Commentary & Analysis
Navigate, Don't Fear: Random Thoughts
By Dr. Joe Webb
Published: June 29, 2009
I'm privileged to offer some introductory comments and then an afternoon workshop at the annual International Graphic Arts Education Association (IGAEA) Conference July 26-30, at Eastern Kentucky University. I'm speaking at the morning session on Monday, June 27, and will then conduct a “Renewing the Printing Industry” workshop (3 hours) that afternoon. Printers will be able to attend the workshop separately. For a complete schedule of the conference, visit www.technology.eku.edu/igaea. For more information, contact Dr. David Dailey at firstname.lastname@example.org or at 859-622-1190.
IGAEA is working on making the event available via videoconferencing to locations in California, Arizona, Minnesota and North Carolina. Contact Dr. Dailey as soon as possible for details about adding your organization to the potential locations.
As I grope around for material for columns, I end up collecting fragments of ideas that I am able to expand, and others that are just thoughts that stand alone by themselves. This is the end of the first half of 2009...perhaps some of these will be thought-provoking, or perhaps amusing, as we face the second half of the year.
I find it somewhat amusing that, after all this time in the Internet age, printing companies and their vendors keep thinking that changes in the economy are the prime reasons for the state of their businesses. We know that the economy and print disconnected about 12 years ago in terms of the GDP relationship. It's hard to believe that something that started more than a decade ago is still stubbornly resisted by this kind of natural businessperson's analytical urge.
Human nature is always at work in the way we attribute the causes of success and failure. If business is great, it's because we have superior management and the insightful decisions we made; business is bad because the economy is against us. Former big league pitcher and bestselling author Jim Bouton ("Ball Four") wrote a (non)bestseller about baseball managers and other life-essential topics with a great title: "I Managed Good but Boy Did They Play Bad."
I've gotten a rise out of audiences when I say that when business is good, everyone thinks they're a genius. But when business is bad, you really do have to be one. We are in the kind of times that requires genius.
When entrepreneurs own a business, finger pointing at others for failures is one luxury they can never have. That's only a strategy for publicly held companies with big boards of directors.
Some printers complain about loss of business to offshore competitors, but I've always wondered if they ever attempted to export anything they made, or attempted to make a direct investment in some of these emerging economies. The offshore print markets will continue to grow, and if you have managerial skill in running print operations, investing in a print business overseas might make some sense. Wouldn't that be an interesting topic for our trade associations to pursue? We're running a trade surplus in print again, not that it matters. Canadian printers are the ones who should gripe: the increase in printing from China is about the same as the decrease in printing from Canada.
There is a major industry supplier that persists in explaining its bad financial results as being caused by the general economic contraction and the collapse of credit markets. This was the same company that executed a stock buyback two years earlier and then recently borrowed money from a government bailout program in a strangely similar amount. Yet, nowhere in the official comments was any mention about the severe media shift from print to digital, which is the root cause of their problems, and the fact that their problems existed well before the economic downturn began.
I got a rise out of the audience at one of the recent NPES Regional Meetings when I said that I thought "do not mail" legislation would pass, and the first time would be in any of these four states: California, Vermont, Oregon, or Washington. The likelihood is probably in that order. If it passes in California, it will affect mailing practices across the country since nearly 1 in 8 U.S. residents live in California.
Speaking of 1 in 8, that's the net loss in the number of print workers this past year. Hmmm... I haven't lately heard the projection that the industry needs 60,000 new workers a year. Even the existing workers are losing their jobs.
If newspaper inserts lose their relevance (that is, newspaper circulation goes down so much that some retailers abandon them), printers wonder what print product would benefit. The benefit to direct mail will be minimal. The big beneficiary would probably be local cable TV. I doubt that newspaper inserts will disappear quickly, though.
Most print mergers and acquisitions are under the radar of the trade press—and everyone else, for that matter. If businesses are under $5 or $6 million a year, they are privately held, and unraveling all of the family issues involved (cars, owner medical plan, owner retirement plans, and numerous other issues) is such a problem that it's usually better to close both businesses and open a new one with its own gnarly problems that will be difficult to unravel when they "merge" again later.
There is a lot of interest in mergers & acquisitions as a means to cope with the recession and our own downturn. In the end, it may actually be counterproductive for the industry. Capital that would otherwise be used to update technology, worker skills, and other key attributes of successful businesses are instead used to pay for existing businesses that may turn out to have the right business model for 2008 but not 2012. Who is to say that what made a print business successful recently will guarantee success just a few years from now?
The diversion of capital to mergers and away from new production investment means that the equipment market might be the last to improve as merged companies cherry pick their combined equipment bases, delaying the need for investment, inadvertently making the companies less competitive with digital communications.
The Conference Board's Leading Indicators uses changes in the money supply in its calculations. The rise in the money supply is so incredibly huge, I suspect the LEI is giving us false signals of an upturn.
I am regularly asked if we have hit bottom. You can only tell if you have hit bottom when you start going up and the bottom is behind you. Things getting less bad is not hitting bottom. It's just getting less bad, and nothing else.
Math is an annoying thing: when something goes down 20%, it has to rise 25% to get back to the starting point. When something falls 50%, it has to double to get back. You get a quick reminder of that when looking at stock indices. We're still not close to the inflation-adjusted Dow from Spring 2000, and the NASDAQ isn't even close whether you inflation-adjust or not.
Despite the recession, it's still worth starting a business. Which has had less risk in the past two years? Safe, dividend-paying stocks, or a well-operated business?
The biggest enemies of investment are taxes and inflation. People would handle their investments differently if they worried about the corrosive effects of both. IRAs and 401k programs can help delay or avoid taxation. They can't protect against inflation.
At the last Graph Expo, a vendor complained about my being too pessimistic about the business. That was funny, huh? Me? Pessimistic?
I know I've written about this before: how much I hate the phrase "lean and mean." Why would someone want to deal with an emaciated and angry company? I like "sleek and adaptive" businesses. Even small businesses can be sleek and adaptive, and even one person can do it. It always has to do with resilience and an ability to see two, three, four, and more steps ahead. The more debt a company has the less resilient and less visionary it can be because the shadow of a bank is always cast upon its business.
Some of my vendor acquaintances have suddenly found themselves working at home as their employers are looking to telecommuting as a means of reducing costs. I've worked in a home office for 22 years now. It's not easy. It has its own discipline, and requires the cooperation of family. It also has its own flow, and you find yourself getting in touch with natural rhythms of your body and psyche. Sometimes they don't match the business day of the office bound. There are also challenges with family, as well as some splendid opportunities.
There are some essentials:
- You need a separate space, and that space needs a door. The biggest turnoff to those who interact with a home office is the noise of kids or pets or televisions in the background.
- There has to be defined off-limits time when no one should interrupt you unless it's an emergency
- Surround yourself with the right technology; you have more technology choices outside of the office than you do when inside an office, especially one hampered by occasionally paranoid information technology policies. Products like Skype (especially with video), instant messaging, and many others are incredible productivity enhancers.
- For some people the biggest problem working at home is the proximity to food; be sure to get exercise. Since you no longer have commuting time, use some of that time.
- Get out of the office and into a routine. A home office can become a dungeon. Get into a routine where you see people outside the house. You won't see co-workers any more, so social interaction has to come from something.
- Schedule regular time for family interaction: I had a daily cup of tea with my son and wife when he came home from school, from nursery school through the high school years, and those daily 10 or 15 minutes were some of the best times we ever had. They were also a reminder that I might have to make up that time at night.
- Meet your deadlines; many people assume a home office will encourage a lack of discipline. The best way is to work during that 5 to 9 AM period. While everyone is commuting during those hours, you can be polishing your work.
- Make appointments to see co-workers for work sessions. A good rule of thumb is that you need to have an in-person meeting about one-quarter or one-third of the time. Nothing increases your productivity more than not being stuck in meetings. Being in a home office environment means that you can schedule only the most important ones.