Government Work Benefits Print Industry During Economic Downturn
Work for the U.S. Government Printing Office (GPO) continues to benefit print suppliers who know how to plan for, schedule and deliver government jobs, according to Government Print Management, the leading representative of print suppliers to government in the United States and a division of Chambersburg, Pennsylvania-based e-LYNXX Corporation.“Doing print for government sources is proving to be a lifesaver for printers and print suppliers during these challenging economic times,” said Deborah Snider, senior vice president of Government Print Management. “Those who establish government printing as a secondary market and plan the work so it fills their idle time are experiencing increased revenues and profits. This happens when they understand the complexities of working with the government and the strategic importance of contribution pricing.”
On average, print suppliers have 30 percent idle production capacity and are constantly seeking short turnaround projects to fill schedule gaps. Because print companies operate on thin margins, even a handful of unsold hours cause their profitability to erode or evaporate, Snider explained. To obtain projects, such as government work, that fill idle production capacity, suppliers offer extremely low pricing, provided they can do so without establishing precedent that affects future price expectations or their ability to bid on future projects. This strategy is called “contribution pricing” because any income for suppliers out-of-pocket costs “contributes” 100 percent to the bottom line.
The number of print suppliers obtaining GPO work during the past quarter (Oct. through Dec.) was 1,263, and the work for the top 50 suppliers during this period was valued at $105,293,322. During the past 12 months, approximately 1,817 suppliers won GPO point work valued at $421,886,169.
“Since 85 percent of the jobs that the GPO procures are for less than $3,500, many suppliers find them to be ideal for filling what would otherwise be idle production time,” Snider said. “For those that rely heavily on GPO to fill downtime, this very competitive work can increase profitability from an industry average of 3 percent to about 14 percent.”