Book Manufacturing Outlook: Time for Clarity and Communication

The book printing market is experiencing high levels of demand and a continued resurgence among consumers for physical books. While a good problem to have, it could be a problem nonetheless as we move into 2023. While the U.S. may narrowly avoid a recession, it is possible that caution and risk avoidance will impact buoyant markets such as book printing, particularly when a pandemic boom led many publishers to build up strong inventories.

Kevin Spall

Kevin Spall, senior VP at Scholastic, offers a perspective on this from the publishing side, explaining: “Publishers are full, having overbought because demand was high and capacity was low. We bought inventory to be prepared. And now, as demand softens, we still have inventory. The need to reprint is less certainly than it was a year ago when the demand was just starting to spike, and those are not issues that are going to go away quickly.”

Notably, a deal that would have seen a seismic shift in the publishing industry — and subsequently the book printing market — was recently blocked by the courts, ultimately leading publishing giants Penguin Random House and Simon & Schuster to call off their proposed merger.

Demand has soared in 2022, according to the Book Manufacturers Institute’s (BMI) "State of the Book Industry 2022” report. The printed book market remains on an upward trajectory, continuing to build on the momentum of 2020, when COVID-19 kept people at home and interest in reading surged.

John Galligan

While a growing industry with increasing demand is positive, meeting that demand brings challenges amid an uncertain and volatile few years. “The industry is going through significant growth,” according to John Galligan, president of Bradford & Bigelow. He alludes to changes in traditional production schedules, adding: “It has gone through a seismic change because there just isn’t enough press and paper capacity to do all this work in six months of the year.”

Adi Chinai

Adi Chinai, president and CEO of King Printing, advises a pragmatic approach to current circumstances: “Some people may be thinking that this will continue forever, but we have to be realistic about the uncertainty in what’s coming. We don’t want to injure our industry by going over capacity again, and then fighting over every single order that we’re all looking to utilize to keep ourselves sustainable.”

Chinai wonders if this is the calm before the storm, or if these elevated book manufacturing levels are set to continue. However, he remains optimistic about the outlook for King Printing: “We’re continuing to invest in our business. We’re still bullish, and we still think that the market will continue to do well. But we are living in uncertain times, which changes the dynamic of how we have to operate.”

An outlook for the book printing market written one year ago painted a picture of an industry tackling labor shortages and supply chain challenges, but that ultimately remains buoyant. What has changed in the intervening 12 months? ‘Change’ itself is the one constant in life, as Chinai attests: “Supply availability has changed, the available labor has changed, and the way that customers are buying has changed. We as users of consumables have changed as well in the way that we purchase, and the way that we plan, procure and look at our supply chain.”

Spall agrees: “We’re in a very different place today versus where we were sitting last year at this time when, for any variety of reasons, printers were booked out for 12 to 18 months, and we just couldn’t find capacity domestically. About four months ago I started getting calls from print partners with pockets of capacity maybe once or twice a month. Now, I would say across the board softness is in everyone’s view for the year ahead.”

Jim Fetherston

The limited availability of paper remains a significant topic. Jim Fetherston, CEO of Worzalla, notes that not only has the paper sourcing challenge evolved since this time last year, but so have paper companies themselves. “[Getting] paper was impossible a year ago,” Fetherston says. “It is not anymore — paper supplies are loosening up. The big difference now is paper companies have evolved. A lot of the paper industry has been taken over by private equity firms. There’s consolidation on the supply chain side, which makes it easier for the paper mills to figure out what they’re going to do, and they want commitments a long time in advance.”

Galligan echoes the idea that the paper industry is in a transformative period. “There are no new paper mills being built. Some of these paper mills have been converted to packaging. As I say, it’s the Amazon effect; it’s because of the demands of online shopping.”

The “BMI State of the Book Industry 2022” report quotes Dave McCree, CEO of Lakeside Book Co., the largest North American book manufacturer: “The stress of the supply chain has forced us to be better manufacturers. We have more demand than supply, so we have stress on labor. We have customers that want product and we can’t get it out. So how are we going to go about fixing that?”

It’s a question that contributors to this outlook report have offered insights on with a similar thread — one that focuses on improved collaboration and communication to facilitate better forecasting and clarity. “We advocate to all our clients that forecasting is not an option anymore — it’s essential,” Galligan explains.

“Forecasting is probably the biggest problem, or opportunity, for the industry because of the limited capacity that is available when there are spikes in demand,” Spall adds. “As an industry we need to do a better job at that. When the demand spiked 12 months ago and there was no capacity to be had, there was no discussion about that. As an industry, we weren’t prepared.”

Fetherston urges productive communication between all book manufacturing stakeholders in the year ahead to ensure each partner is properly equipped to manage the industry’s variability: “In 2023, we need to have a very cooperative meeting of the minds in the supply chain — from the publishers to the printers, to the providers of paper and transportation.” All those independent parts can’t act unilaterally, he says.

“There’s going to have to be a roundtable discussion with all of those components because the world has changed. For my industry, the manufacturing side, there has been a distinctive shift during the past 10 years, between consolidation, bankruptcies, and people just exiting the business. There’s much less capacity in North America than there used to be for printing.”

Collaboration is always key, Chinai points out. “In certain industries it’s much more challenging than others, but I would agree that, with collaboration amongst that value circuit, we will see much more longer-term success. We have to help one another in our industry — we should be trying to drive long-term growth, not short-term wins.”

The “BMI State of the Book Industry” states: “The combination of labor and material shortages is driving book manufacturers toward continuous improvement strategies such as optimizing workflow, investing in automation, and assessing the areas of the production process that would benefit most from increased efficiency.” This provides further opportunity for digital inkjet to capture more of the book production market.

Spall expresses a desire for more intentional use of digital printing, rather than just for replenishment in short runs. “Crossover point needs to increase. I don’t know if it will be next year, but we will see that digital crossover point increase. That’s an area that’s going to continue to grow.”

There is no doubt book printing demand remains strong in a market that was buoyed by the COVID-19 pandemic. However, effective forecasting and forward planning are key to avert fragmented value chains, bloated inventories, and capacity challenges, as is useful communication between industry players.

The latter may be somewhat uncommon but, in an industry experiencing its fair share of transformation, it may be a valuable strategy for managing uncertainty.