Don't Be Taken Hostage --DeWese
Okay, that's it! I'm enraged!
I've taken another 150 print buyers hostage, and this time I'm not telling where I'm holed up with this motley crew. You remember the last time I took print buyers hostage; I admitted that I was holding them in the Ritz Carlton in Chicago. I served them Dom Perignon and the best Beluga. Eventually, the FBI "negotiated" their release.
I'll tell you about my demands later. First, I want to tell why I'm so angry.
It was this past Friday, about 4 p.m. I had given myself the afternoon off to tend to my garden. Why not? Most of my clients were golfing and not likely to call.
But my pal Dave called. I was irritated by the interruption, but I trudged up to the house to take the call.
Dave owns a printing company in New York City. It's not far from the hallowed ground formerly occupied by the Twin Towers. Dave was broken hearted and needed to talk. At 3 p.m. he had been informed that, after 20 years of award-winning service, his largest customer, Goliath Global Industries, had relegated his company to "second-tier" status.
"Second tier" it was explained really meant "second team," and that effective Monday at 9 a.m., Dave's Litho will get no more job quotes.
Splash! Five million in print sales just hit the water and sank to the bottom.
Whap! Dave never had a chance to get off his stool when he took a head shot and was down for the count.
Dave is an emotional guy whose waters run as deep as anyone I know. He asked why? He was told, "We have a new executive we hired from Humongous Industries and he has revamped our print purchasing practices. Four new printers are in and you are out."
Dave asked, "But what about 20 years of faithful service? What about our quality and all the supplier awards you have given us? What about our immediate responsiveness? Whenever you want something, we have it in your hands in 20 minutes. What about your print buyers who love us? You are headquartered in New York and we're New Yorkers!"
Dave was told it didn't matter. The new executive has selected four printing companies for the first team and you are sitting on the bench. "We will call if we need you."
Dave is pouring out his heart to me. He said, "These new printing companies are in other cities. The closest is an hour away by plane. Doesn't it count that we are New Yorkers, post-September 11? We kept all of our people on the payroll even though our post-September 11 revenues were one third of the previous year."
Excuse me a minute. The hostages are complaining about the gruel and bread crusts I fed them. I'll be right back.
Dave asked me, "Doesn't it mean something that we took in displaced tenants of the Twin Towers and provided them with office space? We have always been good citizens. Like many New York businesses post-September 11, we vowed to fight and keep our 200-plus jobs in the city."
Dave is a classy guy and he didn't remind Goliath or me that a children's cancer research center is named for him, because of his personal contributions and his fundraising. I thought to myself, "I guess Dave's charitable and community work didn't count for anything, either."
I asked Dave, "Did they tell you that your prices were too high or why you were so suddenly unqualified?"
Dave answered, "No. They said we were the victims of a new print procurement program that requires Goliath to use fewer print suppliers. This is a program installed by the new executive."
I thought to myself, "This sounds like one of those 'I'm the new sheriff in town and things will be done a little differently around here from now on.' " And, in my mind, I saw the new sheriff standing in the middle of Main Street, hitch up his jeans, tug the brim of his Stetson lower over his eyes and spit tobacco juice at a passing cur.
I jerked out of my fantasy as Dave was asking, "Harris, what do I do now? Goliath represents about 15 percent of our revenue."
Dave, like so many people, thinks that simply because I am the all-powerful Mañana Man, I can solve all problems immediately. I can solve all problems; some just take a little longer than immediately.
Excuse me again. "You buyers must stop banging your tin cups on the bars. Don't make me come back there again. Remember you are my hostages. It's 8 p.m. and lights out. Nighty, night."
You see, these new print procurement programs that proliferate our industry are all about SQUEEZING MARGINS. Our margins are razor-thin in the first place. Dave's call is not the first I've had.
So, now you're getting a clue as to why I have chosen to risk another armed charge by a brigade of G-Men brandishing automatic weapons by taking all these print buyers hostage.
I'm not letting them free until I get some things resolved. If it's not some hotshot executive vowing to squeeze the dumb printers, it's a consulting company full of brand new MBAs telling a client, "You're paying way too much for printing. Pay our modest (ahem) fees and we'll squeeze the printers hard."
Of course, these tough executives and the "we'll save your bacon" consultants have never seen the typical commercial printing company income statement. For that matter, I'm sure they don't know an offset litho press from letterpress. They don't know dot gain from ghosting. They have no empathy for the inordinate difficulty associated with running a business that is simultaneously capital- and people-intensive. It probably has not occurred to them that printing is job shop manufacturing, the most difficult of all manufacturing processes.
And yet, they want it faster; two, three or four days, and cheaper. Faster should mean more money. I'd love to see some of these consultants boot up their PCs, create an Excel queuing theory model and schedule one damn two-color press. Forget about a whole plant with 10 presses, three folders, two cutters and two stitchers, not to mention the whole front end. It's a nightmare. I wonder why you guys ever got in the business in the first place. If the print procurement geniuses keep it up, none of you will even be in commercial printing any more.
You think I've got hostages?
I'll tell you who has the hostages. It's the new-fangled print procurement people who are taking the printing industry hostage. Oh, I must admit, that I am the guy who wrote about loving your customers and I hasten to add that there are tens of thousands of highly qualified print buyers who have well-defined and well-conceived print purchasing selection criteria. But, I'm not talking about printing "customers." I'm writing about print "procurers."
And, until I come up with some brainstorm idea, you will have to continue to respond to their RFPs. And they will continue to squeeze you. Unless...
Unless, just maybe, jes mebbe?
You guys will do what I wanted during the last hostage incident. You will stand together and, at the stroke of midnight on my 60th birthday, June 30, 2002, you will simultaneously raise your prices by 25 percent. Yep! All of you. At the same time. Raise prices 25 percent.
If you will all do that, the hostages are freed. It's as simple as that.
If the feds go after anyone for price fixing, it will have to be me. It was my idea. You didn't all meet in some sleazy hotel room to price fix. I asked you to do it and you did it.
Urge your bosses to treat your suppliers as partners, and use fair and meaningful criteria to select the vendors that supply your companies. And, you, you print salespeople, love your customers to death. Treasure their every request, treat them with class and always take the high road. Maybe if we prove our loyalty, we will be rewarded with more loyalty.
My final subject is my Great American Print Sales Prospecting Contest. The leaders are presently Printing Corp. of America, a Consolidated Graphics company, in Towson, MD; United Lithographers in Spokane, WA; and Victor Graphics in Baltimore.
Okay. I've got to conduct some group therapy sessions for the hostages. I'm counting on you to get out there and sell something!
About the Author
Harris DeWese is the author of Now Get Out There and Sell Something!, published by Nonpareil Books. He is a principal at Compass Capital Partners and is an author of the annual "Compass Report," the definitive source of information regarding printing industry M&A activity. DeWese specializes in investment banking, mergers and acquisitions, sales, marketing, planning and management services to printing companies.