Yes, Plants Are Busier, But Margins Suffer

More commercial printers report that they're staying a bit busier these days, but add that their main complaint continues to be widespread pricing pressures that prevent them from making a decent margin on the work they're producing. "There's still too much capacity around so no one's getting rich," says John Williams of Midstate Printing Corporation, Syracuse, N.Y. "We've just got to accept that we're in the middle of an extended business era in which high activity and low profits are the norm. I don't see us getting back to the go-go days of the late 1990s anytime soon."

Other printers say that it has become much tougher–-practically impossible–-for a typical commercial printer to find high-value, high-margin jobs right now, even for operations that pride themselves on either higher-than-average quality or outside-the-norm processes. On the first count, adds Williams, "Quality has become a given, ranked right up there with above-average customer service." On the second count, says Jonathan Sawyer, seventh-generation proprietor of Henry N. Sawyer & Co., Charlestown, Mass., "We've carved out a nice niche in producing book jackets with special effects, such as foil stamping and embossing, but today we can no longer rely on straight presswork for the majority of our profitable work."

These were just some of the comments gathered from a cross-section of printers attending an event a few weeks ago called the Newport Regatta, held in Newport, R.I. for the third consecutive year by MAN Roland Inc., Westmont, Ill. The event, to which MAN Roland invites hand-picked customers and prospects, involves a full day of sailing on one of a half-dozen 12-meter yachts that have competed for the U.S. in the America's Cup, the sport's most coveted prize. The fleet includes such storied names as American Eagle, Columbia, Freedom, Intrepid, Nefertiti, and Weatherly.

"This is a very successful event for us," says Yves Rogivue, chief executive of MAN Roland. "Our guests have a wonderful experience helping to crew the yachts, plus there's plenty of social time where everybody can relax and talk about business, leisure, family life, and everything else that's important. We're happy to provide that break."

Conversations among hosts and guests pinpoint some of the prevalent industry trends: consolidation and rumors, shifts among print buyers, technological innovations, and, of course, every person's expectation for a sustainable turnaround. Other trends are less obvious but just as important: competition from China even for lower-run, quicker-turnaround commercial printing; less loyalty among established clients; and frequent laments among clients about overspending earlier in the year, meaning that the rest of 2004 could be quite tight.

And what's the message for vendors in these printers' comments? On the eve of the Graph Expo and Converting Expo show next month in Chicago, it seems reasonable to observe that exhibitors must be able to present solutions–-whether they're based on new technology or workflow gains–-that are clearly beneficial to printers' clients, justifiable from a business standpoint, require simple and straightforward implementation, and have either an early-as-possible payback or, absent that, fit well into a thoughtfully planned system, workflow, or strategy.

In other words, printers heartily agree that the days are gone when managers bought equipment because they wanted the latest bell or whistle or because a neighbor or competitor had just installed a system. Rather, printers are requiring that a capital investment have a clear, customer-beneficial rationale, one that's direct and understandable, and which holds the expectation, not the hope, of benefit in the short term.

Sounds basic today, but this is a business basic that sort of got away from people in the go-go years but makes a great deal of sense today.

rynostroza@reedbusiness.com