In mid-January, Alonzo Printing closed its doors after more than a year of struggling financially. Jim Duffy, owner of Alonzo Printing for 22 years, shared his thoughts on the closure and had some advice for others in the same situation.
WTT: Alonzo Printing was not just a flagship green printing company, but seemed to be a successful web, sheetfed, and digital printing company. And yet, in January 2010, after 33 years in business, you shut the company down. How did it all unravel?
JD: In an effort to reduce labor costs, we made a lot of investments in equipment in 2007. We put a new press in and we had enough work for two shifts a day. Things were going OK and we were making money.
November 2008 came along and sales were down. We lost money that month, but we were still profitable for the year. Then the bombshell hit.
December of 2008 and January and February of 2009 were awful months for us. By the end of January 2009, we were down from 50 to 36 employees and Alonzo had lost more than $300,000. Despite our efforts to reduce costs by May 2009 Alonzo was behind on press payments.
“A large financial company” – I’ll just call them that – removed our press in October 2009. With the cash deposit, the dollar value of 20 payments and a conservative street value the leasing company had received more than a million dollars in assets.
Despite this the “the financial company” sued Alonzo Printing – and me personally – for $1.2 million. Because of this Alonzo had no choice but to cease production and close its doors
When a company closes, employees lose their COBRA benefits unless there are at least two employees in the system. In order to ensure employees the ability to receive COBRA benefits, Alonzo prepaid healthcare insurance for two employees through June 2010.
That's really what happened. Some of us get caught up in this and some of us skate through it. I do know that a lot of printers are on the edge. They're hanging on with their fingernails and running out of cash.
Some printers will benefit from Alonzo’s departure. That's $4 million of web work, $1 million of sheet fed, and $1 million of digital that has been absorbed by other printers.
WTT: What about your initiatives as a marketing services provider? As a company that offers more than printing, a company that offers direct mail, pURLs, campaign management, and other marketing services?
JD: I never viewed Alonzo as a marketing services provider. Did we understand what pURLs are? Did we understand what Direct Smile is? Yes. While we used the tools sometimes, I never truly felt that the West Coast adopted them as much as the East Coast.
We bought Printable and never used it. We didn't really have the technically skilled people to make it come to life. Did we do variable? Yes. Did we have a storefront? Yes. We used Page DNA because they were local with no upfront costs; it’s pay as you go with them.
We marketed Alonzo, and from a pure marketing perspective, it was just a dream. And yet, it was another issue of not having the right people to make it really come to life. Then we reached the point where we couldn't hire the right people. That's how you get caught in the spiral.
You do need to market yourself; you need to do it in a way that's going to be meaningful for your clients. But, when you're caught in this web of reduced cash flow, how do you do it?
We started with a monthly newsletter. Then it became bi-monthly, then quarterly. Then I got so busy and I stopped producing it all together, not to mention it cost money we didn’t have.
WTT: What is your advice to the other printers? To the ones who might be hanging on by their fingernails?
JD: Number one: set your egos aside. For the most part, we’re talking about presidents in owner-operated companies. They have to set their egos aside and actively consider merging with other printers to keep it all alive. It's hard to do; nobody wants to fail.
Do it from a business model and not from a personal model. You may need a facilitator to help you get there; someone to help you clearly define roles and responsibilities. You will have to lay some good people off for the entire entity to survive. It hurts to lay them off, but if you don't do it, you're going to fail.
Number two: I would caution people to think very seriously about the commitment they make for digital equipment. It’s very expensive to operate.
There’s no doubt in my book that HP has the best print quality of any color digital application, but it’s a very costly system to maintain. And if you're stuck in a lease with an older model, you're paying a premium while the new buyers are paying less money and have a competitive advantage. It’s not like buying an offset press where you can pay off the press and keep running it for years. Digital equipment has a definite shelf life.
If you lease equipment, don’t get a fair market value lease. Instead opt for the $1.00 buyout. It may cost slightly more but it gives you much greater flexibility. Also, get a short term lease; I wouldn’t lease anything for more than three years because you’ll get caught up in it. Just don't plan on keeping any of this equipment for a long period of time.
People are going to be a lot more cautious about buying equipment. There's so much equipment out on the market right now; it’s readily available. Unfortunately people don’t have the cash to buy it.
Number three: cut, cut, cut, cut, cut! Don't be afraid to cut. You have to do it. You don't have an alternative. Too many people are just too kind. It's "Oh, we can't lay this person off. She's a single mom, and she's got this and she's got that, and we've got this and we've got that."
WTT: In your perspective, has the green initiative lost its edge? Are people asking you for green? Are they backing off? What's happening there?
JD: When you have a softening economy going on, print goes down. When pricing is the key, the green initiative takes a backseat. We reduced the amount of FSC-certified products that we're bought, because it cost more.
In 2008, we measured our carbon footprint. A part of that process included the papers we purchased and the recycled and post consumer content of those papers. 92% of all the paper we purchased contained recycled content and 48% of all the paper purchased was made with from post consumer waste. Needless to say this was a monumental achievement and commitment to using environmentally sustainable papers.
In 2009, we were forced to change how we bought paper. We went from buying 40% recycled content to 10% recycled content. We even went to buying virgin FSC-certified papers because they had a certified history and you could be assured they were coming from sustainable forests and they did cost less.
Everything was price. Some people wanted green. They wanted recycled. They wanted FSC. But you know what? Many printers are FSC certified because it is the green thing to do not because customers are will to pay for it. For the most part, they want the FSC logo but didn’t want to pay for it. We kept running low VOC inks - vegetable and soy-based - and we used low VOC cleaners and press washes.
I realize that with the shutting down of Alonzo coming to a close and having the time to think back, given the chance, I would do many things differently.
Thank you for the opportunity to tell the Alonzo/Jim Duffy story. I'm committed to sharing my strong commitment to a “green” and sustainable print industry. It wakes me up inside and I realize that we - by we, I mean the print industry - certainly can do a better job of caring for our environment.
WTT: Thanks, Jim, for being so forthright with us. Our best wishes for you!
Discussion
By Erik Nikkanen on Mar 16, 2010
Thanks Gail and Jim for this very realistic view of the struggle in running a printing business. It also confirms my view of the need to obtain low costs performance improvements to processes for printers.
At the core of this business is the fact that ink needs to be put onto paper in a controlled way. In many ways a simple process. Instead of simplifying the technology with better science, the industry has provided complicated and expensive technology which was aimed to make money for the vendors but not so much for the printers.
With the double disaster of loss of work to the internet and the financial melt down, printers and vendors have now been caught off guard. The greatest assets in this environment would have been to have lots of cash and some good ideas to retrofit existing equipment. Both seemed to be out of reach just when needed.
Troubles like this are partially due to the model printers use. They buy from vendors instead of developing new ideas internally that might provide a better benefit to cost ratio. For over twelve years I have been pushing the idea of correcting the fundamental problem of ink/water balance and density variation. These are prime sources of cost generators but there was never an interest to look at obtaining a consistent and predictable solution to control that cost.
Even though my solution was very low cost, there was no interest among printers. It is unfortunate that printers have now got into this kind of terrible position but I am not surprised at it. Not all printers can be saved. Even good ones will fail due to some errors that cascade into a big mess. As someone who has developed a fundamental solution that is low cost but one that has been rejected by printers for over a decade, I have to say I can not feel too sorry for those that fail.
Jim's story is a great example for those printers that are still alive. Be careful how you use up your precious resources. I need surviving printers to eventually use my technology. I need smart printers and press manufacturers who will take the right kind of risk. Good luck to those that are still in business. I'm rooting for you.
By Patrick Berger on Mar 17, 2010
This isn't about ITB. This isn't a soap box for ITB.
This is about economic times and what can happen with added debt at the wrong time.
Jim did an excellent job of explaining his problem and the ultimate result.
It took a lot of courage to do this interview. Watching the death of your company is quite emotional and depressing.
Thank you Jim for the interview.
By Kate Dunn on Mar 17, 2010
Erik,
No one should have been "caught off guard" by this situation. As communication channels have expanded and been adopted by the population it should have been a "no brainer" that print volumes were going to go down. Other channels offer better ways to communicate some messages and to get those messages to some people. The recession only sped up the process. The fundamental problem here is that the business model for most printers was and is based on volume. The more you run, the cheaper it gets. There simply isn't enough volume to go around and the industry is self correcting. If you don't have the volume to bring your costs down but the market will only bear a certain price - you lose money on the things that you sell. It doesn't take long to run out of cash especially when you owe on a lot of iron. Just putting in digital equipment doesn't fix the problem especially if you are still selling digital or purls or store fronts on price. As long as the sales people in this industry can't figure out how to solve a strategic problem and create value for their clients, this is going to continue unless of course you can find enough volume to make the old model work which is a really big if.
By Erik Nikkanen on Mar 17, 2010
Pat you are right. It is not about the ITB. I am sorry I introduced my particular depressing story.
But I do think that printers would have had a better chance if they had developed more technology or capabilities in house. Look at your operation. You have done a lot to develop extra capabilities that I am guessing have helped you through these difficult times.
Even a lot of small improvements made in house could help. Things done to delay buying new equipment. But in these times even the best of efforts might not save a printer. It is an historical shift in the business of print.
By Bob Rosen on Mar 17, 2010
Jim Duffy's poignant and heartfelt remarks should serve as a warning sign to many CEOs whose companies are trying to make the transition from being traditional printers.
Being successful in selling entirely new added-value services requires much more than calling yourself a "marketing services provider." It requires an entirely new skillset, a new way of thinking, and new people who probably know very little (and care even less) about printing. Getting comfortable in that new role is not automatic, and getting clients to believe you're a credible resource is even more of a challenge.
Merely changing the tag-line on your business card isn't enough. Nor is telling your existing salesforce "go out and sell marketing services."
The ALonzo story is also a reminder that if you're making a transition to a new business model, you must remember to pay even closer attention to your existing model, which will be paying the bills until the new model reaches critical mass.
CEOs must certainly commit themselves fully to making the necessary transition, but can't permit themselves to be so completely diverted by the new initiative that they stop fighting every day to extract every dollar of profit from their existing business.
Condolences to Jim Duffy, and thanks to him for speaking so frankly about the realities of being caught in the midst of making a difficult transition.
By chuck on Mar 17, 2010
At the end of the day, this was a tiny little old school printing company that made some half-baked attempts to jump on bandwagons like going green, and becoming a marketing service provider-- but neither had a real plan or the DNA to be successful. They needed to focus on a business plan and selling. They needed new energy and intelligence in the firm. They needed the ability to use technology to help their Bay Area clients (who are often very high tech themselves). You can't fake that.
By John Franco on Mar 17, 2010
Thank you Jim, for sharing your insights on what was clearly a very difficult time for you and your business. With regard to all print service providers, I think Kate's comments are right on target. Without constantly looking to create situations in which your company is viewed, by your customers and prospects, as a solution provider, as opposed to just another printer, to quote jobs, your business will only continue to work off of shrinking margins and you will be fostering a climate in which price can be your only differentiator. Additionally, right now, the focus of the owner(s) of the print business must be to reduce the cost of production, by ways of effeciency and waist reduction, within the existing operation. Items such as improving make ready time, production time, keeping tight control on quantities produced vs. billed and streamlining the number of steps from front door to back door, are key. When times are good there is a general tendency to think that if you just get your share of the volume your problems will take care of themselves. However, as we can all attest, when the times get tight, all of the ineffeciencies of our businesses, become very painfull to endure. Regardless of how well, or poor your business is fairing now, I believe it would serve all business owners well, to change their focus from working in the business, to working on the business. Only through maximizing profit, can any of us realistically expect to weather any sustained down turn.
By Tom Crouser on Mar 17, 2010
If a company has a really dramatic decrease in sales (say 50% for 90 days); then that's the General Motors scenario. Few, if any, can survive.
In this case it seems there may have been additional complicating factors but the essence is a dramatic drop in sales will require a company to have a really strong current ratio (current assets/current liabilities = 2.0 or MORE) in order to make it.
Many in this industry troll around the 1:1 mark and keep it there by withdrawing assets (salaries, dividends, withdrawals, distributions)during the good times. The mindset is that they will borrow their way out of trouble if needed.
That process didn't work this time for a lot of reasons; mainly the collapse of the small business credit markets.
Specifically, my guess would be that this company started with a lower rather than higher current ratio (don't know but comments seem to indicate that: we were doing okay); bought equipment and hard wire expenses higher (don't know that either but my guess is that equipment payments were more than any reduction in wages); and then get hit with a dramatic decrease in sales.
Actually either the GM Scenario of dramtically reduced sales OR increasing a company's hard wired expenses for expansion (green or otherwise) is a potential problem.
In this case it appears to me that both happened at once.
So, I agree with Chuck. No amount of greenwashing the print shop into a Market Service Provider will overcome financial realities. Picked the wrong time to stretch and borrow for new equipment. Sad but it happens and it really doesn't necessarily have to do with the digital vs. offset thing.
By Rachel Ann Shattah on Mar 17, 2010
I was fortunate to meet Jim Duffy several years ago at a PINC conference. After that introduction we became friends...when he was asked to speak or help another printer he always helped. Jim gave and as you can see by this interview continues to give by sharing his expertise,experience and the real story. I thank Jim for sharing his story that needs to be told and heard.
By Rich Casey on Mar 17, 2010
Thanks for sharing your story Jim. Honest, open dialogue in these trying times is extremely valuable. On the other hand, rude, belittling comments from someone named "chuck," who doesn't have the journalistic knowledge to understand that publishing an editorial, without a byline, deems it meaningless, are a waste of everyone's time.
By Eddy Hagen (VIGC) on Mar 17, 2010
Wow... this interview leaves me with mixed feelings. On the one hand: great interview, great insights from Jim (we need more people with such insight). But on the other hand it is sad to see that somebody who seemed to do the right things didn't succeed.
Jim touches a few really important points, one of them: the egos. And I would extend that with this: it's a personal, even emotional thing, running a print job. I have figures on the printing industry from the National Bank of Belgium going back to 1994, showing that more than one out of 4 (!) printing companies has a negative net profit margin. It is a constant in the industry... Even in 'good' years. This is not only the case in Belgium, I also have figures from other European countries showing more or less the same, so I would be surprised if it would be different in the US. A rational decission would be to close down a shop if it has multiple years of losses, if it is wasting the owners money. But it is an emotional decision, not a rational one...
One other point Jim accurately shows, is the need for the right people, to make all those nice new tools work... And - next to the unwillingness of some managers to invest in the education of their people - once again egos play a role: also the workers should be willing to evaluate and improve their work or working methods, they should not have the attitude that they know everything, that they are the best specialist. Everybody can learn new tricks. Certainly in an arena where everything has changed over the last decade... Just think back what a print shop was like ten years ago...
And a third important lesson, which I retrieve implicitely in the interview, is the danger of hypes... It is not because consultants, industry analysts, journalists, ... (*) say that something new and great is coming, that you have to jump onto the band wagon. Usually it takes longer before a new technology really gains market share (Bill Gates stated that already years ago: "The influence of new technology is always overrated in short term, but underrated in the long term."). And not every technology is a fit for every company. It has to fit into your company. Into the product range, even the philosophy.
When it comes to hypes - or let's call them 'hot new technologies' - everybody should keep in mind the Gartner Hype Cycle (http://en.wikipedia.org/wiki/Hype_cycle).
And in everything that you do: be realistic! Don't let yourself be carried away by nice powerpoint (or keynote) presentations, glossy brochures and flashy websites. Know what is feasible and what is not, for you, for your company and certainly for your customers: they have to pay for it! Aim for the best, but prepare for the worst.
Eddy
VIGC
(*) btw: I'm one of those consultants/ analysts/ journalists, but I always try to give a realistic view on things... You first have to be able to walk before you can run.
By Erik Nikkanen on Mar 17, 2010
Tom, excellent description of the problem. It is a business problem first.
By Bill on Mar 17, 2010
Chuck,
At the end of the day, the fact that this was a small printing company is irrelevant. They must have had some level of success to have been around for 30 years. I do agree that the green initiatives that have become a financial weight around the necks of printers who have taken on the burden of certification with no way to pass any of the costs on. The only ones making money are the certifying companies who produce no product. Every trade magazine I read has some new way for printers to take their focus off of their core business.
Just like the dot com bust we have brilliant people who keep telling us that we must use their new and unproven processes and products to survive. A few years ago when investigating whether to enter the digital market the salesmen were telling us to buy their equipment and train our sales people to create a new market for this service. We decided that this seemed to be putting the cart before the horse and decided to focus even more on our core business. Yes, volume is down but if we continue to promote the value of print and paper, those who keep their eye on the ball and not let their efforts be hijacked by the green movement or the latest new fad will survive and eventually prosper.
By Noel Jeffrey on Mar 17, 2010
Chuck & Bill,
One thing you should be clear about. Alonzo was "green" long before it became trendy. Jim Duffy has been committed to environmentally sound practices at least since I got to know the company in the early 1990s and probably before that. It just wasn't fashionable then but a few people cared. The Bay Area suffered a real loss when this company closed.
Noel
By Michael J on Mar 17, 2010
While the human story is not pretty, the business story is pretty simple. From Pat Berger's comment,
"This is about economic times and what can happen with added debt at the wrong time."
It's the same story that explains Lehman, AIG etc etc. It's easy to put a story around it, but mostly it's about some bad luck.
Amazing how when things go well, we're geniuses and when things go badly, we or someone else is a dope. The reality is that a world of complexity most "strategies" are merely stories told after the facts. It sounds good to say, I decided to x, y,z.
Mostly what what happens in the real world is people make the best decisions they can give the resources and constraints they see at the time. No amount of cheerleading changes that.
It's perfectly natural to not speak of risk. It's why nobody wants to be insurance. Sure mistakes were made, everyone makes mistakes. Sometimes you get really unlucky and the mistakes have nasty consequences.
No doubt if business people followed Ben Franklin's wisdom, bad luck would strike less often. Except sometimes. When it strikes more often.
By Niki Maguire on Mar 17, 2010
Thank You Jim, for continuing to contribute your honest and forthright advise to the industry. I think your comments about print companies merging should be thought about long and hard by many. Watching the closure of American Litho last year was a bitter reminder of these times, but given that Alonzo was "standing alone" and not part of a big print corporation made it especially hard to see you have to shut the doors. I trust you will continue to share your insight, your love for the environment and your generosity wherever you land. Happy St Pat's day my friend!
By chuck on Mar 17, 2010
@rich casey: It's tough times, this is a cautionary tale and I am grateful to Jim Duffy for sharing it. I also think it's very sad. I am not making an "editorial" here on this blog; instead I wrote a post as a printer and a businessman with some observations that, taken in context, might help someone else. I had been to Jim's plant and saw some directional mistakes being made a few years ago. Do you have some advice for our colleague readers here beyond "don't listen to rude chuck?"
By Bill on Mar 17, 2010
Noel,
I was in no way disparaging Mr. Duffy's efforts at running an environmentally responsible company. What I was trying point out (poorly) is that doing so costs real money, money that in most cases cannot be recouped. As a printer much like Alonzo on the opposite coast I certainly can relate to the pressures of evaluating hype versus legitimate new opportunities in these economic times where any mistake can be fatal.
By Erik Nikkanen on Mar 17, 2010
Bill, your comment is critical.
"I certainly can relate to the pressures of evaluating hype versus legitimate new opportunities in these economic times where any mistake can be fatal"
This is a critical issue and a great problem in the industry. How can one tell the difference between hype and truth? The industry is so full of Myths that are presented as Truth, that it is no wonder there is confusion. The graphic arts institutions have not helped but have actually perpetuated common myths.
I would guess that much much more money is invested in marketing hype than in actual rational scientific research that tries to explain the processes. People have been trained in the printing process but not educated in the science of the process. Knowledge of how the process actually works is a protection against hype.
By Mary A. Redmond on Mar 17, 2010
I want to thank and applaud Jim for the courage to share his story. It’s easy to talk when we’re “King of the World.” Not fun when a 30-year business closes the doors. Closed doors rip your heart out. Been there. Done that. No money left for the T-shirt.
My husband’s family trucking company was forced to close after 32 years. My sister and brother-in-law’s 8-year old printing company closed 4 months after he died of a heart attack at age 43.
I’m sad when our phone rings too late to help printers. That is, when leasing companies will no longer speak to owners. Attorneys are poised to strike. The leasing company’s repo truck is in the parking lot.
If I can offer any suggestion--be proactive with lenders. One printer I know offered his leasing companies altered payment plans last summer. All but one agreed to restructure. Business and cash flow improved. He’s now making regular payments. One leasing company refused to negotiate. They hauled off the equipment after a 6-month impasse.
Jim mentions the $1.00 buyout lease. That is one way to remove end of lease uncertainty. Negotiate the lease before it is signed. Here are a few tips:
1. Negotiate the equipment purchase price as if you are a cash buyer.
2. Ask for 3 finance options.
a.$1.00 purchase.
b.10% purchase option.
c.Fair market value purchase option lease.
3. Make sure at lease end you can return, renew or purchase the equipment. If it’s a digital press, you probably want to return it.
4. As Jim suggested, keep digital leases short.
If you want a few more ideas, here is a link to an article I wrote for NAQP last year with Seven Tips to Keep the Presses Running. http://bit.ly/2KhoGF
By Clark Omholt on Mar 17, 2010
Great interview. Jim didn't pull any punches. Most of the punditry in this industry is thinly disguised vendor promotions. This was a refreshing change. Jim got to the heart of the matter, discussing cost containment, financial strategies, making difficult personnel cuts. We work mostly in the Bay Area and have a fair number of printer clients. Alonzo seemed to me better run than most. I can only wonder what's going on with the others...
By Rick Littrell on Mar 18, 2010
What a great discussion here and many need to take heed. Buying equipment is easy compared to planning and staffing for success with it. This is an area where many are lacking. I have been guilty of it myself.
Times have been very difficult for most of us lately, but those that took extra risk in early 2009, were "Dead Men Walking" if they did not have a plan in place. Many paid, and are paying, for their mistakes in a very brutal way.
I always find it interesting when printers discuss becoming "marketing services providers" when they have no one on staff who is responsible for their own marketing. Given today's trends towards social media, personalized communications, and having "peer to peer discussions" with relevant communities, how can the printer provide value in that discussion without having an internal marketing person and/or a strategic relationship with a marketing organization? I don't think that they can. There are many examples in the market today to prove the point. A change in tagline will not change their ability to intelligently discuss marketing strategies and the various media available to their customers today.
Today's economic environment is not friendly to companies that make investment mistakes. It is important to remember that staff and organization must be prepared BEFORE the "new and improved" equipment is purchased/leased/installed. This is a mistake that I made when starting Magicomm, and just now beginning to fully recover from it. Goes way beyond the operational aspects, which printers have traditionally been very good at. If the PSP doesn't know how to price it, marketing it, sell it, and talk about it, then they are doomed regardless of the equipment. 0% chance for success.
But as we all know, it is easy to talk about this after the fact and I would think that it is fair to say that many of us are not growing as we expected or planned for. Tough times in a changing communications environment. Not a place to be if you are not planning for change. Think about it...
By Michael J on Mar 19, 2010
Rick-
Well said.
By Ian Mackenzie on Mar 19, 2010
Great discussion here. Alonzo's business was in the heart of Silicon Valley. With the demise of so many well established printing firms in the Bay Area lately - Hatcher, American Litho(bought by CGX I thought) - is it simply a case of over-capacity in a relatively small geographic area? This, of course, could have been compounded by company (client) initiatives to "print less" in general.
Did local market conditions also play a roll? I would imagine that real estate costs, labor rates, taxes and the poor financial condition of the California "micro-economy" did not help either.
I saw a great quote from Warren Buffet the other day that perhaps applies to our business sometimes,
“When management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.”
By Greg Goldman on Mar 22, 2010
Finally to the end of the this excellent thread the conversation turns to what I see as the real problem within the graphic communication industry...over capacity and commodity based pricing for print manufacturing spells death for a print service provider. Especially is in an expensive place like the Bay Area. This is nothing new for print manufacturing here in SF. Lot of the work has migrated south to LA for this very reason.
I agree with Ian that the overhead of rent and labor rates as well as a customer base that is more geared to using the web to communicate than printed material has made things difficult for all print providers. I am not sure if Alonzo was a union operation or not but if it was it didn't help Jim's situation. Bottom line here is there are too many business establishments (a statement that could be applied world wide) providing print to a customer base that is demanding shorter run lengths and quicker around times at prices that can not be supported by some who operate in places with higher over head. Unfortunately, simple economics and market factors will continue to reduce the sheer number of businesses here in the US.
Jim's experience does not grow on trees or come from an expensive MBA program, my hope is Jim can take some time to reflect on the past 30 years and use his vast experience to help others from making similar mistakes in these challenging times..
By Ken on Mar 24, 2010
Jim made the right decision to shut his operation down, its a shame he did not react sooner -- been there done that. Having never met Jim, I had the occasion to review some of his product once, impressive workmanship. Best wishes to Jim and his future endeavors.
That said, operating in the graphic arts trade has certainly changed over the decades. What we might take from this example and Jim's candor is the importance of getting lean in this industry. Credit is not capital and market position is everything. Once again, positioning IS everything.
Enviornmentally ill: Most buyers of printed media will only invest so far to "go green" add nausea. Lets face it, the green campaign is just a campaign. It reminds me of a fad, kind of like streaking was in the 70's. Most buyers do it to show off their "social responsibility" or for the corporate sustainability statement. Put all the feel good ... save the planet ... spin on it you want but at the end of the day economies are driven by supply and demand.
After shutting down my shop years back we turned brokerage -- I can already hear your hisses :) We place print domestically and offshore at 100's of manufacturers. American print manufacturing has been faltering for some time, layers of regulation, inflating financial systems; materials; overhead, out of control labor costs, workers comp, health insurance makes it nearly impossible to deliver "competitive" craftsmanship and is incrementally killing the U.S. print industry.
Back to positioning: Sure every buyer wants low prices and everyone knows that gang printers have destroyed certain market segments right? But what good is cheap print media if it is not effective? If it fails to communicate or function? Sure, you have tuned your plant for optimal throughput, have the best skilled labor force and the latest/greatest machines but you likely have no marketing research or plan let alone a campaign ready to launch.
Case in point right from todays WTT headliner http://bit.ly/95H5rU did Donnelley land Williams-Sonoma solely because they are Goliath or because of positioning? From reading the quotes in the article I submit it was the latter.
By Greg Barber on Mar 29, 2010
I applaud Jim for doing this interview and I feel his pain. I am sure a lot of us are terrified of our own futures in print.
I see PDF'S and JPEG marketing and virtual online brochures as a sign of our times.
Personally, I am glad I am a manufacturers representative. I work with many print plants form NY to CA.
Maybe, a few of you will contact me.
Greg Barber
By Robert Reichstein on Mar 30, 2010
I applaud Jim for his candor, and from what I have read, it sounds like Jim was a great operator. I am sorry for what has happened.
However,I think the issues for print companies are more macro than micro. A college professor of mine once said the definition of a dying business or industry is when there is an increasing need for capital which yields decreasing returns. The print model personifies that axiom.
The print model that was so profitable, is dead.
Back in the day a press could be in service for more than a decade and was considered great collateral for banks so they were relatively easy to finance. Pre-press and post press investments were negligable in comparison to today. Print was a main channel for advertising. Many print companies had at least a week backlog of work so manufacturing was planned and efficient.
Today, printers are losing more and more work to more fluid methods of information distribution such as the internet for catalogues, sell sheets, emails, social media, etc. and then fight for the left over scraps among themselves. Manufacturing has become a reaction to an order submissive to it's time constraints as opposed to initiating strategic planning.
There is relatively little gross margin on orders today so the ability to support tens of thousands of square feet in which you are warehousing multiple sizes of plates, paper, and supplies, supporting non revenue producing employees such as sales managers and fore men, and passive owners is quickly becoming un- realistic. And if that doesn't stress your business model out enough - pepper in the increasing length of time to collect receivables, if you are fortunate enough not to have customers declare bankruptcy!
I have spent 35 years in the print industry.
I have had to reinvent myself as well as my companies more times than I can count. But I can tell you there is hope. And Jim has the key.
Drop your ego and roll up your sleeves. Follow the lead of other manufacturing industries in this country. Down size, specialize your offerings, streamline costs, and think globally (or at least beyond your home city). When you find your niche, understand that now companies must be built to change with the times, and constantly look for signals of change, you will live long and prosper!
By Mike on Apr 21, 2010
Chuck is correct actually. Alonzo depleted their sales force in late 1999 from 7 to 3. And that was 3 inexperienced (pay them less) sales people. Jim Duffy continuously jumped on band-wagons, and drove Alonzo into the ground because of his inability to focus and create a business plan. Therefore, a company full of good people lost their jobs over several years. He mentioned Alonzo went from 50 people down to 36. He failed to inform everyone, when I did business with Alonzo, there were over 120 people employed in the late 90s. It was a continuous downward spiral before the economy went bad. Bad decisions by Alonzo management sank that ship.
By Ron Hinchley on May 20, 2010
I am looking at 1985 Alonzo printing and mailing of the Silicon Gulch Gazette. Microcomputing's first newspaper. Sorry to see Alonzo go.
By Alan on May 26, 2010
Jim Duffy's statement makes it clear that he provided excellent leadership at Alonzo Printing and was hurt by unforeseeable economic trends, irreplaceable employees without adequate skills, and financial institutions that he was forced to borrow from.
Employees (including those who left years ago) and vendors know the truth. Jim Duffy took ownership of a successful company, and slowly but steadily drove it into the ground, incurring the hatred of most of his employees.
It would take pages to detail his mistakes, but the highlights were a love of spending money (on high-priced equipment, not employees), an unrealistic assessment of Alonzo's capabilities and future, and a refusal to make any business plan.
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