What happened to all the printing businesses??

The printing business has become so capital-intensive that the banking crisis of the last several weeks affects virtually every manufacturer, including printers. As short-term interest rates rose in response to a tightening credit policy, and banks’ reluctance to lend to each other, any manufacturing business with structured debt or a line of credit began to feel the pinch. From 9-15 to 9-18-08 the LIBOR rate (which many bonds are tied to) tripled from approximately 180 basis points (1.8%) to 540 basis points (5.4%). Every small business is feeling the effects of years of Wall Street greed, and unlike Bear Stearns and AIG, Uncle Sam isn’t coming to our rescue.

While printers produce a vastly higher quality product than 10 years ago, costs have not fallen as many thought they would. Equipment, facilities, insurance and energy continue to rise in cost faster than our clients can realize a cost savings. The client continues to get a much better product more quickly, but not at a lower price, unfortunately. Rising short-term rates are just one more obstacle for the printer, and the printers’ clients in realizing a lower-cost product. No wonder there are ½ as many printers as 10 years ago, and the ones remaining are producing larger volumes, and probably carrying more debt as a result of growing business.