Does Repro Work Trend with AEC Work Anymore?

By Ed Avis

            In the January 4 edition of AEC Today, I wrote about my predictions for the reprographics industry in 2019. I based my article on the traditional concept that reprographics will follow the construction industry. When there’s lots of construction, there’s lots of repro work. (You can read that article by clicking here.)

            But after that article came out, I got an email from Joel Salus. Salus has deep experience as a reprographics company owner and operator, and as a consultant to others in the field, and I respect his opinions greatly. Salus wrote the following:

“Noticed your article in the newsletter - outlook for 2019 - and wanted to give you my SWAG opinion on trends/outlook.

“Because of ARC’s size and geographic reach, I do consider ARC’s results to be sort of a barometer on our industry, and I, therefore, don’t think it is unreasonable to look at Construction Industry (CI) ‘spend’ vs. ARC revenues, from a trend perspective.

“I’ve been involved in the repro industry long enough to have experienced several recessions - the effects of recessions on our industry (sales-wise). It USED TO BE that reprographer revenues tracked construction spending. As CI activity went up, our sales went up, as CI activity went down, our sales went down. (This comment is based on my 48 years in our industry.) Years ago, before “digitization” began to impact our industry it was a given that our sales would recover almost in direct proportion to construction spending. THAT IS NO LONGER HAPPENING. And, I suspect that is no longer happening because of the impact of digitization. What I’m seeing is that A/E/C customers are printing less on a per-project basis. They are using digital tools - this use is increasing each year - and this is enabling A/E/C customers to print less (per project) (fewer prints per project).

“When you look at the file I’ve attached (Editor’s note: click here to view this file), you will notice that ARC’s revenues peaked at just over $700mil. When you look at Construction Spend, you will notice that the total CI spend for 2017 was well over the peak CI spend pre-recession. But, you will also notice that ARC’s revenues have NOT recovered. While I’m definitely not a rocket scientist, SOMETHING (perhaps a variety of factors related to ‘digitization’) has had a very severe impact on Reprographer revenues. Given what I’m seeing, our industry’s members can no longer rely on construction spending as a predictor of their forward revenues. I do expect that further digitization (tools and such) are going to have a negative impact on our industry’s revenues, even if CI spend increases.”

            Salus further suggested that I check with some other APDSP members about what their experiences have been in that regard. In other words, regardless of whether ARC is experiencing this trend, are independents noticing it, too? So I surveyed our members on this topic.

            The results were a little surprising: Of the 35 members responding, 15 of them (about 43 percent) said that their plan printing work still corresponds proportionately with construction. Nineteen of them (about 54 percent) said plan printing still corresponds with construction, but not as strongly as in the past. Only one respondent said plan printing does not correlate at all with construction.

            To get a little deeper, I interviewed some of the respondents. Those interviews explained one key thing: Plan printing may be down, as Joel noted ARC has experienced, but the correlation between traditional reprographics and construction is still there. It’s just that fewer plans are being printed overall, regardless.

            “We’re definitely tied to the construction industry – if it dies, we die,” said Bruce Schwartz, owner of ABC Reprographics in Denver. “Some of our larger building projects don’t print as much. They give their subs digital files, and they bring them to us for printing. And their using less sets to produce each building. But right now they’re building quite a lot. I would say we’re getting a little less from each client, but overall we’ve been pretty steady.”

            Another thing I learned from my interviews, and it’s not surprising, is that it’s a very local situation. ARC is a national business, so their plan printing trends follow construction in the macro sense. But for a small independent shop, the local market is all that really matters.

            For example, I interviewed Shirley Shaw, owner of Blueprint Express in Arroyo Grande,

California. She reported in the survey that traditional repro does not follow construction as strongly as before, and when we spoke, she explained that for her, that was an intentional decision.

            “I cannot let the construction industry dictate my success,” Shaw says. “The trend in construction absolutely affects the repro end of the business. If no jobs are going up, no one is getting plans. But my mindset for quite some time has been, especially these past five years, that this little business has to operate no matter what the construction industry is doing. We are the only reprographics business in our area, so it demands that we keep our doors open, no matter how few scans and prints we are doing, because it’s a 40 minute round trip for someone to go to the one of the bigger cities.”

            Eric Schalla, account manager of Tri-Co Reprographics in Santa Barbara, California, says the tie between his business and construction is still tight, but, like Shaw said, some local factors are affecting plan printing overall. For example, the city and county recently started allowing builders to electronically submit plans, instead of requiring paper sets (which helps confirm Salus’ hypothesis about digital plans eating into the print business). Schalla can’t say for sure that that is the key reason printing has dropped, but it plays into the equation.

            “While the correlation of construction activity and traditional reprographics printing is still definitely there (in other words, we’re still printing plans for new projects), we have seen a definite drop down in our high-production wide-format color and monochrome,” Schalla says. “Last year, in our only location in Santa Barbara, we saw a marked drop down from averaging 11,000 square feet per month from January to August, to a dropdown and stay down average of 8,500 square feet from September through December. While it’s not unusual to have low numbers during the holidays, we haven't seen consecutive months with low numbers in the past five years.”

            Another repro shop owner I spoke to, Christian Cummins, owner of Idaho Blue, was more confirming of Salus’ hypothesis:

            “Because of the way digital files are getting passed along to GCs, subs, owners, and building departments, they may never hit the doorstep of the reprographers shop. About how much less is the connection these days? I think there is still a good connection, but they might not think of us the same as the old days. With digital files, it is easy to pass the file around and do what you want with it. Plus most firms are only doing a few full sets and half dozen or so half size sets.”

            In the survey, I also asked whether less traditional AEC work – not related to plan printing – corresponded to construction. This kind of work could include digital file management, document archiving, spec printing, etc. Presumably, even though digital files have damaged the plan printing business, it should not have affected this side of the business as much. In fact, if digital file management and document archiving are solid parts of a shops business, then the move towards digital files should only increase this type of work, right?

            Well, not according to the survey. In contrast, of the 34 shops that answered this question, only six (about 18 percent) said that their non-plan-printing AEC work corresponds proportionately with construction activity. Eighteen respondents (53 percent) said there is some correlation, but it’s weak. And the remaining 10 respondents (29 percent) said that business doesn’t correspond at all!

            So I guess the jury is still out. Salus’ feeling that digitization has hurt traditional reprographics is definitely confirmed, and that’s not a surprise. And to some extent that means the connection between construction and the health of repro is weaker than in the past. But the connection is definitely still there.

            Feel free to join this debate by commenting below.