Healthy 2005; raw material costs, increased expenses point to a challenging 2006 for manufacturers.
Though 2005 was a healthy year overall for manufacturers in the specialty printing industry, a soft fourth quarter foretold the challenges ahead in 2006, according to a new study released by NASMA, the North American Specialty Printing Manufacturers' Association.
Nine of every 10 respondents to the association's first Manufacturers' Business Outlook Barometer (MBOB) study reported gross sales increases in North America of more than 1% from calendar year 2004 to 2005, with 29% reporting sales increases of 11% or higher. Only 10% claimed sales were level at +/- 1%, while none reported a decline of more than 1%. The story wasn't quite as positive for gross margins (reported as a percentage of gross sales), although 62% still reported year-to-year increases in profitability.
During the fourth quarter of 2005, however, the picture changed as sales slowed and costs rose: Gross sales were either level or down for 35% of the respondents compared to Q3 2005, and only 38% reported increases in quarter-to-quarter gross margins. The reason for the change: More than half of those reporting a decrease in gross margin in the fourth quarter cited an increase in raw material costs or other increased expenses.
The MBOB study is designed to be a quick indicator of the health of the specialty-printing industry's manufacturing sector. Conducted by Robstan Group, the association-management firm employed by NASMA, the study compiles sales and profit data contributed anonymously by the association's members. NASMA plans to conduct the MBOB study quarterly.
In 2005, NASMA released its first Market Metrics study, charting detailed sales and manufacturing data for screen-printing consumables including graphics inks, mesh, and stencilmaking products. NASMA is conducting that study again in 2006, adding textile inks to the list of surveyed products. The association plans to add other categories of screen and digital equipment and consumables to the reports as its membership grows.
NASMA, based in Kansas City, MO, comprises 30 manufacturing companies in North America that supply the screenprinting, digital printing, and related specialty-graphics markets. NASMA research is available only to its members.