Printers' profits get squeezed as the recession slows down presses.

Commercial printers with annual sales of $20 million to $50 million are being especially hard hit in the printing industry slump, say printing industry experts. They have a tough time buying the new equipment they need to compete with big rivals and paying their overhead in the shrinking Los Angeles printing market.

"There will be a big decrease in the number of printing shops in Los Angeles this year. There are too many weaker sisters. The middle sized-printers will get smashed," said Chris Madison, president and owner of Los Angeles-based Colorgraphics Inc. The firm, which mainly does general commercial printing and provides four-color separation services, reported $55 million in sales for 1991.

"Printers who have good cash positions and good relationships with banks will be the only ones who survive," added Gene Parana, president of Los Angeles-based Anderson Lithograph, which prints advertising inserts, financial reports and general commercial jobs. It reported 1991 sales of $105 million, up from $95 million in 1990.

Clients are reducing quality -- opting for less expensive work -- as well as quantity in their printing orders. Though the cost-per-piece goes up when they buy fewer copies, total billings typically go down, Madison said. As a result, printers have cut administrative jobs where possible. Occasionally, they have had to eliminate production and printing positions, he said.

And with clients tightening their marketing budgets, billing delinquencies have increased from 60 days to 120 days in the past year. The slower cash flow especially smears midsized printers who -- trying to compete with industry leaders -- bought expensive new equipment and now are scrambling to pay for it, said executives with major Los Angeles printers.

"Companies who bought lots of equipment -- and didn't have the marketing to sell product and keep it running -- are going out of business," Madison said.

For example, Pasadena-based Welsh Graphics filed for Chapter 11 bankruptcy protection in mid-February. The firm had incurred too much debt in buying equipment and said in its filing it had to take the action to work out an alternative payment plan with its major creditors. Welsh reported sales of $33 million for 1991, unchanged from the year before.

Even printers that have been doing well are affected by the surrounding economic malaise.

"We depend on large printing jobs from homebuilders and car makers," Parana said. And big advertisers have cut back on their printing orders just like the little guys, he said.

Even companies that haven't been hurt by the recession are trimming their printing orders, albeit in sometimes subtle ways. They don't want to look as though they are spending lavishly when competitors have axed their printing and promotions budgets. As a result, they use four-color printing on fewer pages, have fewer illustrations and order fewer copies, Parana said.

Printers say tough government regulations also are slashing into profits. Most printing operations generate toxic solvents, air pollution and noise that must be controlled, Madison of Color Graphics said.

Printing profits would have fallen lower if not for the fact that paper-supply companies, seeing the paper orders decline with dwindling number of pages being printed, reduced prices to their lowest level in three years, said Ewle Grossberg, chairman of George Rice & Sons, Los Angeles. His printing firm reported $117.4 million in sales last year, up from $107.2 million in 1990.

Diminishing business volume exacerbates the excess printing capacity situation in Los Angeles, he noted. But, Grossberg said, the printer's lament is the customer's joy because every printer is trimming margins to come in as low bidder.

Like Madison of Color Graphics, Grossberg said printers must have state-of-the-art printing equipment or they can't bid on the more lucrative contracts. Hardware and software to enable printers to set type, retouch color and lay out pages save labor costs and clip production time, he said. Firms that want to bid on high-quality color printing jobs need to buy new presses or modify their existing equipment, Grossberg said.