One of the common complaints heard during these challenging times is the lack of price/cost discipline found throughout the industry. Our industry has been fraught with over-capacity for years and individuals who are willing to lower the price so they can “make it back in volume.” A more recent occurrence are the charlatans who create on-line bid situations which guarantee their client a reduction in print costs, the intermediary a nice fee, and some poor schlemiel of a printer an opportunity to see how low a project can be priced. The results are normally a shoddy product and an unhappy client — with new pricing expectations. When will it all end?
Last month I had a conversation with a member who against his better judgment decided to accept an invitation to be part of an online bid. A project which normally billed well north of $1,000,000 ended up being “won” with a $300,000 bid. Where’s the sanity in that? In another conversation, this time with a well-established and well run inplant operation, their management was challenging their cost structure because more and more of their work was being underbid by the commercial market. These symptoms of “dead printer walking” really concern me.
The assumption many of these “low-balling” (I’m using a nice phrase) firms have is that the economy will return to its pre 2008 hey-day and things will be great again. My friends that’s not going to happen. Today’s print market is at 2004 levels (per Dr. Joe Webb) and it will be many years before we see 2007 levels. It’s time for our struggling brethren to REALLY look at their opportunities and realize that it may be time to hang up the spikes.
For the health of the entire industry, companies can not continue to bid prices which just cover material, labor, and costs of their equipment debt. Suppliers can not continue to extend credit to “at-risk” firms. This not only jeopardizes their existence but creates tremors felt by the entire industry. Manufacturers can not sell equipment based on making “the numbers” for the quarter. And as hard as it may be, companies are going to have to walk away from business regardless how much they’re asked to meet the “low-ball” price. Meeting that price is not a short-term win – it’s a long term loss. What makes us think that customers are going to let the industry “reset” their pricing once “good times” are back again? It’s a no-win situation.
The future of print is very viable if print providers have the profit margins which will allow them to re-invest in new technologies and create new business models. That can not happen if dying firms are setting the price levels. It’s time to break the chain.
If you have not been paying attention to Clean Air issues — you better start! As an industry, offset lithography has been a target for good reasons. We use volatile organic compounds, which are precursors to low level ozone which can create health issues, and print producers tend to do business in heavily populated areas. These areas are continuously having the EPA crank down on the restrictions. This summer the EPA will set new ozone standards which will adversely affect many cities such as Austin, Oklahoma City, Wichita, Tulsa, and East Texas within the next few years. Although some digital technologies may remove the target from the industry’s back, that reality is many years into the future, and the regulations are impacting today’s industry in the midst of the most sever economic downturn in its history. Continue reading
I’m sitting at an airport in St. Louis on my way to Chicago’s Wrigley Field. I’m observing the road warriors talking on their cell phones while others hack away at their laptops. It’s a typical summer mix. Ladies in business suits and lacquered nails. Guys in polo shirts and sports jackets, and a smattering of families with kids in tow. But I’ve just noted a foursome which probably has something else on their mind. Baseball.
Two dads and their sons are headed to “the friendly confines of Wrigley Field.” The sons are somewhere in their late teens (it’s harder for me to tell ages now days), but they have something in common – the game. I’m eavesdropping and hearing talk about shortstops and range; OBP; who of their friends is getting a “ride” for their baseball skills, and who is/was a better catcher, Joe Mauer or Johnny Bench (my money is on Pudge).
I’m glad to see this connection which will probably become a common touchstone for all of them. My grandfather and I had that. Although he and I did not have a lot in common, and English was his second language, we had baseball. I still remember him sitting in his favorite chair listening to his beloved Dodgers (in a Spanish broadcast, of course); something he did every day during the season. But it was this love of The Game, which connected us then and now. And makes the game of baseball special for me – and now for my son.
Baseball is on my mind right now. The Texas Rangers are playing decent (it’s before the All Star break) and I’m headed to the Windy City later this week and going to catch a Cubs game. What makes it special is that one of my brothers (there’s three) and my son (only one) will be joining me.
We’re not Cubs fans, but all of us played the game and enjoy the experience of being in a historical ball park like Wrigley Field. Two of us bleed Dodger “blue,” and my son —- he committed the ultimate sin. He became a San Francisco Giants fan when he lived in SF. Now that he lives in San Diego and is following the Padres, we might forgive him. Might. If he starts following that east coast team in pinstripes, he’s out of the will.
The road trip will also be interesting because of the conversations. James (son) is a web architect (he put together this site for the ol’ man) and is very much a Gen X’er having been born in 1976. My brother and I grew up in the printing business and still think that paper is a wonderful vehicle. More to come . . .
I’ve been remiss in putting my thoughts down over the past week or so. Is it due to being busy? Summer doldrums (summer temperatures and haze is upon us)? Or just lack of “thought?” Probably the latter. Regardless, here are some vague thoughts on the world of print and business . . .