Pitfalls for the Private Sector
No business sector is more representative of small business than printers. There are approximately 36,000 commercial printers (not including neighborhood print shops) in the United States. However, this number is falling dramatically as more and more printers fail due to the recession, an increase in bulk mail rates by the U.S. Postal Service (USPS), and the government's ongoing unwritten policy of manufacturing print in-house rather than reliance on the private sector.
Not too long ago, 51 percent of everything printed ended up going through the mail. When the bulk mail rate went up, direct mail volumes went down in favor of online advertising and other less expensive forms of marketing. This changed print business dynamics. Not only did the USPS get itself into deeper financial trouble by reducing this major source of contribution to its overhead, but it hurt the print industry. Now, instead of printers utilizing 70 percent of their capacity on a day-by-day basis, the utilization figure dropped like a rock. In some cases, the capacity utilization is now 20 percent or less.
According to the Printing Industries of America (PIA), the print industry consists of nearly a million small business people. In fact, the average commercial printer had 27 employees and revenues of about $4.5 million. This is no longer true, as many of these printers have been hit hard by the economy and are desperate for work.
Approximately 10,000 of these print companies are registered to do work for the United States Government Printing Office (GPO), and of those 400 historically have been active, depending on workflow from the GPO to remain viable businesses. The GPO sends work valued at about $400 million a year to the private sector. A few years back, that number was more than $500 million.
Last year, total GPO work to the private sector was $440 million. There has been roughly a 27 percent drop in GPO derived income by private sector printers over the last 12 years. Factor in inflation and the drop is even more dramatic. The reason for the drop is not better management, more efficiency or even less print. The reason for the drop is the uncontrolled growth of the in-house print plant operated by the GPO, the granting of waivers by the government for the operating of thousands of other in-house print plants and the active efforts by many government agencies to circumvent the rules. This does not bode well for the print industry—especially now that the sky may be falling for many printers.
This is a growing concern because government agencies now, more than ever, are requesting more printing. Federal government forms alone, according to a recent New York Times news story, have increased to more than 8,000 different types—enough to require 10 billion hours of time to fill out compared to just one billion hours in 1981.
So, why less work to the private sector when government print demands are increasing? It seems Congressional directives are not being followed. According to Title 44 of the U.S. Code enacted by Congress in 1813, all print procurement by executive, legislative and judiciary agencies must be ordered through the GPO, as opposed to through individual agencies. Now, though, a system is being created by GPO and agency administrators as they use waivers to channel GPO work directly to agency print shops, third-party creative agencies and contractors including those for the U.S. Department of Defense and other departments. Accountability is limited. No one knows how many agency print shops exist, and they certainly do not know how much print work is produced by them. We do know GPO work to the private sector is dropping. We also know that if the government were a private sector entity, the total amount of its print would be between $30 billion and $90 billion, not the $1 billion or so GPO either prints in-house or procures from the private sector.
What this does is undermine private sector printers—tax paying businesses—that have a long history of supporting federal agencies with quality work and competitive pricing. In most cases, this pricing is for far less than the same work that can be accomplished at GPO or government agency in-house print facilities.
None of this is surprising. In-house facilities keep sucking up taxpayer dollars, private sector printers keep going out of business and various administrations and Congress continue to build an unrelenting history of doing nothing to solve the problem. Waivers and government in-house print plants persist. Are we alone in thinking $30 billion here and $30 billion there is not enough money to worry about?
What is at stake is clear. If the liberal grant of waivers continues to go unchecked, more and more private sector printers that depend on GPO work will go out of business. Taxpayers will continue to pay more than they need to when print is done in-house by the federal agencies and the GPO rather than being outsourced.
If the GPO were to move all of its print to the private sector, printers would at least double the government work they are doing now. To start, that could save taxpayers more than a hundred million dollars while pumping much needed revenue into the economy. If waivers were re-examined and in-house operations closed except for intelligence work, on-ship print shops, overseas shops, and that which is absolutely requisite for the exigency of certain operations, then government costs would go down by billions—likely $100 billion to $300 billion over 10 years—enough to make a dent in such necessities as healthcare.
Our president talks about change. Here is his opportunity to save some real money. Nothing could be simpler. No act of Congress is required. The president simply orders executive agencies to close non-exigent, in-house print operations and follow the law that requires GPO to manage federal government print. Then Congress directs GPO to buy, not make.
Congressional oversight of GPO is handled through the bipartisan Congressional Joint Committee on Printing. The Joint Committee can readily call for strict enforcement of Title 44 and insist that GPO be more vigilant about adhering to private sector bidding requirements as they are already set forth by Congress. If the president were to shutter agency in-house print plants, except those that cannot be replaced by private sector efforts, results would follow immediately. Federal government costs for print would go down, quality and service would go up, the print industry would be stabilized, private sector printers would earn profit and pay taxes and the savings would lessen the budget deficit—substantially.
Maybe this president will turn talk into action. PPR
About the Author:
William Gindlesperger is a nationally recognized entrepreneur, inventor,
author and consultant in print and procurement. He founded ABC Advisors and its successor, e-LYNXX Corporation (of which he is currently chairman and chief executive officer), in 1975. Under his leadership, the firm has grown into the recognized profit enhancement leader. Print buyers and
suppliers alike have benefited from his insight and innovation.
Gindlesperger has directed major in-plant studies in both the private and public sectors and he is highly regarded for his knowledge, advice and work on behalf of firms in matters pertaining to the U.S. Government Printing Office (GPO). He has testified before the U.S. Senate Committee on Rules and Administration regarding government print and procurement policy. He also has worked directly with numerous Congressional and Senatorial members and staff and has advised Congress on the development, operations and future of GPO print procurement and the federal print program in general. He was founder and the first chairman of Printing Industries of America's (PIA) PrintPAC (political action committee), and he has been recognized for his contributions to PIA and services to the print industry.
Gindlesperger invented the methodology that optimizes cost reduction in the procurement of specification-defined goods and services. He has been granted two separate business method patents by the U.S. Patent Office, first for the competitive procurement of print and then for the competitive procurement of all specification-defined goods and services.
A native of Chambersburg, Pa., Gindlesperger is a graduate of Dickinson College.