Cup-a-Joe

It’s no longer news in the print industry that competition is much greater than ever before.  Not only are you fighting the price war with the guy across the street, but you’re also fighting with the guy located out-of-town/across the ocean AND alternative media.  In my recent meanderings, I’ve run across two more.

The first is the “green” blogger who condemns all print.  This individual lambastes print as evil, but truly doesn’t do their homework.  This type of editorializing concerns me because more and more individuals deal in sound bites (bytes?) and thus don’t think beyond what they just read or heard.  Case in point is this site where the author shares this tidbit, “Nearly all the industries have their shares in polluting the environment but out of all the industries, the printing industry is the major cause to pollute the environment.”

Another recent discovery is the USPS’ “Small To Medium Enterprise Solution” project which will launch next spring on a trial basis in Austin.  Kudos to the USPS for trying to find ways to make direct mail easier to use, but this model is not one that is going to excite the vast majority of small to medium printers in the U.S. who are already fighting UPS, FedEx, and Staples for market share.

I’ll be the first to admit that there is no simple solution to this complete change in our competitive landscape – and there is not putting the genie back in the bottle.  Ownership and management must realize that selling is no longer just a process of discovering who is buying and providing them with a price.  It has become much more complex.  The selling cycle is going to become longer and the tools which we use to “sell” print are also much more complicated.  The old sales models are not going to work, and there are plenty of other industries out there with good models to copy.

An article last week made mention that Wall Street’s banks had eased their credit terms to hedge funds and private-equity firms that borrow against securities and trade over-the-counter derivatives.  To quote the great Yogi — “It’s deja vu all over again.”  There is more cash sitting on the sidelines than there’s been in a long time, and these guys get more access to additional dollars so they can speculate.  Wow, what a country!

Elizabeth Warren, who leads the congressional panel overseeing the Troubled Asset Relief Program, said U.S. taxpayer bailouts helped Wall Street and not small banks.  TARP “worked really well for the Wall Street banks, but it didn’t work well for the rest of the banks in the system,” she recently said on Bloomberg Television’s “In the Loop with Betty Liu.”

I hate to say it, but I think that our financial system is out of sync.

Meanwhile, the folks who make this country great, our blue collar workers and small business men and women are getting the short end of the stick.   Our politicians are not willing to find creative ways to help businesses and people, get off the sidelines.  There’s talk of more money for education, job creation, and small business lending.  Why not just stop writing laws for a while and let the system move forward.  Get creative with finding ways to support small and medium size businesses to get the money they need to start producing and hiring — and don’t expect it to happen overnight!  Too many folks in our country don’t understand that business (and consumers) won’t start hiring/spending until they know what’s going to happen over the next 12-18 months.  As long as the Administration and Congress keep talking about more laws and more deficit spending, more the reason folks will stop, wait and see.  Not a good way to kick-start an economy.

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.

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’m observing the European meltdown, and the literal Greek Tragedy, which is presently occurring.  Although one wishes to blame the Greek populous and poor management by its politicians, it’s really all about entitlement.

Over the years, the Greeks have become accustomed to generous (by world standards) entitlements which quickly became their God-given right.  Now, when it’s time to re-trench for the good of the country, the riots have begun. read more »

In the past several weeks I’ve been in Southern California, Chicago, and Pittsburgh.  In each of those regions of the country there was a bit of optimism in the in air.  Granted, no one is happy with our nation’s economics.  The Tea Party is having hissy fits over the Administration’s direction, and the health care supporters are in nirvana.  As for the print industry in those areas of the country as well as the MidAmerica region, there is a glimmer of potential.   It’s like baseball.  When the season opens, everyone has a shot at the pennant, or at least being a division winner.

Yes, the business is not what it used to be, and there are still too many “dead printers walking,” as Tom Crouser says, but we’re seeing signs of life in the advertising/print community.  And as us baseball fans know, spring is always a great time of the year.

It’s been a pretty busy time the past week; thus, blogging was not top of mind — but it should have been with all the recent industry happenings! 

I saw that Bowne & Co., where I started my industry career many years ago, was bought out by RR Donnelley.  This repositions RRD into the document management business and gets rid of their biggest competitor in the financial printing biz.  This acquisition shows that they are further distancing themselves from the “traditional” world of print.  Given that Quad recently purchased World Color/Quebecor and Transcontinental spun off their U.S. facilities to IWCO, the landscape is changing rapidly.  And did you see that Heidelberg and Komori won’t be at GraphExpo this year?But the real question is, what does this mean to the privately held general commercial printer who is the backbone of the industry? 

I wish I knew, but I’ll say this much.  If the canaries are dropping off right and left, there’s something going on in the coal mine.

Did you see the “Advertisement” regarding the paper trade dispute in the recent issue of Graphic Arts Monthly?  My friend Bob Lindgren has been passionate about this issue (as are quite a few printers in Southern California).  His position, which I think has real merit, is that paper which is the largest component of cost (other than labor) for most printers “is about to become less plentiful and more expensive because a group of U.S. paper mills are trying to persuade the government to impose a tariff on certain types of coated paper from Asia.”  If you are not up on this issue, you may want to do a bit of research.

What I found interesting was that on the page following this “ad” was Trish Wales “Paperwatch.”  Trish stated that “These duties, if imposed could result in higher prices, but the likelihood is low.  Only sheets are included in the petitions, so large volume web grades will not be affected.”   Hmm.  Question Trish.  Supply & demand.  If the supply is reduced and demand remains the same — what happens to price?  Also, the vast majority of printers live in the sheetfed world; so, how can you so easily discount the impact to those folks?

Well February is quickly coming to a close, and I will share a bit of good news.  Word on the street is that estimating activity is busy — and that is normally a very good sign.  Keep the faith.

Newly elected Massachusetts’ Senator Scott Brown’s campaign frequently referenced the number forty-one — signifying that if elected he would be the 41st Republican senator.  Needless to say, the Democrats worse nightmare came to pass yesterday.  No longer do they have the leverage of 60 votes in the Senate.

What does this signify for small business — it’s momentous.  Although the health bill could still pass, the likelihood is greatly reduced.  Cap and trade is now no longer a slam dunk and any potential bills regarding “card check” become much more difficult to pass.  These are the pluses.

But let us not forget that for the past decade — and more so the last several years — we have congressional representatives who have become strident in moving their position forward rather than trying to work for a common good.  We need more statesman and less politicians in Washington.  Because there is a need to reform the health care system, and climate change IS an issue, and we do need regulations for financial institutions.  We just need balance and individuals who understand it’s not just about keeping the extreme left — or right — happy.

Let’s hope 41 understands these issues and Congress puts aside it’s “payback” mentality.

As business people, we can truly say that 2009 has not been pretty.  Yet, all of us can be thankful for many of the blessings we enjoy.

This became very clear last week when I celebrated a very special birthday — 60.  At the celebration, I was joined by my children from California and Texas along with long-time close friends, who really have become family.  It’s these folks, and my spouse, who really are life’s blessings.

It’s this time of year, as we celebrate the holiday season and the upcoming New Year, when we can easily be consumed by the frantic pace, and the “what-ifs” of life.  So, kick back and chill a bit.  Look at the many positives in your life rather than focusing on the negatives — and we all have those!  Don’t even get me started talking about back pain and arthritis *grin*

So, enjoy the season and let’s all look forward to a better 2010 — because it WILL be better.

Here’s wishing everone a wonderful Christmas and a prosperous New Year!