The Long View: Such is Hope

Ken Mergentime is the former executive editor of Sign & Digital Graphics and WRAPS magazines.

As the year draws to a close and we replace our calendars, I can’t help but look ahead with a spark of hope in my heart. Maybe I’m being naive, but despite the rough economic ride we’ve had, and repeated warnings that our recovery will be long and uneven, I know with an illogical certainty that 2010 will be a very good year. Such is hope.

And as the economy lumbers its way through its course correction, it leaves in its wake the churn of change, some of it very good indeed. Wise sign and graphics shops that have invested in and implemented tactics of product diversification are finding that, though business may be slow, there is enough of it to keep their doors open. And as business picks up—as it inevitably will—they will be in a much stronger position than they were before.

On the manufacturing side, huge pressures have been brought to bear due to the slowdown. Businesses that were overextended before the downturn are finding themselves in a very weak position, and some may not survive at all. Companies in stronger financial shape are finding this to be a ripe opportunity to gain market share and strengthen their own positions. The scent of acquisition is certainly in the air, and some companies are making their moves.

Take, for example, Agfa’s acquisition of Gandinnovations. No one was particularly surprised by this news since Gandi hasbeen struggling in bankruptcy since May 2009. It’s a great move by Agfa because Gandi’s solid UV-curing printer platform—which compliments Agfa’s nicely—will enable it to more effectively compete head to head with biggies such as HP, EFI/VUTEk and Fujifilm—and even give them a slight edge with Gandi’s strong line of grand-format textile printers. Of course, the net gain by Agfa will depend on how much it paid for the firm, how well it can assume Gandi’s considerable debt and future printer sales.

In another year-end acquisition story, Canon made a bid to buy Océ. This move came as a surprise to some and has some interesting angles. Analysts are saying the bid price was good for Océ shareholders, but at press time there was still the possibility of a rival offer from companies including Hewlett-Packard, Kyocera, Xerox, Toshiba or Konica Minolta. If Canon’s bid is successful, it will place them in a much stronger position within the signage and large-format printing markets. Océ’s very successful Arizona UV-curing flatbed printer platform will likely gain a big boost in sales due to Canon’s ready access and deep penetration within corporate in-house printing environments.

And then there was Fujifilm’s announcement that it was consolidating by creating a new organization called Fujifilm North America Corp., which merges Fujifilm USA and Fujifilm Graphic Systems and makes Fujifilm Canada a subsidiary of the new company. The move brings together multiple operating divisions, and results in huge net savings for the firm—a logical step, considering the announcement earlier in the year that Fujifilm was laying off or redeploying 5,000 of its workers.

And hundreds of smaller companies and shops across the country are making similar kinds of moves to help them gain a more secure foothold on the future. All this change sounds scary, but my gut tells me that it will result in a profitable 2010 for the industry a whole. Let’s hope I’m right.

Okay, back to work.