Commercial printers not out of the woods
Of all the industries with a target on their back during the Great Recession, printing appeared to have one of the biggest bulls-eyes. When tough times arrive, the first instinct in business boardrooms is to cut advertising and marketing, which affects printers in turn.
There has been some industry consolidation, with big players like Quad Graphics acquiring other printers and establishing a greater presence in the local market. Adding to print's discomfort is the demise of print-consuming clients, including catalogers like Wisconsin Cheeseman.
Yet the recession thus far has proved that print will continue to be a viableÃÂ channel in cross-media campaigns. Some printers expect revenue to return this year to pre-recession levels, but they are not prepared to say the industry has put the recession in the rearview mirror.
Chris Carpenter, CEO of Royle Printing, said the full-scale impact of the recession hit his company in 2009, blunting some momentum it had going into that year. "When general business is bad, they cut what they consider to be incidentals – marketing and advertising – and print is obviously a channel of advertising and marketing, so that was impacted and, in turn, we were impacted."
Norm Tuttle, president of Tuttle Lithography, wishes the recession was a distant memory, but he's seen too much roller-coaster action to confirm that. "In the past two years, every time we thought we had a backlog, it went away," he stated. "I think everybody is a little hesitant to declare we're out of the woods."
As with most industries, withstanding the recession required making difficult decisions to downsize staff or engage in price wars. Print executives explain their industry has always been an extremely competitive market because of overcapacity – more production capacity than actual demand for work. "I described to a number of people that some of the pricing we've seen in our industry was somewhat desperation," said Vance Kapalcznski, president/CEO, American Printing Co. "It's extremely competitive, and sometimes competitive isn't even the right word."
Consumers might get short-term price benefits but, in the long run, Kapalcznski said they have to be concerned about who they might be partnering with because the current price levels are not sustainable due to increasing costs for fuel and print consumables such as paper.
Kapalcznski believes the price paring has reached the point where some printers are willing to run at a loss in an attempt to weather a storm. That can make it challenging for other printers to hold on to clients while others are simply trying to survive, which brings the conversation to value and the depth of the business relationship. The value proposition is no longer about just the print job.
This expanding role is a sure sign customers are looking for more of a one-stop shop, and that printers must get to a different levels of engagement, including executive-level management, with customers.
"We're able to convince organizations that there is more to it than just producing an inexpensive brochure," Kapalcznski said. "It's the overall success of this brochure. Why are you printing it in the first place? What support collateral or communications needs are you doing on the front and back end? What are you trying to accomplish with this? And how can you best use our resources to accomplish those tasks?"
Clients are looking for more of a one-stop shop on a variety of fronts, compared to pre-recession days. American Printers acquired The Printing Partners about 18 months ago, which helped the company move into short-run offset printing and digital. Now, customers approach with requests not only for traditional printing, but short-run digital, variable printing on demand, and even things like Mac support and design – "things that we historically have not gotten involved with," Kapalcznski noted.
For the workforce, it means adding people with different capabilities, including IT staff, systems support, and project management personnel.
According to Carpenter, some of the conventional wisdom that emerged at the start of the recession, that newspapers and magazines are on the way out, has been disproved. Contrary to popular belief, Carpenter said the fastest-growing part of the magazine print market is the 18- to 34-year-old demographic. "People tend to think the younger generations are strictly about Twitter or smart phones," he noted, "but while they certainly use those, 18- to 34-year-olds are the fastest-growing segment of magazine print readership.
"The reality is that print versus Internet, there are a lot of pros and cons, but there are a lot of pros for both. I think you're being foolish to be dismissive of one channel over the other. The smart publishers we're dealing with are using a multi-channel approach, which includes an online presence and print."
Sometimes a recession can be a great driver for transformational change, and this one has accelerated moves into short-run printing because it allows for less "spoilage," or unused pieces, and is therefore more efficient and cost-conscious. "We had to move in the direction that the industry has been saying it's headed, for a long time, which is shorter-run, faster-turn, flexibility, and multi-media marketing channels," Kapalcznski noted, "and those are all the changes we've made over last two years."
In the longer view, printers agreed that investments in new technology and process made over the previous 15 years – in computer to plate, in automated presses, and in advances like absolute resolution – helped them become more efficient before Rome began to burn.
For American Printing, the acquisition of The Printing Partners brought new capital equipment. For Royle Printing, which recovered in 2010 with a modest increase in sales and expects to return to pre-recessionary levels this year, the installation of a new web press two years ago was like replacing a Model-T with a Lexus. "Light years' difference," Carpenter said, "not only in quality and the efficiency, but the labor productivity of the new equipment is far ahead of where we were even three or four years ago."
Not everyone saw the recession coming, let alone its severity, but those who continued to play offense probably fared better than the industry as a whole. Royle's new press requires about 40% less labor than a similar piece of equipment that had half the yield. Carpenter said he would not have wanted to be in print today if the company had not made such investments.
The new web press was installed in 2008. "The lead time on that was 12 months out," Carpenter noted. "We had been planning for the new press based on where we were going as a business, and our strategic plan, beginning four years ago. Through all the research we did on the type of equipment we wanted to buy, some may have questioned why we made that investment when we did, but by the same token, those investments really helped us weather that storm and now puts us a on a pace to really grow our business into the future."
Before the recession, Tuttle Lithography invested heavily in digital printing capabilities – a decision that has paid off handsomely. "It's fair to say digital has really kept us out of real trouble," Tuttle said. "It now makes up 25% of our business."
Tuttle also cited press automation and the precision of absolute registration. "With our latest press, the same signal goes to prepress from the computer to image the plate, and the information also is sent to the computer on the press and the pressman starts the job. The computer automatically makes all of the settings for him. It's more efficient, you don't need as many people operating the press, and it's faster."
Absolute registration is another efficiency-driven innovation. In the old days, printers used film to make the plate, but had material that would expand and contract, Tuttle explained. "Now when we're putting the image right on to the plate, it's absolute registration [no variance]. It's a money saver and a time saver."
With all these changes, the name of the game today is timing and quick turnarounds on print jobs. "When people want something, they want it now," Tuttle noted, "and print quantities have gone down considerably."
As print tries to make the recession a distant memory, there is more an embedded sense of "new normal" than a restored sense of normalcy. Said Kapalcznski: "I think what we're going to continue to see is sort of the roller coaster, from a printing perspective, with modest growth. Those organizations that see something other than modest or flat growth are those that bring value that is significantly different than the traditional, 'We provide you printing.'"
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