Friday, December 16, 2005


Where Have All the Profits Gone?

This past Monday, the Commerce Department released its Quarterly Financial Report, and its printing industry data were disappointing. The four- quarter moving total of inflation-adjusted profits before income taxes moved lower, from $3.89 billion to $3.59 billion annually, the lowest level since Q2- 2002, when it was $3.15 billion. This means fewer dollars for needed investments to reconfigure our industry's plants for greater productivity. It also means the pressures for consolidation are yet more intense (and we thought they were intense already!). Consolidation forces capital that would have been used for new plant equipment to be used for acquisitions instead. On one hand, more productive companies become stronger through the acquistions, but the industry-wide installed base of equipment does not necessarily improve because the dollars were spent elsewhere.

Commerce Department Quarterly Financial Report

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