The 2008 meltdown resulted in several strategic changes in the printing industry and direct mail in particular.  Since print volume decline was forced upon us, the only short-term controllable variable for managers was cost-cutting.  This took on several forms which are still with us:

• Head count reduction---asking fewer people to cover the same number of positions, and
• Equipment idling and plant closures---this plant and equipment will never be seen again.

It’s what economists call “creative destruction”.  Witness the death of Sanden, Manroland  and Muller Martini as web press manufacturers.

For those mailers and suppliers with the needed capex budgets, this has led to mergers and acquisitions (five of the top 10 printers in 2007 are no longer free standing companies), and an acceleration toward digital presses and new litho equipment with faster speeds, shorter makereadies and integrated imaging heads.  The net result of this increased output capability---far exceeding market demand---pushes prices down, squeezing profit margins for even the most efficient plants.  For envelope manufacturers, the growth of digital 4-color mailer formats has added additional pressure, since of course, clients don’t hide a color mailer with a household specific targeted message inside an envelope.

The result is a trend toward even more M&A---bringing lettershop and distribution capabilities, for example, into plants that were once profitable as commercial litho only. 

For all of us, whether clients or manufacturing suppliers, the trend toward consolidation of suppliers, as a cost cutting measure, will continue.  For clients it speeds and simplifies the purchasing function (can you say reduced head-count?).  For most suppliers who don’t have all the capabilities on their own floor, fine-tuned volume based sub-contracting relationships open new doors for their sales force, allowing thinner profit margins on more functions to yield overall acceptable profits.

Companies who embrace this M&A / sub-contracting formula as part of a change strategy will survive and grow.  Those who don’t will eventually join that growing list of former industry players.