You can run, but you can’t hide. There’s no escaping [cue dramatic music]: The Recession. Had enough of the media’s fear-inducing headlines? Like it or not, this is reality—and not just for the printing industry. But that doesn’t mean suppliers and distributors have to close their eyes and wait for miracles to fall in their laps. Instead, major label manufacturers are licking their economic wounds with diversification, new product offerings and a new optimism that’s speckled with realism. But manufacturers admitted they had to take a hard look at where their business has been and where it is heading before they could embrace the future and its possibilities.
Bob Hakman, president of the Itasca, Illinois-based Diversified Labeling Solutions, observed that last November was the first month he was directly impacted by the struggling economy. His company has remained at a reduced order volume level for the past three months. And for the first time in the company’s history, it was forced in January to make staff cuts.
Nevertheless, Hakman knew financial troubles were brewing for a while.
Well before recent months, he noticed the overall market was changing, as a result of companies outsourcing overseas. “The North American label market got hurt over the past five-plus years with the transition of manufacturing over to China and other overseas markets. I have been reading that this exodus has started to reverse itself when oil hit its highs last summer and long-term, I see some additional manufacturing coming back to North America. Additional consolidations and reductions in capacity are needed to stabilize the market for labels, and I believe this current downturn will result in that happening,” he surmised.
The Custom Resale Group also found 2008 challenging. The group includes the companies Printegra and PrintXcel, both of Peachtree City, Ga.; VersaSeal, Montrose, Ala.; National Imprint Corporation, Claysburg, Pa.; Wisco Envelope, Tullahoma, Tenn.; Discount Labels, New Albany, Ind.; Lancer Label and Dealer Label, both of Omaha, Neb.; and Synergy Label, Smyrna, Ga.
Steve Porter, director of marketing, labels for Discount Labels, said distributors selling label products geared toward the automotive industry were affected the most. He admitted the most difficult aspect has been with consideration to monitoring and making necessary adjustments to staffing levels to support business.
Despite the gloomy economic outlook, Hakman continues to find the positive and encourages others to do the same. “Keep trying to be the best you can, and remember to keep a positive attitude. Your customers, employees and vendors will pick up [on it] if you are down, and it is not going to help you in the long run,” he stressed. “This recession is only getting worse from all the negative news and political coverage we hear, so until that changes, the economy will continue downward.”
And Hakman makes good on his word. Staff members of Diversified Labeling Solutions are working to be the best they can be by further reducing error rates and setting new industry standards for quality service. The company was even recently awarded “Trade Supplier of the Year” by one of its customers who recognized the value of quality work.
Positive thinking seems to have caught on like a virus.
The key, according to label professionals, is to combine one’s optimism with a desire for diversification. Mike Vejar, vice president of sales of Wilton, New Hampshire-based Label Art, continues to see this with his own customers. “We believe it is inevitable for industry morale to not be negatively affected. The key is, ‘Do you accept the circumstances or take steps to face them head on and fight your way through it,’” he questioned. “Not surprisingly, I’m finding that many distributors who I speak with are doing the latter—putting up a fight. I hear comments like: ‘I’m diversifying my product offering to balance our declines in other areas’ [or] ‘I’m focusing on prospecting more rather than relying on long-term customers to sustain my business.’”
Vejar finds the latter statement particularly interesting and has realized that when times are tough, a penchant for change intensifies. Traditionalists married to old routines are rethinking their original strategies and branching out in hopes of finding new ways to maintain and build business.
“My best advice: diversify, diversify, diversify,” he emphasized. “In other words, increase your supplier partnerships, and expand your product offering. The ones [who] do will be best prepared when the economy wakes up.”
The Custom Resale Group has taken a similar approach in terms of product diversification. For instance, customers can choose from a vast array of labels and features ranging from one to 11 colors (including four-color process), variable data printing, dual-web products, double-sided decals, foil stamping and embossing, scented or scratch-off inks as well as specialty constructions like self-laminating labels and expanded content labels.
Porter commented on how the various Custom Resale Group divisions will incorporate a new product or print feature based on consistent customer needs and requests. He explained that Synergy Label worked with a Georgia distributor to develop a self-laminating label with a holographic security feature for use with temporary auto tags. “Likewise, there are times when fade-resistant flexographic inks can be used as a more cost effective alternative to a traditional screen-printed product. The key is working with our customer to understand the performance the label needs to provide and then ‘engineering’ the appropriate solution,” he suggested.
Though paying attention to customers’ needs are important, companies also must invest in new equipment or maintain what they have in order to produce the most eye-catching labels. Digital printing is all the rage and an important one that shouldn’t be ignored, according to Porter and Vejar.
“We see continued demand for high-quality graphics for short to medium runs with the ability to rapidly get them to market. Digital printing technology will continue to help customers meet the needs of their clients in providing solutions for private or personalized branding of specialty foods, wines or beverages,” said Porter. “Brand managers, for example, can test market new focused products with relative ease and minimal costs versus traditional print methods by utilizing digital technology. This could range from single, black-ink variable data printing to process color images.”
Porter went on to say Discount Labels has digital ink-jet technology which allows the company to handle variable data printing and sister company Lancer Label will be introducing this technology during the second quarter this year.
Meanwhile, Label Art recently introduced a fourth digital press to its arsenal, enabling it to fulfill requests for variable data and variable imaging, Vejar added.
Interestingly, another trend suppliers are noticing in this market is that customers are re-inventing themselves. Porter is seeing customers position themselves as full service providers rather than simply providing a single item (e.g., business forms). When distributors have the chance to turn additional profits by dipping into other niches, it becomes even more crucial to learn which departments— such as marketing—need some extra TLC, despite a temptation to cut corners during tough times. If you don’t market yourself, how will everyone know you’re still surviving, and more importantly, how will they know that you can help THEM?
“Some companies cut back on marketing budgets and try to ride out the recession by just servicing their repeat order base. Companies that are successful continue to market themselves and do not get caught up in the gloom and doom,” Porter declared. “Pursue different products [that] you may not have in the past. Perhaps you sell promotional products to your clients and are already meeting with the individuals who promote their business and products. Talk to them about the labels, stickers or decals they use on their products, promotional flyers or point-of-purchase marketing collateral.”
Chuck Hester, general manager of Ennis – Wolfe City Tag & Label, located in Wolfe City, Texas, echoed Porter’s comments. To succeed in any time, not just a down time, companies must continuously seek out different methods for bringing value-added solutions to their customers, he noted. “I think customers have a realistic view of the challenges the industry currently faces. I firmly believe if you service the customer and provide industry-leading quality, service and a competitive price, you will succeed in any time or condition. Many of [the] customers I have talked to have a similar mind-set and are working harder than ever on uncovering new opportunities,” he noted.
Not only has Ennis’ tag and label division expanded its variable imaging capacity with UV inkjet in the last two years, but it’s also looking for new items such as holographic foils and tamper-evident stocks. Furthermore, to assist customers with these products and services, the Wolfe City facility, along with its sister location in DeWitt, Iowa, has an expert onsite to make product recommendations and to answer any difficult questions distributors may receive from their end- user clients.
In regard to the future, Hester fully intends to focus not on the competition, but on running the best business he can and encourages others to do the same. “Even as Ennis has grown as a company, our facilities have maintained their identities. ... We are focused on building a relationship with distributors that is profitable and successful for both parties,” he stated.
So, the next time the Dow plummets (which could be as you’re reading this article), another business peer closes his or her doors or the media says: “Not since the Great Depression,” remember, a little “I think I can, I know I can” mantra can shape who we are and who we choose to become. PPR
- People:
- Hakman
- Mike Vejar
- Steve Porter