Last week I spoke at TACUP (Texas Association of College and University Printers). Of course no printing show – regardless of whether its focus is on in-plant or commercial printing or if its draw is national or regional – can get away from the challenges in the industry. As a result, I had several one on one conversations about the future of in-plant printing. The most often asked question from both in-plants and their parent organizations is, “What is the long term prognosis of in-plant printing services?” Answering that question is not easy.
The printing industry is undergoing challenges impacting both commercial and in-plant printers. Over the last 2 years I have worked with in-plants that have remained in business and others that have been outsourced. One advantage of an in-plant is that it uses a business model that does not include profit and often has a lower cost structure because it may not pay rent or utilities, or charge tax. As a result, a well run in-plant with enough demand can save the parent organization between 10-30% on commercial printing costs.
But in-plants, like their commercial cousins, are struggling with the same two issues – cyclical and structural changes that are reducing the demand for printed products. The cyclical change is tied to the economy, while the structural changes are from technologies that are disruptive to the printing industry such as the Internet/ email, cell phones, and e-books, among others. While a portion of the demand will return as the economy returns, the effects of the structural change are more profound and the declines due to those changes may never rebound.
To answer honestly, “What is the long term prognosis of in-plant printing services,” you have to acknowledge the two different camps. On one side are the “naysayers” who say that in-plant printers offering printing services are not sustainable. On the other side are those who say in-plant printers, like their commercials cousins, are evolving and will survive as long as they are responsive to their customers changing needs. The most recent market research supports the later thinking and shows us that, while there are signs of declining numbers of in-plants, they will remain a vital source of print production.
In February 2009, InfoTrends released a study of the in-plant market titled “In-House Production Printing—Critical Trends for Corporations, Government, Education, and Non-Profits.” The report, based on responses from 376 in-plants, revealed that digital printing is quickly displacing offset in in-plants, Data Center Integration is growing and in-plant production is increasing.
In two assignments I worked on this year, I would say that this conclusion is spot on. In both very large in-plant assignments I have seen digital printing displacing offset and Data Center Integration become a motivating factor for keeping in-plants. I suspect that the original impetus behind the statement digital printing displacing offset was due to toner-based technologies. I think that is further supported by high speed inkjet presses.
The InfoTrends study also estimates the number of in-plants in the U.S. to be 52,078 and estimates there was a decline in the number of in-plants of around 2.5 percent from 2006 to 2007. The report supported the thinking that the success of in-plants will come from their ability to be responsive to their customers’ changing needs. When asked which new products and services they expected to show the greatest growth, they listed the following areas: internet based services (Web-to-print), variable data printing, cross media marketing and digital asset management.
Which one of the two camps do you fall into – in-plants are unsustainable or in-plants will survive?
Howard Fenton is a Senior Consultant at NAPL. Howie advises commercial printers, in-plants, and manufacturers on workflow management, operations, digital services, and customer research.
Discussion
By Cary Sherburne on Nov 03, 2010
We are just putting the finishing touches on a white paper on the value of in-plant printing operations in the college and university environment, and have documented some very good success stories as well as a number of best practices that demonstrate how creative in-plant managers are changing their operations to bring value to the institution and to support multiple media. One in-plant from a very well-known institution, for example, is managing electronic signage around the campus. Instead of printing flyers, people can use these signs to advertise their events. Another is insourcing about 60% of his work from state agencies in addition to doing almost all of the campus printing. Our research would reflect that a well-managed and entrepreneurial in-plant operation, at least in higher ed, offers significant value to the institution.
By Vic Nathan Barkin on Nov 04, 2010
As a 12-year university in-plant veteran as well as former president of the Arizona chapter of the IPMA, I agree wholeheartedly with your synopsis as well as the results of the InfoTrends study.
Two things I'd like to add are that first, any production-oriented business no matter how diversified is dependent on capacity utilization. In-plants are notoriously famous for ignoring that rule for many reasons, the most common of which is that some don't think they have to act like a business. Therefore, a single-shift shop that couldn't survive in the commercial world is likely to survive in the in-plant world because upper management either intentionally or ignorantly doesn't look at the in-plant as a profit center.
My second comment which is definitely tied to the first is about in-plant budgeting. Smart in-plants report to their parent organizations just like a business unit with P&Ls based on fully loaded budgets. That said, many do not, and because of that, mere existence justification numbers become cloudy. In some cases it's intentional as the parent organization assigns less-tangible valuations such as responsiveness, confidentiality and enterprise integration factors above true TCO. In those and other cases things like rent, utilities, HR, G&A, and/or enterprise IT are not included in in-plant expense side of their P&Ls which can give the appearance of economical effectiveness, when in fact it is not.
Again, this may be intentional or not depending on the view from the ivory tower. It may actually fit in well with the organization's cost-of-doing-business philosophy, but all it takes is a changing of the guard to jolt the status-quo. There's an old tongue-in-cheek mantra in play with this, "Retain Current CEO".
By Tim Kelly on Nov 04, 2010
Howie, we have seen in-plants thrive, rather than fight for survival, with the addition of web-to-print. We have tracked the results of in-plants that have implemented WebCRD, the web-to-print solution for in-plants. The results are encouraging for in-plants.
* Increase print volume – 30-300%
* Increase productivity – produce more volume without an increase in staff
* Expand services – volume justifies new services
* Increase the value of documents printed with variable data
* Streamline accounting with automatic reporting and MIS integration.
By Chuck on Nov 05, 2010
This statement...
"One advantage of an in-plant is that it uses a business model that does not include profit and often has a lower cost structure because it may not pay rent or utilities, or charge tax. As a result, a well run in-plant with enough demand can save the parent organization between 10-30% on commercial printing costs."
...is nonsense.
First of all, SOMEONE is paying the rent and utilities. And someone is certainly paying taxes.
And anytime you have a group within an organization that "doesn't have to make a profit", it's a recipe for failure.
Competition is good. Putting jobs out to bid is good. The marketplace for print is extremely competitive, so it's a difficult stretch to believe that someone in the printing community couldn't beat an InPlant on all metrics-- price, quality, delivery, service.
An operation of this sort makes sense if the products produced are very specific and unique to the parent company, or if the materials produced are secret or confidential, or if turnaround times can't be met because the facility served is in a remote location.
There may be a few other good use cases, but if the print users are located in a metropolitan area that has many printing companies, maintaining the overhead of an Inplant operation is not such a good idea in today's environment.
By Patrick Dugan on Nov 05, 2010
Vic,
Can you clarify your statement about capacity utilization.
Many successful inplants have implemented lean and cellular manufacturing where the emphasis is not on utilization but throughput reduced cycle time and quality.
Just like any manaufacturer , if the focus is on what matters to the customer not utilization, the plant is usually profitable.
By Buzz Tatom on Nov 05, 2010
In-plant printing seems to go in cycles. They seldom if ever last. I have seen hundreds of them shut down. Buying printing equipment for one customer and expecting it to support itself is a failed strategy. Printing companies are able to stretch costs across many customers. You usually find this In-Plant talk coming from someone trying to sell you something or try and build their own little fiefdom inside a corporation. What happens when the print need changes or their is a cut back in print needs from that one customer? Uh-oh.
By Roger on Nov 05, 2010
Chuck's observations expressed the same opinions I held seven years ago at which point I left the commercial world to manage an in- plant. I've since found a good in-plant outsources those things it can't produce economically. However, the bulk of the work an in-plant is required to produce is work a commercial shop either wouldn't want or couldn't do as well, as fast, and/or as economical. For many in-plants, the reason for their existence is the same as why you wouldn't want to go across town to get a dozen copies, it's convenience.
By Alan on Nov 06, 2010
What can I say that has not been said?
I’m a UK Print Manager, in a University. My background is a hard-nosed ex-commercial printer / manager (well dogs body / jack of all trades really) and as such you tend to be judged and judge by results and contribution. These results (or outcomes) may be over a number of years, but in reality, we are as good as our last job, because a business can not survive whole cost accounting if it makes a loss and fails to cover all costs and makes a surplus to invest in it’s resources and future (or to pay off loans and keep cash-flow).
In the commercial world, all the deadwood is cut out and incompetence is not tolerated. Everything is gered up so the growth can be maximised and every commercial opportunity be optimised and converted into money or investment in kit and profitable technology systems and skills.
You also have to have quality, marketing and deal closure skills at most levels and commission is used to bring in new work. The ability to make a silk purse out of a sow’s ear and the ability to exploit or die is essential at all levels. The company needs to be a team, all working for the continued health of the company and everyone’s job.
There are good reasons for in-house or outsourced provisions. Good commercial printers know when to outsource a job and make a smaller margin, than run the risk of making a failure and get a dissatisfied customer.
I think that every university and college needs an in plant, but this in plant needs to be fully functional and judged by results and costs. It needs a good manager, with a commercial understanding of risk, worth and skills.
However, the answer to this enigma and the fight against neo-Luddism is management.
If your management is poor or you are a poor manager then you will never reach Nirvana and you may end up flogging a dead horse, which is not healthy or productive for anyone and it just confirms proof of incompetence and inability at all levels.
By Catherine on Nov 09, 2010
It’s nice to see a couple of in-plant managers like Roger and Alan weigh in on Howie’s article in addition to the vendors, consultants, and commercial printers who tend to respond to these types of articles. Especially Alan, who was right on in his response.
It’s not about the economy or changing technology. It’s about MANAGEMENT! Effective in-plant managers plan for and react to economic changes, incorporate appropriate technologies, understand their cost structures, provide knock-your-socks-off customer service, focus on the business needs of the organization, maintain confidentiality, protect the organization’s brand, and provide convenience and unrivaled turnaround times—these are the in-plants that will survive and prosper no matter what happens in the economy! The managers who do not do this will see their shops close. Many higher education in-plants have been open since the late 1800s; the in-plant I manage has been going strong since 1923.
In-plants do the same things with the same skills, the same equipment, and the same supplies as commercial shops. Why separate in-plants and question whether we are sustainable? I don’t hear anyone asking whether commercial print is sustainable, but there are probably more commercial shops that have closed their doors during the past couple of years due to the economy than in-plants. So give me a break. It’s not about being an in-plant, it is all about being a competent manager. And when the time comes to choose a consultant to assess your in-plant, a competent manager will make sure she chooses a consultant familiar with the in-plant industry that will present a fair and unbiased assessment. Better yet, a competent manager will choose a consultant who has actually managed an in-plant!
By Paul Abdool on Nov 09, 2010
This is fantastic commentary. Good debate or shall I say clarification on earlier points.
As the Chairman of the Xplor International's Board of Directors, I love these discussions and variety of opinions - it makes us stronger and question how we do what we do each day!
I go into several in-plants and service bureaus and PSPs each year with my day job and I believe that an imaginative and creative business that is constantly seeking out new business is imperative.
And yes, new business exists in an in-plant too! The difference is that the in-plant has to market its services internally to reduce outsourcing that is inevitably taking place by departments that have not been well served in the past: marketing, sales, and customer service.
I believe that both will continue to exist and the dominance will only shift back and forth based on trends, leadership, regulations and control perceptions.
By Alan on Nov 14, 2010
Paul Abdool said "I believe that both will continue to exist and the dominance will only shift back and forth based on trends, leadership, regulations and control perceptions."
Paul, you may be correct in your belief, but yoyo management, full cost understanding, quality and fashion is the main part of the problem.
Discussion
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