Printing Pinch

Menus for a ritzy, French bistro. Brochures for a getaway to a ski resort. A business card reminding you to remember Joe the Salesman the next time you want to buy. It’s all commercial printing. But what’s a commercial printer to do when the restaurant shuts its doors, the hotel falters under a heap of debt and Joe gets the axe.

The U.S. commercial printing industry depends largely on the advertising and product needs of business customers and, in turn, their customers. Since the advertising and marketing business—like most businesses in the nation—is suffocating under the stronghold of the faltering U.S. economy, so is the commercial printing industry.

Sales for this particular sector, including all available services, fell 3.4 percent during the six months ending in October—the steepest decline over any six months since the first half of 2003, according to the January-released Printing Business Conditions, which is part of the National Association of Printing Leadership’s State of the Industry Series.

Like many companies, Garon Gembe, president of Greencastle, Pennsylvania-based commercial printer Graphics Universal, said his company has felt the pinch of the recession.

“We were rolling along well for the first three quarters of 2008,” Gembe said. “It was steady until the last quarter of 2008—everything dropped off.”

Gembe noted this economy does not rival economic downturns of the past.

“One unique thing about the current time is that everybody is affected,” he commented. “That’s unique compared to other slow times. Across the board—every area—manufacturing, financial markets, education and healthcare markets. Other years you would see manufacturing down but the financial market strong, so you would still have the one area to fall back on.”

Some companies are softening the financial blow by offering deals to customers, others cut workers’ hours and some get the sale by providing the best service possible.

Gembe admitted it’s tough to generalize when it comes to giving advice to other companies, but did offer some tips on getting through these dark economic times.

For instance, Graphics Universal has chosen to rely on excellent customer service skills.

“We want to be seen as a value-added partner,” Gembe said. “Keeping the ones you have is always the number one priority. We are active and aggressive in our approach. Finding new clients also is important, but not very easy in these economic times.”

To further keep a handle on business during these rocky times, Gembe admitted that his company sends employees home when “work dictates that.” He explained there was a time when workers would stick around after printing jobs to do “busy work.” Also, some equipment purchases that were “on the front burner have been moved to the back” until the economy stabilizes.

Though making those moves can help keep operating costs down, Gembe is not in favor of reducing charges.

“In a slow time, it’s dangerous to get into giving discounts or slashing prices,” he said. “The service aspect is the most critical part. We build business around service.”

On the other hand, John Taylor, president of the Newport News, Virginia-based Apollo Press and vice president Eddie Dent, said there is value in offering customers special deals.

At times the company will offer two-for-one deals and short-term discounts on some products.

“But we don’t do it for everything,” Taylor said. “Sometimes you can pick up customers this way.”

And on a similar note, it sounds basic, but watching every nickel and dime also is important. “It may sound simple but you must watch the amount of money that goes out the doors,” Gembe said.

But, it’s not only what you do, it’s who you are.

Gembe does feel that commercial printers who aren’t as diverse and, instead, specialize in something such as labels or forms are at a disadvantage.

“The label and forms industry has not been good for a long time,” Gembe observed.

Steve McGrath, vice president of Menasha, Wisconsin-based Dynamic Graphics, agreed that some “heavily-niched” printing companies may experience greater volatility during these shaky economic times.

“We’re fortunate,” he said. “We are a very diversified organization with an extremely broad portfolio of products and services. Dynamic was designed to support the varying needs of small and large companies.”

Taylor shared these sentiments, saying diversification really is the key to his company’s success.

“We’ve been selling direct to accounts for years,” Taylor said, “and to dealers and to small printing companies.”

Taylor’s company provides a mix of services and in the next few months it will be offering bindery services to small printing companies.

“That allows us to pick up another source of income,” he said.

Taylor added about 40 percent of his business comes from the healthcare industry. He said that’s an industry that simply doesn’t slow down. Taylor explained while it doesn’t make the company immune to tough financial times, it does help.

McGrath believes Dynamic Graphics and its customers benefit from the continued investment of new technology across multiple product lines and new member firms.

“Each year we’ve added new companies with enhanced technology and new capital investments,” McGrath added. “This provides a cost effective way to remain at the forefront of current trends.”

McGrath went on to say Dynamic likes to understand what customers do within their business. This is especially important considering there are between 35,000 and 37,000 commercial printers in the United States.

“Dynamic is truly committed to understanding client business objectives and needs,” McGrath said. “We provide a full range of ideas, unique alternatives and cost effective suggestions to help our clients achieve the best results.”

Printers also must re-examine the way they conduct business.

“Over the last 10 years, lots of companies reduced their vendor base, implemented preferred supplier programs and worked to manage print through internal and external sourcing organizations,” McGrath explained. “Severe economic conditions may provide open discussion for a review of current vendors. People are looking for new ways to accomplish their objectives.”

McGrath had one final thought in terms of retaining and adding new customers. To stay competitive, he said it is essential for commercial printers to be creative, responsive and constantly work to take the workload off clients who have reduced staff and shrinking budgets.

“Anyone can print,” he said. “Good people and honest relationships can help you win.”

Though some commercial print executives and stakeholders believe this recession is unique compared to those in previous years, they said, like every other rocky economic period, things will turn around.

Since there isn’t any magic lamp to rub, companies just have to get by the best way they can.

“Just be patient and weather the storm,” Gembe said. “Slow economic times do come and go.” PPR