There’s a running joke about the forms business. It chooses you, not the other way around. So what’s a fated print supplier or distributor to do when, just to survive, he or she has two major opponents to battle: technology and the economy? In 2007, Print Professional’s Top 100 Manufacturers analysis reported that while paper-based forms continued to dominate all printed product category sales—accounting for $931 million of the $2.97 billion total sales figure—their numbers had dropped overall from the previous year. Not wanting to disappoint, forms sales continued to decline in 2008. Yes, forms were still the crowned champion of printed products, beating out direct mail, commercial print and labels & tags, for example. But, their profits took a dramatic tumble down to $813.4 million.
This isn’t surprising when the orders are slowing down. Tim Goodwin, president of Carrollton, Texas-based Goodwin Graphics said his company started to notice a decrease in orders around late July/early August 2008. “We started seeing people pull back. We also started to see we weren’t getting very many quotes. Normally, we take a ratio between quotes and captured orders, and that tapered off,” he commented.
Goodwin also has observed a change in quantities in regard to orders. He explained a job calling for 50,000 forms last year, now only requires approximately 15,000 to 20,000 forms.
In addition, customers are waiting until the last minute to place an order. Turnaround times are much more easily met with no backlog, but no backlog means no business.
All factors considered, it, in turn, becomes increasingly difficult to determine purchasing amounts because there is no longer a stable factor to base decisions. “It hurts us on our purchasing power, so far as our materials. We used to be able to go by our historical usage to forecast our purchasing, but you might as well throw that out the window and get a crystal ball out because you’ll be better off,” Goodwin joked.
Current economic conditions also affected the company’s workforce, Goodwin mentioned. He has had to layoff about five employees. Though the company has had to make tough decisions concerning staff, Goodwin Graphics is at an advantage. The company has no debt.
“We’re kind of in a unique situation. We don’t have any loans. We don’t owe anybody any money. The building we’re in is paid for. ... That gives us a pretty good foothold to survive what we’re going through,” he said.
Dewey, Oklahoma-based Central States Business Forms is in a similar position. Owner Kenneth Adams recalled at the start of the recession in the late 1980s, the company had a fair amount of debt. But Adams sold another company and used the proceeds to pay off Central States Business Forms’ loan. In the end, Central States survived the recession just fine and has since remained debt-free. Nevertheless, the differences between the late 1980s and today are striking.
“I do believe the business conditions today are quite different and more unstable, and the forms business is much more competitive in this market. The plan of attack is to control expenses, watch receivables closely and [to not] miss any opportunity for business,” Adams stressed. “The year 2009 will be a very difficult year for all of us.”
He went on to say the recessionary impact affected Central States around mid-2008, with the fourth quarter being the most difficult. To date, Adams has released five employees, reduced expenses and reviewed his various customer relationships. “The current business conditions are still stressful and will probably get worse as the year progresses,” he predicted.
Headquartered in Brooklyn Park, Minn., Royal Business Forms & Printing is another manufacturer feeling the impact of the times. “Our fiscal year starts on Oct. 1. Although 2008 was a good year for our company, we realized 2009 was going to be a very difficult year in terms of maintaining sales volume. Our business plan for 2009 was based on a 10 percent decline in revenue. We noticed things slowing a bit last fall, but more so recently,” said Tim Urness, vice president.
To save money, the company has reduced staff through layoffs and attrition. The company also has the benefit of carrying very little debt. “... Surviving this downturn will not be the issue for us. Our challenge is to keep busy enough so we can keep any additional labor costs to a minimum,” he affirmed.
Urness can’t say the same for of his industry peers. Some, he said, have already closed their doors, while others are merging plants. He continued to discuss the importance of keeping employees informed of impending challenges because everyone needs to work together when it comes to devising strategies and solutions.
“There is no question [that] demand for the traditional products has declined dramatically over the past several years. In order to survive as a manufacturer, you have to continually reduce cost[s], increase productivity and aggressively go after new opportunities,” he asserted. “We need to take in a much higher percentage of new business today, just to maintain sales, than we did five years ago. The advantage of selling forms products in today’s market is that they are consumable print products and, for the most part, necessary to do business. So, although we are not seeing the frequency of repeat orders [that] we did a year ago, and in some cases per order quantities are down, we are still getting orders.”
Clearly, suppliers are still taking in orders as indicated by the above referenced Top 100 Manufacturers sales figures. But like Urness mentioned, the demand has declined. Goodwin cited this as a disparity between the country’s current state compared to similar situations of the past, based on a discussion with his father, Thomas A. Goodwin, III, who is also the CEO of the company. In doing so, Goodwin disagreed with Urness and supported his argument with the mailer product (multipart forms comprising a large portion of his business).
“At that particular time, we had something that nobody else had—a product that everybody wanted,” he joked. “[My father’s] response was, ‘Yes, we felt it, but it didn’t really change what we were doing.’ ... The biggest challenge now is with the way people can pay their bills. You’ve got to remember the mailer product was originally designed to get an invoice or billing out quickly. And really, all you had back then was a postal service. Nowadays, you have e-mails, faxes—any numerous ways to pay the bill.”
The solution? Give the people what they want. Get their attention. Goodwin Graphics, for example, has created some unique unit set forms. “The other ones that we’ve done are kind of unique in the sense that they’re used for inventory control, where the back ply is a full-size label and there [are] three or four parts actually glued on top of that. And then we have some promotional stuff we’ve done, which is what we call a doorhanger job. It’s punched out to where you can put it on a doorknob, and one of them we do has got an envelope with a glassine patch on it, so the envelope sits in there,” he explained.
Goodwin encouraged distributors to call with any out-of-the-box designs or strange form constructions. He related a story where a customer of his presented him with a design for a DVD mailer. It involved a two-way form, so users can put their DVDs in the envelope, seal it and drop it off in the mail, echoing the likes of Netflix. The catch? This mailer is certified to where it can be sent for the one ounce postage (42 cents for one way), unlike the pricier 65 cent-costs of other DVD mailers.
While the forms industry is experiencing some tough times, it could always be worse. Suppliers could be working with textiles products and transportation equipment, with respective 12.3 percent and 10.3 percent shipment declines for 2008, according to the U.S. Census Bureau’s Manufacturers’ Shipments, Inventories & Orders report.
Tenacity is key. “Don’t give up on the first two or three tries,” Goodwin urged. “I mean, it took [Thomas] Edison 1500 tries before he got the light bulb right.” PPR