid funded our salaries, our bonuses, our houses, our cars, our vacations, our perqs) are diminishing and are expected to further decline, or, worse yet, are expected to evaporate for the most part, then is it even going to be possible for the "reprographics" industry to remain relevant .... and profitable? I've never been able to predict the future, but if we simply take a look at what's happened in the small-format document space (since developments in that space always happen in advance of developments in the large-format document space), the future of "prints on paper" does not look outstanding. While I do believe that reprographers have "the relationships" (with those who do have needs for help with document management, document distribution, and document logistics, that doesn't necessarily mean (i.e., it is not "a given") that reprographers will be able to benefit from those relationships. The future of reprographics (or, I should say, the future for reprographers) is going to require a "reinvention" of who we are and what we do..... and how we are thought of. Reprographers who don't make the change may survive, but their companies will be a lot smaller, revenue-wise, profit-wise, than they were in the past. But, even reprographers who do make the change will very likely experience much lower revenues and profits than they achieved in the past. [(And, this is the major reason why "consolidation" will continue to happen in the reprographics industry; some of that consolidation will happen not because of "acquisitions", but from reprographers bailing out, closing their doors (the latter, if this depression continues another couple of years.)]"

Okay, sorry, that was a mouthful, for sure.

What are your thoughts?

1. Do you think that reprographers will experience the same rebound in revenues from "plans printed on paper" that they experienced after previous recessions were over and done with?

2. If you do not, then what do you think will happen to the size of reprographics companies (number of employees going forward vs. prior to the current recession)?

3. Do you believe that reprographers can successfully participate in the document management, document distribution, document logistics space, simply because they have "relationships" with participants in the AEC community?

4. Do you think that the reprographics business and industry is experiencing a "paradigm shift", and, if so, what do you see as the major factors causing (or that will cause) that shift?

And, please share any additional thoughts you have about "the future of the reprographics business and industry."

Please either e-mail your comments to me or post your comments as "comments" on my blog. My e-mail address is joel.salus@mac.com For those of you who e-mail comments to me and who do not want me to reveal your name if I do a follow-up article, then simply tell me that you want to remain anonymous, and I will certainly honor your request to remain anonymous.

Thank you.

p.s., please let your friends and associates (and competitors) in the reprographics business and industry know about "Reprographics 101".

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