The
Business Ledger -- Overseas Printing Threatens U.S. Market
BY MARK THOMTON
Staff Writer
The $160 billion U.S. printing industry is feeling the pressure of
overseas competition, as best-selling books and even Bibles are being printed
in Asia at a third of the cost.
The Chicago area has the world’s
largest concentration of printing companies, with Elk Grove Village boasting
more printers per capita than any other city in the world.
However, a
growing Chinese printing industry is competing for a stake in what once was
solely U.S. territory. While it hasn’t been a threat to time-sensitive
publications, mass-circulated books and annual catalogs are increasingly being
printed overseas at a fraction of the cost because the slower turnover time
allows for it.
For the first half of 2004, the surplus in printed
materials trade declined by $75 million, a 38 percent decrease compared to
2003, the printing industry consulting firm Strategies for Management, Inc.,
reported in its study, “A Critical Look at Offshore Printing.”
Ten years ago, the U.S. had a 72 percent surplus in books and printed
matter; today it is barely more than 16 percent, the report said.
As
numbers continue to decline a few printers in the Chicago area are experiencing
a loss in revenue.
”Over the last two years a lot of competitors
have jumped into the field,” said Joe Orlandino, director of sales and
marketing for Edge Publishing in Chicago’s Bridgeport neighborhood.
“Our newest competitors send stuff overseas. I cannot compete with
that.”
Orlandino estimates that he has lost around 20 percent of
his business to publishers who have decided to ship overseas. He claims the
portion of his company that has been hit the hardest is catalogs, brochures and
directories for local chambers of commerce. By aligning with a publisher who
ships overseas, chambers are getting a greater return on advertising revenue
than Olandino’s firm can offer them.
“I find it reprehensible
to go to a chamber event and hear people say buy local, when really a lot of
them are jobbing out services overseas,” said Orlandino. “When
confronted about it they stick their head in the ground. They act like they
don’t know or don’t want to know.”
A simple Google
search of “Overseas Printing” brings up numerous advertisements
selling printing services for 30 percent less in China. It’s no wonder why
some publishers are deciding to move the process across the
Pacific.
“The industry is being affected and part of it is our own
fault,” said Steve Johnson, president of Carol Stream-based Copresco.
“To print something in China it takes eight to ten weeks, but to print
something in the U.S. it takes four to six. We take too long of a lead time so
people start to look offshore. We need to improve our environment.”
Copresco has found a niche in which it does not face competition from
China. While it does print books, it only handles specialty publications or
advance copies that can be printed in small-volume runs in a short period of
time. Essentially, says Johnson, it’s “on-demand”
printing.
“If you are going to print 50,000 units then you are
going to go to overseas, but if you only need 500 copies by next week, then you
come to me,” he said.
Johnson said it has even become difficult to
find book printers in the Chicago area because taxes and labor costs are too
high. Downstate printers can offer printing at lower costs.
Jeffrey
Johnson, CEO of Tyndale House in Carol Stream, a Christian publisher, says that
even Bibles are being printed overseas now.
”In my experience that
is happening (overseas printing) especially with four-color products,” he
said. “And in some cases Bibles are being printed overseas.”
Johnson acknowledged that he has had Bibles and children’s books
printed overseas and that the pricing was better than anything available
domestically and that the quality of the product is usually just as good as
what is turned out here.
However, there are certain risks that are
assumed when working over seas. The printing industry is usually seen as a
collaborative business, but when books are being printed in Hong Kong, it is
hard for a publisher in Buffalo Grove to give his input.
“Working
overseas is a different animal,” said Copresco’s Johnson. “There
are certain risks.”
Johnson recalled an incident in which a
colleague had a shipment of 50,000 units come into Los Angeles, only to have a
set of pages missing in each book. Legal remedies for this kind of thing are
much murkier as there is no recourse other through Chinese
courts.
“You are forced to make print run decisions where you
can’t react quickly,” said Tyndale’s Johnson. “You give
yourself more sway if you print in Crawfordsville.”
Nor are
Chinese printers subject to American quality standards.
“The
quality is fine,” said Niall Power, president and CEO of The Printing
Industry of Illinois-Indiana Association (PII). “What we don’t know
is in the case of children’s books, what kind of paper or chemical or ink
they are using. Children tend to put things in their mouth. They don’t
have as stringent of controls. That could become problematic.”
Despite its drawbacks, the bottom line difference in price of 30 cents
versus a dollar is usually enough to lure some publishers overseas.
Now
domestic printers will have to try to reinvent themselves to compete with this
new competition. Experts agree if they can’t compete on price, it will
have to be on service.
“A lot of printers are trying to establish
stronger customer relations and do more than just print,” said Ron Davis,
chief economist for the Printing Industries of America (PIA). “They are
trying to speed up the print production and delivery. They see that as a way of
competing.”
Tyndale’s Johnson has noticed this trend and found
it to his advantage.
“Domestics as well as Canada have gotten more
competitive to the point where it can be worth doing it here to avoid long
turnaround and other risk,” said Tyndale’s Johnson. “We did a
four-color children’s book first overseas and the cost was great, but for
other reasons we then went to Canada and it was better.
”It
(Canada) can’t match it for price, but it can make it competitive and we
were willing to pay more for better availability and turnaround.”
On the whole, the American printing industry has not really felt
threatened by overseas competition, because right now a certain portion of the
business has been affected.
However, experts agree that trends in the
book-printing sector will continue and are not likely to halt. In fact, it is
still possible that other portions of the industry will be affected down the
road.
For now the U.S. still exports more than it imports. PIA’s
Davis said that last year there was a total of $4.2 billion in imports and $4.6
billion in exports. Of the imports, $1.4 billion was in the book industry, the
largest portion of it.
Still, with cost always a concern, and if time is
not an issue, companies will more readily look overseas.
“We asked
our members, which is 8,000 companies, if their customers were beginning to
look for global sourcing, and 39 percent of them said ‘yes’,”
Davis said.
But as the PII’s Power said, that is simply the world
in which we live.
“We live in a global economy,” he said.
“It’s not right to say we can export and not import. From a global
standpoint it’s a poor argument.”
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