When Is the Right Time for In-Plants to Invest?

In a presentation recently, I was asked if there were specific times in-plants are more likely to invest. I had to think for a second because the commercial and in-plant investment plans are different in many ways. First, in-plants tend to hang on to equipment longer. For example, there are many in-plants with presses that are over 15 years old. Second, while both commercial printers and in-plants are effected by the growth and declines in the economy, they are not impacted at the same time.

It can be argued that as the economy shrinks or grows so does sales of print and print-related products. Commercial printers are impacted almost immediately while the impact to in-plants tends to be delayed, similar to how economists talk about leading and lagging indicators. I believe this delay is the result of the time before the in-plant's parent companies feels the upturn or downturn in the economy.

The length of the delay is different in different companies and related to the business of that parent company. In vertical markets that work with year-long contracts such as insurance or healthcare that delay may be a longer. In other verticals such as manufacturing or education, the delay may be shorter.  Economy changes and the impact to the in-plant.

The figure above is an attempt to map out the changes in the economy and the impact to the in-plant such as a budget cut, or a request to improve service or expand services. The figure is based on data from Andy Paparrozi from Idealliance and it represents printing sales nationally. The vertical axis represents sales in billions of dollars of print related services and the horizontal axis represents years. The blue line maps out the sales and the red line represents a possible time lag of when that impacts the in-plant. I believe the best time for in-plants to invest is when the red line is going up and the worst time is when it is going down.