What will 2020 hold for reprographics firms? The predictions from observers of the industries APDSP member firms serve vary from field to field. Here are predictions for the AEC market and the advertising/signage market, both important to most APDSP members.
Architecture, Engineering, Construction
The traditional AEC segment is still the dominant market for most APDSP members. Printing of E-size drawings is definitely down from years ago, but smart repro shops have made up for that by offering other services, ranging from workplace signage to safety supplies to RFID tracking services. Whatever services they offer, a strong AEC market is good for the repro industry.
Here are summaries of reports from several AEC industry observers:
AIA Consensus Outlook: The American Institute of Architects (AIA) creates a useful report twice a year that combines the outlooks from several sources, including Dodge, Moody’s, and Wells Fargo. The most recent version, from last July, predicts a 2.4 percent increase in non-residential construction and a 1.1 percent increase in commercial construction in 2020.
The AIA Consensus report offers rather in-depth analysis of a number of trends affecting construction. They note that business confidence scores have dropped to Great Recession levels, driven by anxiety over trade issues and corporate debt. On the other hand, consumer confidence remains high, likely because of low unemployment and low inflation.
This paragraph reprinted from the report discusses some concerns coming from architecture firms:
“In spite of these emerging concerns in the broader economy, the construction sector has largely shown continued healthy conditions. Recently, however, U.S. architecture firms have been sending off worrisome signals. After a strong January reading in the AIA’s Architecture Billings Index, there has been a period of softening. Since February, ABI readings included one fairly significant decline plus other essentially flat monthly readings. This has been the softest four-month period for the ABI since the last recession. While other indicators—project inquiries and new design contracts—have not been as worrisome, this recent volatility in the ABI has generated concern for the construction outlook.”
There is a lot more to this report. If you’d like to read more, click here.
Dodge Data & Analytics: According to the 2020 Dodge Construction Outlook, overall U.S. construction will drop 4 percent in 2020 compared to 2019.
“The recovery in construction starts that began during 2010 in the aftermath of the Great Recession is coming to an end,” says Richard Branch, Chief Economist for Dodge Data & Analytics. “Easing economic growth driven by mounting trade tensions and lack of skilled labor will lead to a broad based, but orderly pullback in construction starts in 2020. After increasing 3 percent in 2018 construction starts dipped an estimated 1 percent in 2019 and will fall 4 percent in 2020. However, [this] will not be a repeat of what the construction industry endured during the Great Recession. Economic growth is slowing but is not anticipated to contract next year. Construction starts, therefore, will decline but the level of activity will remain close to recent highs.”
Some specific construction markets that Dodge included in their report are commercial buildings, which they predict will drop 6 percent in 2020; public works construction, which they think will grow by 4 percent; and institutional construction, which they think will remain even with 2019 levels.
Click here if you want to read more of the Dodge report.
Deloitte: This large accounting and consulting firm issued a report that looks at how certain aspects of construction will fare in 2020. Among their predictions is the continued rise of digital technology, both in terms of building information and personnel management.
The paragraph below, reprinted from the report, outlines what Deloitte predicts for digital technologies on construction sites, and offers some insights for innovative reprographics firms looking to expand their services to traditional AEC customers:
“Digital technologies bring with them some important impacts to E&C work: who does it, how it is done, and even where it is done. Geolocation, remote site monitoring, personnel location tracking, live mark-ups, and the seamless transfer of as-built information can all optimize communications at connected job sites and improve worker safety. One of the upsides of workforce safety digital tools (e.g., wearable sensors) is the mitigation of risk on the job site, which could cause significant changes in costs related to liability and insurance in the future.”
Click here to read the whole report.
Advertising/Signage/Banners
If you print large-format color – and most APDSP members do – 2020 should be good for you. Why? Mainly because of politics. If you print banners, posters, lawn signs, or any other stuff that politicians need, you’re in for a windfall in 2020.
“We forecast an 11th year of growth in 2020 as record political spending will generate an all-time high of $5 billion in ad revenue and mitigate the effect of the expected economic slowdown,” said Vincent Létang, executive vice president of global market intelligence for Magna, a division of advertising agency IPG that researches markets.
To read more about Magna’s report, click here.
If you print signage for retail stores, the outlook is mixed. Online stores have pressured bricks-and-mortar stores for years, and that’s not changing. However, some trends seem to point towards more stores opening in 2020, and many existing stores striving to attract customers with more “experiences.” Both of these trends point towards more business for sign makers.
The two paragraphs below, which discuss the fact that young people like shopping in stores, come from a report from CBRE, a real estate services firm:
“The shifting demographic focus has been mainly on the baby-boomer ‘silver tsunami’ and millennials in recent years. However, Gen Z is a cohort with tremendous spending power positively impacting brick-and-mortar retail, especially shopping malls.
“Gen Z (born between 1997 and 2010) has officially entered the economy and will continue to drive traffic back to malls in 2020. This generation spends $143 billion per year and influences an additional $460.5 billion in spending by others, according to eMarketer. They are digital natives who consume collaboratively using all digital platforms to research, cost-compare and connect.”
Click here to read more from that report.
And here’s a paragraph from a report from the National Retail Federation, which discusses the importance of experiences in shopping. The concept of “experiential” shopping doesn’t necessarily mean more signage, but signage is required to get customers into the store:
“The retail industry has been talking about experiences for decades — remember ‘The Experience Economy,’ written by Joseph Pine and James Gilmore in 1999? Today it’s imperative — regardless of whether a company is selling apparel, personal care products or tires. Customers can buy just about anything online; snag their attention with storytelling and hands-on interaction and your “audience” will remember the experience.”
Read more by clicking here.
The bottom line? This year should be fairly steady from a demand standpoint, with some strong areas. As always, firms that pay attention to trends and adapt as needed will do better than firms that sit on their hands.