By Philip K. Ruggles
The printing industry has been a core part of America’s business network since before our country was founded in 1776. Spanning that 230 or so years, our industry has faced its share of challenges and met them head-on. As these challenges and the economic environment in which they occurred have ebbed and flowed, the printing industry overall has exhibited an independent spirit, a toughness and an ability to endure just as America itself.
We are part of an industry that provides products and services as an integral segment of America’s communication network. Printers manufacture products but also provide vital communication services, and this dichotomy – manufacturing or service – has resulted in a mini-identity crisis for many years. America’s 35,000 or so printing companies are largely small, entrepreneurially-driven businesses that compete with each other head-to-head. It is an industry that has survived and matured because of the inherent flexibility of process and product supported by the ingenuity of company leaders and employees to work together for the common good. We have had our share of great moments and celebrated accordingly, and also our share of challenges which we have met head-on. America and print have matured together, through thick and thin.
The times, they are a’changin – truly historic sea-change.
There are three major structural shifts occurring at this moment in time that will affect every printer in America. Taken individually, each of these events is significant on it’s own; taken together they add up to a serious, perplexing situation for print as a communication tool and for manufacturing print as a business. The three structural shifts are:
Structural Shift No. 1: The American economy goes bust.
I write this as our stock market has dropped to around 8,500 from a high of 14,164 last year at this time. Experts say it is poised to continue to decline even more. Our once-dominant American economy now teeters on the brink of imploding, significantly affected by the plummeting value of investments and the dollar globally, with unpredictable credit issues and broad economic chaos that is likely to last for at least the next year and probably longer. While there is some disagreement among experts, it appears we are in or about to enter a full-blown recession. Some experts have written that American’s economic situation is akin to bankruptcy for a company – but it is our government that is bankrupt. It is an economic crisis of historic and frightening proportion and needs to be fixed properly. There is no question: we will all feel serious economic pain, with small businesses expected to be among the hardest hit.
Structural Shift No. 2: Print manufacturing has gone global and offshore is cheaper.
There has been a globalization of print manufacturing, allowing high quality print products to be made much more cheaply overseas, at costs – with shipping to the U.S. included – below what those same products cost to make domestically. This is a serious, long-term loss for the printing industry and also for the manufacturing component that is critical to America’s economy. As I used to tell my students: As goes manufacturing, so goes the economy.
Structural Shift No. 3: The Internet is the communication medium of choice.
There is a pronounced, irreversible acceptance by the American population of the Internet as the communication medium of choice; this impacts negatively on the need for a diverse range of print-based products. This mass movement to the Internet and away from print is further exacerbated by two critical issues: (1) the increasing cost, availability and negative environmental impact of paper and ink, two of our most important materials, and (2) the significant, ever-increasing transportation costs of print product distribution. Even though this Internet shift has been in play for some time, its negative effects are ever-emerging and are particularly damaging because of the wide swath of print products affected.
Because these are all structural changes, the proverbial “printing industry card deck” is the process of being re-shuffled and the result will be a realignment of our industry and the businesses within it. Successful print companies, if they are not prudent and careful, may be wiped out and start-ups, some without a traditional printing mindset, may be launched to go after certain print markets with laser-like precision. It means that what we have known to be gospel is no longer gospel, that what experience has taught us to anticipate will happen may not happen the way we think it will. With such structural paradigm shifts the “going back to zero rule” is not only possible but becomes common and any past successes won’t matter. We’ve seen this happen recently with the demise of Quebecor and the exceptional, rapid success of VistaPrint.
Change in the form of paradigm shifts waits for nothing and sweeps everything up in its path. And even as this triple set of conditions hits us hard and in unpredictable ways, the day-to-day business operations of a printing company must go on: Payrolls must be met, client’s orders must be filled, sales reps continue to try to sell product, suppliers must be paid. Businesses must go on, crisis or not.
As Thomas Paine so famously wrote in 1776: “These are the times that try men’s souls.”
What should a printing company executive do?
More specifically, it seems to me that the question being asked by print company executives is:
“What prudent actions should I take to prepare my company for the very rough and unpredictable road ahead?”
For the hundreds, perhaps thousands, of printing executives I’ve met over the years, I observe they are, as a whole a resilient, enterprising bunch. They are certainly not shrinking violets. There is kind of ever-present “maverick quality” (not intended as a political statement) that makes them interesting and dynamic. There is a competitive toughness sharpened by years of being in an industry that requires keen survival skills. They have learned how to roll with the punches, to re-formulate their game plan, to take a different approach when the last one didn’t work, and take risks (sometimes too risky in my view). In general they compete in an industry that has, since the time of Ben Franklin, experienced generally marginal profits, caught between shifting cost/price disciplines, dismal customer loyalty and continuously changing technology.
In sum, our industry has many street-smart, articulate executives who have done well by learning how to maneuver, persevere, avoid calamities and look for work-arounds to solve their problems.
Indeed, they will need all of these skills as they work to address the three structural paradigm shifts noted earlier. To help, I offer the following eight “action points” for consideration, without significant embellishment.
Action Point 1: Evaluate the foundations of your business.
List the foundations on which your company was built and has become successful. What markets and customers do you serve successfully, and which ones are honestly not profitable? What is the soul of your business? Does your company require certain individuals who, if they left, would materially cause the business to decline? Stand back and identify those key base supports that your business must have to survive.
Action Point 2: “Set thine house in order.”
Identify those things that need to be fixed to all the company to survive. Have you put together a cohesive survival plan where you have identified what you would do if it comes down to making the serious choices to ensure survival: cutbacks of staff (who?), reduction of suppliers, improving product output at minimum additional cost, selling off of unnecessary assets, using a magnifying glass to locate costs that can be cut. Set your business house up in such a way that you can live in it with minimum anxiety.
Action Point 3: Keep everything in perspective.
Even as you set your house in order, be positive in perspective. You’ve weathered tough times before and survived. Try to begin every day with proactive, positive thinking. Remember: Everyone else is pretty much in the same boat . . . and that hope almost always triumphs over fear.
Action Point 4: “ . . . for you shall know the truth and the truth shall set you free.”
It is time for fact and truth, not fantasy and fiction. Cut to the chase: Truthfully, what are your company’s reasons for success? In all honesty, what areas have you ignored or refused to investigate or clean up and why have you allowed this to happen? Truth be told, what in your business could be eliminated or cut back with little or now loss to the company?
Action Point 5: Identify and work on fixing your three biggest problems at the root cause level.
As you deal with Point 4, you are naturally led to problem-solving by identifying root causes. Instead of being over-broad which tends to water down the process, here is a key survival action plan: Carefully identify your three biggest business problems and then put together a reasonable, do-able way to solve them at the root level. Getting to that root cause level may take brainstorming with employees, why-why analysis, fishbone analysis, Pareto analysis and other root cause tools. As you make progress in fixing your three biggest problems, you lessen their negative impact on the company and thus improve your survival component significantly.
Action Point 6: Innovate . . . seek non-traditional solutions.
A key to survival is being different and using these differences to your advantage. One of the real differentiators I have noted with the most successful printers I know: they seek new ideas, different approaches, non-traditional perspective, outside-the-box input. Instead of running away from the unique, rare or unusual, they embrace it long enough to see if it can benefit them. Keep in mind that it is NOT a time to casually experiment with any “wild idea” – but it is the time to look beyond and consider innovative areas were the company may have a natural ability to succeed.
Action Point 7: Become active in the political arena with other printers.
Politics is the process by which laws are made. Political activity for print company executives, with other printers, has the immediate benefit of learning about pertinent current laws that may be advantageous to your company, and longer-term gains whereby your company supports revising laws or new legislation that helps your business. PIA/GATF, NAPL and other associations are a fairly easy portal to enter this arena. A word of caution: don’t get overly caught up in this area as it can be deceivingly sexy yet it can also be very time-consuming, with rewards that may not come to fruition quickly.
Action Point 8: Keep your sense of humor.
Laugher is the best medicine. I once worked with a guy who could find humor in pretty much every situation. He was great to be around, especially in a pinch, and I think of him often when I encounter a challenge. Even in those times that he and I dealt with serious stuff, he looked for humor in the situation, which made what we were working on much less serious and somber. If you want to keep your blood pressure down and your thought process active, find humor and fun as you tackle your challenges.
These three structural changes are major and significant events but they are not doomsday events. Two Yogi Berra quotes come to mind:
“It ain’t over till it’s over.”
“It’s tough making predictions, especially about the future.”
Godspeed as you work hard to make the best of this perplexing situation.