When to call it a day - magazine article

You are either in the business or out of it and so, in a time when we have never seen such change as is currently afoot, Andy McCourt looks at reasons why some printing firms should consider going quietly whilst others should fight like hell.

I had the privilege of sitting on one of the Print21 Action Agenda workgroups in 1999 and 2000 and one of the most 'edgy' activities was the scenario planning. Imaginary scenarios based on a series of 'what ifs' were played out looking 5, 10 and 15 years into the future. One thing for sure, the scenario of fewer printing companies serving a static or receding print market is proving true.

But how does the industry arrive at 'fewer printing companies?' Are we expected to see firms voluntarily closing their doors for the 'greater good' of what we know as 'the industry?' Click on Printing Industries' website and then 'About Print 21' and the first thing you see is 'Exit strategies.' Think about this. An industry association actively promulgating methods of exiting the industry it serves; and thereby reducing its membership. But is this wrong? I don't think so. It's a frank admission that times have changed and that some operations will have to exit in one way or another.

A bitter pill for all
It is a bitter pill to swallow for both printers and association. Parallels could be drawn with the Titanic; there are not enough lifeboats - who qualifies to be saved? The analogy must stop there. Unlike the Titanic, the printing industry is not about to sink, but the vessel is changing its floatation dynamics at a rate of knots. Clearly visible in this melee is the role of private equity companies. They have swallowed up dozens of formerly independent family-run printing firms and are in the process of corporatising them into Geons and Blue Stars. On a smaller scale, firms such as Pegasus and even medium-sized metropolitan printers are on the lookout for takeover targets that fit the bill. That the acquired companies have fulfilled their exit strategies can be counted as a positive move for both them and the acquisitive entities.

Three things happen when an industry starts to consolidate. At the top end, costs are extracted, profits increase and investors get returns. However, the corporatisation tends to atrophy customer relationships at the small and medium scale. Good ole' Joe who ran the joint and worked the press when needed is no longer there.

The second thing that happens is the corporatised single-name entity loses its common touch. Big juicy customers get all the attention and, ironically, this leaves openings for the small-to-medium enterprises that remain in the game. These fiercely independent 'mongrels' pick up the cast-offs from the table and prosper. No offence intended.

The danger zones

The third thing that happens is that some businesses fit into neither category - they cannot be corporatised and they do not benefit from the nutritional egress thrown out by corporatisation. These are the ones that need to exit. It's time to call it a day when there is no succession plan in the printing business - no younger element ready and willing to take over.

It's time to call it a day when your gross profit margin slips below 55 per cent unless you are a print broker who does not have to pay for presses and other equipment.

It's time to call it a day when you have to refinance every piece of equipment in order to inject capital into an already under-capitalised business.

It's time to call it a day when the downward spiral of zero profits and high borrowings forces you to factor invoices or use debtor financing in order to stay afloat and pay wages.
It's time to call it a day when you are so busy working IN your business that you

have no time or inclination to work ON it. Things happen around you and, because you are at the coalface, you can't possibly see the above-ground warnings that portend closure of the mine.
Of course, it is all reversible; everything is. You can stop, take stock, make changes and turn around. Equally you can proceed exactly in the direction that got you where you are and end up where you were always going to end up. Choose change.

Not scary - just different
Don't be frightened by the current corporatisation of the printing industry - it had to happen and is indeed positive in an overall sense. Be part of it or be different but for goodness sake be something!

Certain businesses are not naturally conglomerate-friendly and I believe SME-targeted printing is one. It's like window-cleaning. The guy that cleans your windows is probably self-employed, or in a small company. I am not aware of an international conglomerate that dominates the global window-cleaning sector, perhaps with a name like 'Fenestrex' or 'Glasscom.'

Unless of course you are thinking of the other windows; the non-looking-through kind; the kind that runs 90 percent of the world's computers; the one that we love to use but regularly curse because of its foibles.
Now there may be a sound reason for de-corporatisation. Maybe even calling it a day.

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