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Snapshot of the Sign Industry 3rd Quarter 2007
By Johnny Duncan
As with the last quarter of 2006, those questioned in this poll also feel that business is good and the future looks promising.
We kept it simple again with the questioning basically the same as last year. We wanted to know three things:
Our approach was simple: Pick companies from various segments of the industry, in different parts of the country, and ask them how things are going. We wanted to do what you would do if you could shout out the window to your neighbor in the sign industry and yell, “Hey, how’s it going?”
Instead of charts and graphs (some of your sign associations might have those resources available on their sites and some offer them for a small fee) we prefer the feedback in the words of those in the trenches.
Keeping it going
“Our growth increased about 15% in the last year,” says Randy Souther, General Manager of SignArt, Charlotte, North Carolina, a participant in last year’s survey. “Things have been great. The only problem is that we are getting fewer employment applications, so it is getting tougher finding the help we need to keep up with demand.”
MaryJane Shackelford, of Barnes Advertising in Zanesville, Ohio states, “We are having a banner year. We just closed August which turned out to be the best month in the history of Barnes Advertising Corporation!” Business looked good for most of our respondents, but it sometimes depended on location. “Our growth has been slower than we expected, but not by much --- only 2%-3% less than our projections,” says Scott McDaniel, President of Cajun Signs, Ville Platte, Louisiana. “Our State here is still in disarray, believe it or not, and we are still feeling the effects of the two hurricanes two years ago. Not that it is an excuse, mind you; it still has New Orleans residents rushing back to make sure their home is not on the demolition list! A number of local factors are at play in my area.”
While some areas of the country may have experienced dips or valleys during the year, most experienced growth --- some at small percentages and some like Mike Branz, President and owner of Garfield Signs & Graphics in Greer, South Carolina. “We’ve experienced continued growth at 18% over prior year that was 14% over the year before that!”
Slowing it down
Since the mid-1960s, when the explosion of sign ordinances and government regulations really took off, sign companies had to add yet another challenge to their to-do list. Federal and State ordinances along with city and town regulations make for a minefield that business owners must tip-toe through in order to protect their profits. For some sign businesses in 2007, the regulations did not pose much of a problem, but depending on the location of the business, regulations and ordinances can be a pain in the balance sheet.
“Here locally we have very few sign regulations to speak of, but in our neighboring larger cities it is getting to be ridiculous what city governments and state governments will do to try and make a few dollars and along the way make a name for themselves as being progressive and trying to beautify the city,” says McDaniel. “One of our larger cities tried to pass an ordinance, whereby all signs could be no higher than 12-14' off the ground, and whereby all standing signs would have to be changed out or retrofit, with no grandfather clause exemptions. Thankfully, that ordinance did not pass.”
“We see more and more that municipalities are adopting and enforcing sign ordinances,” says Branz. This seems to be the trend throughout the US as more so-called beautification projects get under way and more bureaucrats give their two cents into community affairs. Some of the ordinances make sense and most sign businesses are more than willing to adhere to the rules. However, many hurt sign businesses as well as any business wanting to advertise along roadways, in city limits, or at a reasonable shape and size to get their message across. As Randy Souther states, “Sign ordinances are getting tougher and taking more time, which cuts lead times to keep customers happy.”
“Barnes Advertising is currently in the midst of negotiations with one of our larger markets,” says MaryJane Shackelford. “They are currently re-working their zoning code and the initial document was detrimental to our survival. We are confident that we will be able to come away with a code that will both address the cities concerns and still allow us to serve the community.”
In addition to government regulations, the price of fuel also affects the growth of a sign business. According to the US Department of Energy, “oil market fundamentals will likely remain tight reflecting continued production restraint by members of OPEC, rising consumption, moderate growth in non-OPEC supply, and falling inventories. Barring a slowdown in oil demand growth, continued high demand and low surplus capacity leave the market vulnerable to unexpected supply disruptions through 2008.” In other words, no one knows exactly where fuel prices will go, but chances are they will go up.
How does this affect your sign business? Well, since we’ve been given the doom and gloom speech regarding oil prices for the past few years, business is still good for many in our industry. Most just make adjustments to accommodate the burden of fuel costs. “I have not noticed energy prices affecting our buying patterns or that of our customers,” says Shackelford. “Since we have boards in thirteen counties, I have noticed that our energy costs have tripled. Our billposting crew and sales people are dedicated to taking any cost cutting measures that they can, to reduce our overhead.”
“In the Deep South, it gets hot and I mean hot in the summer months,” states McDaniel. “I am talking at or over 100 degrees daily and the humidity is nearly at 100% every day. So, our electricity costs have gone up considerably over the past two years. Now in our installation area of the business, with the price of gasoline hovering around $3.00 per gallon, we’ve had to raise our mileage charges and service calls. We tried a fuel surcharge, similar to UPS, but we received too many complaints about it, so we just raised our rates and the complaints stopped.”
Finally, when asked about the pressures of competition, most of the companies surveyed responded that they have seen about the same level of competition with not much change. Or they simply adjusted to capture other markets like Mike Branz, who had this response: “Competition remains at a high level for retail and for competitively bid installation work; therefore we focus on other segments.”
The future and beyond
“Oh, that is an easy one, digital printing that will last for at least five years. It has played a major role in our profitability in the last two years for us,” says McDaniel. “We have been able to maintain and in some cases increase production, with less personnel. In the coming years I see a new revolution in signage with the advent of the flat bed digital printers that are arriving on the market as we speak. It will open new avenues of business and increase the quality of most companies’ work. It will definitely be exciting to see, it will be a whole new revolution.”
According to Randy Souther, “The LED technology is the best it has ever been, and seems to be getting better every year. The lighting trend with LEDs and electronic ballast and transformers is probably the trend that will have the greatest impact on our business in the next five years.”
Shackelford believes that “as the digital display becomes more affordable to all outdoor plants, it will have a huge impact on the industry.” A different point of view is Branz who “has seen the increase use of LED versus neon and channel letters” impacting his sign business.
Regardless of the segment of the industry you may be in, the future holds even more and faster changes in technology than ever before. The good news is that while not every business segment of the industry was polled, it appears that from the feedback from the questions, the conversations with our peers at the various trade shows, and the exchanges from the SignIndustry.com message boards, 2007 was indeed a good year prompting hope for a profitable 2008!
For more information on the companies included in this article, you may contact them at:
Barnes Advertising, 740-453-6836 firstname.lastname@example.org
To submit your business growth, obstacles, and challenges, write to: Johnny@signindustry.com
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