First Quarter of 2022 and Paper Shortages

The purpose of this article is to discover how the current landscape is affecting our industry. A survey conducted by the PRINTING United Alliance/NAPCO Research State of the Industry Survey, which discusses printing companies' projected outlook for 2022, will be presented. It will include how it affects Documation and other printing companies. Moreover, we will discuss ways Documation has and will continue to implement to protect our company against the disruption of the supply chain. This article will also review PRINTING United Alliance/NAPCO Research State of the Industry (SOI) Panel reports on how paper shortages affect us, and ways we can still strive during times of inflation.? ?

First Quarter’s Survey Results and How that Impacts Documation

In a survey done by PRINTING United Alliance/NAPCO Research State of the Industry Survey, there were a reported amount of 260 printing companies that participated in this survey from the United States and Canada. Among the industries represented in the survey were commercial printing, graphic and sign producers, apparel decorators, functional printers, and package printers/converters that had an annual sales range from less than $250,000 to more than $250 million. Based on the results, 64.3% of companies in the printing industry anticipate an increase in sales, but 37.5% foresee an increase in pre-tax profitability as a result to cost inflation, production disruptions, and other effects of fractured supply chains and labor shortages.?

Additionally, 92.3% of respondents mentioned continued shortages of substrates and 68.6% specified more expensive labor as their major concerns, as well as further increases in both. 54% of the companies reported a concern about maintaining profitability, while 50.4% asserted that increasing sales is a priority. 39.1% of all companies surveyed and 46.7% of commercial printing companies worry about losing clients to print alternatives due to production delays and sharp increases in production costs.?

There are multiple actions we have implemented to protect ourselves against the disruption of the supply chain. Actions such as administering ways to build inventory, working with our clients to meet their printing needs and explore base alternatives, making sure to engage with our suppliers, overseeing past material requirements, and encouraging inventory management to a vital position, can help improve and protect our supply chain (“State of the Industry Update”, 2022).

As a consequence of changes happening in the paper industry, at times we have difficulty getting the paper we need and the grades we require in the quantities necessary to meet customer requirements at the times they prefer. It is reported in the article written by Mark Hahn, The Target Report: Paper Industry in Transition-May 2022 m&a Activity, owners of printing and packaging businesses spend lots of time purchasing paper stock every day, and for many years, Documation has worked hard to increase customer orders with confidence in the availability of the necessary paper substrates on a just-in-time basis.

Documation has been buying any paper we can get whenever it becomes available and stocking it up. Although this seems like a great solution, it is important for us to note that it can become a problem because of the build-up in inventory and its cost. When stocking material, it occupies valuable space, which increases net working capital requirements. The good news is that this matter will not be running exceptionally long once hoarded paper reaches its equilibrium with available space and capital (Hahn, 2022).

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Paper Shortages??

Paper shortages in the industry are a nightmare, but it’s the number one challenge across the board. In Painful Paper Cuts Continue as Supply-Chain Shortages Persist, PRINTING United Alliance/NAPCO Research State of the Industry (SOI) Panel reports that 64.3% of respondents expect to see an increase in sales for the year. Furthermore, 47.6% expect to see their costs rise as fast as their sales growth through at least mid-year, if not longer. Panelists say they don't see an end to the problems anytime soon, since 93% expect shortages to continue through the end of 2022 and into next year (McQuiken, 2022).

Cory Sawatzki, VP of Purchasing for the AlphaGraphics chain, says, “Conditions will get slightly better over time. I believe the U.S.-based paper [manufacturing] will remain low from an availability standpoint, due to mills not reopening, or converting to board or brown. But some relief will come when overseas supply comes back. That will take time, and the fuel costs would be to watch the cost of shipping/freight here in the U.S. I think that 90% of the reason paper manufacturing here is not something people want to do.” ?

It is possible, from time to time, to find ourselves in situations where stock availability does not guarantee availability at the time of order. The availability of paper can change by the minute, and we cannot give customers concrete information until you place an order. Here are some steps you can take to ensure favorable outcomes for your print orders:?

• Understand all alternative papers and how they are different from each other.?
• Ensure you give your project extra production time and finalize print files and orders at least two weeks ahead of a regular deadline.?
• Continue to communicate with your Customer Service Representative on upcoming projects and print needs?

It is certainly not what we are expected to deal with nowadays, in which orders are ramping up again as the impact of COVID starts to dissipate. Although 2022 will be a challenging year for us, we believe that if we continue to innovate, embrace innovative technologies, and remain steadfast, Documation will see considerable growth in 2023 and beyond.??

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