Tuesday 24 March 2009

Profit from the recession.

In every recession there are a vast number of losers, and a small but interesting number of winners. The purpose of this blog is to try to identify those strategies which can make printing companies winners in these difficult times.

I have my own ideas, which many of you will have heard over the years, but I would be most interested if you could tell us your ideas, to try to build a useful list of do's and don'ts.

Many years ago I had a colleague who had at one stage been a keen motorcyle racer. He told me about the time he went in for the Isle of Man TT race (for those who don't know this is a rather extreme road race - see http://en.wikipedia.org/wiki/Isle_of_Man_TT). He recalled coming round a corner, seeing a large thick fogbank that had come in from the sea, braking to kill his speed - and then noticing that a few competitors, instead of braking, accelerated suicidally into the fog! On asking them afterwards they all said that because a significant proportion of riders automatically brake, by accelerating they were creating and consolidating a position in front of the pack. They knew the road well, and had a reasonable hope that there wouldn't be any unexpected obstacles. My friend Steve said he suddenly realized that he would never win the TT!

The point I'm making is not that you have to be suicidal to win (?) but that what looks like an obstacle can in the right hands confer a competitive advantage.

Over the last few weeks I have talked to many printers and have been interested to see that they can be divided into three main camps: those who are desperate for work at present, those who are ticking over but are worried about what the future will bring, and those who are up-beat and doing well. The purpose of this blog is to allow different members of the Printpak family to help each other with comments and suggestions as to what strategies can help you take advantage of the recession and create a competitive edge.

At this stage I would normally go on about the importance of accurate estimating, etc, and not doing a job below cost. This time let's have comments from you guys (and girls). After all you are the experts!

Richard Fergusson

Sunday 1 March 2009

In this job we get to talk to a lot of printers, and a question I always ask is “so how’s it going? Are you busy?” which I must say I have been asking with greater trepidation recently. The interesting thing is that some printers do seem to be extremely busy.

On the face of it that would appear to be encouraging, as it means that companies are trying to promote their way out of recession. On the other hand the recent BPIF Printing Outlook survey reports that almost half the printing industry has been forced to cut prices despite rising raw material costs. This is obviously unsustainable in even the short turn, so what is happening?

The obvious answer is that many printers are reverting to their discredited old motto ‘Turnover is king’, or as I once heard it put ‘If I work all the hours God sends I must be doing something right!’

Well, OK. If you’re working round the clock you may be making fuller use of your resources, and your rent and admin. costs etc. are spread over more jobs, which could, if you're careful, bring your print costs down by as much as 10%. The problem is we’re beginning to see reductions in price of far more than that, which in an already squeezed industry is not, on the face of it, healthy.

But there is a rather paradoxical light at the end of the tunnel, which is that people who reduce their costs that far are actually chasing turnover for immediate survival – they simply have to, in order to pay the wage bill at the end of the month. That £30,000 job they are doing for £23,000 can be factored for £18,000 which gets them neatly out of the mess - for this month. What about next month? I suspect that we are about to see a major shake-out of those printers who do not stick to their guns when pricing.

We live in interesting times!

Richard Fergusson