How Legislative and Regulatory Changes Affect Printing Businesses
The following article was originally published by Printing Impressions. To read more of their content, subscribe to their newsletter, Today on PIWorld.
In the past year, while the attention of many printing business owners and high-level managers was on common challenges — mainly labor shortages and supply chain disruptions — changes in federal and state regulations continued to change and develop. Further, the economic environment within which we operate continued its rather unorthodox moves. To dig deeper into recent developments in these spaces, what they mean, and what printers should pay attention to in the year ahead, an esteemed group of industry experts, assembled here, provides meaningful insight.
Economic Performance and Market Conditions
Despite the best-laid plans of print services providers (PSPs), an undeniable reality is that economic conditions have a strong effect on business, as well as budgets of customers. According to Andy Paparozzi, chief economist at PRINTING United Alliance, 2023 is gearing up to be, “a rough year.” He cites the slowing of the U.S. economy, along with labor shortages, cost inflation, and supply chain disruptions as factors providing significant headwinds. PSPs can improve their position by acting on leading indicators, marketing for the times, and by maintaining sharp focus.
Elaborating on his strategies, Paparozzi says leading business indicators must be monitored “even more closely than usual … but monitoring will not be enough.” He advises companies to set trigger values for each indicator used, and define what will be done if a trigger level is met. No business should lose time wondering, ‘So what do we do now?’ Marketing for the times, he says, means meeting the customer where their need is today, not as it was when business conditions were more favorable.
Finally, Paparozzi contends, maximizing business focus and execution means tightening management overall and paying stronger attention to what delivers profit. This can include marketing for value, letting unfavorable customers go, and charging for services that were once gratis. “How will we stay focused … no matter how challenging the macro environment?” he asks. Those with the right answer will have a successful 2023.
Within the results of the PRINTING United Alliance “2022-23 State of the Industry Survey,” Paparozzi shares how PSPs today are preparing for the year ahead. More than three-quarters of respondents are planning to increase prices, and nearly two-thirds are taking steps to control costs more effectively. Nearly 60% are seeking to increase productivity through capital investments. Commercial print providers, results show, are also looking for strong opportunities, and some of the most popular exist outside the familiar realm of commercial printing. They include applications such as banners and soft signage, folding cartons, labels, and direct mail.
A Rundown of Key Federal Legislative Activities
According to PRINTING United Alliance CEO Ford Bowers, the passage of the Postal Service Reform Act of 2022 was a notable legislative win for the printing industry last year. Particularly with the strength of direct mail in the commercial printing sector, the presence of a strong and viable U.S. Postal Service, he says, is paramount.
Looking toward the year ahead, Bowers says that given recent shifts in the U.S. Congress — where Democrats control the Senate, and Republicans now control the House of Representatives — “we can anticipate an increased level of legislative gridlock.”
Regarding current conditions for business, he says that although 14,000 manufacturing jobs were added in the U.S. in November, companies are still facing rising costs, supply chain challenges, and workforce shortages. PRINTING United Alliance is currently working with the National Association of Manufacturers (NAM) to ensure transparency of the Inflation Reduction Act, which was signed into law in August.
The law contains $369 billion, including funding opportunities related to energy and climate change. “If the states receive funding to distribute,” Bowers notes, “then we want to make sure they consider the printing industry.”
Addressing specific hot topics on the legislative front, he says action is also underway to preserve tax credits related to immediate expensing, interest deductibility, and research and development costs. Again, PRINTING United Alliance is working with NAM on this preservation effort.
According to Bowers, the Alliance signed on to letters to Congress (through the U.S. Chamber of Commerce) and to President Biden (through Americans for Free Trade) urging them to avert a broad-based rail worker strike, which was threatened in December. The strike, the signers believe, would have been detrimental to the slowly recovering, but still fragile, U.S. supply chain.
He also highlights new privacy laws put into place in five states (California, Colorado, Connecticut, Utah, and Virginia). These new rules require businesses handling consumer data to take specific steps to secure that data. The Alliance’s preference, he adds, is for a federal law as opposed to a patchwork of state laws.
EPA and OSHA Regulatory Developments
In the past year, Gary Jones, director of environmental, health, and safety affairs at PRINTING United Alliance, says movement by both the U.S. Environmental Protection Agency (EPA) and state regulatory bodies to regulate chemical compounds PFAS and PFOS have continued to move forward. While Jones explains this movement doesn’t affect all industry players, it should be of particular interest to those in the printing of food packaging and apparel. “EPA has put a lot of effort into heightening regulations to include the triggering of reporting requirements.” Jones says the EPA is looking into designating PFAS and PFOS as superfund-classified chemicals.
Asked what key developments took place in the regulatory space during 2022, Jones points to workplace safety. He says OSHA enforcement activities are up, as the agency’s enforcement staff (and budget) has been restocked. Within those inspections, he says, “there has been a significant focus on machine guarding, lockout/tagout, hazard communication and forklift training.”
Further, OSHA has initiated a rulemaking process on heat illness and prevention that, in the printing industry, could require action in non-air-conditioned workplaces and delivery vehicles, and during the installation of outdoor signage or graphics. Finally, he highlights EPR (extended producer responsibility) actions, which are designed to beef up recycling efforts. EPR rules have been put in place in California, Colorado, Maine, and Oregon, and could affect the cost of goods.
Jones advises that, for the year ahead, printing operations need to “have a really good handle on what is or is not a hazardous waste.” He says some printing operations have gotten into trouble recently because wastes that are not hazardous were mislabeled. “The material wasn’t hazardous, but the vendor said it was.” This mislabeling, in some cases, falsely raised the company’s waste generator status, requiring unnecessary action, such as creating contingency plans. “Know what types of hazardous waste you’re generating and how much,” he advises.
Human Resources and Staffing Concerns
While finding qualified employees is an ongoing challenge in the industry, management of current employees also requires great attention. Adriane Harrison, VP of human relations consulting at PRINTING United Alliance, says one of the most significant areas of interest in staffing “is the decision whether employees can continue to work from home versus the office.”
She notes some companies are experiencing situations where people who never got to work remotely feel they have been denied that benefit. “It creates a division between employee groups,” she says, “and creates a chasm of collegiality and culture.” Not all jobs, however — especially in production — can be done remotely.
From a staffing standpoint, Harrison believes there will be an uptick in regulatory and legislative activities that will affect U.S. workplaces. “Movement is underway to address minimum wage issues,” she says, “and states are revisiting that.” She sees a chance that the federal minimum wage, which is currently $7.25 per hour, could be increased, and says that while few in the printing industry are only earning minimum wage, the raising of that standard could lead to wage compression. “In order to keep people happy, [companies] will need to treat them equitably and will need to raise wages.”
Harrison is also following the Joint Employer Rule, which she says comes into play with temporary workers. Independent contractor rules should also be considered.
The year ahead, according to Harrison, should include a strong focus on training and career development. “We’re being faced with hiring people who have no experience in our industry,” adding that if we want to keep employees, then we need to train them. “It becomes more of a career.” She contends this approach should not only be for entry-level jobs. It should also extend to management — training people to move into management positions. “Employees need to feel vested, feel a sense of loyalty, and a sense of proficiency, which is a good feeling.” This approach helps with retention, recruitment, production, and quality.
Postal Service Developments and Rate Increases
The resurgence of direct mail, which has come as marketers have sought more effective ways to contact and communicate with customers and prospects, has been a highlight of the printing sector during the past couple of years. That said, Leo Raymond, owner and managing director at Mailers Hub, argues that the accelerated rate of postal increases “is causing havoc for budgets and creating uncertainty.” Raymond expects to see continuing postal price increases in the year ahead, at rates that U.S. Postmaster General Louis DeJoy has described as being “uncomfortable.”
In the printing industry, the strongest effect will be felt in direct mail. “I would bet that mail volumes are decreasing,” Raymond says.
He believes that many of the developments within the U.S. Postal Service stem from the Postmaster General’s bold plan to revitalize the service, bringing operational changes, new network design, and a move toward large sorting and delivery centers. Despite these plans, Raymond points out that services offered are defined by the public and the U.S. Congress, not by the Postmaster General. He also highlights the Postal Service Reform Act of 2022, passed last year to address USPS finances and operations by lifting existing budget requirements. Further, the act requires the Postal Service to continue six day per week delivery.
Asked what 2023 will bring for those who rely on the USPS to complete their services, Raymond says, “it’s going to be another tough year with price hikes and structural changes.” Regarding steps PSPs can take to mitigate expected rate increases, he says while “there is nothing new under the sun” (e.g., pre-sorting and discounts), he urges companies to work with their clients to moderate the impact of rate increases.
Further, he says changes in technology like the growth of inkjet printing, and the desire for printers to automate, are beneficial. Particularly, he notes increases in data processing skill and digital printing technology that enables highly targeted personalization: “A data-driven press will do things an offset press won’t do.”