Ways to Fight Economic BS --Morgan
AS YOU are probably aware, more than 3.6 million Americans have lost their jobs since the onslaught of the recession, nearly half of those in the last three months alone. In January, the U.S. unemployment rate reached 7.6 percent, which is the highest level since 1992. The printing industry is also suffering from the deteriorating economy. In a recent Quick Poll survey by Print Buyers Online.com, 67 percent of our print buying member companies reported they have downsized in the last six months, and are beginning to feel the squeeze. Laura Hardy, vice president and production director at Ogilvy Public Relations Worldwide, recently shared the following with Print Buyers Online.com:
“A hiring freeze, not replacing staff who had left, along with the restriction on using freelancers, have caused the current staff to juggle a tighter workflow. It’s a challenge to meet the ever-changing daily requests. We really push for more organized requests coming in, so that we are not just in ‘reaction’ mode. But it’s tough,” Hardy admits.
Another print buyer shared, “We have had two company-wide layoffs in the last six months. If the economy doesn’t turn around soon, there will probably be more.” Another contributed, “My company has downsized considerably over the past year, and has reduced its workforce by more than 20 percent. All creative and copywriting is now outsourced, and our print spend has been reallocated to Web/SEO/SEM efforts.”
But how is the recession affecting the print industry as a whole? Just ask any printer. In a recent Quick Poll survey, 90 percent of our print supplier respondents said they had lost a print buyer contact due to downsizing at their customers’ businesses. As you know, print suppliers spend a minimum of six months and up to three years in developing the relationship that turns a prospect into a customer. The repercussions of losing so many contacts not only has an immediate impact on sales, but also will surely impact the printer’s ability to get work from past clients once the economy does recover.
If your company is experiencing layoffs, you are not alone. According to the U.S. Bureau of Labor Statistics, there were 38,000 mass layoff events in the graphic arts industry in January of 2009. Here’s just a random sampling of companies that have reported their struggles in recent press releases:
Due to the decline of fine paper orders, Domtar Corp. is cutting 185 employees and shutting down a fine paper production unit at its Plymouth, NC, mill. This will result in a decrease of 293,000 short tons of the mill’s uncoated freesheet production capacity.
Kodak is cutting more than 3,500 jobs in 2009—more than 14 percent of its workforce. The company posted a $137 million, fourth-quarter loss on plunging sales of both digital and film-based photography products, and its stock is now at its lowest level in more than 40 years.
Transcontinental Inc., a commercial printer and newspaper publisher, is cutting 1,500 jobs (10 percent) of its North American workforce and is reducing costs to deal with the stress on its business caused by the recession.
Established in 1859, the first newspaper in Denver before the city was even founded, the Rocky Mountain News, is no more. This has left 225 people out of work, and the people of Denver with only one local newspaper to read.
So what can we do about all of this negative news? Here’s what print buyers are doing to save their organizations—and printers may benefit from doing the same.
Remain focused on what you can control. Feeling the pinch? This is not a time to shrug your shoulders and give up due to external forces affecting your business. While your competitors are decreasing their marketing efforts, you can choose to capitalize on your company’s brand instead. Now is the time to shout as loud as possible from the rooftops all that you have to offer, since your voice will be amplified without the competitive clutter.
Also remember that all buying companies are concerned about the financial health of their suppliers. By continuing to market and maintain brand awareness, it makes your customers feel more secure about your company.
Reduce fixed costs. Get your team together to figure out what areas can be diminished or cut to create overall savings for your company. And leave no area of your budget untouched. In addition to reviewing line items, determine where you can cut back. Do your best to keep overtime expenses to a minimum.
Talk to your suppliers and see if you can arrange for discounts on ink, paper, equipment, supplies, etc. Remember that they are suffering, too—and may be open to adjusting their prices, just as you are lowering yours. If your distributors refuse to lower their costs, don’t be afraid to rebid elsewhere.
Review your accounts receivable. Cash flow is key in this unstable market. Do you have customers who take more than 90 days to pay their bills? Now is the time to be more discriminative in which jobs you accept. Be wary of clients who already have a slow payment policy, as this could even cause more problems with your cash flow. Also find out if offering discounts as incentives will help them pay faster, and keep you solvent.
Streamline administrative tasks. Take stock of your administrative operations expenses. Are all of your jobs allocated to the most efficient people? Is there software you can use that will not only make your project tracking easier, but will require that something only be entered once vs. three times?
Don’t be afraid to recreate job descriptions so that your organization becomes as efficient a structure as possible. And don’t forget to develop a scorecard to monitor progress and ensure that the desired results are being achieved.
Provide consistent product quality. A poor economy is a buyer’s market, so it is not the time to deliver less-than-superior results. Deliver quality products, every time or you may find your customers will start turning to your competitors.
Maintain equilibrium between profits, debt and investments. Dust off financial text books and review current ratio, total debt ratio and profit margin formulas to determine how much liquidity your company has. Or find a trusted intern to do it for you for free. This information will enable you to take the necessary steps to get things back on track.
Adjust business plans. Sit down with your management team and tweak your numbers to reflect accurate financial projections. Actively demonstrate the precautions you are taking to ensure that your company is insulated from the economic crisis, and how you will be able to expand operations to keep up with the competition once the economy turns around.
Educate print buyers on their options. Let them know how they can save money and they will keep coming back. Saving money is on every buying company’s mind. The key is to offer proactive solutions, such as reducing paper weight, reducing the size of the piece, etc. Sharing how they will save money will secure their business, and put you in a position to be perhaps one of the few printers that does get their work.
If you begin to feel disheartened, remember that history has proven that those who roll with the punches will stay in business. You must change and adapt in order to survive. It’s up to you to figure out how to do so.
Our team at Print Buyer Online.com encourages you to find ways to help your print buyer clients reach their budgetary and environmental goals. To learn more about how vanguard buying companies are remaining successful during these trying times so you can share their techniques with your customers, join us at the Print Oasis 2009 Print Buyers Conference and Exhibit in Phoenix on May 17-19.
At the conference, you will hear case studies presented by leading print buyers and production managers, who will share tangible examples on how they are working with their printers to remain profitable—and what you can do to create stronger relationships with them. For more information, visit www.printoasis.com. PI
About the Author
Suzanne Morgan is founder and CEO of the annual Print Oasis Print Buyers Conference (www.printoasis.com) and Print Buyers Online.com, a free community of more than 12,000 print buyers whose member companies purchase more than $14 billion a year in printing. PBO conducts research on print buying trends and teaches organizations how to work more effectively with print suppliers. Morgan can be reached at smorgan@ printbuyersonline.com.