Cup-a-Joe

I just read this factoid.  Per SmartTrend News Watch, the top five publicly held companies in our industry which have the most potential for earnings growth are:  Deluxe Checks, RR Donnelley, Consolidated Graphics, Cenveo, and InnerWorkings.  Who had the top potential?  InnerWorkings.  Now let me ask a Sesame Street question — who doesn’t look like the others?  Who’s not really a manufacturer — yet is considered a printer?  What does this portend for the industry?

This past week was a real eye-opener for many printers in Texas as one of the state’s best-known firms, and one of a handful which had been owned by the same family for over 100 years, shuttered their doors. Padgett Printing was a top echelon company for the vast majority of it corporate life. It was a company which utilized the latest technologies and was known for being a good corporate citizen. The family run business had a solid management team. So, what happened?

As is probably true of many firms in this recent industry depression (let’s not mince words), it was a victim of its own success. For the past 20 years, like many other firms in Dallas/Fort Worth, it grew at rates far exceeding standard industry growth. Investments were made in equipment. Personnel. Infrastructure. It was a good time to be in the print industry – and a profitable one. But, who could foresee the train wreck that was 2008 and has continued through 2011? Thus, like many firms in our industry, what seemed to have been built on solid ground, collapsed with the tremors created by a major economic recession and major shifts in print purchasing.

We can argue all day about what should have been done or what could have been done – but we really don’t have access to that insider information. And that’s moot. But there are lessons to be learned.

The days of mass consumption of print growing in excess of GDP are gone. In the past decades, in order to grow and be a “successful” printer, one had to add more and larger presses. You went from a duplicator to a 20″ press to a 28″ press to a 40″ press to ½ webs or more recently, long perfectors. Along with that growth came more debt – and more iron to feed. In the past, one could ride out the economic cycle — but not this one.

The sands of print are shifting and if one is not looking carefully at the road being traveled and not willing to think strategically, the road could rapidly disappear. The “build it and they will come” philosophy which worked for many years is a dead end. Today’s firm needs to understand the market dynamics of visual communications (not just print) and realize that success is still possible, but don’t plan on taking the same road as your predecessors.

On a final note since we’re speaking about different roads.  Check this out.

One of the key issues which has been raised by many folks regarding the Internet world is the financial model.  How do you pay for this stuff?  This has specifically been the question when it came to the world of newspapers and publishing.  It seems that things are a changing.

Several studies recently reported by “News & Tech” indicate that online publishers are beginning to develop “for pay” solutions – which is crucial for the success of content on the web.  A report from FTI Consulting indicated that a landscape in which consumers will pay to receive news and information on their mobile devices — a reversal from how consumers perceive content on the Web.  The firm stated, “The data … suggests that the public’s desire for consuming content on-the-go will drive strong growth for e-reader friendly devices. And these models hint at a return to paid subscriptions and a print-like advertising model.”

Another study by the Newspaper Association of America (NAA) stated that newspaper websites continue to dominate the Internet landscape.  Citing analysis conducted by comScore, NAA said that newspaper websites attracted 102.8 million unique visitors last  September, 61 percent of all adult Internet users. The survey also indicated that newspaper websites reach 55 percent of 25-to-34-year-olds and 73 percent of individuals in households earning more than $100,000 a year. “This data from comScore reinforces how newspaper publishers are leveraging original, high-quality content to build a powerful and engaged audience in the digital space,” said NAA President and CEO John F. Sturm in a statement.

Yes, everything is changing — but there are still plenty of opportunities.  We just can’t keep looking under the same bushes.

I had a thoughtful conversation the other day with one of our members – a long-time sales rep and sales manager.  It was regarding the concept of value-added. He had seen a recent “Hotline” article in our newsletter and was concerned it was sending a message which was negative to the sales force. read more »

Trade associations tend to move relatively slowly – OK, very slow – when dealing with industry issues.  Boards are comprised of diverse leadership and frequently the staff has a different perspective on industry concerns.  But I was very glad to see the action which the Printing Industries of America’s Board of Directors took late last month.

Printing Industries of America (PIA) is going to take an aggressive role in working with its affiliates (there are 24 of us), and other organizations, to develop messaging to reinforce the “value of print.”  PIA developed material and a web site last year, but it was PIA Southern California which took the bull by the horns and created a serious campaign, which may very well be the one adopted by the national organization.

Although we may not see anything in the next month or two, this action will help focus the industry’s efforts to combat the insidious messaging that print is dead.  Congratulations to the Board of Directors. They stopped kicking the can down the road.

These past few weeks have been awful quiet in regards to the print industry.  We continue to watch the economic fist-fight between President Obama and the Republicans and wait to see the results.  The Libyan mess has been relegated to the back pages – but the instability this has created in the Middle East is being reflected in oil prices.  Not a good thing for the economy, or our industry.

I’ve been reading a variety of blogs and articles on print and its “changes,” and continue to see a diversity of opinions.  One group will say – “the industry is not going away,” while another is saying “the sky is falling.”  Hmmm.  Maybe we can all agree that the next few years are going to be “different.”

The SFI/FSC fight of who’s holier-than-thou is filling up the blog pages and there still continues to be cynicism on producers and consumers on the whole issue.  Yet, one thing we should not overlook is that companies which have solid sustainability practices (this means a lot more than “being green”) have found ways to reduce their costs of operation by minimizing waste, in materials and production – and that’s a good thing.

I see that USPS has put IMb on the back burner — again.  Still too much confusion – and Postmaster Donahoe has bigger fish to fry.

Oh, baseball fans, note that the Texas Rangers are 8-1.  Not a bad way to start the season!

This past March Motheral Printing hosted an Association breakfast meeting on the generation “gap.” It was one of the best programs I’ve seen on this topic – and I’ve been to a few.

It was led by David Danforth with Eastfield Community College and Dr. Rick Lumadue with Texas A&M – Commerce.  These college professors, who are both Gen X-ers (born between 1964 and 1980), were very entertaining and candid with their observations.  These were not guys who are consultants or doctorial candidates writing research papers.  Every day they are seeing the new generation (Millennials) in the classroom, and they are also interfacing with the Boomers (administrators).

The key to this program was the observation that the upcoming Millennials (born between 1980 and 2000) are motivated very differently than the Boomers or Gen X-ers.  They communicate differently—via blogs IMs and text messaging rather than phone or face-to-face preferred by the older generation, who are frequently their supervisors.  They are heavily influenced by their parents and peers and are very team oriented.  Where Gen X-ers were highly independent and self-motivated, the Millennials need structure and very focused leadership. Millennials are multi-taskers and are not use to having lines of authority – they ask “why.”

Given that our industry’s workforce composition is beginning to change, managers and supervisors need to understand the dynamics of the groups they manage and how their own biases can affect their leadership. The more we can learn about ourselves and our workforce, the better leaders we become.  If you would like a copy of the PowerPoint presentation used by Danforth and Lumadue, please contact me.

I had an insightful conversation with a member recently.  He and his spouse had been in business for 30 years and primarily served the small business community as well as select large accounts.  With nothing larger than 11×17 presses, they had carved out a nice business, as have many printers over the years.

The company has gone through dramatic re-shaping over the past five years.  Where at one time they employed over 15 employees, they’re down to the husband/wife and two part-timers.  No, they did not have their heads in the sand.  Over the years they adopted desktop prepress and adopted short-run color copiers and still utilize their offset presses.  This is not an isolated story but one that is being seen more and more frequently across the graphic arts landscape.

Yes, the printing “pie” has gotten smaller, but there’s something else at work which is truly affecting our “ma & pa” printers.  It is corporate buying patterns.  As corporate America has downsized and become leaner, they have started to outsource to integrated buying firms.  In our industry those firms come in different names, but are familiar — FedEx Office; Staples; OneSource; WorkFlow One, and Standard Register to name a few.  Their model is simple.  Purchase through their centralized systems and you will see significant savings.

This has played havoc with the commercial/quick printer who was already seeing his slice become smaller because of Internet based technology.  In this new world, the decision of using a local supplier in not an option.  No longer were competitive pricing, service, and ability to meet deadlines important.  The driving issue was corporate profitability.  Squeeze the “fat” out of the system had become the mantra.  In search of this year’s improved earnings per share, things changed.  Yet, one has to ask at what cost to manufacturing? Employment?  The Consumer?  From the macro economic perspective, were we that much better off?  And can anything be done?  Probably not in the short term — but somewhere down the road, some corporate mogul will realize that there are hidden upsides in using vendors who are committed to doing the right thing for a company, not the cheapest.

This past month saw interesting press releases from two of the industry’s biggest equipment manufacturers – Xerox and Heidelberg.  Of the two, Heidelberg’s concept of a mixed-media machine may have more of an immediate play; although ink jet may be the long term solution for print providers.

On an industrial relations note, there are some interesting things going on with unions in the public sector, where practically all of the unionization growth as occurred over the past 25 years. With states talking about cutting and restructuring, union leaders are becoming  very nervous and are talking about unleashing $25 million to counter the  efforts of the states – who are doing the right thing to protect their taxpayers.  As most folks know, I’m not a proponent of organized labor.  It’s not that labor should not have a voice.  The problem becomes when compensation/benefits become institutionalized and when the business/government entity needs to make changes to survive, the labor institution would rather kill off the host.  There must be a better way.

Speaking of jobs.  The recent Republican budget proposal to cut $61 billion this year is an eye opener.  Which raised a comment, a valid one, from the Dems.  These cuts could represent upwards of 800,000 jobs.  So one must remember that cutting the deficit/government spending will create some nasty side effects.  Are we as a country willing to do what we have to do?  Do the politicians have the moxie to do it?  It could very well cost them their jobs.

And for you monetary/fiscal weenies (thanks for the article James), check this article out in WSJ’s Market Watch. I think the author addresses many of the issues which have created the imbalances between Wall Street and Main Street.  Although I tend to vote red, I do have a concern with Congress’ un-willingness to deal with many of the issues which got us in this mess.  I for one would like to see a new Glass-Steagall bill enacted – and we can thank our fellow Texan Phil Graham for the original bill’s demise.

I was having a brief conversation with a friend of mine.  He is a semi-retired banker with an expertise in small business and some history with printers.  He made an observation which I found interesting.  “No one is printing any more catalogs, brochures, annual reports.”  He noted that he no longer sees car companies producing brochures, he’s receiving electronic annual reports, and he no longer gets a Sears or JC Penney catalog.  Ergo print is dead.

Yet, if we look around as I observed in my last blog, print is still everywhere.  It’s just being produced differently and through different channels, but he does not know that!  Our biggest challenge as an industry is demonstrating our viability as an effective mass communication solution.  We no longer compete with other printers – but with other media and changing perceptions.  PIA Southern California’s most recent campaign, “Choose Print,” targets that challenge.

As I explained to my friend, print is still a very viable tool – but it’s just produced differently (on demand and short run print) requiring different equipment/technologies and there are still opportunities.  And that brings up another point.  If you’re not talking to your banker about your company’s viability and that print is not dead, you will face serious financing challenges when that time comes.