Printing price hikes kept in check; steady page growth and competitive market give publishers a price break

Folio: The Magazine for Magazine Management, Feb, 1989 by Jean Marie Angelo

Printing price hikes kept in check * Publication printers are forecasting only minimal price hikes for customers in 1989. Most printing executives contacted by FOLIO: report increases will just cover modest inflation, as well as any labor cost increases.

The reason for the modest price rise is the competitive marketplace in publication printing, which leaves little room for jockeying on pricing, according to executives at Mack Printing Company, United Color Press, Arcata Graphics Company, R. R. Donnelley & Sons, and others.

In fact, the market is so competitive for short-run printers (pressruns up to 200,000) that some printers are price cutting, says Paul Mack, president and CEO of Mack Printing. "I haven't seen any relief concerning the unrealistic pricing that has been going on," he notes. "We're seeing only modest room for price raising."

In general, printers expect a stable year for publications, following a year of modest growth. Generally the year after a Presidential election and the Olympics is considered disastrous for magazines, but Brown Printing's president, James Rifenbergh, believes otherwise, predicting a 3 percent growth in advertising pages.

Robert Swam, president and CEO of Arcata Graphics, agrees that 1989 will be a good year for magazines. "We didn't see any major increases in ad page and circulation gains for 1988," he says, "therefore, we don't expect a decrease for this year. I think the Olympic/election year is overplayed in its effect on magazines."

"Prices will be stable because of the competitive marketplace," adds Al Pryzbylkowski, operations director, Newsweek. "I'm dealing with most of the major printers, and I'm seeing a lot of clients switching from one printer to another. There's a lot of movement, and it seems to be more than the normal amount. Printers are fearful of losing a chunk of their business, so they are becoming more aggressive on pricing."

The tone is somewhat different than the one that ushered in 1988. At that time, many printers were hoping to raise rates for the first time in four years.

But only one printer contacted by FOLIO:, Brown, counters the trend. "Printing prices should be firm during the year or go up," says Rifenbergh. "I don't see any technical advancements that will improve productivity quickly enough to save on costs."

Printers acknowledge that price increases would be hard on publishers already socked with 1988's postal and paper increases. Second-class mailers were hit with an 18 percent rate hike in April 1988, and paper has remained tight, putting prices at an all-time high. Generally, paper prices are up 25 percent since 1987, and execs have mixed forecasts about the paper situation for '89.

Although Irving Herschbein, vice president/director of manufacturing, Conde Nast, believes paper prices will go up again in 1989, several printers believe paper price hikes have topped out. "I think we'll see a moderation of paper costs," says Carl Doty, executive vice president of operations, R. R. Donnelley & Sons. "They should be substantially less than what we've seen. Demand and supply are in better balance."

Still, coming off a tight supply situation means that publishers must do long-term planning if they change grades, explains Constance Riley, president, Waverly Press.