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Another year is in the books and the quick and small commercial segment of the printing industry seems to have done rather well, especially when compared to some previous years. While attrition among the less efficient shops continues and few new shops are coming on line, overall sales grew in 2007. Consolidation and franchise conversion programs are putting stronger competitors in the market and an increasing number of printers have realized that business management skills are vital to success. On the down side, a souring economy has many printers wary of what is to come in 2008.
As we close out the year, the gap between the have's and the have not's continues to widen. Throughout the year QP columnists have tracked many success stories and also some failures. There seldom has been one deciding factor that has made the difference between success and failure. However, there has almost always been one characteristic found in successful shops—the ability to adapt to changing times. As the 2007 NAPL State of the Industry noted, "Entrepreneurs will transition their businesses. Printers will struggle to survive."
On the technology front, digital is firmly entrenched and is increasingly competing with offset for four-color work. PDF workflows are pretty much a standard, while JDF still waits in the wings. The promise of Variable Data Printing (VDP) has yet to be fulfilled, but it is tantalizingly close to becoming a marketable and profitable part of the job mix for quick and small commercial printers. The major stumbling block here remains database management skills. Web-to-print is also becoming more common, although it is not yet a standard offering. Mailing services and wide-format continue to be significant contributors to many printers' sales and profits.
One area of particular concern continues to be the ability to hire and retain staff. As the industry evolves, the skill sets needed to transition quick and small commercial printing businesses have changed. So have the makeup of the available workforce and the competition for their services. Young people entering the workforce are much more tech savvy than their predecessors and have more employment options.
The other edge of the sword is the failure to provide adequate training and education opportunities for employees already on staff. By some accounts, a quarter of our industry spends nothing on training, 36% spends 1% of revenue or less, and a significant percentage have no idea how much they spend because they don't think it important enough to keep track of. This may prove to be the most significant roadblock to success in years to come.
Despite the challenges, the quick and small commercial printing industry remains healthy and offers many opportunities to entrepreneurs who approach it as a business and not a trade. Technology is offering new tools to the industry, but people continue to be an essential element for success.
What's coming next? We asked some of our regular columnists for their comments about what they see for the industry in the year to come.
David Fellman
Last year started out with a lot of talk about variable data printing, and I'm afraid the year ended the same way—lots of talk, but not a lot of sales volume! This year has the potential to be a different story because we're starting to hear some success stories at the user level. Not "we can do variable data printing" from printers, but "we have used extreme personalization and it has worked for us" from printers' customers. It has taken a while to transfer the buzz from the printing community to the marketing community, but it's starting to happen.
To keep this buzz growing, printers have to understand that we've only scratched the surface on database driven personalization. Sure, putting the recipient's first name on both sides of a postcard is pretty cool, and it will increase response rates, but nowhere near what the combination of personalized text and images are capable of.
Printers also have to understand that personalization is not about the printing anymore, it's about the database. Yes, the printing is the enabling technology which makes it all possible, but the limits of extreme personalization are defined only by what marketers don't yet know about their customers and prospects. That's where I'd be focusing, on helping my customers and prospects to learn more about their customers and prospects as a first step toward applying that knowledge—and my variable data and variable image printing capabilities—to marketing their businesses more effectively.
John Giles
In 2008, more quick and small commercial printers will be turning to automation. Progressive printers who have developed digital standards and implemented a PDF workflow will be able to cut their costs as they push a job through production. Automation is available for both offset and toner based work. Prepress is the most obvious place to begin with automation, but a number of vendors will be pushing JDF-capable equipment for press and post press.
Automation won't work if management isn't on board because it is more than just software and equipment. Jobs have to be broken down into their common elements, and owners and management have to make decisions about what are the company's production standards. Printers who remain a job shop and treat every job as a custom job will not be able to take advantage of the new automation technology.
The worst trend is printers selling marketing services such as PURLs and Web-to-print services by turning them into a low-cost commodity service. The key to the success of the new technology is the added value it gives to customers to increase their return on investment when marketing products and services. Too many printers think that they can sell these services because they can sell the service cheaper than marketing firms and ad agencies. The big problem is that the printer focuses on the cost of the mechanics of the job and not the value. Printers who offer these services below market value will only muddy the water and drive down the value in the customer's mind. The printers who will have success with the new technology will be selling the service at a price comparable to agency work.
John Stewart
I believe I am seeing a greater propensity than ever before to turn to medium and high-speed digital color copiers to process jobs that, in the past, would have either been printed via offset or sent to a broker. I see larger and larger quantities being run on digital copiers than would have been considered just a few years ago.
This move has come about as more and more print and copy shop owners find themselves taking a new look at all the direct and indirect costs of offset printing (plates, make-readies, ink washes as well as problems related to actual press production and finding and keeping good press operators). They are balancing these considerations against the high consistency and fairly high reliability of digital copiers. The latter is winning out more often than not.
Run lengths of 2,500 and 5,000, which in the past would have been quickly relegated to an offset press or brokered out, are now just as likely to be put on a digital color copier, while the total meter click costs for some of these jobs are often higher than the direct costs of offset or brokering, taking all costs and considerations into account often finds these jobs today being assigned to a digital copier.
We will of course have more definitive data on this with the NAQP 4C Practices and Pricing Study that is expected to be released in late January or early February.
David Handler
These futuristic columns are always a challenge, but 2008 could be a tough one. Experts suggest the sub-prime meltdown has more iceberg below the surface. For the first time since the Great Depression, housing prices nationwide suffered a year-over-year decline in 2007, and that foundation remains shaky. Oil at $100 a barrel is finally impacting consumer spending.
As an optimist, I prefer the glass half-full look. Quick printers—and many of you have been through many difficult cycles—will always find creative ways to help your loyal customers. Personalization is the hot buzzword, and being in the game is essential to being relevant. Similarly, transitioning beyond ink on paper is essential. On the talent side, demand overwhelms supply. Be sure to treat your employees wonderfully and coach them to become the performers you desire.
From this writer's perspective, it's a year to sow, with better days to come; unless, of course, that whole election thing in November changes my view.
Debra Thompson
Human resource magazines are filling up with predictions about what is going to happen in the next few years. There are some significant indicators of the growing intensity of the war for talent and the problems associated with acquiring and retaining top talent. There are new studies that have been looking at the human resource keys to business success. The five that were most often cited as critical for the future are: talent retention, leadership development, performance management, talent acquisition, and employee training.
The major challenge for all companies will be having enough people to do the job. The combination of Baby Boomer retirements and the smaller follow-on generations will make it difficult, if not impossible, to find the talent that the businesses need. That will force a focus on greater investment in human resources to build an agile workforce that can adapt to the future technological changes, understand issues and solve problems quickly, and learn all of the new skills needed to compete.
Because of the shortage of critical staff, it will be necessary to understand the value of your employees and the importance of talent management. It must become a central business goal. The need for higher productivity through improved communication and cooperation can only be met with engaged employees. It is important to understand that employee disengagement is not an employee problem, it is a leadership problem.
It will be necessary to build trust and job security by addressing the personal issues that are important to the employees. Principally that is going to require creative ways of providing health care benefits and also assisting employees with their issues of day care, elder care, career development and skill building, and a myriad of family issues. Solving these employee concerns is critical to retention.
It is important to be able to not only communicate the vision and the direction, but also to understand what motivates your employees and then design a performance measurement and rewards structure that recognizes employees who have bought into and sustain the corporate culture. Talent acquisition will be governed by the increased use of pre-hire testing. These predictive assessments will help to take the guess work out of hiring.
The bottom line is still true. It takes a competent, stable, well-led work force to gain the competitive advantage. It is time to put your HR strategies in place so that your company has the right focus on winning the talent war and building your team.
author: by Bob Hall