Industry Overview

The commercial printing industry in the US includes around 35,000 companies with $90 billion of annual revenue. Several giants like RR Donnelley and Canadian printer Quebecor World have multibillion revenues, but most printers considered "large" have annual revenues under $1 billion. The majority of commercial printers are small or midsized businesses that operate one production plant, employ fewer than 20 people, and have annual revenue under $5 million.  Despite continuing consolidation, the industry is highly fragmented; the largest 50 companies hold only about 30 percent of the market.

Competitive Landscape

Demand depends largely on the advertising and product needs of business customers. The profitability of individual companies is closely linked to effective sales operations. Large companies have scale advantages in purchasing materials like paper and ink, in serving large customers who have regional or national needs, and in making efficient use of expensive presses. But small companies can compete effectively by offering better local service.  Annual revenue per employee averages $145,000.

Digital technology is changing the competitive landscape of the commercial printing market. Prices for digital color pages are falling below offset printing prices and companies who fall behind in the shift to digital printing are at risk.

Products, Operations & Technology

Commercial printers produce magazines, phone books, labels, advertising brochures, catalogs, newspaper inserts, direct mail marketing pieces, corporate reports and other financial printing, training manuals, promotional materials, and business forms. (Book publishers and newspaper publishers are not included in this industry.) Most commercial printers offer four distinct services: design and other prepress services; actual printing; finishing (including folding, cutting, and binding); and fulfillment, which includes packing, storing, and shipping (often on a "just-in-time" basis). Other services can include packaging, database management, Web design, CD services, training, and consulting.

A typical commercial printer has different presses and binding equipment available to work on various types of jobs. The main printing process used is offset lithography, using either individual sheets (sheet fed presses) or continuous rolls of paper (web presses). Sheet fed presses print up to 16 pages of letter-sized product (a 16 page "signature") at a time, at speeds up to 15,000 impressions per hour. Web presses print 32 pages at a time at speeds over 40,000 impressions per hour, and are usually used for production runs of more than 50,000 copies.

Presses usually print in one, two, four, or six colors; some presses can print eight. Digital presses are still used primarily in specialty applications. Paper is the biggest individual manufacturing cost, often amounting to 25 percent of revenues. Printing papers are often coated, and are bought in sheets or rolls from distributors. Some customers provide their own paper, but most is bought for customers, with a modest price markup. Paper prices can vary significantly from year to year. Commercial printers generally don't keep large inventories of paper as requirements change from job to job. Instead, they rely on regional distributors to provide the many varieties and grades. Inks, films, printing plates, and cleaning solvents are other major material costs. The solvents used to clean inks off the presses can be a major air quality problem.

Major press manufacturers include Heidelberg and Komori for conventional presses; and Xerox, Hewlett-Packard’s Indigo, Kodak's Nexpress, and Punch Graphix’s Xeikon for digital presses. Large ink manufacturers include Sun Chemical and Flint Group.

Printing technology is evolving rapidly. Virtually all prepress work is now done with computers. Digital presses are still expensive and used mainly for special types of work, but the movement to an all-digital printing environment is occurring rapidly. Small printers may be unable to make the investments in digital technology.

Sales & Marketing

The largest single market for printing services is advertising, for newspaper inserts, magazines, and direct mail materials. Although some work may be done regularly for large customers under long-term contracts (magazines, product catalogs, and phone books), most is on a project basis, often after a bidding process. Work may be episodic and many printers keep extra presses to meet anticipated peak demands. Marketing is usually done by a traditional sales force calling on potential customers.

Commercial printing is a local business. Small printers can compete effectively with large ones because the small size and high variability of most printing jobs means that few economies are achieved by having larger presses. The high degree of personal attention that most print jobs require, such as client approvals of proofs and "press checks" during actual printing, means that customers prefer to use a local printer. Price is often a secondary consideration to quality and timeliness. Some types of printing, such as magazines and catalogs with large print runs, are more effectively handled by large printers.

Finance & Regulation

Commercial printers generally keep low material inventories and don't require inventory financing. Receivables are generally collected within 60 days, and are sometimes financed. Equipment is often financed, or is leased. Presses have become more expensive, though more versatile, because of computerized controls and enhancements.

Some printers have difficulty maintaining adequate workplace air quality standards, and emit pollutants into the air, mainly because of solvents in ink and the solvents used to clean ink from printing plates. Some printers also generate toxic wastes because of inks and solvents. Workplace safety may also be a problem, although the illness and injury rate has decreased rapidly in the past decade. Workplace regulations are enforced by OSHA and state agencies.

Regional & International Issues

Large amounts of the paper used by commercial printers are imported from Canada. Total paper imports to the US are close to $10 billion per year, of which $7 billion are from Canada.

Commercial printing is primarily a local business and imports and exports are less than 10 percent of US sales. China and Canada account for over half of all imports, while Canada, the United Kingdom, and Mexico are the largest export markets.

Human Resources

Production personnel in commercial printing plants include employees with special skills in operating complicated machines, and lower-paid, relatively unskilled workers. Average hourly wages are near the national average of $16. Fringe benefits are an additional 19 percent of wages. Although some printing jobs are directly concerned with presses, an increasing number are in prepress design and layout that make greater use of computer skills.

The number of people employed in commercial printing has been declining in the last five years, as more of the work has become automated. The industry’s annual injury rate is comparable to the national average for all industries.

Industry Employment Growth - Bureau of Labor Statistics

Average Hourly Earnings & Annual Wage Increase - Bureau of Labor Statistics