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Commentary & Analysis

A Tango of Advance and Retreat

By Noel Ward,

By WhatTheyThink Staff
Published: May 31, 2005

By Noel Ward, Executive Editor Having the lowest costs and still delivering the level of services customers are seeking seem mutually exclusive to me. May 31, 2005 -- Mergers and acquisitions are well outside the kinds of things I normally cover. Still, there is a rhythm, a pattern, a tango of advance and retreat to these operas of wills, egos and greed starring big corporations and venture capitalists. How the processes work and how the players move also holds a kind of morbid fascination--and wonder--about the posturing of the leading players. Consider the ongoing machinations presently enriching the lawyers dealing with Robert Burton's quest to take over Cenveo. Now, I have no feelings about Cenveo one way or another. They are a big printer and have most of the pluses and negatives that surround other larger print providers in this time of changing communications landscapes. What I question is Mr. Burton's statement (reported in WTT on Friday, May 27) that Cenveo must become the lowest-cost producer in the industry. Why not second or third lowest? Or why not be the one that delivers the greatest value to its customers? Virtually all the leaders in our industry recognize that print providers must change to being providers of a broad range of services, many of which cross media boundaries and must be sold consultatively. Having the lowest costs and still delivering the level of services customers are seeking seem mutually exclusive to me. The level of investments in technology and services required add costs, as do offering the additional value-added services customers are coming to expect from print providers. When costs are trimmed to reach some arbitrary "lowest cost" something has to give. It can be quality, level of service, adoption of new technologies, the range of capabilities you can offer, the ability to compete or differentiate your business, employee retention, and so on. Pick as many as you like. And remember, for long-run jobs with a generous schedule, there is already a low-cost --and low-price-- competitor that will almost always do a job for less: China. Call me crazy, but I doubt any of this is a concern to Mr. Burton and his associates. I will admit to not being closely attuned to the details of balance sheets, corporate reports and financial statements. But it seems to me, and others I have spoken with, that Mr. Burton's strategy of being the low-cost producer is really phase one of a plan to eviscerate Cenveo and send the workers home. Which really keeps a lid on costs.



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