Global Sourcing Solutions, Inc announced Chrysler is moving its catalog work offshore. In the announcement James Letzel, President and CEO of GSSI stated, “As the North American printing industry has consolidated over the last several years, domestic printing prices have escalated and options have become fewer for print buyers here in the U.S. The decision by Chrysler to move production of domestic catalogs off-shore should be commended as visionary and at the very least, fiscally responsible, by allowing GSSI to manage the print production for their automobile catalogs and ultimately providing Chrysler with significant savings, both GSSI and Chrysler have demonstrated that global solutions are available for these important sales and marketing tools.”
From a cost savings standpoint domestic printing prices have escalated in comparison to prices paid for offshore work. The cost savings from sending work offshore could become a short sighted move in the current political and economic climate as companies are being scrutinized for every move.
Michael Makin, President & CEO of Printing Industries of America in email to Print CEO commented "Our industry has consolidated over the years but if anything the current market has made competition even more intense here in the U.S. Ask any printer in the market today whether their prices have “escalated” and you would be laughed out of the room. Chrysler has numerous options to address its cost structure, including addressing its stifling labor relations expenses. It needn’t cut its domestic print budget."
What struck me as I read the release was that offshoring catalog production hinders the use of personalized print communications. Printing thousands of catalogs here in the U.S. or in a far off land is an archaic method to produce marketing collateral.
As we discuss this issue we must remember the move to electronic media is taking away more business from U.S printers then offshore work. Last year for example GM spent half of their $3 billion marketing budget on electronic media.
Discussion
By John on Apr 02, 2009
A few weeks ago I went into a Toyota dealership looking to get a car brochure. They didn't have any brochures. Instead the sales rep spoke with with and based on our conversation printed out a customized a 2 sheet "brochure" on the spot from the dealership's inkjet printer.
Chrysler could take a lesson.
By Dr Joe Webb on Apr 02, 2009
Just because industry's overall prices have not gone up does not mean that Chrysler's have not gone up. The big automakers were always difficult to work with. Their bidding processes were tough, their volumes big, and they knew they could almost get whatever they wanted by ratcheting up the pressure on suppliers. For that reason, Chrysler's prices may have been very thin-margin, cost plus prices for printers. Because printers have not seen decreases in paper prices, and are seeing other materials prices rise, and other costs (like Michigan's taxes), it could very well be the case that their prices actually did rise: printers may not be able to "take it any more."
There might be another problem: Chrysler is having credit problems. What printer could stand a big customer holding them out for 120 or 150 days before payment? There is a good chance Chrysler's payments may be even longer if they end up in bankruptcy.
I have no doubt that for the volumes they are likely talking about that printing in China may be much lower than in the US. Perhaps the company statement did not want to state that specifically.
Like the comment about Toyota above, the real problem is the persistent denial of the effects of new media. Most people shop for cars online today, especially for feature comparison and price research. Consumers are far better armed than they used to be.
What I find quite interesting is that this was announced IN JULY 2008. http://www.myglobalsourcing.com/news.htm#031008222225
Why is this coming up now?
This is also an international logistics project. There is a lot more to the cost than just putting ink on paper, if you read the press release.
So yes, Chrysler could be seeing higher prices, because they are including the costs of page production, and those prices are not necessarily going down.
And there's an ad agency involved... who knows what other costs may be involved in their decision. Ink on paper may be the very least of it.
By Michael J on Apr 02, 2009
People should face the fact that anything that can be produced any where on the globe means competition for everyone on the globe. Anything that can be done on the internet can be produced any where on the globe.
It just means that America finds itself in a new competitive world. In the first stage of "outsourcing" that mean we got the benefit of very cheap products.
The second stage should be thought of as 'global sourcing". In an internet world the notion of "outside" and "inside" some lines in the sand makes less and less sense every day.
I think I read that 70% of IBM's sales force is not in the US. All the globals have much greater growth numbers not-in-the-US.
The best place to compete is actually print production because then the competition is energy costs. Local always beats global on energy costs.
To Dr. Joe's point, the fastest growing ad agency is in India. They have the revolutionary idea of getting comped on the basis of results, not on a retainer or a negotiated deal.
To Adam's point about personalization:
The hardest part of personalization is the IT work. The best place to get huge scale IT work is India. IT work has no limits of time and/or space.
On the other hand, the output of personalized stuff is most economically done locally.
It's part of the reason that I think the silver bullet of "market services provider" is just so much blablabla. Con't get me wrong. For those very few companies like DME or the Ace Group who have the right DNA, it's very good. But for the family owned commercial printer, whose DNA is printing, fast, good, and efficiently it's a wild goose chase.
For those with printer DNA the way to win is being the most efficient lowest cost producer. Then you have room to move prices as the market moves. No matter where in the world the competition is coming from.
By Michael Makin on Apr 02, 2009
The points that your readers make are all good. In a free market system, companies should be able to engage in commerce (including printing) offshore, but when taxpayer bailout dollars are used, this is a different question (in my personal opinion).
The last time Chrysler turned itself around Lee Iaccoca (CEO at the time), focused on keeping jobs in the U.S. His head is probably spinning right now. I think Chrysler should be ashamed of itself. I am so glad I traded in my Chrysler 300!
By Michael J on Apr 02, 2009
I think it's important to remember that Chrysler was purchased by private capital. Their interest is in the dealer network, not in producing cars.It looks like they will do the deal with Fiat. Chrysler gives them the dealer network, they supply the tech, and cars will be built wherever most appropriate. My bet is that like Toyota, they'll build the cars in the States.
As for GM, they make most of their profits overseas. To describe any global as an American company doesn't really make any sense. Xerox? Kodak? Oce? IBM? Ricoh? Canon? Which are "American" companies?
The "bailout" money are actually loans and stock purchases. AIG is now owned 40% by the Federal Government. GM just recently found out what the strings are when they need money from the Feds.
Wagoner and his team should have been fired years ago. If the Board of Directors were doing their job, he would have been. Meanwhile, if stockholders ever get it together lots of other too busy too focus Board of Directors are going to be looking at the same thing.
Printers who have manufacturing facilities in the United States are the real treasure. They can't move and don't want to move. They are American companies.
It's not personal. It's business.
By Andy McCourt on Apr 02, 2009
"The decision by Chrysler to move production of domestic catalogs off-shore should be commended as visionary and at the very least, fiscally responsible"
Huh? Visionary??? What the...? How much vison does it take to get a print quote from offshore where pay, OH&S, raw materials, service, infrastructure and government on-costs might be a fraction of an advanced western economy? The whole statement is mypopic gobbledegook. The way to do auto catalogues in 2009 is 100% digitally, targeted, personalised, short run on demand and that means locally. It's last century thinking to just say 'how much did we spend on print then and how much can we save on the same thing by offshoring.' Chrysler hasn't saved a cent. It'll cost 'em. It's a PR disaster (see Michael Makin's comment e.g.)and they will be importing a high percentage of redundant printed products, headed for the pulpers. Think outside of the square Chrysler! Think digital.
By Patrick Berger on Apr 03, 2009
The cost of the catalogs have been passed on to the car dealers for years. When a dealer needs catalogs or brochures there are charged for them by the car manufacturers.
I have a close relative who has been in new auto retail for 50 years and have seen the charges for the catalogs. The prices that the dealers were charged sure looked like positive cash flow for the car manufacturers.
When the car manufacturer ends up with catalogs left over then they are a cost burden.
By Jack R Wagner on Apr 03, 2009
If the pressman printing the Car catalog
purchased a lower quality Chrysler instead of
a higher quality import then we would be
justified to make a stink.
By Brad Mintz on Apr 03, 2009
I understand and agree with offshoring but for a company that the American tax payer is bailing out they should be stimulating our economy. Print in the USA.
By Brian Regan on Apr 03, 2009
It is a hard pill to swallow for sure. Taking money from tax payers and bailing out a firm and having that same firm take tax payer money and send it were it has little impact to the tax payers that dished it out.
However, let us not forget that China has been lending to the US heavily. Their investments here and in their own country was based on the US continuing to grow. With the recession things have changed and soured our relationship with China.
Still hard to swallow.
By Michael K on Apr 03, 2009
The private capital company that owns Crysler also owns Newpage paper. Newpage tried unsuccessfully to curtail the import of paper from Asia, and the parent company turns around and buys the paper and printing from Asia. Somehow that is visionary? To me it is just bad business.
By Michael J on Apr 03, 2009
@ Patrick,
nice point. It's a vendor looking at the channel as a revenue source. Sounds like what we see in the printing industry.
By Ken Cring on Apr 03, 2009
It's ironic that these are the same captains of industry that complained loudly about the foreign automakers eating into their market share.
By Cue on Apr 03, 2009
What a joke! Way to repay the tax payers after they receive the bailout money.
Consolidation!!!! It's called print evaporation in the US.
Maybe the car companies should stop requiring they print on a 12 color press.... and print basic 4/c process.
By Dan Davis on Apr 03, 2009
Why don't we stop calling it the "Obama" PR Man's "offshore printing" and say what it really is....printing in China. If Chrysler thinks this is the way to go, they ought to ask clients like Weight Watchers and others who have been there (on a bunch of unfullfilled promises) and they will come screaming back.
By Barry Clark on Apr 03, 2009
A company that has so little new products on the horizon MUST do what it can to cut it's costs. Offshoring the printing is a great idea, Should the company go into bankrupcy, it would undoubedly be a Chinese printing company that gets stuck with the bill. The US taxpapyers are already in the hole with Chrysler for the bailout. It's unfortunate that the workers suffer, but all I can say is enough is enough.
By C P Hoult on Apr 06, 2009
Just to say I am an American is a short comment.
I am a lithographer also. I am now one who will not buy Chrysler. GM or Ford will get my next order for a new car/truck.
CPHoult
By MitchT on Apr 06, 2009
Chrysler doesn't get it. Like many of the car companies they have continued to rely on their agencies because they have gotten rid of so many people. These agencies are the wolves in sheeps' clothing. They design these catalogs to boost their individual portfolios. Why not design a 6 color or 8 color book (not 12 color)that opens up a huge viable asset base here in the states? Why not direct your client to the best practices of the industry? The best way to save money is to incorporate a pre-printed catalog in limited supply to dealers, combined with digital products and electronic media, not sending your agency to Korea for 3 weeks. In addition to not printing the catalog, there is additional savings to be garnished by managing the entire lifecycle from prepress to logistics.
By Don Piontek on Apr 06, 2009
MitchT's comments are "spot on". Managing the product catalog (and sell sheets) on a JIT model (using digital print) can be a much more cost-effective way to handle product literature than simply off-shoring it. The logistical considerations alone make off-shoring much less compelling than it appears. Another reason why Chrysler won't survive.
By Dave S on Apr 06, 2009
Where are all the union autoworkers crying foul? You gotta love the Buy American mantra...when it only applies to buying my product! Give me a break...can't wait to buy a Nissan.
By Lisa Bickford on Apr 09, 2009
A big part of the car-buying process is emotional and a beautifully printed automobile brochure with vanishes and coatings and the whole TACTILE thing going on is the perfect example of a spot where printing kicks internet mktg's butt. And a brochure printed out on some guys laser printer at a Toyota dealership?! Come on - ugh! No emotion there. You wanna commoditize your product even more? Print it out on some lame laser printer or inkjet. And yes, Chrysler is being short-sighted to off-shore their printing especially at this particular time.
By Michael J on Apr 09, 2009
Hi Lisa,
But . . . a versioned, personalized Print product produced on a high end digital production machine could do both. Ok. mostly no varnish. Ok. The don't get it in the showroom. But it comes as a follow up the day after going to the showroom. And it could be matte film laminated or it could be pre printed shells with customized color inside.
By Sheila on Apr 09, 2009
Real nice Chrysler. You want people to buy American, you use American money to bail you out and then support foreign workers. Why didn't they ask China for the bailout money?
I see this time and time again, where major companies, headquartered in your home town, send their print work to Canada or outstide of the area to get the cheapest price, but then preach to the media about having a sense of community. What BS. How does that help the people in the community when you send work outside of the community or out of the country? Their back-ends don't follow what the front-ends preach.
By Bill Fleck on Apr 09, 2009
I think it is unreal to think that a company that requires our money (tax payer money) to survive would do such a thing................welcome to America or should I say China.
By Michael J on Apr 09, 2009
The back end of any global is about money. They have to buy at the best price or another global is going to eat their lunch. It's the only thing they can do.
Local printers, and other local businesses, who are living here, have families here and communities here have an incentive to buy here.
It's what they naturally do.
The real problem with the short sighted idiots who run Chrysler is that they would have gotten a much higher ROI if they used digital and personalization. But remember this is a hedge fund that looks at balance sheets and funny money. This group knows very little about making cars.
But maybe that's why Obama told them they had 30 days to do the deal with FIAT, or quietly go into the night.
By John on Apr 12, 2009
Chrysler is off shoring brochures? Not a big deal. Hopefully there is a Supply Management professional who is looking at landed cost verses domestic production. And the benefit should far out weigh the additional risk that extends the supply chain to the other side of the world. Many, e.g., Dell discover off shoring increases total cost and move everything home again. However, you cannot blame Chrysler for trying. Besides, the percentage of exported print from China on aggregate is insignificant.
By natalia c on Apr 20, 2009
Chrysler is following in the footsteps of brands like Nissan and Infiniti who started to 'offshore' the collateral years ago. Fast forward to now in the Los Angeles market where within the last 5-8 years we have lost 3 of the 4 big high-end printing companies to 'global sourcing' of this kind. I would state that this is mostly a corporate buzzword upon which various executives and their minions got promotions and bonuses for saving the company money by outsourcing offshore. When simply working smarter could have saved them millions, kept quality still within reach and saved many people's livelihoods.
By Michael J on Apr 21, 2009
Working smarter is not a global's speciality.
Consider the really stupid waste of human capital with the global's firing experienced people to "cut expenses."
I bet that in most small businesses the boss understands that the defensible advantage is the people. I know of many small business owners that worked without taking a salary for years just to protect their people and their business.
That's smart, because when things turn around, you still have experienced people to make hay while the sun shines.
If a global has Board of Directors that doesn't pay attention, you get CitiCorp. It's probably the reason that Chrysler is in such deep do in the first place.
I chalk it up to the fact that they live in bubbles, not the real world like the rest of us.
By Dave Y on Apr 29, 2009
Today's news is that the Auto Unions will get a big piece of equity in Chrysler (GM as well) in return for bailout money.
Now to watch the battle of the UAW versus Print unions! How will the Feds manage that one (since they are so much in charge, now)?
By Mike on May 04, 2009
I think Chrysler is a horrible case study, since they will eventually fold.
Discussion
Join the discussion Sign In or Become a Member, doing so is simple and free