Will Tomorrow’s Paper/Ink Price Increases Make Print Production Cost Prohibitive?

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An American Printer Commentary
By Andy & Julie Plata
Co-CEOs, the OutputLinks Communications Group

Will Tomorrow’s Paper/Ink Price Increases Make Print Production Cost Prohibitive?

The Notification

raised pricesWe received a press release recently from a global product supplier to the print and package industry that seems to indicate one more profit impediment for printers. The company’s PR was a notification that they are being forced to increase prices in the next few months.

What most caught our attention was the list of causes for the pending price increases.

  • Raw materials
    • Shortages of
    • Increasing uncertainty of availability   
    • Raw material increases
  • Supply chain
    • Worsening conditions
  • Inks
    • India and China reducing pigments and base chemicals manufacturing
    • Narrowing supplier base
    • Costs increasing
  • Stricter Environmental Regulations
    • Reduce availability
    • Increasing costs
  • Transportation
    • Rising costs
       

chart increaseAs a result, the supplier announced that they cannot absorb all their cost increases and need to raise prices to cover costs and maintain product quality and service.

The Print Provider?

How do print providers manage the 2019 plus the coming 2020 increases for ink, paper, personnel, utilities, equipment, cybersecurity …?

When it comes time for the print provider to increase their prices to cover costs and maintain product quality and service, will their clients be willing to pay those additional costs? In fact, many clients are requesting price reductions to help manage their cost of doing business.

Print providers sometimes have limited options when a supplier for parts, ink, or specialty papers increases fees.

However, print clients do have options. They can either reduce quantities (not suitable for the provider) or switch providers (even worse for the provider) or move from print to social media (bad for the whole print industry).

Mr. Mitarai, the chairman and CEO of Canon inc., often shares one of his early business lessons: "The primary purpose of any business is to make a profit. If you can't beat bank savings rates, your company has no reason to exist."


The Question Is

How will your company, or your employer’s company, be able to manage the consistently increasing cost of doing business in 2020 and beyond?

Thanks for reading.

Andy and Julie PlataPromoting print tech for the digital age,
Andy & Julie Plata
Co-CEOs, American Printer and the OutputLinks Communications Group

Stay tuned for our continuing Commentary on the changing print-tec industry environment and its effect on clients, employees, dealers, partners, and stockholders in the global print industry.

 

 

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