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Dickeson--Don't Be Stupid About Paper

September 1999
"It's the economy, stupid" is the now oft-quoted statement coined by political consultant James Carville during Bill Clinton's 1992 campaign for the presidency. It simplified issues of the Clinton campaign against an incumbent president basking in high opinion poll ratings. The phrase focused that presidential campaign on the concern of a majority of the voters of the country at that time.

What Carville did was modify the old KISS principle: Keep It Simple, Stupid. Focus was needed for the campaign, and he supplied it. Simplicity, for Carville, was the economy.

"It's the Paper, Stupid!"
Now it's our—the printing industry's—time to focus, to simplify. "It's the paper, stupid!"

Paper is our thing. We convert raw paper to printed materials. Weight, grade, printability, surface, consistency, brightness, strength and cost of paper control our destinies. These are our paramount concerns as printers, concerns shared by our publisher customers. For real estate, the three cardinal rules are location, location, location. For printing and publishing, the three rules are paper, paper, paper! For us, it really is the paper, stupid.

Remember the WOW—War on Waste—campaign back in the mid-1970s? It gave us focus on the usage of paper to enhance productivity a quarter of a century ago. It's time to refresh our perspectives, renew the immediacy of that message, re-charge our batteries.

To illustrate the significance of paper, let's take an extreme example. The new web offset presses are not only faster, they're wider. One of those new presses, printing for 55 percent of available hours in a year, consumes 35,000 tons of roll stock. At $50 a hundredweight, that comes to $35 million annually! (Those numbers do have a way of narrowing the focus, don't they? It truly is all about the paper, isn't it?) Just a single percentage point of paper used in a year to operate that press is worth $350,000.

(Question these numbers? Drop me an e-mail, and I'll send you the assumptions and calculations.)

That's at one end of the paper spectrum for web offset…for the time being. Think magnitudes. Turning over your inventories 12 times a year, you need space in the warehouse for 2,800 tons of paper for one press. If you're furnishing the stock and collecting receivables in 45 days, you have around $4 million in accounts receivable generated by just the paper for that one press.

Add that to $3 million of raw stock inventory, plus in-process and finished goods inventories, and the claim on your working capital resource tops $7.5 million a year. Now suppose you had two or more of those presses in your plant! OK, scale it down from that Himalayan level for your shop. Relative impact of paper is the same as a capital resource consumer—always.

 

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