Credit climate for printers improving, remains under threat

By David Ward, San Diego, Thursday 11 August 2011

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The credit climate for the US printing industry has been slowly improving in recent years, but remains challenging and could take another plunge downward due to the current US economic turmoil according to the Printing Industry of America (PIA) body.

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According to its most recent full survey, Q1 2011, the credit index was -33% - still low, but better than the -54% in Q4 2009.

Ed Gleeson, manager of economics and market research for PIA said that, based on early responses, the printer credit index was up even further to -23.5% in Q2 2011, though one in three printers are still noting credit conditions are having a moderate or significant negative impact on their business.

In an interview with PrintWeek, Gleeson noted that the PIA has only been measuring what it calls the Credit Conditions Diffusion Index since Q4 2009, adding, "From what we've tracked in our quarterly surveys, the conditions are improving, but they're still considerably in the negative territory.

He added that the credit survey, which is included in its quarterly Print Market Update, doesn't delve into what type of credit issues printers are facing, whether its short term loans or longer-term financing for buying new equipment. Instead it asks the 140 US printers who participate in the survey simply whether the current credit conditions are impacting their business.  

"I kind of expect that by the time we've finished collecting the data for that survey for a higher percentage of printers to say that they're having problem getting credit," Gleeson added. "Though some of that might be tied to the recent news, because what's in your mind now tends to dominate how you answer that type of question."

The difficult credit market is having an effect not only on printers but also their suppliers. Last week Michigan-based Manistique Papers, which supplies specialty offset paper for commercial printers, filed for bankruptcy after being denied additional funding by its lender.
 
Manistique Paper, which employed 150 - making it one of the largest employers in the town of Manistique - said the bank denied its request despite its good financial history.

The company did not respond to an interview request from PrintWeek. But in a press release announcing the bankruptcy, director/general manager Jon Johnson said: "In light of the lender's decision, we examined our few options with legal counsel and we regret having to make the decision to file bankruptcy. The business circumstances leading to this decision were unforeseen - we are as shocked by this as everyone else. We had thought and hoped that the lender would allow us to continue operations while we searched for alternative financing."

The company said it had hard hit this year by rising raw material costs, while the soft economy had cut into demand for offset paper. But Johnson said he was hopeful a new buyer could be found that would enable the company employees to return to their jobs.

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