With most COVID restrictions lifted and companies making their best effort to return to “business as usual,” there is still an ongoing ripple effect from the pandemic and a few things to watch this year. Print + Promo Marketing Magazine released their State of the Promo Industry this month, which includes the biggest issues to look out for throughout the rest of 2022.
More than a dozen executive orders were signed by Biden a year ago when he first took office that were in response to the pandemic. These orders included additional stimulus checks, unemployment benefits, funding for state and local governments, a national vaccine program and more.
This was a small boost to the economy that the promotional products industry needed to see after suffering major lows in 2020. This industry relies on a growing economy, as marketing or advertising can often be victim to the first cuts by businesses.
We see now that inflation would only be temporary if supply had quickly caught up with demand, but that was not the case. Many supply chain issues and disruptions came about from overseas lockdowns, shipping container shortages, containers not making it to port, and a national truck driver scarcity.
In Biden’s State of the Union address, he proposed a “Made in America” strategy approach to combat inflation. One of the executive orders related to Made in America, which was intended to increase the amount of federal spending on products made by American companies. The Federal Trade Commission (FTC) also stated that marketers making unqualified Made in USA claims on labels should be able to prove that their products are “all or virtually all” made in the United States.
Sourcing American-made products that suppliers can decorate right here in the US has been one solution to help maintain a positive business trajectory during the pandemic. Specifically in the midst of material shortages and overseas delays. Promotional products that are manufactured right here in America can often be sent to the customer with a faster production time. The general consumer has been more understanding of supply chain issues and delays – when previously they were able to get a customized item on a rush within a week – however if a promotional item is needed quickly, Made in the USA is typically the best route to go.
Two years after the states first implemented facemasks, lockdowns and social distancing, there has been a noticeable absence of the public wearing masks. New guidelines have been released by the Centers for Disease Control and Prevention (CDC), which states that more than 70% of the U.S. population is in an area with “low” or “medium” COVID-19 community level and masks are not recommended or required for the general public.
Although promotional PPE (personal protective equipment) had been an alternate way for the promotional products industry to continue surviving in business, the landscape is shifting and changing again.
With the decline in mask wearing and PPE, this is the closest we have come to a return to “normalcy” since pre-pandemic. However, we are still not able to declare the pandemic to be over. It’s been a continuous education process for promo suppliers and distributors to make and revise COVID safety rules for their business as things change.
Throughout the pandemic, many were faced with the decision of do I have a job, or do I take care of my family? If one is to weigh out those options, family will win out every time.
According to the Bureau of Labor Statistics, 4.3 million Americans quit their jobs in December, down slightly from the record 4.5 million in November. This period has been referred to as the Great Resignation. Typically, this includes low-wage workers who are tired of being low-wage workers. Because there is a labor shortage, many companies have increased their hourly rate to attract new employees, and this is where many of the lower wage workers are heading for. Alternatively, the unemployed decide not to pursue a new job because the lack of childcare or they have had the time to reassess priorities and shift their paths.
The promotional products industry has absolutely suffered when it comes to skilled labor shortages. The U.S. Bureau of Labor Statistics reports that the printing industry employment decreased by 2,800, or 0.7% last year, to 375,000, after decreasing by 47,300, or 11.1%, in 2020. However, as the economy is opening back up, employment is starting to slowly recover.
Factory workers and machine operators have been the hardest employees for promotional product suppliers to come by and retain. It will take effort on the company’s part to build quality teams back up. With a lack of experienced printing employees, businesses are now looking to find people with a passion for learning the industry, who may have little to no experience, and teaching them.
Focusing on hiring more women in the industry is another pool to pull from. ResumeBuilder.com reported that female employees were disproportionately pushed out of the workforce during the pandemic, and 35% of women who lost their jobs remain unemployed.
Attracting skilled and reliable employees, and retaining them, has been a huge priority for promotional product companies. The businesses who are successful are often offering higher compensation and benefits with more schedule flexibility.
Once that new team is in place, the key for promotional distributors and suppliers is to keep communication across all departments. Promises made by the sales staff to the customer must be able to be fulfilled by the production teams. Keeping this communication open and flowing is very important.
Labor has been just one of the critical supply chain issues most industries, including promo products, have been facing. However, there have been some positives. For example, air shipping time overseas has been fairly reliable. The transit times are still slower than pre-COVID times, but the average of 4 – 5 days from China for example, has not increased since 2020.
As far as shipping via ocean freight, experts believe the backlogs may start clearing up later this year. As reported in February, the number of ships waiting on the busy West Coast ports was down to 78 from a peak of 109.
As we hang on to the positives, we are still dealing with international lockdowns. Recently, Shenzhen, a major shipping hub in China, incurred a lockdown causing the standard ocean shipping times to greatly increase. Pre-COVID, an average turnaround time for ocean freight to the shipping warehouse was 21 days. Currently, it may take up to 80 days for the freight to become available in the US.
The current Russian invasion of Ukraine is also expected to make a huge supply chain impact. Ships in and out of Europe are being forced to reroute and fuel costs are rising.
As shipping prices continue to rise, that will trickle down to promotional companies having to increase their product pricing. Despite supplier and distributor’s best efforts to keep costs down, promo product prices are expected to continue to increase throughout 2022.
The final prominent issue within the promotional product industry is product availability. In the Alliance’s “State of the Industry Update, 1st Quarter 2022,” 92.4% of respondents said materials shortages would be the biggest challenge their companies face this year.
Since the pandemic began, it does seem that on the promo side, there has been some slow improvement in securing more goods and inventory. Suppliers are adapting by focusing on products they can easily stock and produce at a quick turnaround time, which in turn help distributors.
The biggest concern is specifically affecting the printing industry. There is a huge shortage of paper. No one has it! Paper mills were subject to all the same challenges we have been seeing – not enough quality employees in the workforce, shipping delays, and material shortages. Plus, with the huge surge in online shopping, a lot of paper materials had suddenly been seized by boxes and packaging. Finished paper products are getting harder to come by.
To keep business surviving (and ultimately thriving), it’s imperative for promotional distributors and suppliers to continue fostering honest customer relationships. To be upfront and truthful with customers will go a long way in this pandemic marathon we have been running. Those who are able to evolve and adapt to the ever changing supply chain situations will be in the best position. Although there will always be challenges brought on by the economic and political landscape, it’s important to remember that we are all in this together.