The printing, envelopes, and business documents market is estimated to be $175 billion. Cenveo participates in a $60 billion portion of the total print, envelope, and printed office products market, including; closely held, customized broad, and limited offerings. The industry is highly fragmented with 32,000 commercial printers in the US, though current competitive pressures are forcing 4-5% of capacity to become rationalized annually. Throughout the 1980’s and early 1990’s the printing industry grew at a similar rate to GDP, but since 1997 it has lagged GDP growth. As a result, commercial printing operators are supplementing their core ink-on-paper services with a broad range of communications services that add value for clients. Conditions have improved for the industry over the past two years, due to these additional service offerings, as well as an improvement in the broader economic recovery, but the competitive landscape remains challenging. Specifically, industry overcapacity, commoditization of services, lower customer switching costs, and price erosion remain secular headwinds. Higher raw material costs from rising paper, ink (derived from natural gas and crude oil) and energy prices have also put more pressure on industry participant’s margins.
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