Common issues plaguing the North American printing industry
November 12, 2021 By Bob Dale
I recently spoke to printers from across North America about their top business challenges and opportunities. While the priorities changed weekly, there were a few common challenges that I’d like to offer for your consideration. In the early part of the year, the top challenge was dealing with the high price of paper and other substrates and consumables. This changed a few months later when paper became scarce. Clients began to select printers on the basis of their ability to get paper.
Pricing issue transitions to material shortages
During shortages, part of the solution is based on your relationship with the paper supplier. We all know the challenges, but if you paid your bills on time, had a collaborative working relationship and were smart with your inventoried stock/JIT order process, your supplier will help you as best as they can. We know of printers who are frequently challenging their paper suppliers and being delinquent on payments, so they are moved to COD and limited stock and no allocations.
It’s also a case of how well did your customers treat you as their print provider? There are customers who consider their printers as partners and treat them fairly. Others argue prices, refuse legitimate charges and then delay payment. Will you be incentivized to bend over backward to get paper for them when others treat you fairly?
Labour availability is the second most common challenge. This is an issue for printers all over North America with positions from entry-level unskilled labour and skilled staff to executive-level positions going unfilled. Companies have used creative ways to hire staff. For example, they’ve offered increased compensation, better working conditions, signing bonuses and relocation cost incentives. These strategies come with other challenges. For example, if new employees are offered premium wages to join, this will increase the expectations of current staff. As you raise pay scales to avoid staff departures, your costs will increase, so either your prices increase or you reduce costs through efficient production.
Smart tech investments
This brings us to an opportunity—smart investment in technology. There are frequent news about companies investing in presses with automated features and bindery and finishing equipment that reduce labour and improve workflow by increasing throughput.
While vendors may provide you with excellent case studies, you still need to do the research to evaluate the investment’s impact on your operations. It is important to remember that reducing 25 per cent of work hours of four different staff members does not always result in cost reduction equivalent to the salary of one full-time employee.
Mergers and acquisitions present growth opportunities. If a company is healthy and has access to capital to make a tuck-in acquisition, the result can be rewarding for both the buyer and seller. The challenge is that many owners do not have a realistic understanding of their company’s worth due to the financial impact of the pandemic.
While the average commercial printer experienced a revenue decline, government subsidies helped offset the decline. Business valuations must take the impact into consideration. Many owners want to be paid today for future sales without a track record to demonstrate success. While sales activity may be returning, the company needs to prove this trend will continue, and structure a deal that shares the risk of future activity.
With these challenges and opportunities, one thing that is common for many successful people is the need to be optimistic, and share positive messages about printing and the future of the industry. Together we can help our customers, employees and companies and make the industry stronger.
Bob Dale is COO, Connecting for Results, Inc. He can be reached at email@example.com.
This article originally appeared in the November 2021 issue of PrintAction.
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