What We Need Here is a Revolution By Ed Marino of Presstek November 6, 2006 -- Tony Cordova, owner of Kwik Kopy Scottsdale, made an interesting statement following the installation of a Presstek chemistry-free CTP device: “Purchasing the Vector TX52 was not about cost savings. We were already spending the money between chemistry-related costs and production inefficiencies. The acquisition was, in a sense, reallocation of resources already being consumed with the added benefit of increasing our overall capacity and throughput.” Short-run printing is actually mainstream, and long run is becoming niche. Cordova’s comment highlights an interesting shift in the economic dynamics of print manufacturing. The business challenge that led Cordova to acquire CTP was an increased demand for shorter run, four-color work with tighter turn times. At the same time, with ten other printing establishments located in his immediate vicinity, Cordova knew that competitive pricing would be a critical survival factor for him. His manufacturing process, which had been effective in earlier times of higher margins and longer run lengths, was no longer economically viable and he knew he had to rethink his business from the ground up. Cordova is certainly not alone in facing these challenges. In a recent white paper, (also available today at On Demand Journal) noted economist and industry commentator Dr. Joe Webb points out: “The current cost structure of the printing industry is a function of its capital equipment base. With many presses purchased in the late 1990s, there is a mismatch of installed base of equipment's optimal use and the nature of print demand. Long-term cost restructuring can only occur through investment, especially in modern workflows that permeate all functions of modern print organizations and reach outside to their clients and freelance support personnel.” Short Run Goes Mainstream Because of a growing demand for increased relevancy and immediacy of information, and the “anytime/anywhere” nature of print alternatives, the days of mass media are numbered, if not completely gone. Even such venerable means of mass communication as newspapers and magazines are suffering from this trend, with both circulation and ad revenues declining. Consumers of information have become used to timely, relevant communications - anything else is likely to quickly find its way to the round file, a fact that does not escape marketers, who are the largest buyers of print. This has given rise to the increased demand for shorter runs of more targeted communications, and the emergence of the term “short-run color.” But as Dr. Webb points out in his white paper, there is significant confusion about what “short run” actually means. For a web printer, it could mean anything less than 20,000 units. At your desktop printer, it could be a run length of one. He presents a more realistic and far-reaching definition: “unit counts lower than expected when equipment was originally justified and purchased, [resulting in] a mismatch of equipment capability and current job characteristics.” According to this definition, he points out, short-run is actually mainstream, and long run is becoming niche. Rethinking the Model When he made the decision to reengineer his production process, Cordova recognized this fact, but took it a step further by realizing that rather than requiring a new investment to fix the problem, he was merely reallocating resources he was already consuming. He came to this conclusion by examining his operation from end to end rather than examining individual production silos. His new configuration allowed him to reduce shop headcount by one, from seven to six employees, while at the same time, increasing his pressman’s productivity by 40 percent. He intuitively came to the same conclusions Dr. Webb puts forth in his white paper: 1. Digital workflows are essential to revolutionizing the print business. These are not just in production, but throughout the print organization. 2. The physical nature of print documents lends itself to smaller presses in smaller formats for the general commercial market. There will always be specialists who need large press capabilities, but the mainstream will not. 3. Manufacturing costs in the print enterprise need to further shift labor cost to capital investment that are more flexible and ensure a better competitive profile with other media. Printing in the 21st Century As I talk to Presstek customers who have adopted chemistry-free CTP or acquired DI presses, I find that the results that Cordova saw are not unusual. By updating their production portfolios to more closely match today’s market demands, these printers are repositioning themselves to be stronger, more profitable players in an increasingly competitive landscape. With the renewed energy and revenues this restructuring has brought to their businesses, many of them are also now able to branch out into other types of services beyond ink or toner on paper, most notably participation in the growing market for delivering blended printed/electronic communications for the integrated, multi-channel campaigns marketers are increasingly trying to implement. The centerpiece is still the printed piece, which becomes even more powerful by leveraging email, the Web and other means of communication to achieve the multiple customer touch points today’s marketers are after. Printers that update equipment to match market demands are repositioning themselves to be stronger, more profitable players in an increasingly competitive landscape. It is this new short-run future that Presstek foresaw more than ten years ago and has been driving ever since by bringing products to market that incorporate more automation and take more steps out of the process. They are designed to eliminate the mismatch between equipment capability and current job characteristics that is so prevalent in print establishments. They are a way in which printers can reallocate resources to stimulate profitability and growth. And they provide a mechanism by which print can remain a viable communications medium far into the future—fast, efficient, high quality printing with a short-run manufacturing cost in line with buyers’ expectations. To learn more about these dramatic shifts in the dynamics of our industry and the facts and figures behind it, be sure to read Dr. Webb’s white paper, Major Trends and Rethinking the Nature of the Print Business. It may be one of the most important things on your to-do list as you think about the future of your business.