SIC 3993
SIGNS AND ADVERTISING SPECIALTIES



This category covers establishments primarily engaged in manufacturing electrical, mechanical, cutout, or plate signs and advertising displays, including neon signs and advertising specialties. Sign painting shops doing business on a custom basis are classified in SIC 7389: Business Services, Not Elsewhere Classified. Establishments primarily engaged in manufacturing electric signal equipment are classified in SIC 3669: Communications Equipment, Not Elsewhere Classified, and those manufacturing commercial lighting fixtures are classified in SIC 3646: Commercial, Industrial, and Institutional Electric Lighting Fixtures.

NAICS Code(s)

339950 (Sign Manufacturing)

Industry Snapshot

More than 5,743 establishments were engaged in the manufacture of signs and advertising displays in the late 1990s. Industry shipments grew from $7.9 billion in 1997 to $9.7 billion in 2000. The largest portion of sales in this market was attributable to signs.

In the late 1990s, nonelectric signs accounted for 34 percent of all specified types of signs, while electric signs made up 28 percent. Of those, 28 percent of electric signs used fluorescent lamps, 20 percent used luminous tubing (such as neon, argon and hydrogen), and almost 50 percent used incandescent bulbs. The most common materials used in making signs (10 percent of the total materials consumed) were polymers and plastics (including vinyl), followed by fabricated metal/metal products and paper/paperboard products. Advertising specialties accounted for less than 15 percent of the total output.

Throughout its history, and especially in recent years, the industry has fought against perceptions of signs as visual pollutants, which must be controlled or even banned except when conveying "vital information." These perceptions often are countered with new stylistic designs and aggressive government lobbying.

Organization and Structure

A sign shop is an establishment that manufactures signs and advertising specialties. Sign shops are located throughout the country, with the greatest number of establishments located in California (about 580 in 1997). In general, though, the largest amount of shipments and the greatest number of employees are clustered in the Midwest and eastern seaboard states. In 1997, with fewer than half the number of firms in California, Illinois' 224 establishments accounted for almost the same dollar amount in shipments—$631 million (8 percent of the U.S. total). Shipments from California, Illinois, New York, Ohio, Texas, and Wisconsin made up 40 percent of the 1997 U.S. total, and 38 percent of the industry's employees worked in those states. A 1992 state-of-the-industry survey reported a significant increase in the percentage of shops doing business in the Midwest, as well as in the nation's central, southern and eastern regions. Furthermore, many sign shops expanded operations to serve a wider geographic base. This expansion was probably the result of a trend toward larger shops, whose greater output quantities and increased sales forces allow them to serve larger areas.

The largest buyer of signs and advertising specialties was the gross private fixed investment industry. The next largest were highway and street construction, eating and drinking places, and wholesale trade.

In 1998, the size of establishments ranged from single-person sign shops to such industry giants as Everbrite Inc. and Signmark, each with sales estimated at more than $110 million. An estimated 75 percent of sales volume in 1992 was generated by less than 10 percent of all sign shops. This top-heaviness may continue due to the increased volume of signs and the prevalence of quantity orders over custom or finely crafted work. The development of computer technology decreases the need for specialized skills and gives rise to rapid-sign franchises, which facilitate same-day construction of signs. According to the 1997 Economic Census, moderately sized sign shops (those with between 20 and 100 employees) accounted for almost 42 percent of total shipments (approximately $3.3 billion).

The 1997 Economic Census showed that the electric and non-electric sign industries continued to experience great expansion and had a combined, all-time high of $7.1 billion in sales in 1997, up from 4.9 billion in 1992. This represents an average increase of nearly 9 percent each year. In the entire industry (including advertising specialties), the average sales per employee totaled $95,526. This represented a 6 percent upswing in profitability compared to 1995, when average sales per employee totaled $90,046.

A 1996 Signs of the Times state-of-the-industry survey reported that about 64 percent of respondents outsourced less than 10 percent of sales in 1995, up from 62 percent in 1994. A total of 23 percent outsourced between 10 percent and 24 percent of their sales, and 13 percent outsourced more than 25 percent of sales. Generally, as indicated in the survey, companies that outsourced more than 10 percent of their business showed higher sales-per-employee figures.

Background and Development

In the nineteenth century, signs and advertising displays were a common sight in both residential neighborhoods and commercial areas. Since electronic media was not yet developed, outdoor advertisements played a more crucial role in name recognition than they do today. Advertisements were often painted on empty brick walls, storefronts, or barns. The growth of cities reduced the amount and visibility of available space and necessitated free-hanging signs made of wood or metal. The advent of the automobile also increased the amount of road and traffic signs.

The public perception of advertising signs as eyesores was slow to develop. If it existed at all in the first half of the twentieth century, it was certainly not evidenced by the popularity of such cultural icons as the Burma Shave signs. With the ascendancy of television, the use of signs as part of nationwide advertising campaigns diminished.

Regulation and zoning have been recurring trends throughout the latter part of the century. Long considered the province of local governments, limitation of signs became a federal issue during the Johnson administration, with the passage of the 1965 Highway Beautification Act. And, in 1990, the introduction of the Visual Pollution Control Act by Republican Senator John H. Chafee of Rhode Island, which made it easier for governments to compensate owners, reflected a national desire to remove many highway signs. Under this legislation, funds earmarked for highway construction and maintenance were to be used for sign removal. Up to $428 million was allocated to the Federal Highway Administration to compensate sign owners who had erected signs before laws were passed that made them illegal. Federal regulation of sign display has been opposed by active lobbying, as well as by publications such as the Wall Street Journal. For the most part, control of sign proliferation has remained on the community level. The potential negative impact to the industry caused by the reduction of advertising signs has been offset by an increased demand for signs of other types.

Electric Signs and Luminous Tubing. At the end of the nineteenth century, luminous signs were a new phenomenon. The hazardous and expensive gaslit method of lighting quickly gave way to electricity. In 1898, Sir William Ramsay and Morris William Travers discovered neon. In 1910, French physicist Georges Claude experimented with sending an electric discharge through a neon-filled tube. The charge produced a bright red light whose color and luminosity could be modified by altering the current. The subsequent development of luminous tubing using inert gases provided a relatively safe method of lighting. Though too expensive for general purposes, its brightness made it ideal for advertising and other special uses. Increased production of hydroelectric power under the Roosevelt administration lowered the cost involved in electric sign manufacture and use and expanded the use of neon as an advertising tool; and as an art form. Two of the best-known neon-using locales, Las Vegas and the Times Square area of New York, were developed during this neon heyday of the 1930s and 1940s. Artkraft Strauss Co., the original manufacturer of virtually all of Broadway's electric signs, continues to be the major supplier for the area. The company also redevelops and renovates signs that are now considered historic landmarks (such as Times Square's famous Coca-Cola sign).

Neon reached the peak of its popularity in the 1950s. Regarded as an example of the opulent decadence of the previous generation, it gave way to inexpensive plastics as the advertising medium of choice during the 1960s. Electric signs in general, however, continued to thrive. Electric advertising displays with moving mechanical parts proved to be attention-getting, point-of-purchase devices. Computer software also allowed for the programming of changeable messages on road signs, advertisements, and architectural signs.

The industry also has been spurred by changes in signs on roadways and other public places. As travel becomes easier and tourism from non-English-speaking countries grows, a trend toward universal symbols to replace or augment public signs has increased demand. The National Park Service was at the forefront of a movement to make recreational signs easier to read.

Current Conditions

The most important development in the industry since the early 1980s was the introduction of computer technology into the manufacture of signs and displays. The ability to program sign design and manufacture through software greatly reduced turnaround time, often to less than a day. It also increased quantitative capabilities and reduced the amount of craftsmanship necessary in production. At the same time, however, there was a resurgence of hand craftsmanship in sign making (perhaps in response to the stylistic standardization caused by computer technology). Major consumers such as Disney and MGM ordered signs made of ornately hand carved gold leaf. In addition, neon had regained much of its former popularity.

Another important industry development was the response to the Americans With Disabilities Act (ADA). Its enactment in 1992 required that all public buildings display architectural signs (including exit signs, emergency instructions, and elevator signs) that are readable by disabled persons, including the blind and visually impaired. In practice, this entailed creating signs with raised characters at least three inches high that were accessible by touch. Since many architectural signs were originally engraved, replacing them with raised-letter signs necessitated complete retooling. The expected increase in sales caused by the ADA had not occurred by the end of 1993. Consumers were slow to enact the required changes, and the federal government was slow to enforce them. In the absence of a test case, the government was unwilling to provide its own interpretation of the act, so businesses, building managers, and architectural firms were uncertain as to exactly what changes were required. By 2000 the industry still had no clear-cut direction from the federal government, as many cases were still being mediated.

In January 2000, Sign Business Inc. reported that the largest LED video display in the world was near completion in Times Square. The display is the NASDAQ Stock Market's new headquarters and will consist of an LED screen 120 feet high by 90 feet wide. Stock price updates and video content will be shown on the screen.

Industry Leaders

According to Forbes , Whiteco Industries (Merrillville, Indiana) was the largest private business in the billboard industry as of October 1996, occupying a 7-percent share. Averaging $850 per month for highway signs and $3,500 monthly in large markets, it had a yearly cash flow of about $60 million. In 1998, however, Whiteco's outdoor unit was purchased by the Chancellor Media Corp., which was in turn acquired by the Lamar Advertising Co. in 1999. Lamar's 1998 sales totaled $289 million, making it the largest player in the outdoor advertising business. The company also markets interstate logo signs and transit-related displays on buses and bus shelters.

Workforce

The industry as a whole experienced reductions in total number of employees, payroll, and production workers in the early 1990s. On the other hand, sales per employee reached an all-time high of $97,700 in 1991, which indicated that many companies were focusing on streamlining their work force. In 2000, signs and advertising specialties manufacturers employed about 89,028 workers, 57,110 of which were production workers. This was up from 72,000 workers (46,200 production workers) in 1994. Total 2000 payroll of roughly $2.8 billion was up from $1.8 billion in 1994. In 2000, the industry's production workers earned an average hourly wage of $12.63.

By far the largest production group employed by the industry consisted of assemblers and fabricators. These workers made up 14.9 percent of the entire work force in 1996, but was down from 17 percent in 1994. The next largest groups were production supervisors at 4 percent, sales workers at 3.9 percent, and general managers and top executives at 3.9 percent. The Bureau of Labor Statistics estimates that by the year 2005, the number of assemblers, fabricators, machine operators, and hand workers as a percentage of the total work force will be reduced by 18.7 percent. Automation may be chiefly responsible for this decline. During the same time span, the sales force was expected to increase by 30.1 percent. This may be explained by the expanded size and geographical client base of the average sign shop. Precision workers, sheet metal workers, and duct installers were predicted to increase by 16.2 percent.

Research and Technology

American industry started the revolution in computer-aided sign making in 1983. The most important innovation gave an operator the ability to key instructions to a CAD-based knife plotter, an instrument that cuts a pressure-sensitive design (such as a logo or lettering) from a sheet of perforated vinyl. This vinyl substrate (the material on which the actual sign information is contained) can then be attached to a signboard or directly to another surface, such as a store window or truck door.

Most large and mid-sized sign companies had computerized systems, and it was estimated that up to 90 percent of hand lettering jobs had been taken over by computers. Startup costs for computer systems range from $6,000 to $35,000, but the increased speed of production reduces turnaround time and employee hours. Orders that previously took six weeks to complete were now done in a single day. The demand for quickly made signs had spawned a number of rapid-sign franchises. Fastsigns, a national vinyl-graphics chain, had 165 stores nationwide by mid-1992. By 2000, it had expanded into the industry's leading quick sign and graphics franchise with 420 stores in the United States and abroad, including the United Kingdom, Canada, Mexico, Argentina, Brazil, and Columbia. In Australia, the company was known as Signwave.

Another computer-based innovation is the electronic message sign programmable through software. Traffic signs benefit from this innovation, as do supermarkets and retail stores. In 1989, Videocart introduced a video screen mounted on the handle of a shopping cart. As the cart passes electronic sensors placed in the store, a message appears on screen relating to a specific item or promotion. At the checkout counter the screen displays news and entertainment features. The Videocart and other electronic merchandising, such as electronic coupon machines, were slow to gain acceptance in the marketplace in the early 1990s, however. Progressive Grocer reported that only 12 percent of chain groceries used electronic media in 1990 and 1991.

Although Norway, Germany, and Japan added important contributions to computer-aided sign making, America was still the leader in the field at the end of 1993. Calcomp, Xerox, and Hewlett Packard pioneered four-color imaging, a process that produces a color image directly onto the substrate by a method similar to that of a laser printer. This technique will bring more color and versatility to computerized sign design.

Advances in the area of luminous sign manufacture have served primarily to increase safety. A solid-state transformer has been developed to replace the core-and-coil construction previously used in neon lighting.

In response to a growing public concern over the rights of disabled people, a "talking sign" has been developed which may satisfy the requirements of the Americans with Disabilities Act. This small, hand-held device, when pointed in the direction of a sign, would activate a sensor that converts the sign's information to a voiced message. The talking sign's limitation is that it only works with signs equipped with the sensors; however, it has applications in public arenas, government offices, rapid rail systems, and other large venues.

Further Reading

County Business Patterns. U.S. Census Bureau Available from http://www.census.gov/pub/epcd/cbp/view/us97.txt .

Darnay, Arsen J., ed. Manufacturing USA. 5th ed. Farmington Hills, MI: Gale Group, 1996.

Dundas, Bill. "Fiber Optics on the Fast Track." Signs of the Times , March 1997.

Hudis, Mark. "All the Signs Point Up." Mediaweek , 15 July 1996.

Industry News from Sign Business. Available from http://www.nbm.com/signbusiness.news.shtm .

Lefton, Terry. "The New Sign Age." Brandweek , 27 January 1997.

Samuelson, James. "You Can't Zap It." Forbes , 21 October 1996.

"Statistics-SIC Code 3993." Gale Business Resources (Integrated). Farmington Hills, MI: Gale Group, 1999.

"A Sure Sign." Entrepreneur , January 1997.

——. "The 1996 State-of-the-Industry Report." Signs of the Times , July 1996.

——. "Vinyl Usage; The Signshops Speak." Signs of the Times , January 1996.

Tymoski, John. "Sign Making on the Internet Goes Mainstream." Signs of the Times , June 1996.

U.S. Department of Commerce. "Sign Manufacturing." U.S. Census Bureau, 1997 Economic Census. Washington DC: GPO, 1999.

United States Census Bureau. "Statistics for Industries and Industry Groups: 2000." Annual Survey of Manufacturers. February 2002. Available from http://www.census.gov .



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