Alert: Don't Be a Casualty of the Recovery

With more and more signs pointing to better times (even though printing in general continues to lag), it would be truly tragic if a printing company, having survived three years of recession-like conditions, were now to become a casualty of the recovery, so to speak.

One way for this to happen is to be caught undercapitalized, that is, to have insufficient cash flow to be able to pay for paper and other raw materials if a big or a new order comes in, particularly considering the long payment terms that customers are now accustomed to enjoying.

Another certain way that a company can expose itself to risk during an upturn is to be caught short on efficient capacity and at a disadvantage in terms of workflow. This risk looks less obvious, given the abundance of idle or underutilized machinery that is located throughout the industry.

It's also deceptive: a printing manager looking over a plant filled with durable, time-tested equipment might feel frustrated at its underutilization but otherwise would seem to have no real reason to feel vulnerable. But if production equipment hasn't been upgraded in the past four years, plant configuration remains largely unchanged from its original layout, and investments in software have been minimal at best, the operation likely is at serious risk on the open market, that is, competing with many other plants. Those other plants, by the way, have also survived the past three years, so while some are weaker, others are a lot stronger.

That reference to software is key since, as if no one had noticed, developments in this area have been the quiet story of true progress in the printing industry in the last few years. Software permeates everything today, applied to operations, of course, but also to workflow and management information, often to dizzying levels.

While programs have long been available to improve output and minimize makeready and waste in prepress, the pressroom, and the bindery, newer products streamline customer job input, automate business processes and pinpoint costing, raise employee productivity, expand the capabilities of the sales staff, and much more.

Moreover, software is the stuff of workflow (except of course for physically moving machinery into close proximity); for its benefits to workflow and automation, software stands to be wonderfully beneficial to a plant.

All these matters become important right now because it appears that, given current economic conditions and their likely trending, I believe that what printers think, say, and do in the second half of this year could very well determine how they do over the next year or even two. Not everything involves spending money on new machinery or software, although we are reminded (page 14) that the bonus depreciation provision for new equipment that Congress included in last year's tax relief bill for businesses is still in effect this year, although it was not extended to 2005.

But just as important as any capital investments are the mental decisions that top managers can make regarding their own business confidence and that of employees and even their clients. Given the high-risk nature of this stubborn, hesitant recovery, the near-term future requires thinking even more creatively than in the past, speaking more positively, acting more confidently. Doesn't it make sense for all of us to make an extra effort to lay the groundwork for better days ahead?

As for motivation, if nothing else we can keep in mind the tragedy of becoming one of the last casualties of the long-awaited, hoped-for recovery.