U.S. printing prices have failed to keep pace with inflation during the past 25 years, the CEO of the country’s second largest printing company told a Senate panel this week.
“During that same time period, the price of postage has continued to increase and as a result the single largest expense of printing is now the postage associated with delivering the final product,” Joel Quadracci, Chairman, President & CEO of Quad/Graphics Inc., testified Wednesday during a Senate hearing on the “Crisis Facing the U.S. Postal Service.”
“Over the last 25 years, through technological advances and process changes resulting in productivity gains of more than 4% annually, the printing industry has been able to actually reduce the price for printing (adjusted for inflation),” Quadracci said. “The Postal Service should address its problems by achieving the same cost control success,” but instead it is saddled with “extreme excess costs.”
“If the Postal Service can manage its costs and maintain an affordable pricing structure, its business can remain sustainable and ours, in turn along with it.”
“There are three main components to printing a magazine, catalog, retail insert or direct mail piece: the cost of the physical printing of the item, paper and postage. It may be tempting to address the Postal Service’s financial situation by simply raising postage rates to “cover the costs,” but I cannot stress enough how damaging postal rate increases are to our industry,” he told the panel.
“There is a direct negative correlation between rate increases and volume. Our customers demand predictability and affordability and if prices
suddenly increase more than expected they react by reducing their volume to cover the extra postage or move away from print altogether.”
“We are encouraged with the direction we have seen the USPS take over the last year-and-a-half,” Quadracci said, but a number of legislative changes are needed so that the Postal Service can manage its costs more effectively.
Quadracci noted the “tremendous capital expenditure” Quad and other publication printers have made in co-mailing and other “work sharing” activities that save the Postal Service money and earn mailers greater postal discounts. If not for those efforts “to help clients manage their postal costs through work sharing, mail volumes would have been reduced to an even greater extent over the last decade.”
Quadracci did not take a stand on the current hot postal issue – Saturday delivery – but noted the importance of USPS continuing to accept shipments and to process mail on Saturdays.