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GLOBAL COMPETITION — DANGER LURKS OFFSHORE

June 2006 BY CHRIS BAUER
Managing Editor
CHUCK NASON admits he wasn’t fully prepared for the effects of global competition as it accelerated in 2001. The president and CEO of Worzalla Publishing, a Stevens Point, WI-based book manufacturer, watched as a significant portion of the company’s four-color children’s book work went to China.

“Global competition has affected us in a major way,” Nason contends. “It caused us to suffer a five-year slide in annual sales from just over $62 million to $44.4 million a year ago. This has meant little or no wage increases for our employees and a freeze on capital equipment purchases for four years.”

Nason points out what many printers already know—foreign printers, particularly in Asia, provide significant pricing advantages to the book publishing community.

“With China, for example, this starts with a currency that has long been devalued, which gives Chinese printers a 30 percent to 50 percent advantage just on the currency alone,” he reports. “With lower wages, fewer benefits, lack of environmental regulations and nothing in the way of OSHA to ensure plant safety, Chinese manufacturers simply have less overhead to support through their pricing. A publisher buying on price alone finds the
Chinese option an attractive one.”

Unknown Competitors

Experts agree a company like Worzalla is not alone in its experience with competition from foreign printers. And, many times, the U.S. firm may not even be aware the competition exists.

“For many companies, it’s not on their radar screen,” observes Dr. Joe Webb, a partner at PrintForecast.com, Harrisville, RI. “It’s often hard for them to know which jobs they’re not being asked to bid on—such as those that are part of marketing campaigns with non-print media elements—or to know what competitor wins a bid in the normal course of business. Offshore competition certainly adds to that confusion.”

Dr. Webb also believes that most domestic printers are not only unprepared to deal with offshore competition, but the entire concept that they can, or should, globalize their businesses is a foreign concept all together. He says many firms don’t know how or where to begin.

“Communications and physical logistics are so good today that geographic proximity is less important than ever,” Dr. Webb explains. “Being close to your customer was never really about geography, anyway. It was about having a shared understanding of goals and objectives, as well as getting things done in the most cost-effective manner today and in the future.”
 

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