• 323113, Commercial Screen Printing
• 323117, Books Printing
• 323119, Other Commercial Printing (except Screen and Books)

Are we really okay with that?  Where are our associations in this process?  They have not submitted any comments that I can see.  This classification puts the bulk of our industry into a classification called “other.”  How useful can that possibly be?  By the way, that includes flexo and gravure printing.  You can read the whole document  by visiting this link and searching for 323.

We only have until July 12th to provide comments.  It’s very easy.  All you need to do is send an email to (email hidden address not shown) with the subject NAICS12.  Let’s not let this roll through unchallenged.  Let your voice be heard!

Here are my suggestions, based on product, not process.  Maybe they are not the best choices.  I hope others will chime in and make them even more representative of our industry today.

• General Commercial Printing
• Packaging Printing
• Publication Printing and Direct Mail
• Book Printing
• Sign and Display Graphics Printing
• Other Commercial Printing (including Letterpress, Blankbook, Looseleaf Binders, and Devices Manufacturing)

This also raises the larger issue of the entire classification of our industry, which has not been updated by the Census Bureau in any meaningful way for decades.  The next time classifications can be changed is for 2016 data.  We missed the 2012 window.

What do YOU think? Is Quick Printing still a viable category?  Should one or more industry associations step up to the plate and help the Census Bureau more accurately define our industry?  We do a great deal with that data, but if the assumptions are wrong, what does that say about the data?  I’m just sayin’ …

It’s important to remember that, in this kind of environment, every aspect of business becomes more important.  Rapid growth and high margins can hide many sins, but slow growth and low profits reduce the margin for error and magnify the importance of performing almost every business activity as close to perfection as possible.

So, this post is about rework.  Or, more specifically, about eliminating the errors that create the need for rework.  Just how important is this issue?  The impact of rework on profits will vary from company to company, but it’s fairly easy to illustrate the importance.

Suppose, for example, that a company has a pre-tax profit margin of 5 percent, which means that the average profit margin on jobs is also 5 percent.  The average job size in this company is $3,000, and the cost structure of the company is typical for a printing company.  Column A in the following illustration shows the job profitability of the average job.  The selling price is $3,000, and the profit on the job is $150 (5% of the selling price).

Now suppose that just prior to shipment, an error is discovered that requires this job to be completely redone.  Column B in the above illustration shows the financial impact of this rework.  The selling price is still $3,000, but now the cost of materials and outside services has doubled.  Notice that the internal conversion costs in Column A and Column B are the same.  To make my point in this example conservatively, I’m assuming that all conversion costs are fixed and that the company has sufficient unused capacity to redo the job without adding costs such as overtime work, etc.

Because of the rework, the job “profitability” becomes a loss of $900.  Therefore, the total negative impact of the rework on profitability is $1,050 – the $150 the company should have earned plus the $900 loss the company actually sustained.  That’s bad enough, but here’s the real significance.  With a 5 percent net profit margin, the company will need to sell $21,000 of new business just to make up for the negative profit impact cased by the rework ($1,050 / 0.05).

Rework can be a huge profit drain in a printing company – a profit drain that most companies can ill-afford when replacement profits are hard to come by.  Yet, despite its importance, many managers don’t pay enough attention to rework or to the errors that create it.

Over the  years, I’ve reviewed dozens of printing company financial statements, and I’ve rarely seen rework costs reported on the income statement.  Rework costs are sometimes tracked in a job costing system, but the issue here is one of timeliness.  By the time job cost reports are analyzed, several days or weeks may have elapsed since the error occurred that caused the rework.  The people involved may have forgotten what happened and why.

The real tragedy here is that most of the errors that create the need for rework are preventable.  To prevent these errors, a company needs three things:

• A system of quality processes and tools that are designed to prevent errors from occurring (or detect them as soon as possible)
• Employees that consistently follow the quality processes and use the quality tools
• When an error does occur, the company must have a process that identifies the root cause of the error and determines whether the error was caused by a flaw in a quality process or tool or a failure to use the process or tool in the right way

Most rework can be prevented.  Given the impact that rework can have on profits, managers should take a close look at this important issue.  In a slow-growth, low-margin business, even small improvements can significantly boost profits.

Now that super wide printers can cover something as wide as 5 meters, the old fashioned sign painter is going the way of typesetters.

This is a beautiful – and sad – tribute to a dying craft.

Click on the image below and watch “Up There,” a tribute to a “daredevil” art. It’s really spectacular viewed full screen.

(Note: You will be asked to confirm your age because the video shows a beer ad… go figure.)

A memo by CEO Keith Jones notes:

This is very sad for all of us in the RBI community and I wish colleagues at these titles the very best for the future and thank them for their services to readers, advertisers and the company.

And it should be!  Pricing is the single most powerful profit lever that most managers can employ on a daily basis.

A few years ago, I used data from PIA’s annual ratio studies to compare the effect of a price increase vs. cost reductions on profits.  Specifically, I compared the impact of a 1 percent price increase, a 1 percent reduction in the cost of materials and outside services, and a 1 percent reduction in operating expenses on the profits of an average $10 million sheetfed printing company. 

For this dataset, a 1 percent price increase would cause profits to increase by 100 percent.  Let me repeat that.  A 1 percent price increase would cause profits to double.  A 1 percent reduction in operating expenses would cause profits to increase by 64 percent, and a 1 percent reduction in the cost of materials and outside services would boost profits by 35 percent.

The profit impacts will vary depending on a company’s cost structure and current profit margin, but I’ve performed this analysis for dozens of companies, and the results are always the same.  No management action can increase profits more quickly than raising prices a percentage point or two.

Unfortunately, price is also a double-edged sword.  Nothing will cause profits to fall faster than allowing prices to slip down by one or two percentage p0ints.  For example, if a 1 percent price increase will boost your profits by 50 percent, a 1 percent price decline will reduce your profits by the same 50 percent.

What this means is that managers need to pay very close attention to pricing decisions.  Winning even small price increases can be very beneficial to profits, and giving even small discounts can be very costly.

How powerful is price in your company?  I’ve created a worksheet that will enable you to answer this question.  If you’d like a copy, e-mail me at ddodd(at)pointbalance(dot)com.

Francis was also HP’s primary liaison with Dscoop, the independent user group for HP Indigo.  I am sure he will be missed on many fronts at HP, and we are looking forward to hearing about the new challenges ahead of him at Oce.  Good luck, Francis!  We’ll be talking!

In last week’s ERC newsletter/blog post, we talked about the difference between finding and creating opportunities, and how the true entrepreneur—like a true artist—is able to “see” things in nature or the market that no one else and sees, and feels compelled to bring those ideas to fruition, rather than just finding things that someone else has hidden, like Easter eggs.

This week’s excerpt from the forthcoming book, Disrupting the Future: Uncommon Wisdom for Navigating Print’s Challenging Marketplace by Dr. Joe Webb and Richard Romano, takes that general idea a few steps further, and offers six concrete strategies for making the transition from a “printing company” to a new communications logistics management company. The goal is to minimize risk, which is actually a key attribute of successful entrepreneurship, while creating a new relationship with the marketplace that others can’t seem to see.

1. Partner with Another Company

Is there a service or product you want to add for your current customers, but don’t know how to bring or develop these services in-house? New media, social media, video production, etc.? Find an outside company to partner with and outsource these tasks to. Networking at local business events, industry seminars and trade shows, and other networking events—actual and virtual—can be excellent places to locate individuals or businesses who may have the skills to you need to outsource to. And don’t forget that you can use Twitter and LinkedIn to find these folks, as well.

It may often be a case of making contact with a freelancer and saying, “I really need some help with my business. Perhaps we can work together and develop this social media content management service. I have a large pool of contacts because of all the print work I have done over the years.”

If your printing company is big enough, it may even be worth acquiring one of these companies and running it as a separate business. That can be decided later once there is a good track record of success and cooperation. Some large printing companies have found that the best way to transition their businesses to where they needed to go was to acquire an agency. Remember, not everything needs to be done under your own roof by your current staff. If you want to move into a new market quickly, and with credibility, an acquisition may be one of the best ways to work. In fact, developing a new service from scratch in-house may take time, and opportunities may not wait for that.

A critical aspect of the relationship is long-term trust. If there is any sense that either side is into the relationship just for occasional jobs, then it’s not the right partner to pursue.

2. Start and Nurture a New Business

There is no reason why any new initiative has to be part of your “old” printing business. It may sound harsh, but in some cases it’s accurate: propping up a dying print business may be throwing good money after bad. Therefore, take your new initiative and start it as a new business that exists in parallel with the old one. Staff and equip it appropriately, but keep it separate. Nurture it, and if down the road the old printing business dies a natural death…well, life goes on. Both businesses need to work without a safety net. That safety net only postpones hard decisions to another time.

This “new business” doesn’t even need to have any new equipment, at least not at the outset. The new business can simply start by assembling strategic partners. Eventually, you can acquire your own in-house capabilities once the concept is proven.

3. Ditch Old Equipment

How many times has this happened: you finally paid off your car loan and exulted in the fact that you can save money each month by not having to make a payment. Once that final payment is mailed, it seems that the car “knows” and it’s at that point everything starts breaking down. So, no, you don’t have a monthly car payment anymore, but you do have regularly increasing repair costs.

Printers often make the same mistake with regard to equipment. They keep old equipment around after it has been paid off in the mistaken belief that just because there isn’t a payment being made that it doesn’t have a cost. But it has whatever it costs to operate it and to staff it, as well as an opportunity cost (i.e., there are other things you could be doing with floor space, resources, and staff). If it’s no longer being productive, it doesn’t matter how paid off it is. It’s still a non-recoupable cost center.

This is not to say that you should ditch all old equipment. If it’s productive and profitable, great. But any only marginally used piece of equipment ties up capital that can be better applied elsewhere. That capital is often employee time that is spent on old processes at a time when they should be gaining experience with new ones.

4. Don’t Think You’re Competing Against Yourself

There are commercial printers who feel that some of the new ways of doing business compete against themselves. That’s fine, and they might. The idea, however, is that there is a life cycle to businesses, and often those new ways will replace the old business, except they will be the new ways of a competitor.

As an example, an important application for digital printing has been the production of digital photo albums. These include wedding albums, with photos uploaded and printed in short runs for guests, relatives, as well as corporate and organizational events.

There are services that specialize in offering this online. Consumers go to a Web site, choose a template, upload their pictures, and select the kinds of binding they would like. There is heavy use of pre-designed templates, rather than totally new design. This is a benefit for the customer, because the templates offer a format that they could not create themselves, and the printer uses the templates because it brings a predictability to the work. Many printers feel uncomfortable with template-based businesses because they may offer professional design services, and template-based offerings undermine those design services.

The discomfort comes from the fear of competing against their own high-end production processes, taking their high-end clients and turning them into low-end ones. We don’t grant the premise. High-end clients are usually high-end clients for a reason, and in most cases likely won’t be lured into producing a lower-end job. But at the same time, there are lots of new lower-end customers that could be attracted by offering such a service—and again, it could be as a new business. Big customers usually started as small customers. As Bill Cosby used to say, “I started out as a child.”

The strategy, then, is to offer template-based services as a separate business. Because it would be owned by the same printing company, but marketed with a separate identity, the host company could identify larger users of the template-based services and then target them to upgrade to professional services. What better way to cultivate customers than ones that have been qualified by knowing their track record of purchases.

5. Specific Products May Change, But There Will Always Be Specialty Opportunities

Another concern for many printers making a transition to niche specialty products is that they often have a large upfront capital outlay. For example, the idea of buying digital printing equipment for the production of digital photo books or calendars or other products that are purchased one piece at a time, rather than a long run of 5,000 finished units at a time, is understandably scary. One order of many seems like much better business than trying to attract hundreds of orders of individual items.

These days, there are numerous ways to sell specialty printed items on a private label (or “brokered”) basis. There are printers who have already made these investments and are willing to brand Web sites and sell output on a trade basis. Our industry has always had a history of brokered and trade services, so it’s nothing new to our culture. Once sales volumes are high enough, only then should a consideration of investment should be made, or it may be the case that new money can be spent on a different project that expands the business in a different way.

It’s tempting to think, once again, that certain specialty products are fads—like the digital photo albums. Will there always be a market for them? Probably not. But the advantage of digital equipment is that it maintains a flexibility to capitalize on opportunities for new specialty print products. All these types of projects have similarities, and having experience with one, and the equipment to produce it, makes you able to understand how to produce others when the “new thing” comes along. Today it may be digital photo albums. Tomorrow, it may be…printed collections of blog posts or tweets or Facebook pages. Who knows?

It’s worth mentioning here this story that came over the wire last week:

Newspaper Club launches start-up for printing newspapers on demand, buying low-cost city press time during off hours and reprinting favorite online material.

Unused presstime at daily newspapers may find new customers from an unlikely source: bloggists who would like to see their postings committed to print. Newspaper Club, a U.K. start-up, has launched a business printing newspapers on-demand, buying low-cost  press time during off hours and reprinting material for customers, much of it originating as blogs and other online material.

The point is, once you are set up to take advantage of these types of one-off projects, you are ready for whatever comes along.

6. Clean Your Company

No, we don’t mean dust the equipment and empty the trash cans. We mean that more metaphorically. As an example, there are consultants that go into troubled businesses and “clean” them up to make them attractive to a prospective buyer.  We hope that by reading this book it doesn’t come to this (but it may), but perhaps cleaning you company so that it is attractive to clients is a strategy worth pursuing.

This is not merely cosmetic, or marketing-based obfuscation (i.e., your Web site screams “We’re a marketing services provider!” but mumbles “Actually, we’re just a printer who heard that was a great way to sell more printing.”) Do you offer the right mix of things and then promote them in a way that entices new business and then retains them as ongoing business?

That said, if you do need someone to come and clean up your company for potential acquisition, isn’t that a sign in and of itself that you’re dealing with a withering business—which cries out for change?

With all of the discussion about how many trade shows we really need in the printing industry and whether they need to be held annually, a consolidation theme that has been on the table for some time, a new printing trade show pops up at Messe Dusseldorf, home of drupa.

According to the press release, digi:media is planned as an annual event starting in 2011, will be an integral part of drupa in 2012 (May 3 – 16) and as of 2013 (April 11 – 13) will be held again as a separate event.”  The release also states that digital printing has opened “up new target groups for print communication.” What the release does not say is that this show is targeted at German-speaking attendees, although it would like to attract vendors worldwide, and of course, vendor materials will likely also be available in English.

It will be interesting to see what type of vendor and attendee support there is for this European show. It sounds very similar to the On Demand model in the U.S. Last year, from my perspective, On Demand brought to mind the dying days of Seybold.  Perhaps with some level of economic recovery on the horizon, On Demand will regain a level of energy and enthusiasm, but with the stark shift at Graph Expo to digital technologies, and the exit of key exhibitors on the offset side, at least for 2010, one wonders why we need two U.S. printing shows. Perhaps the climate is different in Europe.

The messaging for this new venture at Messe Dusseldorf seems to me to be very print centric. Wouldn’t it have been better to focus this event, if indeed it is even needed, on multichannel communications, making it a platform for discussions between the marketing/agency community and the print community to help establish and better define the new role of print in the marketing mix of today and over the next few years, as well as to educate printers on how to blend alternative media into their service offerings?

Maybe that is the intent, but the language of the release still emphasizes print and does not seem to have the right kind of messaging to draw in the all-important marketing/advertising community, who all-too-often have little print domain expertise or interest in print, and may not even be considering print as part of the picture anymore as they move more budget to alternative media. If they do wish to include print in the mix, it often becomes a commodity part of the project, offloaded to procurement who is tasked with getting the best price per piece.

The challenge for print service providers or marketing services providers, or whatever we are calling ourselves today, is to engage with marketers and agency folks much earlier in the value chain, and that is difficult to do leading with a print message.

April of 2011 will be upon us before we know it … but there is still time to adjust the messaging to achieve the results I am sure the Messe Dusseldorf team wants to achieve and to engage the marketing/advertising community in the dialog.

What do you think?  Is this an event you would attend as a visitor or exhibitor? I guess we will find out in 2011 … meanwhile, WhatTheyThink will be contacting the Messe Dusseldorf team to gain more clarity about their intent for this new event.  Stay tuned.

“We have disaster teams designated for emergencies like this,” she said. “We know what we have on our plate and we know who needs to come in to get it done.”  Topping the list for the GPO is The Economic Report of the President, which was due today and delivered on time.  The crew has also been focusing on the Congressional Record and the Federal Register.

Gary Somerset, GPO Public Relations, reports that the GPO Police ensure the security of the building under all conditions, and a number of members of the force volunteered to remain on-site for 72 hours, sleeping in cots and eating MRE’s to secure the facility.  Others include the facilities crews that make sure everything is operating.

“In Production, we have people from prepress, press and bindery,” added Welcher. “Everyone who could come in did come in.  A few were unable to since streets had not been plowed.  Even some of the streets in Washington D.C. have not yet been plowed.”

The GPO will be out delivering other work when the government reopens. “We have lots of deliveries of material that was produced before the shutdown that we have been unable to deliver,” said Welcher, “but that will get taken care of as soon as the respective offices reopen.”

“Since we opened our doors March 4, 1861,” Somerset stated proudly, “we have not shut our doors.  We operate 24/7 regardless.”

When asked if she was looking forward to things getting back to normal, Welcher replied, “I sure am.  Not the traffic, though.  The roads have been pretty clear.  My husband and I have even helped a couple of people that got stuck as we were on our way home.”

It should also be noted that since President Abraham Lincoln, who founded the GPO, visited them in 1861, there has never been another Presidential visit to the GPO.

President Obama, I think this calls for a visit, don’t you?

Because of the complexity of this transaction, but the share exchange ratio and actual value of the transaction will not be determined until closing. However, 60% of the combined company will go to existing Quad/Graphics shareholders and 40% will go to current Worldcolor shareholders.  This means that the Quadracci family will continue to control the company based on its ownership of Class B shares.  There is no financing condition precedent to this transaction closing.  Although it is, of course, subject to shareholder and regulatory approval, it is expected to close in the second or third quarter of the year.  $1.2 billion in funds have been committed by Morgan Stanley and others to complete the transaction.

In terms of the previous offer by RR Donnelley, Angelson indicated in response to an analyst question that the Quad/Graphics transaction was “entirely friendly,” and would offer the opportunity for Worldcolor shareholders and employees to join what he described as the most efficient, technically efficient, automated and forward thinking company in the industry.  Angelson also indicated that this transaction had been in the works since August 11th, when Quadracci and Angelson first had lunch to discuss the transaction, and was followed by an exhaustive due diligence on the part of Quad/Graphics.

In response to another analyst question about any regulatory barriers, Angelson estimated the value of the U.S.  print market at $160 billion, made reference to RR Donnelley’s approximately $9 billion in revenues, and indicated that with the combined new company expected to come in at just over $5 billion in revenues, there were no anticipated regulatory barriers in such a fragmented print market. Angelson indicated an S4 with full background and details of the deal will be filed with the SEC within the next month or so.

Angelson quipped, “Not since Thomas Jefferson dined in the White House alone has there been such a collection of intelligence that went into putting this deal together.”

It is interesting that this largely share-based transaction will now make Quad/Graphics a public company, to be listed on a U.S. stock exchange to be named in the future at a price to be determined at that time.  In the past, Chairman, CEO and President Joel Quadracci has told WhatTheyThink that the company has been advantaged by being able to manage generationally, rather than being constrained by the quarter-to-quarter expectations of the Street.  During the call, Quadracci was quick to point out that although Quad/Graphics has been privately held, it has been run with the same stringent financial management and integrity that would be expected of a public company. As the deal unfolds and the integration of the two companies begins, and when the company is listed on a U.S. stock exchange with full public reporting, it will be interesting to see how that actually plays out in real life, and whether “generational management” can continue to be a reality for the combined companies.  If anyone could pull this off, it would certainly be Joel Quadracci.

More information on this transaction, including a replay of the conference call and supporting materials, can be found here.

Seth Godin took Ms Reidy to task in his blog.  Godin wrote, “Hello?  You don’t have the power.  Maybe if every person who has ever published a book or is ever considering publishing a book got together and made a pact, then they’d have enough power to fight the market.  But solo?  Exhort all you want, it’s not going to do anything but make you hoarse.  Movie execs thought they had the power to fight TV.  Record execs thought they had the power to fight iTunes.  Magazine execs thought they had the power to fight the web.  Newspaper execs thought they had the power to fight Craigslist. . . Smart businesspeople focus on the things they have the power to change, not whining about the things they don’t.”

Hold that thought.

Over the Holidays, I found myself re-reading Theodore Levitt’s classic article titled, “Marketing Myopia.”  “Marketing Myopia” was published in the Harvard Business Review in 1960, and it quickly became one of the most important articles HBR has ever published.  Levitt argued that companies stop growing (and often go into decline) because their leaders define their business in terms of specific products or services rather than in terms of customer needs.  In one of the more memorable passages in the article, Levitt wrote:

“The railroads did not stop growing because the need for passenger and freight transportation declined.  That grew.  The railroads are in trouble today not because that need was filled by others (cars, trucks, airplanes, and even telephones) but because it was not filled by the railroads themselves.  They let others take customers away from them because they assumed themselves to be in the railroad business rather than in the transportation business.”

No one reading this post needs to be told that printing companies are facing unprecedented challenges.  The media landscape and the very ways we communicate have changed dramatically, and they will undoubtedly continue to evolve.  The new methods of communication have reduced the need/demand for many kinds of commercially printed documents, and that demand is unlikely to return.  In essence, the market has decided that for some uses and purposes, other methods of communication are better or cheaper than print.  Those are the facts.  And they are beyond the control of printing company leaders.  If Theodore Levitt was still with us, I think he would probably say that many printers are in trouble today because they “assumed themselves” to be in the printing business rather than in the communications business or the marketing business.

Printing company leaders cannot control how the market for print is changing, but they can control how they respond to those changes.  The specific responses will vary from company to company.  Most, if not all, effective responses will require that a company make significant changes to its business model and/or its product/service mix.  Many responses will require a company to acquire or develop new business capabilities, and some will entail becoming a different kind of business.  These changes will not be easy to make, and they are not without risk.  But, for most companies, the far riskier approach is to do nothing.

Dr. W. Edwards Deming put it well:  “It is not necessary to change.  Survival is not mandatory.”

“Will there be plenty of room for profit in print? Absolutely. Printers will make tons of money and so will plenty of publishers.”

I stand by that statement today and that is why I have picked up this press release from Publishers Press. Talk about seeing and profiting in the future. Look what my friend Michael Simon calls his company. He calls it a Content Distribution Provider. I think Michael has nailed our future perfectly. Publishers Press may print but they have their eyes firmly on the future.

Several years ago Michael once asked me if I would recommend that his children continue in the fifth generation family printing business. I assured him then, and I still feel that way today, that there is and will be a huge and profitable future for print if he handled the direction of his company with an eye on digital progress. I counseled that print will be around for a long time, but it might not be the predominant way that people will read in the future.

For whatever it is worth to my readership, I love the concept of a printer morphing into a Content Distribution Provider. I have said for over fifteen years that publishers are now in the information distribution business. It never occurred to me to extend that concept to my printer friends.

Print Engine: Abdicate The Throne

The printing industry is in a fight for long-term relevancy.  Factors such as e-delivery, Internet statements and bills, postage rates, “don’t print” green initiatives, instant information access, and more are legitimate causes of page volume decline.   However, I believe this mess is largely our own fault.

While many industry experts tell print service providers they must transform their businesses into marketing service providers, major manufacturers continue to regard the print engine as the center of the business universe.  There is no doubt that print quality and speed are important.  However, future sales results will increasingly depend on delivering value beyond marks on paper to sophisticated e-marketing and IT-centric decision makers.

Reposition Print For A New Generation Of Decision Makers

This relentless devotion to printed output and print engines causes the industry to be viewed as slow, static and antiquated by today’s iPhone and “Crackberry” using decision makers.  In these circles, printing anything can be considered environmental genocide, old fashioned and outdated.  The fact is that (gasp!) the printer is a peripheral to the computer and the computer has always been king.

In this time of crisis, our leaders must help re-message communications to project a 21^st century industry persona.  Continuing to promote print heads, speeds, feeds, and inks as king will result in increased distancing and irrelevancy in the eyes of savvy e-centric CMOs, CIOs and agencies. Truly embrace, promote and fully implement IT-centric solutions marketing and sales practices.  Don’t stop making great print engines, just actively market them as a valuable part of the new IT-centric communications model.

Never Waste A Good Crisis

As an industry, we need to move further up the entire communications value chain by articulating how print compliments e-marketing to drive results.  Personalized URLs and TransPromo communications are a good start.  To truly reposition print, we must actively create and commit to solutions (not product) marketing and consultative selling practices – while minimizing elongation of the sales cycle.  Rest assured, solutions will drag print engine sales – and at higher margins.

Finally, let’s not forget the sales force.  To sell solutions and keep Wall Street happy quarter to quarter, suppliers to the industry must invest in the creation and widespread adoption of consultative selling practices  – now.  Sales teams need new sales models, training, innovative IT-centric sales tools, revamped compensation structures and unwavering leadership to drive behavioral changes.  This requires bold, new thinking and execution.  Luckily, there are many smart, talented, true leaders within the vendor community who are fully capable of delivering the change needed – if they chose to.

According to Truncale, although NAPL is doing well and is a year ahead of growth targets established three years ago, the resources available to these organizations are much different than in the past. Areas of cooperation and collaboration could include such things as combining resources for events, meetings, seminars and conferences; programs to attract young people to careers in the industry and support our education institutions; as well as larger issues that go beyond the resources of any one organization to tackle, including postal concerns, do not mail initiatives and understanding and anticipating how emerging generations want to deal with communications and information. “The challenges are numerous and significant,” he says, “in an indistry that is already being challenged. We will be actively seeking and promoting collaboration and cooperation, and we look forward to working with all interested industry groups to determine what future changes are needed to best serve our members, clients and all industry stakeholders.”

Here’s your chance to weigh in. How do you think things should be structured to make the best use of our limited resources? Where should these groups focus if they are going to collaborate on key issues? Let’s get a conversation going so they have our input as they start working through what are likely to be some very challenging conversations.

Somewhere Jeff Higgins is smiling. I remember at his retirement roast last year he spoke of his focus on people. This philosophy appears to be ingrained in the culture at xpedx. I found it a bit funny when John Torrey, VP & General Manager, ended the day he expressly mentioned that he wanted the takeaway to be the people. Mission accomplished John!

I was part of a handful of media who were welcomed to the new tech center that opened in suburban Cincinnati on April 6th. I was joined by WhatTheyThink’s award winning editor Patrick Henry. Pat has a great post up at his new blog “A Printing Office” about his thoughts on the day. Pat gives a thorough overview of the tour and some great insights into things to come from xpedx.

Aside from being struck by the great facility and people, I wondered how the new center might affect what xpedx and companies like them do at trade shows. I have been hearing rumblings about more companies focusing on such centers and have heard of some even expanding their footprints lately. You will even hear whispers from some saying these will replace trade shows.

When asked during an open Q&A session how what they’ve built here would affect what they do at trade shows going forward, xpedx replied that while it did let them be more picky about what shows to go to they would still be involved in trade shows moving forward. In fact, at Print09 xpedx is “going big” as they put it. They’ll have what they say will be the 6th largest presence overall and 2nd best placement (right next to Heidelberg). You get the sense that this is how they want to be seen – shedding the reputation as a small press focused manufacturer to now compete with the big boys. That’s a message to their prospective customers as well. xpedx wants them to “Think Big”, something that could turn into their Print09 theme.

I think you will see the trend toward a more focused approach on technical demonstration centers, but I’m unconvinced they will replace trade shows entirely. The built in efficiencies of getting hundreds through your booth to kick the tires versus the costs associated with flying multiple groups a year into a technical center seems to be at least a wash if not a net benefit to going to a show. It’s an interesting question. What do you think?

Bill Stahl, Technical Demonstrator:

Dave Baker, Pre-Press Demonstration Specialist:

Entering the tech center:

Tom Weisenbach, Executive VP of Marketing & Sales, welcomes the group:

Dave Baker demonstrates different plate making capabilities:

Bill Stahl demonstrates the Ryobi 755 with inline UV casting and foiling system:

Don Coggswell and Bill Stahl present the 920 series:

xpedx execs (L-R) Don Coggswell, John Torrey, Bill Van Buskirk, and Tom Weisenbach:

The media:

The main reason is that technological changes keep going, and they are often encouraged by slow times as information creators, disseminators, and users search for costs and methods that match their increasingly scarce resources of time and cash. Time becomes more scarce because companies downsize (10 employees at 40 hours a week is 400 hours; 8 employees is 320; just because there are 80 hours left does not mean that the same corporate functions disappear). This is one of the main reasons why printers can find some upside in outsourcing logistics (inventory & fulfillment) and deployment (mailing, e-mail services), and digital media (video, podcasts, and others).

Since the post-recession industry will be different than the industry was going into it, printers have to change their costs. This is not a hunkering down process, but a recognition that costs reflect the investment printers have made to offer certain services that were needed prior to the recession. Changing costs does not mean doing less, changing costs means making different investments targeted to what will be needed a year and three years from now. This is why investment should be as constant as possible, about the same amount in good and bad times. If it’s not, printing companies often make big investments before slowdowns and miss business upturns. You want to hit upturns with the best costs possible, just as much as you want to go into downturns with the best costs possible. The information marketplace doesn’t wait for printers to have new equipment or services.

This week, the University of Southern California Annenberg School’s Center for the Digital Future issued their 2009 report about Internet use (PDF Link). Here are some highlights:

The percentage of Americans who use the Internet has reached 80%

• 40% of those age 66+ go online, an increase from 29% in 2000
• The time Internet users spend online has grown in each year of the studies, and is now 17+ hours per week
• Light users spend an average of 2.8 hours per week online
• Heavy users who average 42 hours a week online
• 24% of American households have at least three computers
• The percentage of households with no computers continues to decline; only 15% do not have a computer
• Broadband is by far the dominant form of online service at home, nearly 80% of Internet users, more than double the level of five years ago, and eight times the percentage in 2000
• Access to the Internet by phone modem has dropped to 16%
• Two-thirds of home Internet users keep their broadband connection turned on most of the time while they are at home; only 20% percent do not

Just think of what these data will look like two years from now. What do printing entrepreneurs need to do to benefit from these trends rather than cowering in a corner having hunkered down hoping the 2005 printing industry comes back in 2010?

I use two trite sayings when I’m making presentations, and they get a good chuckle. The first is “ignore your competitors and stay ahead of your customers.” This is the essence of marketing and the purpose of strategic planning. By staying ahead of your customers, you automatically stay ahead of your competitors.

The second one is “when business is good, everyone looks like a genius; when business is bad, you have to be one.” This one has to be amended. When business is bad you have to be a genius entrepreneur. This does not mean you have to be a genius intellectual, you just need to be insightful. It often means that you have to become a master of the obvious, seeing things that are right in front of you that others are myopic about. It’s not easy, but it’s what print businesses need now. Are we up to the task?

The Nation‘s Christopher Hayes reports:

Thanks to an obscure tax provision, the United States government stands to pay out as much as $8 billion this year to the ten largest paper companies. And get this: even though the money comes from a transportation bill whose manifest intent was to reduce dependence on fossil fuel, paper mills are adding diesel fuel to a process that requires none in order to qualify for the tax credit. In other words, we are paying the industry–handsomely–to use more fossil fuel.

Beware the scourge of the unintended consequence? With public scrutiny over TARP funds at a fever pitch, how long will such contrived practices last? Of course, Hayes does point out another unintended consequence that could benefit printers: paper mills will likely be over-producing to take maximum advantage of the tax credit and this will likely drive down paper prices. Given the circumstance, it’d be hard to argue for such a thing.

A quick search shows that the word “print” or a derivative shows up only twice in the entire document: it provides for notification by print or broadcast media for certain individuals whose contact infomation is not sufficient (Page 147); on Page 179, it says, “The website shall include printable reports on covered funds obligated by month to each State and congressional district.”  Internet, on the other hand, is mentioned 19 times, largely driven by the $7.2 billion which is included for the development of broadband networks in rural and underserved areas, as well as funding for broadband equipment serving educational government and medical institutions.

So what does this all mean for us?  A recent B2B article provided some interesting information.  The industries most affected are commercial construction, alternative energy, telecommunications, computer hardware & software, and of course, those darn financial institutions.  In most of these industries, companies are looking at various associated marketing initiatives.  For example, Contec Construction Products reports a shift from brand awareness activities to more focused marketing targeted at the public sector.  A company representative said, “We are shifting from print media to more electronic tools and taking more of a rifle-shot apporach to target places where dollars are being spent.”  This will include the creation of web microsites for sectors such as military and engineering, and targeted email to promote such products as precast bridges.  Relative to alternative energy, a manufacturer of solar rooftop panels said, “Through low-cost marketing and Web 2.0 tools, we can target in on specific market segments that are excited by the bill.”  And it continues …

This reinforces even more the prediction of Dr. Joe Webb and others that the current economic situation we are experiencing, augmented by the severe structural change our industry is undergoing, will result in an industry that looks very different when this is all over.  It also reinforces the advice that printing firms must move their services beyond ink or toner on paper to survive and thrive in the new world of integrated marketing.