The State of Book Printing and Publishing in 2024
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When we last spoke with Andrew Fennell, Friesens VP of Finance, it was late 2021 and “supply chain issues” were a topic of concern. For many industries (the book business included), the COVID years of 2020–2022 felt like a logistical ball of wires that was impossible to untangle. From paper shortages to delayed delivery times, there were many forces working against printers, publishers, and authors hoping to get their books into readers’ hands. Andrew accurately anticipated the outlook for 2022 by saying “on the supply side, we don’t expect it to let up.”
But time heals all wounds — including tangled balls of wires. What was once a gloomy outlook fraught with challenges has given way to clear skies and smooth sailing for publishers and authors with books to be printed.
So, what changed?
We caught up with Andrew once again at the end of 2023 to get an update on the positive momentum being felt in the printing business and what it means for authors in 2024. Andrew also provided candid insight into Friesens’s 2023 and its anticipated view of the year ahead.
Last time we spoke with you, it was late 2021 and supply chain issues like paper shortages and transportation delays were challenging the printing industry. Where do things stand today, two years later?
It’s much improved — that’s across almost every industry, and certainly for the paper industry and the book industry itself. There’s no question that supply chain issues are a rare conversation with our suppliers now.
With regards to paper, it’s night and day. In 2022, where we were having difficulty getting paper from the mills, today you can get what you want essentially when you want it. The lead times are back to normal or, in some cases, they’re better than historical normals. I would say that the only caveat to that is that some mills really reduced the scope of their product line, as in, they simply dropped some paper types or specialty papers. The range of options is slightly less than it used to be, but we can certainly get our house papers, those that we consistently use on a regular basis without any concern. So, that’s a big improvement. The paper mills are not busy currently, and they’re able to meet demand fairly easily. That’s very different than it was a year or 18 months ago.
You also mentioned transportation. Transportation challenges have also significantly lessened. We don’t do a lot [of buying] from overseas, but when we do have shipments coming in, containers have not been a problem (especially from Europe). They were a nightmare 18 months ago, so that’s significantly improved. Truck availability is much improved as well. The cost of freight has actually declined compared to a year ago.
Generally speaking, supply chain challenges for Friesens started to dissipate in the spring of 2023. The mills no longer talked about being on allocation and so lead times started to normalize. We also experienced fewer freight issues.
We’re at 95% of where we were, pre-COVID, and I would call it a full recovery on the supply side, from our point of view.
A full recovery sounds like great news — is it really all sunshine and roses?
The supply side is stable, but the exception — and this is not unique to our industry — is that even though it’s stabilized and supplies have recovered, costs have not come down. They’re sticky. We thought paper prices would drop but they haven’t; we’ve had little bits and pieces here and there see slight declines, but not nearly what I thought we would see.
We just went through an RFQ (request for quote) process [with our paper vendors], which makes everything transparent for us. We saw very, very little budging from virtually any of the mills. That’s the oddity in this — we’ve regained stability and seen a return to normalcy, but costs have not come down.
How has Friesens fared in 2023?
I have to put this in context, because 2022 was a blockbuster year as far as demand for product and utilization of capacity — we were inundated with orders. From our point of view, 2022 was both a fabulous year and a huge anomaly. 2023 has looked like a down year in comparison, but historically, 2023 has actually been quite a good year. We’re starting to compare much of this to 2019, which is pre-pandemic. It sounds odd, but it is the most relevant baseline for us.
Q4 [2023] has been slower than expected, and so we’re trying to unpack that. I would say the major reason for that is because the demand for colour books is down in North America, and that affects not only Friesens but all book manufacturers.
We’re still happy with the volume of books we did in total for 2023 — which ended up being 20 million copies. The upside of being slower is that our turnaround times are better for books, and our on time delivery is very good.
I would like to think we’re somewhat unique in that we didn’t really stop investing. We’ve still got new equipment coming in. We had a couple of new press installations this year. One is a new sheeted press, another one is a new digital press (or inkjet press), and we also installed some new equipment in our bindery. We tend to have a long-term view; although 2023 was down compared to 2022, it was a good year and we’re still investing heavily in the book business because we believe in it.
Looking back, can you sum up what happened in the industry that made 2020–2022 such an anomaly?
Starting in late 2020 and continuing on in 2021 and 2022, the largest North American publishers reacted to significant delays and significant cost increases associated with bringing in books printed in Asia. Container costs spiked dramatically and there were very challenging backlogs for incoming containers — especially those arriving on the west coast. This triggered a fairly pronounced shift to domestic production, meaning publishers sent many (and large) orders to North American book manufacturers instead. This was great for North American book manufacturers but quickly overwhelmed the domestic capacity. Our 2022 was effectively sold out before the year even started! Both 2021 and 2022 were abnormal and anomalous from a demand point of view and this forced us to manage our business in a different way.
As such, 2019 (or simply, pre-COVID) is a better comparison for North American book manufacturers. Demand returned to “normal” by mid-2023 (and we expect that will continue in 2024).
What does the future of printing look like from your vantage at Friesens? Are there any trends or innovations that are shaping the industry?
Throughout the manufacturing sector, there’s a lot of conversation about automation robots — not just book manufacturers, but throughout the entire industry. It’s not new information, but the printing industry is not leading edge when it has come to automation. That’s kind of top of mind for a lot of book manufacturers now: what can we do and what’s possible — specifically in the bindery?
Another emerging technology is inkjet printing — which is certainly not new to the world, nor is it new to the printing industry. However, we’ve always dragged our feet on it because we didn’t believe in the quality of inkjet printing for books [until recently]. And so some of our competitors got into it earlier than us. We’ve taken our time and it’s because we wanted higher quality inkjet printing for the type of books and quality we want to produce.
We just got an inkjet press operational in the last month or two and are working out the kinks, but are very happy with it. It’s delivering the quality level that we believe it needs to for the kind of customers we serve. That’s going to be eased in for us over the next few months. It won’t be a mainstream printing path for many of our books, but for a segment of books, it’s a great fit and it’s the way of the future. We’re really quite pleased with the quality, especially for colour.
What do authors self-publishing their books need to know about navigating the printing industry and book selling landscape in the short to medium term?
One thing to be aware of is there’s still stickiness around pricing. The cost of raw materials is not going down; there was a ramp-up in cost and I don’t think it’s going to ramp down by any significant amount in the short term. That’s relevant to authors pricing and selling their books.
As far as the book selling industry goes, we certainly monitor it. We’ve had inconsistent reports, but the one I’m hanging my hat on is that printed books were down in the first half of 2023 by 3%. A 3% decline is not inconsequential, but it wasn’t 5 and it wasn’t 10. Still, early signs for Q3 are very good and independent booksellers are reporting great sales for the 2023 holiday season, so that’s encouraging.
We certainly believe the demand for printed books is still very high. We’ve all heard about audiobooks and eBooks. But my belief is [those formats] still account for a very small part of the market, and our largest publishers are going great guns on print books. There’s no hesitation from their point of view that booksellers are doing well.
As things stand today, what does 2024 look like for Friesens?
I’ll refer back to our baseline, which is 2019. Historically, Q1 has always been kind of soft, and it will be for 2024. Again, that’s good from the point of view of the publisher and the author, simply because it’s not a problem to get a book printed — there are shorter lead times and you can get your books when you need them (and on time!). Deliveries are all good too. If you’re considering placing a bulk order, now is the best time to do so. While Q1 will be a little bit slower, the back half of the year will be pretty strong for us. The task is certainly with our sales team now. [laughs] They’re going to pick up where they left off to fill the [printing schedule]. But we’re optimistic, no question, that 2024 will be a good year for us again.
Now that the dust has somewhat settled and we’ve seen a 95% return to normalcy, have you and Friesens learned any lessons from the highs and lows of the pandemic era that you’ll apply to the business going forward?
There were several lessons learned (or confirmed) during the pandemic era.
One was to maintain healthy relationships with suppliers: keep your commitments, conduct business honourably, and pay your bills. All those practices work to our advantage in times of supply chain turmoil.
Second, communicate effectively with long-time customers and forewarn them of challenges ahead. We made a significant effort to advise our customers of capacity issues and work with them to find solutions for important orders (reprints, time-sensitive publication dates, and the like).
And lastly, keep your ears open and think long-term. We listened, sought advice, and understood that there were significant market and industry shifts taking place, but also realized that this was not normal and demand would eventually normalize. We knew that we needed to serve and support our customers through the challenging times, but also had to maintain a strategy for the long-term well-being of our customers and our company.
