My name is Jim Rosenthal and I'm Vice President and Chief Operating Officer of Digital Color Graphics in South Hampton, Pennsylvania and I think two topics that are really important to the success or survival of our industry in the future are one is understanding the numbers of our business, financially, not just your financial statement, but what it takes to be profitable, what your model is if you will, your revenue model, but also your cost model.  In other words, when you take a project on at what point does it become profitable and how do you do that within what you have and a long with that goes the second thing that I think is important is adopting lean manufacturing techniques.

If, as an industry, we continue to do things the way we have always done it, doing quotes on a yellow piece of paper, just scribbling things down and not have a robust MIS system that helps us figure out value-added pricing and how much cash is going to be left on the floor after a job is complete and on the other side understand how to manufacture it we’re not doing the right things.  We started to take a look at lean manufacturing and have actually cleaned up areas of our company and it’s not just cleaning up visually.  It’s taking the steps out.  It’s becoming more efficient and of course what that does is drive your costs down, speeds your ability to produce a job up and obviously—or speed it up and deliver it faster, but obviously increases your profits.  So those things together I think are critical to the success and if you don’t have a spreadsheet model, budget, whatever you want to call it that you can plug something into and it tells you the affect on your business you are not operating at an intellectual level that you need to be.  If you can’t say okay if I hire this person and I pay them $30 or $20 an hour what does that do to my profit structure of my company or if I take this type of work on at this gross margin, buying paper at this level what does that do to my gross margin or to my profitability or if I pay a sales person, if I need to overpay a sales person by this much to attract them to my company to grow my business at what point—how much volume do they need to do for me to be profitable then you don’t have a good understanding of your business.

And then again on the other side of it, if you are not looking at taking steps out of manufacturing, making your workflow more efficient your competition is ultimately going to beat you at your own game.

I think the delusion is that people don’t look at their numbers.  They sit there and they say well as the economy comes back if I could just hang on long enough I'll be okay, but the reality is that they are off 20 percent from last year, which is off 20 percent from the year before, which is off 10 percent from the year before that.  So it’s a long way back.  If you are off 20 percent that means you have to grow 35 percent or 40 percent to be just back to where you were and so I think the delusion is just hang on.  I think that’s wrong.  I think that you really do need to look at what you need to be profitable.  Look at your company today and say if I'm breaking even chances are I do not have a positive cash flow, so what do I need to do to get this, what model do I need to with the staff I have or what staff do I need to get rid of or what staff do I need to change to be profitable.  I think that as some older owners or I shouldn’t say older, but longer time owners tend to be very loyal to their employees, so people are getting paid $29 an hour for a $17 an hour job and they continue to give them raises instead of looking at what type of people do I need in what areas at what dollar figure to make this company survive.  It’s very nice to be generous and giving, but on the other hand it’s really important that you ask the question what do I want my company to do for me, not what am I going to do for my company.  If you’re doing stuff for your company versus what your company is doing for you then I believe you have it all wrong.  You didn’t go into business to give all your money away.  You went into business to make money and live a good life.

Definitely take a look at your books, understand your business model, understand what you need to do to be profitable and scale your business, your staff appropriately and at the same when a project presents itself understand what you need to do to make it profitable and on the other side of it, be able to manufacturer it very efficiently.  Take a look at the number of steps.  If a job—every time a job ticket gets touched that costs you money, so eliminate those touches.  Every time a piece of paper has to be moved or a skid of paper has to be moved that’s time and money, so eliminate those types of things.  Anytime a pressman has to look for a tool that’s time you’re losing.  

Have things in places that people can access them.  Have files where they need to be.  Have job tickets be complete.  Have them be electronic, so people don’t have to touch them.  Eliminate steps in the process.  Make your billing more efficient.  Use a robust MIS system to help you do these things and keep the steps to a minimum and do those things and now you’re looking at a better model for what the future looks like and while we as commercial printers don’t compete really with a company like Vista Print—Vista Print has a very small slice of the printing market.  If you look at how many people actually physically touch materials in their building when they produce something it’s very, very little.  Well we can take steps in a traditional custom order to do things like that to reduce the number of steps.