By Rick Barrett of the Journal Sentinel staff
Saturday, March 2, 2002

Wisconsin's printing industry will probably lose companies even as it comes out of the recession, industry experts said this week.

For some printers, the economic recovery could come too late, said Niall Power, president and chief executive officer of Printing Industries of Wisconsin, a state trade association based in Brookfield.

"I would not doubt that we will lose some companies," he said. "We have seen growth at some of the bigger shops, but some of the smaller ones are really hurting."

Printing is a $6.7 billion industry in Wisconsin that employs more than 47,000 workers. Wisconsin ranks eighth in the nation in printing volume, and Milwaukee and Waukesha counties together rank 11th in the nation among regions with the most people employed in printing.

With companies such as Quad Graphics and Color Ink, about one-third of the printing done in Wisconsin takes place in Waukesha County, according to the Waukesha County Economic Development Corp.

Markets for printed materials took a drastic hit the first two weeks after Sept. 11, with sales dropping 20% for more than 4 of 10 printers, according to a Printing Industries of America survey.

Following the attacks, a majority of printers believed it would take six months to a year for their markets to recover, said Ron Davis, chief economist for Printing Industries of America.

While the demand for printed materials such as annual reports and travel brochures has been down, some companies have geared up for more recession-proof assignments such as the printing of food and household item packages and store displays for well-known brands.

Those who have been able to afford it invested in new technology.

The Printery, in New Berlin, recently implemented a print proofing system that lets customers view proofs over the Internet. The new technology allows graphic designers to work on the same material simultaneously from multiple remote locations.

"With the advent of the digital work flow, the overall print production cycle has become more streamlined, but until now the proofing cycle has remained tedious," said The Printery's president, Craig Faust.

The Printery -- formerly known as Badger State Printing -- has 100 employees, $18 million in annual sales, and is part of Houston-based Consolidated Graphics.

The Printery's clients include Kimberly Clark Corp. and Madison-based Rayovac. In addition to printing, it offers services such as online storage of digital images and documents.

"Printers can't afford to be just printers anymore," Faust said.

In Sussex, Color Ink officials say business has picked up considerably in the past two months and that much of the increased volume is tied to a new printing press that can handle heavy materials and plastics.

Color Ink has about 115 employees and three production shifts in its 24-hour-a-day operation.

"We remain cautiously optimistic," said Tom Wiskerchen, Color Ink's vice president of finance. "There are no planned layoffs, and we have been able to dodge that bullet by cutting back on some employee hours."

Companies that manufacture presses and machinery used in the printing industry have felt the weight of the recession and are hoping for better business by the fall, said Bill Lichter, vice president of sales and marketing for LINK-Tech, a Pewaukee company that makes ink valves and ink meters for some of the nation's biggest printers.

"A lot of orders have been put on hold," he said. But, he added, LINK-Tech has just signed a deal with press-maker Heidelberg to supply the company with about $250,000 worth of ink valves a year.

Faster presses

The printing industry is being transformed despite the recession, Lichter said.

"What's happening is a lot of companies are buying bigger, faster presses and they're shutting down older facilities," he said. "There is >a reshuffling of the deck throughout the industry."

While business is lean, some of the area's bigger printing firms have pursued smaller orders that, in other times, they wouldn't have gone after, said Power, of Printing Industries of Wisconsin.

Previous expectations were for total print sales in the U.S. to increase about 3% in 2002 to roughly $169 billion. But several factors could keep print markets from reaching that level, according to Davis with Printing Industries of America.

Sales of printed advertising are expected to recover slower than the overall economy, Davis said. Profit, as a percentage of printers' sales, will probably be down to 1.9% in 2002, compared with 3.1% in 2001, Davis predicted in a recent forecast.

One outcome of the recession that printers might appreciate is that paper and labor costs should not rise significantly this year. Paper and employee compensation account for more than half of a typical printer's costs, according to Davis.

Wisconsin printers have cut the working hours for their labor force, and some have implemented layoffs, Power said.

"Normally, the printing industry runs a lot of overtime," he said.

There has been a 30% decline in the number of small print shops in Wisconsin over the past 10 years, Power said. Some small shops, especially, have struggled to keep up with the cost of new technologies.

Wisconsin's printing industry will recover from the recession, but it won't happen quickly, according to Power.