The optimum size for a printing company

[GeorgeA]

A recent study by the German consulting company Pier 18 suggests that medium-sized printing companies (100-500 employees) are surviving the best in these difficult times. The report looked at the period between 2004 and 2008, a period when the number of German printing companies decreased by 10%. Most of the troubled companies were very large or very small. The only size group that increased was the 100-500 employee group. The report concludes that this is the best size for a printing company. (From: What’s the ideal size for a printing company?)

On the other hand, Heidelberg’s second-in-command, Jürgen Rautert, thinks many medium-sized firms are doomed to disappear. He says: “There will be a structural change in the direction that the medium-sized printers will form a substantially smaller percentage of the industry in two or three year’s time. The big ones will grow and the small ones will maintain profitable niches, offering special services or servicing local business mostly. The medium-sized printers, I think, will either shrink or grow by consolidation. So this hourglass effect will happen: the industry will no longer be a pyramid – it will be an hourglass, more larger printers and smaller printers and the medium-sized printers will thin out.” (From: printweek.com | Latest Print Industry News)

One analysis or the other has to be wrong. Does anyone have an opinion about which is correct?

 

[OutSourceD]

Printing is DEAD.

 

[Morning Flight]

Printing is DEAD.

Mark Twain would disagree.

 

[OutSourceD]

Mark Twain is DEAD.

 

[rbailleu]

guess I should not have bought the new presses, ctp, folder and cutter. also I see a lot of 50 employee firms with old 40 inch presses going under.

 

[ondemandbindery]

I would not say printing is dead. But there is now a significant impact in the industry since the downturn of the economy and where it ends up when the markets stabilize is absolutely looking through a Crystal Ball. I am a very proactive owner of my company in regards to Client relations. I am constantly in shops ranging from the mom and pop duplicator business to huge magazine web printers. There is a new world order to how people think and what they want. It is an On Demand business now and people have gotten smart about printing in general. The Internet is absolutely the reason for this and that is reality. It is also a cut throat business and the margins have always been tight so when you have multiple printers fighting for the same project it just makes the problem that much worse. What I see typically is Digital is moving along but the capacity on big equipment is just not there. Sure, you will have some exceptions to the rule and some printers are connected with markets that have not suffered as bad as other in this economy so this group is not feeling the effects as much. There really is no certain recipe for each and every printer. If your machines are older and just are not as productive as the printer down the street then don't turn a blind eye to the situation. The loyalty factor is changing and long term customers have changed their agendas. My end of the business is the most turbulent in my opinion. I could probably write a book about what I have seen in 2 years going in and out of shops constantly and I would not advise any young person go into this field. The best way to gauge the market is the paper companies. But that is just my opinion.

 

[Keith]

Printing is dead? Then why am I so darn busy? It may be dead as printing patriarchs may know it; the industry is just going through an evolution. I think we are centuries away from a paperless society (I am basing that assumption on the fact that Star Trek takes place in the 24th century). Then again, I'm young, so what do I know.

Keith

 

[GazKL440]

Printing is dead? Then why am I so darn busy? It may be dead as printing patriarchs may know it; the industry is just going through an evolution. I think we are centuries away from a paperless society (I am basing that assumption on the fact that Star Trek takes place in the 24th century). Then again, I'm young, so what do I know.

Keith

hehe good reply...if printing is dead why are we runnin 3shifts, 24hr operation on our 40 and 2 shifts 19hr prod on our 26, with our 3 multi col GTO's flat out all day ?? and we are a small company too... well less than 50 employees...

 

[Lukas Engqvist]

Do you employ zombies?

Do you employ zombies?

hehe good reply...if printing is dead why are we runnin 3shifts, 24hr operation on our 40 and 2 shifts 19hr prod on our 26, with our 3 multi col GTO's flat out all day ?? and we are a small company too... well less than 50 employees...

In a world where zombies, vampires and other undead are the heroes what can I say
I think people have been charmed by new technologies. Are we using print the right way? Today many unprofesionals create print, but they will leave design and implementation of animations and the like to professionals. This means we do end up fixing jobs that should not be let through on account of bad design. It is the bad design that kills us, in the end many just stop caring what the job looks like.
But without death there is no re-birth, it is the nature of things. Evolution takes generations, and we tend to forget for every evolving step there is a death of the "dinosaurs".

 

[Morning Flight]

Printing is dead? Then why am I so darn busy? It may be dead as printing patriarchs may know it; the industry is just going through an evolution. I think we are centuries away from a paperless society.

Bullseye, Keith. Distilled to its essence, printing is putting an image on paper. Doesn't matter whether that's ink or toner, or by what process the image gets there. And putting an image on paper will be with us throughout our lifetime.

This isn't the first time reports of its death have been "greatly exaggerated." In 1967, McLuhan wrote in The Medium is the Massage: "Purely visual means of apprehending the world are no longer possible." To prove it, he wrote a dozen books. Years earlier, in 1959, the Haloid Xerox company introduced the Xerox 914 in my hometown of Rochester, NY. Xerography didn't kill printing, as many had predicted. Contrary to popular belief, the new technology spawned a whole new industry.

Not only is printing not dead, it's alive and well in shops all over the planet. I'm betting my future on it.

Hal Heindel
www.morningflight.com

 

[Ritter]

There is no "optimum size" but the market is moving at warp speed towards the center. Big printers will remain but there will be fewer of them and fewer plants and those plants will either be highly technological or in places where labor is so cheap that it is basically slavery. Small print (corner copy shops, etc.) will remain as well but will have to focus almost entirely on tiny digital printing work and outsourcing. It is logical for these smaller printers to go the route of syndicates or associations between smaller and medium size printers.

Print isn't dead. The old way of thinking about printing is dead. What has traditionally been seen as a healthy employee count partnered with low skills and part specific roles (i.e. bindery, press, postpress) is out. Extreme automation and very very few highly skilled employees is the new paradigm (if you've seen the movie Minority Report... visualize that Lexus factory). This among many other reasons is why employee count is not a bad metric but a horrible metric. You don't run a factory to employ people you run a factory to make money.

My future vision of medium printers...
Volume partnered with what press size the shop is built around are the best metrics. If they don't meet up you are dead in the water. I would argue that shops centered around new 'half-size' presses (ex. speedmaster74 perfecting >=8 units with cp2000 with cip4 and inpress/imagecontrol and/or a similarly sized digital operation) are in the most optimum position. They have the flexibility to run the small work as well as larger work. They are technologically advanced to the point of 'just push go' printing. Press runs are getting smaller/shorter thus bigger presses are getting too expensive to support. In order to support larger presses and possibly even a half-size press workflow is going to have to advance to the point where you are ganging nearly every job without any human confusion or interaction (do not underestimate the future of software!). Folders and cutters should be automated to the point of no human labor what-so-ever. Paper can be delivered to the press, from the press, to the cutter from the cutter to the folder from the folder to the binder and from the binder without ANY human interaction with today's technology (automated 'forklift' systems, I've seen them with my own two eyes in a massive Wal-mart warehouse). Prepress software in the past 10 years has made such huge leaps that nearly every job can be automatically rejected, altered, or approved. The few jobs that remain can be handled by one competent person working with the customer to correct the files or to simply just correct them and move on. Plating equipment is already lights out with the exception of feeding an empty casette time to time.

What is even more core to this idea is the slim profit margin per job you must be willing to make. This old concept of marking up plates, paper, ink, etc. are dead in the water. The new way (as I've already seen some people starting to take on) is cost calculate a job based upon it's cost and then determine the profit you want at the end. Need to discount? You know exactly how far you can go. Can't at the very least project a break even? Reject the job and move on to the next one. This might sound idealistic but if everybody is discounting jobs to unprofitable levels the entire industry bleeds. Automated data from all of this equipment must be reviewed and adjusted to be within constraints. Identify the weakest link find the economical solution eliminate it and move on to the next one.

The core logic behind most of this is incredibly inhumane. Software is cheaper than manpower and makes fewer mistakes (without human entry mistakes it theoretically makes none). It doesn't want days off, it doesn't need human resources, it doesn't bitch, complain, call in sick or want health insurance. The labor left over must be considered overhead because essentially it is overhead. I have heartfelt sympathy for the past generations who were taught, told and put into practice the thinking of an 'honest days work' will payout and allow them to retire. This will happen in waves and it will require people to implement it and manage it but only those with the skills, knowledge and willpower will remain. These are the end results of the so called 'market forces'.

What the printing industry is going through is its own technological revolution a la what the Deere or McCormick companies did to farming in the end of the 19th century. This spawned and allowed the movement into cities in mass numbers leading to heavy industrialization. Where the next mass migration is we do not know...

If you're among the pure dollars and cents business mindset these are the basic ideas that Eliyahu M. Goldratt has been preaching for years simply realized to their full potential. This is what JDF automation is all about. The whole point is empowering management to implement continuous improvement in order to increase throughput and reduce costs.

Wow that was a bit long. This is just my two cents. I am a member of the so-called 'millennial' generation raised with a home computer from the age of 6. I read everything I can get my hands on related to this industry. I love printing. I wouldn't work anywhere where I didn't smell like ink when I got home for dinner.

 

[ondemandbindery]

The whole topic is contigent on what is running through the cylinders in any given shop. Packaging is ok right now. Direct mail and envelopes are taking a hit right now also. A shop with a bunch of one dimensional people will not make it. Throughput is essential for any manufacturer at this point. Printing is still a complicated process. Unlesss it is toner based, there is still the uncontrollable characteristics of fluid and that is still the basis of putting ink on paper. The optimum is really about how well you can generate money with a given amount of square feet. Put mom and pop printing on the corner in 500 square feet and they can have profitability with older equipment. Put 50 employees in 20,000 square feet with all the new technology and it can be a bad investment. Who can do the most with the least wins in manufacturing these days. And there is another part that really has to be considered when discussing this and that is the engine which drives the revenues and that is sales. Who knows who and where is someone networked. That is just as important as new technology. This is truly a question where there is no good answer. I just hope we can all prosper through these changes.

 

[sherry_xie]

great point

great point

Good, encouraging point!!!!

Bullseye, Keith. Distilled to its essence, printing is putting an image on paper. Doesn't matter whether that's ink or toner, or by what process the image gets there. And putting an image on paper will be with us throughout our lifetime.

This isn't the first time reports of its death have been "greatly exaggerated." In 1967, McLuhan wrote in The Medium is the Massage: "Purely visual means of apprehending the world are no longer possible." To prove it, he wrote a dozen books. Years earlier, in 1959, the Haloid Xerox company introduced the Xerox 914 in my hometown of Rochester, NY. Xerography didn't kill printing, as many had predicted. Contrary to popular belief, the new technology spawned a whole new industry.

Not only is printing not dead, it's alive and well in shops all over the planet. I'm betting my future on it.

Hal Heindel
www.morningflight.com

 

[sherry_xie]

Bullseye, Keith. Distilled to its essence, printing is putting an image on paper. Doesn't matter whether that's ink or toner, or by what process the image gets there. And putting an image on paper will be with us throughout our lifetime.

This isn't the first time reports of its death have been "greatly exaggerated." In 1967, McLuhan wrote in The Medium is the Massage: "Purely visual means of apprehending the world are no longer possible." To prove it, he wrote a dozen books. Years earlier, in 1959, the Haloid Xerox company introduced the Xerox 914 in my hometown of Rochester, NY. Xerography didn't kill printing, as many had predicted. Contrary to popular belief, the new technology spawned a whole new industry.

Not only is printing not dead, it's alive and well in shops all over the planet. I'm betting my future on it.

Hal Heindel
www.morningflight.com

sorry, hal heindelm,i have difficutly in opening your website. what is the matter then?

 

[OutSourceD]

In the past, when someone needed a color print, they had to go to the local print shop. These days, most print it themselves on their own desktop color laser or ink jet. I had a man from a janitorial company drop by my shop the other day and he handed me a brochure that he "designed" and printed himself. It looked like hell, but he was damn proud of it. 20 years ago, if I had designed and printed something that looked like that... well, you know.

Is printing dead? I most respects, yes. Is there still a market for the small businessman? I might agree that there is, but it is too small to base your entire career. You must diversify. In this day and age a print shop cannot support itself solely on printing.

If you ask yourself if printing is dead, don't listen to someone who has something to gain by selling you some fancy software package that won't make one whit of difference in propagating one single new sale. Do you believe that if you look like printing.com you'll BE printing.com? Take it from me, the answer is an emphatic NO.

There is little encouraging news in this industry today. If you have been in this business for any time at all just refer to your sales declination over the past several years. Is printing dead? It is surely dying. Are some shops doing well? It depends on how you define it. How am I making a go of it in these market conditions? Downsizing. Cutting overhead. Cutting hours. Layoffs. Otherwise I diversify, by adding large format services and offering web design services. This is not printing though it is related. It allows my company to survive.

If you are in the printing business and you have not diversified your services, your business will ultimately cease to exist. Printing IS dead.

It is not the in the best interest of an industry that is dying to let on to that fact.

 

[T]

I remember when the statement was "Film will never go away"
Just be proactive, that's all I have to say...
Paperless will be here sooner than you think (it's way cheaper and the generation coming up will want it...)

 

[Morning Flight]

If you ask yourself if printing is dead, don't listen to someone who has something to gain by selling you some fancy software package that won't make one wit of difference in propagating one single new sale.

What about listening to someone who is giving away that fancy software package, free, as in free FOREVER?

But you're right on a couple of points, OutSourceD. Computerizing your front office won't magically lead to more sales or new customers. If your marketing and product mix are bad, an MIS will only make them worse faster. In the same way that advertising a bad product will generally kill that product quicker. The main purpose of an MIS is to increase profits. Yes, you will see a few extra orders because you're now quoting jobs instantly instead of when you get around to it, but on the whole, the big idea of a Management Information System is to let you price more accurately and consistently, allow you to redirect your time and focus to where it matters, and cut down on waste.

And you're right on our need to diversify. Both vertically, in what we're doing, and horizontally, in how we're doing it. Offset is the letterpress of yesterday, and Digital as we know it will eventually be replaced by something else. That's just keeping up with the times. But do you really consider Wide Format to not be printing? If every new imaging technology that comes along is considered to be outside the realm of printing, then yes, printing is dead.

Hal Heindel
www.morningflight.com

 

[Morning Flight]

sorry, hal heindel, i have difficulty in opening your website. What is the matter then?

A temporary connection problem, I suspect. Most ISPs guarantee no more than 99.99% up-time. I hope you've been able to visit since, sherry_xie. If not, try

Morning Flight: Print Estimating Software for Offset and Digital
morningflighthelp.com
Unitac - Who we are

all hosted by different ISPs.

Hal Heindel

 

[Morning Flight]

I remember when the statement was "Film will never go away." Paperless will be here sooner than you think.

Film will go away, witness today's announcement of the death of Kodachrome. So now we use digital cameras to take pictures that we then "print on paper" to show aunt Emily. Sorry, did I miss something?

Hal Heindel

 

[GazKL440]

Printing may be dead, but definately not in our lives and perhaps not for a few generations yet... can i make a point about human nature? We like stuff...tangiable, touchable, possesable items, and in a paperless environment, information on a monitor is just lights lined up into dots to provide a colourful image, in much the same way that print is just ink on paper, but you CANNOT touch it, feel it or experience it...yes it may come with moving imagery and sound etc etc etc, but are there any ppl here who would rather read a book than watch a tv? There will ALWAYS be a need for written or printed hard copies, and to quote a tom clancy character, "if its not written down, it never happened" People like to feel, and a paperless environment has no soul.