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Printing Firms Look to Government Markets in Downturn

Monday, April 14, 2003

Press release from the issuing company

April 14, 2003 -- With sales still stagnant, commercial printing firms are turning to government markets to supply needed work. Figures released by the e-LYNXX Corporation’s ABC Advisors division show that more than 1,800 suppliers obtained work during the most recent 12 month period from one of the key public markets, the Federal Government Printing Office (GPO). Yearly volume for the top GPO printers can amount to more than $20 million. Doug Harbach, Vice President of the e-LYNXX Corporation, says recognizable names such as Mail-Well, Moore, Wallace, R.R. Donnelley, Quebecor, and Standard Register dot the supplier list, but the vast majority consists of small and medium size businesses. “GPO obtains printing services for work of all sizes with the awards made either through single job awards or orders under term contracts. In almost all cases, GPO vendors are using this work to fill open capacity between commercial jobs.” Last year, approximately $474 million was produced on contracts issued by the GPO to private sector printing companies. GPO accepts competitive quotes or bids on all of its procurements, and since 85% of the jobs GPO procures have a value of less than $3,500, this market provides an excellent opportunity to obtain work that can be easily inserted into open production holes. Harbach says with recent headlines regarding print sales reading “Painfully Slow Recovery in Progress”, “Consumer Confidence Index Falls 15 Percent”, and “Printers Don’t See Business Picking Up”, the importance of markets like GPO increases. In fact, the Printing Industries of America recently made an endorsement of ABC Advisors GPO-related services. This first-ever recommendation of this type of service displays PIA’s recognition that contribution work from GPO can be a valuable means to maintaining or increasing profits. In making this announcement, PIA CEO Michael Makin stated, “As the commercial market continues to tighten, we expect more of our members to look to federal and state government printing opportunities to fill open time” The negative economic effect surrounding underutilization of equipment is legendary in the printing industry. ABC Advisors long-time studies have found that profitable companies operate at about 70% of equipment capacity. Therefore, prices are frequently set to break even at this point, plus pay for the 30% of expected downtime. When a sales slump occurs and 40% or 50% of capacity remains, already razor-thin profit margins of 2% mean every failure to spin press cylinders moves a printer closer to the “red”. PIA, in referring printers to ABC Advisors is saying, in essence, that one option to riding out downturns in business is to move outside of your primary market. This is where government markets can help because what you charge is invisible to your commercial customers...all the while generating income to pay for costs that cannot be eliminated such as equipment and building leases, electricity, personnel, etc. “GPO contributes in another important way,” Harbach adds. “Since GPO guarantees payment in less than 30 days with a normal turnaround of 20 days, the market can enhance overall cash flow.” While GPO is a logical alternative, work from state and local governments, along with colleges and universities, is plentiful, too. Printers who utilize ABC Advisors can also obtain services to pinpoint opportunities from these non-GPO sources. Harbach says more information on GPO and on getting involved with government markets can be obtained free of charge at www.abcadvisors.com.




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