Saturday, September 28, 2013

IRgA Quarterly Index for the Reprographics Industry - Blog publisher's comments about the Index

 Recently, the IRgA began distributing a newsletter via e-mail, and, in the announcement about the newsletter, the IRgA said that this newsletter will be e-mailed out every other Friday.  This newsletter contains nothing more than an intro to news-items that’ve already been put up on the IRgA’s web-site.  This is a service for those of you who are too lazy to check the IRgA’s web-site.  If you weren’t so lazy, then the IRgA would not have to waste time duplicating efforts to get news to you.  Is this attributable to industry folks being lazy, or is attributable to significant apathy in our community?

The IRgA also recently announced that it will be publishing a quarterly index.  Before I go further about the IRgA’s Index, I’d just like to mention that the IRgA Index is not sanctioned by Reprographics 101!

Here’s what the IRgA says about this new Index:

IRgA is starting an important new research venture, and needs your help! The IRgA Index will be a new quarterly measure of the industry. The main component of the IRgA Index will be a compilation of data about member businesses.

We are seeking 50 IRgA members willing to anonymously answer a simple four-question survey:

1) Is your business up, down, or flat the AEC segment?
2) Is your business up, down, or flat in the non-AEC segment?
3) Are your equipment sales up, down, or flat?
4) What non-AEC vertical market are you currently most successful in?

We will email this survey each quarter to the participating member companies and compile the resulting data regionally. The data will be aggregated; no individual shop's data will be identified.

An index will be created with a simple mathematical formula that will create a number indicating the growth in a segment, just as the monthly AIA Billings Index does for the architecture business. An index of 50 will indicate no growth; anything below 50 will indicate shrinkage; and anything above 50 will indicate growth.

In addition, a number of external data sources will be concisely summarized each quarter, such as Census Bureau housing starts data, National Association of Realtors home sales data, and AIA data.

The result will be a "snapshot" view of the reprographics industry that combines member data with external data to paint a complete picture of the current state and likely growth of the reprographics industry. Over time the index will also provide a historical view of the industry.

Member companies that provide data for the survey, and all Bronze, Silver, and Gold members, will receive a more complete compilation of the data. If you are willing to participate, please email IRgA Managing Director Ed Avis.

My comments about the IRgA’s Index, not even seeing the first Index report (or the other reports the IRgA explains will be forthcoming):

1.    50 firms are not sufficient to produce an Index that provides useful, meaningful information about what’s going on, revenue wise, throughout the reprographics industry.  There are several hundred firms active in the reprographics business in the U.S.

2.    The questions asked by the quarterly survey are “too simple” to provide useful, meaningful information as to how the reprographics industry is fairing on an overall basis.  The only way to truly track how the industry is doing on an overall basis would be to track sales data, sales revenue numbers!  Given the questions that participating reprographers will be asked to respond to – “are your sales up or down” – how does the answer to that help anyone understand how the industry is doing?  If you have 50 participants and 2 firms each compete in 25 different markets and 25 say business is up and the other 25 say business is down, all that will likely mean is that they are exchanging market share in their markets; that does not shed any light on growth or decline in total industry revenues.

3.    Are we as an industry that ignorant?  Many reprographers are timid about participating in surveys that ask for their sales numbers.  Why is that?  I must be missing something!  Even though responses from individual companies would not be shared with anyone, even if they were how would that possibly cause injury to any company?  If I know your sales are $2 mil or $3 mil or whatever, does that somehow arm me to go after your sales?  I’d have to know who your customers are in order to attempt to take business away from you, and I’ve never seen any survey that asks survey participants to publish customer lists or sales reports by customer. 

4.    Several years ago, published reports indicated that reprographics industry sales amounted to approximately $5 billion annually.  It’s my belief that reprographics industry sales are now in the $3-3.5 billion annual range. Could be lower than that.  If the IRgA is going to provide a meaningful Index, then make that an Index that tracks total industry revenues.  Anything less than that is useless … and can prove to be very misleading, especially for reprographers who are trying to gauge the future of their businesses.

5.    NAR and home sales and home starts data are not meaningful indicators of reprographics industry activity.  Most of the volume reprographers do (or, should I say, did) comes from the non-residential sector, not from the residential sector.

I applaud Ed Avis’ efforts to compile and put out information that will help reprographers understand the health of their industry.  But, Ed has never been in the reprographics business himself, and it is, therefore, up to reprographers to tell Ed what type of information they feel will be useful and meaningful to them.  Ed is heavily influenced by the IRgA Board, but they should not be the only ones providing input to Ed on the makeup of an industry Index.  Reprographers, please engage with Ed.  He has repeatedly asked for your help and for your suggestions.

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