October 13, 2006 - (WhatTheyThink.com) - Effective in July the North American Graphic Arts Suppliers Association (NAGASA) has decided to cease as the association serving dealers in the printing industry. In a letter sent to their members, NAGASA's board stated that industry consolidation was the primary reason for the closure. The letter also indicates that NPES may develop a special interest group that could meet the need of dealers. Below, we have included a statement from Orazio "omike" Fichera, President-Publisher, Dealer Communicator. Dealer Communicator is an industry trade magazine serving dealers and most recently supported NAGASA through marketing and administrative activities. WhatTheyThink.com's THE EAGLE has also provided commentary on this news. THE EAGLE contributes regularly on WhatTheyThink.com on issues related to the print industry's distribution channel. Statement from Orazio "omike" Fichera, President-Publisher, Dealer: The shut down of Nagasa, North American Graphic Arts Suppliers Association has every guru touting what they know or what they think they know about the channel of graphic arts dealers. For years, many have said, "Dealers are going away." With the shut down of Nagasa, comes applause from those doom-sayers who don't understand yet that dealers are no different than any businesses in any industry. Some will evolve, some will shut down, some will do what the smart buggy whip manufacturers did - They started making stick-shifts. As for NAGASA, it's failure was due to lack of leadership. When David Steinhardt, the strongest leader the channel association ever had, left the organization, I reported in Dealer Communicator, "Steinhardt leaves a hole so deep, I believe it will never, ever be filled." This statement does not speak poorly of the dedicated dealers and manufacturers who tried their best to keep the organization going. But their focus was more on their businesses. The expression "We Cannot Serve Two Masters" is appropriate in this regard. The lack of leadership, the industry's slide starting around April 2001, and a devastating blow by the 9/11 terrorist attack took its toll on dealers, manufacturers and North America. Are dealers going away? NO! Emphatically NO! How do I know? Dealer Communicator currently owns the largest, most updated database of dealers in the U.S. Its core is graphic arts dealers. It's growth is digital and wide format dealers and the numbers are staggering. To paraphrase Julie Shaffer of PIA/GATF, Director, Digital Printing Council, "It important to provide information and tools for people in our industry to learn how to merge the two principles -traditional and digital…." You can reach omike at [email protected] Requiem for NAGASA Commentary by THE EAGLE Not with a bang but a whimper, NAGASA, the North American Graphic Arts Suppliers Association, died this year. Though less than 10 years ago it boasted a membership of more than 300 firms with collective sales in the billions, there was no obituary announcement. There was no funeral. There is no gravesite. This essay will therefore serve as the recorded memorial. It is fitting and proper that The Eagle offer this requiem. It was this publication that spawned the National Graphic Arts Dealers Association in 1983 from among its dealer-subscribers. The Eagle editor and publisher served as NGADA's Executive Director for several years. Later, at The Eagle's urging, NGADA merged with a more manufacturer oriented trade group, GASA, to form NAGASA. The Eagle was then made the official publication of NAGASA and served in this capacity for several years before going independent. The Eagle editors were then guest speakers at numerous NAGASA conferences. Step by step, NAGASA and The Eagle took different paths. Trade associations such as NAGASA are remarkably resilient organisms. Many live long past their usefulness. Many are redundant. Some do little or nothing and yet somehow maintain a membership. Many survive only on the basis of trade show revenue or some other long-standing enterprises, such as magazines. If they had to rely on dues, they would go out of business quickly. So, the death of this one association may not be mourned by many in the industry. They may see it as just one less dues payment. But, there is much to learn from looking a bit more closely at NAGASA's history and recent demise. In the mirror reflection of NAGASA, any business in this industry should be able to see itself. NAGASA's story is about mission, goals and identity, the basic building blocks of any enduring enterprise. Information as Power NAGASA was the product of the 1992 merger of NGADA and GASA. This merger was prompted by the onset of digital imaging which overshadowed all the old issues that the dealer community had been focusing upon. Collaboration and partnership between dealers and manufacturers were critical now. The industry could not afford two separate and somewhat redundant organizations. A higher mission was needed. The merger blended two very different missions and cultures. The energy that NGADA brought was based on a power dynamic between dealers and manufacturers. NGADA served as an unabashed advocate of the dealer. GASA had served more as a forum for manufacturers to access dealers. As an independent power broker of about 150 dealers NGADA struck fear in the hearts of some manufacturers. It was occasionally compared to a labor union - an unfair and rather absurd analogy since virtually all graphic arts dealers are anti-union and as private companies are fiercely independent. The power of NGADA was not in collective bargaining or in boycotts, as some manufacturers feared. Its main tool was truthful information. As a dealer network, it allowed dealers to compare compensation plans, contracts, marketing claims, customer reactions and the performance of manufacturer managers. Through informal conversations at dealer gatherings and from published information in The Eagle or presented at the conferences, dealers gained a nationwide, even international, perspective. They gained access to a fuller picture of their own businesses, printing technology trends, product life cycles and domestic and international vendors. Free speech and a free press had come to an industry dominated by advertiser-controlled news, manufacturer-controlled narratives and domestically-oriented thinking. Previously, dealers could be kept ignorant, controlled and localized. When sales went down, they could be told it was only their fault. When products failed, well, it was purely a local problem. When profits declined they learned that they were poor businesspeople. All the while, the business model in which they functioned and the larger market in which they operated remained unexamined. NPES did not allow dealers to join. In that forum, actual market data and trends of major product categories were compiled and shared, but not with the dealer companies that actually sold the goods to the printing trade. NGADA changed the informational power dynamic. Discovering Channel Power One very basic fact was documented and reinforced at NAGASA meetings. This was that - at that particular stage of the graphic arts industry - the dealers channel was crucial to the manufacturer's success. Convinced of their market value, dealers became emboldened and less fearful of the major suppliers, Kodak, DuPont and 3M. In NGADA, the dealers also collectively examined and shared ideas on one crucial piece of the business - the dealer sales contract. They discovered they lived under contracts that allowed termination by their manufacturers without cause at any time. They also realized that they had no real voice in the sales quotas on which their performance was measured and the fates of their dealerships depended. When FujiPhotofilm of Japan entered the US market with dealers, it listened closely to what the dealers of NGADA were saying. It offered a dealer sales contact that provided much greater protection against arbitrary termination or even the threat of termination. And, it established independent dealer councils to advise and aid Fuji management in setting goals and pay plans. Soon, some of the largest dealers in the country were selling Fuji goods. AGFA, a relatively small European player at that time in the US graphic arts market, was also listening. It got the message that in a mature market, dealers were the most economic and effective way to reach a market. They accepted what the dealers were saying about the value of the channel. AGFA boldly closed its direct sales operation for electronic imaging products and became the first major vendor to offer graphic arts dealers a "digital dealership." Fuji did the same when it acquired Crosfield Electronics and began selling digital imaging systems. Within the span of less than 10 years, the fates of 3M and Dupont as the major players in graphic arts were sealed. They were replaced by Fuji and AGFA. Lost Mission When NGADA merged with GASA its mission as a dealer advocate and its commitment to be the industry's truth-teller diminished and soon were lost altogether. The conferences of the newly merged group were now heavily attended by manufacturers and they became more about schmoozing and selling than networking and analyzing. Conference attendance swelled and the meeting locations became more lavish and vacation-oriented. Revenues grew briefly, but the association was actually coasting downhill, powered only by past momentum. The energy was gone. The members were in fact feeding off the body. Though on the surface NAGASA appeared to be thriving, a closer and more perceptive examination revealed the onset of a terminal illness. NAGASA had lost its mission and its identity. Soon, its funding depended on large meeting registration fees, not dues. When meeting attendance declined, NAGASA was on a fast road to bankruptcy. Huge market forces that had been brewing for years began to overtake the association, as if they arrived suddenly and without warning. Digital imaging wiped out analog-based consumable sales volume. Profits plunged and companies began merging. NAGASA memberships declined with each merger. The dealers also aligned with key suppliers and these suppliers attended all the meetings. The dealer networking and information sharing that had been the association's life blood drained away. Truth, or even candid inquiries, became "controversial" and disruptive. Better to have a drink and then get to the golf course. As if to officially mark the end of the association's role of offering unvarnished and independent information and analysis, one major vendor in NAGASA mounted a campaign to have The Eagle expelled from the association. The vendor had taken exception to an Eagle analysis. And, as new printing technologies arose such as production level digital "copiers" and inkjet printers, NAGASA barely noticed. Its ability to see the business in national or international terms and to engage in painful reality checks of marketing trends had dissipated. The Eagle made futile recommendations for the association to merge with other dealer channels or to transform itself by aggressively reaching out to new printing markets, beyond traditional offset, and even to the customers to whom they sold. Instead, NAGASA began falling back on traditional printing press and bindery dealers and their vendors, a full retreat into the past. One might say that NAGASA had a long life and it just was old and tired. But associations are designed to have much longer lives than their human members. Few associations die natural deaths. They usually die of neglect. They are sometimes starved or even poisoned. NAGASA's end was preventable. Rejuvenation and reinvention were possible. Indeed NGADA's emergence in 1983 served as one moment of rejuvenation in the graphic arts industry. Continued revitalization would have required finding a mission as dynamic and energizing as NGADA's mission of dealer advocacy. It would need a goal as high as NGADA's commitment to bringing hard and inconvenient truth to its members. And it would need a new identity as compelling as that of unifying the old "graphic arts" channel. Mission, goals and identities can adapt but the process is painful, rigorous and challenging. In the end, lacking a new and broadened mission, the old animosities between the dealer and manufacturer communities, among other factors, kept bold new initiatives from being broached. NAGASA's passing might be seen as a metaphor for all graphic imaging companies that are based on offset technology. Those that redefine their mission as imaging, not just printing, may find an exciting new life in digital printing, shorter runs of a wider variety of products, workflow management, on the internet, and among a far larger customer base than just commercial printers. Rest in peace, NAGASA. Commentary by Steve Aranoff and Robert FitzPatrick of THE EAGLE. 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