Printer’s Devil – it’s in the detail

Standard formats stifling innovation?

2008-11-20T12:10:00Z

Do print management companies stifle innovation? Discuss.

This was a point that came up at the recent Vision in Print conference, where GI Solutions' Robin Welch spoke compellingly about his company's strategy of continuous innovation. "We're an innovative business" is one of those phrases parroted by pretty much everybody these days, but few companies truly manage it. GI has adopted a structured approach towards being innovative, and although this might sound like a contradiction in terms it really does seem to work.

However, Welch and his team find themselves at odds with print managers, because GI's mission is to come up with creative products that others can't produce, and which set the firm apart from the pack. In turn this provides clients with a point of differentiation. But all-too-often direct marketing work that is specified through print managers needs to fit into some sort of standard matrix that can be sent out to X number of print suppliers in order to get the best quote. Hence products become standardised, and creativity goes down the pan. If it's true that response rates are suffering as a result, Welch's mission to move up the food chain with clients might become a little easier.

See www.creativeformats.com for some of the ideas Welch and his team have brought to fruition.

I'm referring specifically to DM here, as I just read with interest the news about how Charterhouse has instigated a new "refreshable" point-of-sale system at T-Mobile using self-adhesive overlays. This is more environmentally sound than the previous system and also involves saving of circa £600,000. Very clever.

Paper: an increasingly precious commodity

2008-11-19T12:42:00Z

Paper prices are a hot topic right now, as publishers and printers grapple with the implications of having to pay rather more for this fundamental commodity.

As a result, I'm sure we will see more closures of marginal magazine titles, and there will be reductions in page formats, paginations and print runs, while other products may well move online. Many publishers have contracted prices that expire at the end of the year, after which some tough budget reviews will undoubtedly be taking place.

This thorny topic was addressed by M-real's Andrew Gunman at the PPA Production Conference last week, where he acknowledged that paper prices that are too high will "kill the goose that lays the golden egg", and of course paper companies don't want that. And given the economic bloodbath we're in the midst of it's a less than ideal time to be raising prices.

But the fact is, the paper companies have to get their house in order. Looking at the roll-call of mill closures the figures are jaw-dropping. Capacity in coated magazine and fine paper in Europe has been reduced by some 3.3m tonnes, or 15% apiece. M-real alone has taken out more than 1m tonnes of capacity. And when these guys close a mill they are effectively closing a whole town, so the enormity of the decisions being made to achieve some semblance of supply/demand balance cannot be underestimated.

In the UK we now have just one major mill producing publication papers, UPM's Caledonian Paper. I worry that as an import market we will be at a disadvantage against our continental colleagues - just look what's happening with gas. Forward planning regarding required tonnages must be high on the "to do" list of those charged with securing paper supply - that single mill strategy might not work in the future.

The paper industry has been in recession for seven years or more, and publishers and printers have benefited from advantageous pricing as a result. But after the big party comes the big hangover. At the same conference IPC Media manufacturing director Jasper Scott stated that he'd had to tell his board that he wasn't going to be able to deliver the price reductions they'd previously enjoyed.

So what is a reasonable price for magazine paper? Gunman was prepared to put his head above the parapet with a price that would allow his company to pay a dividend and make appropriate investments in R&D, and that would be circa £660/tonne. Something to plug into that spreadsheet, perhaps.

Hefty HBOS pack provides short-term boost

2008-11-18T12:23:00Z

The great day is here and my Lloyds TSB/HBOS offer documents have arrived. The pack is, as predicted, a whopper. The scheme document is 352pp plus covers. Also included is a 16pp Q&A, a 4pp voting form, and a pre-paid envelope. The whole polybagged lot weighs in at getting on for a kilo. Ooof. Poor postie.

Imprima, via BGP, has been keeping quite a few presses turning up and down the country with this little lot. Given the size of the mailout, as HBOS has more than two million shareholders, some may still be turning as I type. It's a tiny glimmer of high margin work amid the many dark days we're living through at present.

BGP: friends in high places?

2008-11-17T12:10:00Z

Following the comment trail on the BGP "sustainable pricing" story over the past few days has been both enjoyable and illuminating. I'm just a bit disappointed that there has been no contribution on the matter thus far from BPIF chief executive Michael Johnson.

Why? At the Printers' Charitable Corporation annual charity lunch a couple of weeks ago Michael was ever so keen to talk to me about BGP, and to inform me that I'd got it all wrong in my rather sceptical view about the firm's modus operandi and its somewhat curious financial relationship with chairman John Madejski. See my earlier post here, for the back story to this encounter.

Anyhow, Michael's enthusiasm stemmed from a recent visit to Bicester, during which he spent a fair few hours with the management team and had a good look around the plant. He emerged very impressed indeed. If he's correct in his assertion that "nobody pulls the wool over my eyes" then I'm sure he could provide a useful perspective on the current BGP-centred debate, because he must have picked up on some finer points of the business plan that I have been too stupid to appreciate. So come on Michael, don't be shy. Let's hear it.

Meanwhile, the BGP firestorm put me in mind of something I heard the other day: "what's the definition of insanity? Doing the same thing over and over again but expecting a different result".

BGP beyond belief

2008-11-14T12:52:00Z

Jonathan Ross, he of the notorious potty-mouth, has a new book out. Its title is "Why do I say these things?". To my mind this would be an appropriate caption for Bob Caley's picture on the story where he proclaims that BGP is the only UK magazine printer with a sustainable business model.

Oh my sides! This is patently laughable. I can't help wondering if the multi-millionaire who's picking up the tab for this oh-so brilliant business model is laughing at his vanishing millions? Somehow I doubt it.

No doubt Caley's aim was to be deliberately provocative and he's surely achieved this judging by the comment trail on the story.

I'm currently more interested in the sustainability of the current management team, quite apart from the business itself. What progress is Geoff Hughes making in his new mission to turn Bicester around, and sharpish, I wonder? And why bring him in if everything is going so swimmingly?

FT flying the flag for savvy spending

2008-11-12T17:24:00Z

Readers in the London area may have noticed a clever Financial Times advertising campaign that recently appeared on billboards in the capital. The billboards look like they have been stripped of their posters, leaving behind fragments of poster paper and paste. In one corner there's a small area in the FT's trademark salmon saying "Global downturn. What's the first mistake businesses make?" The copy directs us online to find out more at www.ft.com/budgets.

No matter whereabouts in the country you're located it's worth having a look at this microsite, as it contains a wealth of information that provides useful ammunition for client discussions during these recessionary times. The upshot of the FT's campaign is this: businesses that make knee-jerk decisions to cut advertising and marketing spend during a downturn are making a potentially disastrous mistake. Naturally, the FT is also plugging the benefits of advertising in its own products, but that doesn't diminish the relevance of the message.

The pink 'un has pulled together research into downturns going back 90 years (yes, 90), showing that firms that keep up promotional activity when the going gets tough are the ones that subsequently thrive when the economy picks up again. Who, for example, has heard of Post breakfast cereals? Apparently they were right up there with Kellogg's before the depression of the 1930s. Kellogg's maintained its marketing spend, and Post did not. The rest, as they say, is history.

Similar examples, and the other stats pulled together by the FT, will be helpful for print service providers who want to be on the front foot in their next client meeting. Now, more than ever, businesses need to keep on selling things and print has a proven track record of efficacy in this regard.

Would others have bid for Biddles?

2008-11-11T12:43:00Z

Absolutely intrigued by the Biddles buy-out story, which at the moment raises more questions than it answers. Another pre-pack deal, but this time the buyer is a third party, not the existing management. Does this mean it will be greeted with more approbation than other pre-packs of late? I guess that will depend upon the value of the debt that has been dumped, and how badly burned its suppliers are.

The other interesting aspect is whether the sale of the Biddles assets to newly-formed MPG Biddles will get anywhere near meeting said liabilities. It raises one of the (many) issues attached to pre-packs, which is the lack of visibility - might AN Other book printer have offered more for the assets if they'd known it was for sale debt-free and had the opportunity to put a bid in themselves? We will never know.

I must emphasise that I don't think that all pre-pack deals are automatically bad, just as not all CVA deals are bad - I was recently talking to a director whose company had experienced cashflow problems after being hit with a series of unexpected knocks that were beyond its control. A CVA deal was agreed and stuck to, creditors were paid off, and the firm emerged a stronger and better-run business as a result. Unfortunately such outcomes seem to be the exception, rather than the rule.

What is certain is that we will see more and more of these pre-pack deals. At the Vision in Print conference last week several delegates commented on the fact that it is now commonplace for business owners to be proactively contacted by financial practitioners offering to make all their problems go away by setting up a nice pre-pack deal. Which then, of course, becomes someone else's problem.

Lastly, as Biddles has been loss-making for years I assume Tony Chard and his team are equipped with some of those special underpants to be worn over trousers.

BSkyB decision is an issue in itself

2008-11-10T08:34:00Z

Something that's been contributing to my frown lines in recent weeks is BSkyB's decision to cut the frequency of its customer magazines from 12 issues a year to ten. This was announced back in the summer but didn't get that much coverage at the time.

The titles include the top three customer magazines in the UK: Skymag, Sky Sports Magazine, and Sky Movies Magazine. These have circulations of 7.4m, 4.4m, and 3.6m respectively. The other title affected, Sky Kids, is a bit further down the ABC's list of leading consumer magazines, but still involves over 760,000 copies a month. Hardly small beer.

The move is part of a cost-saving exercise that also involves standardising the formats of all four magazines at 237x190mm. So far, so understandable. I'm sure the paper savings alone on the change of trim size and reduced number of issues will be substantial, let alone the mailing costs.

However, surely this reduction in frequency has the potential to be deeply problematic from a printer's point-of-view. In one fell swoop BSkyB has cut its annual print production requirement by more than 32 million magazines, which is a hell of a lot of print whichever way you look at it.

Customer: Would you like a contract to print my magazines? I need loads of them.

Printer: Oh, yes please.

Customer, some time later: Actually, we've changed our minds and we don't want them every month anymore. In fact, there'll be a couple of months where we don't want any at all.

Printer: Errrmm....

While I imagine this change will be an interesting test of a print supplier's (in this case Prinovis) ability to "flex", to use the trendy parlance, its manufacturing platform and staff resources it sounds like a potential nightmare to me - especially if other customer publishers think this looks like a good wheeze and decide to follow suit.

As one print boss (for the record, not someone connected with any of the titles mentioned above) commented to me recently when we were discussing this conundrum: "I would be reluctant to take on a contract that stands the factory for two months".

Progress in the war against e-tosh

2008-11-07T10:51:00Z

Following my rant last month regarding misleading weasel words about "saving trees" by sending e-cards, I did get in touch with Envirowise to register a complaint about the organisation's current e-card campaign.

I've received the response below, and see a glimmer of hope for a reduction in such disingenuous promos in the future.

"Thank you for your feedback regarding our Christmas e-card campaign. We appreciate your comments concerning the promotional text for our e-card campaign and we should like to reassure you that our intention is not to mislead. By promoting our e-cards we aim to raise awareness of how Envirowise can help organisations use resources more efficiently, benefiting both the environment and the balance sheet. Based on your comments, we are considering our messaging and will review our promotional text for future campaigns."

Remember, comrades, it's up to us all to stamp on the misinformers who besmirch the name of print, so please protest if you see companies or organisations espousing similar environmental flannel.

The GQ feel-good factor

2008-11-05T12:44:00Z

I struggled home last night under the weight of the bumper December issue of GQ, wondering why there never seems to be a native bearer in sight when you need one.

Magazines for the dapper and style-conscious man about town are not a regular read at Francis Towers, as evidenced by the fact that the man of said household exclaimed "Gah! Poor fella, look at the state of his stomach" when he caught sight of the rippling torso adorning the Calvin Klein ad on the back cover. This explains why I had to go out and buy my own copy.

This epic 20^th anniversary edition weighs more than 1.6kg, is the best part of 600 pages in extent, and is stuffed full of ads and inserts. Its dimensions are more akin to a telephone directory of old, or the Littlewoods catalogue. The spine is more than 20mm. It must be trebles all round in the Condé Nast commercial department.

The publisher is of course renowned for attention to detail anyway, but I imagine the planning that went into this issue must have been extra-meticulous. Just thinking about the flatplan makes me feel quite dizzy.

It helps, of course, when you have fantastic content and photography, and Wyndeham Prepress has done a great job on the repro. Nice choice to put Goldenballs himself on the cover, with, appropriately enough, a gold MetalFX effect. Lovely job by St Ives Roche. The text pages are beautifully printed at St Ives Plymouth, and I'm sure Stora Enso will have been delighted by the extra tonnage of NovaPress required for this monster. I had imagined that binding this behemoth would have been a multi-part effort taking weeks and weeks, and was amazed to learn that Plymouth was actually able to do it in one pass on its massive 31-station Muller Martini Corona. Perhaps not quite at top speed... but in one pass. I just picked the whole magazine up by one page - an unreasonable thing to do, I know - but it held.

What's more, the reading pleasure a magazine like this delivers could not possibly be replicated on the internet or on some sort of digital device - just one example being the terrific fold-out section in the centre celebrating 20 years of iconic covers. Turns out that my ultimate boss, Michael Heseltine, was the mag's first cover star - cool! Also interested to see that the masthead hasn't changed in 20 years either, this is pretty unusual in the world of magazines.

Whether this is the biggest consumer magazine ever seen on these isles I don't know - perhaps there's been a bigger Vogue? Record-breaking or not, it's truly something to savour and I will be reading it for weeks. It's a fantastic example of why magazines are far less vulnerable to online substitution than some other print media. At £3.90, it's also a snip and well worth four quid of anyone's money.

It really is a thing of beauty and I hope that everyone involved in its creation is justly proud of the end result. A huge 'rah to you all.

All eyes on what happens next in Tewkesbury

2008-11-03T17:04:00Z

From where I sit it seems pretty amazing that Pindar has managed to get a deal for Cooper Clegg away just a month (pretty much) after putting the business up for sale, especially as plenty of people were of the opinion that no buyer would be found. Rivals hoping to see capacity taken out of the market are dejected that that hasn't turned out to be the case.

So far, so interesting, and putting aside for now any understandable curiosity about the composition of the BIMBO team that has bought the firm, and their backers, we will now swiftly move on to the next interesting thing which is what happens next. All the vibes are that Cooper Clegg will lose its Bauer Consumer Media work. The Condé Nast titles are, apparently, up for tender too. However, recent events have demonstrated that there are no easy decisions at the moment for publishers looking to review their rosters.

When I look at the magazine web offset sector it seems that on one hand we could be on the cusp of some major structural changes that would involve high-profile casualties... or on the other there'll be lots of huffing and puffing but everything will stay pretty much as it is. Buyers will be acutely aware of the power they wield and their responsibilities (as the NJP saga demonstrated, nobody wants to deliver the fatal blow to a long-standing supplier) and the potential for career-limiting decisions as they attempt to second-guess the market while ensuring continuity of supply.

The criticism most often levelled at Cooper Clegg was that it needed to reinvest in the larger format 64/72pp web presses that have become standard issue in rival press halls up and down the country. Putting aside the minor point that the people who have invested millions in said presses aren't exactly rolling in gold, the Tewkesbury presses at - what - fifteen years old? must indeed be a bit tired now. But let's look at what the company has going for it in its current setup. It produces work for extremely demanding clients, and it has a highly-skilled workforce. It can not only print this work, but it can finish it too - funny how often this area is overlooked. I'm sure there are plenty of people who could print, say, Easy Living or Sainsbury's magazine. But how many have the bindery capabilities or capacity to finish the job too? Last but certainly not least, it has two short cut-off webs. These presses have been the business's salvation for some years, and with paper prices on the up and everyone very focused on paper costs at the moment they still have considerable appeal to print buyers. Maybe the way forward for Cooper Clegg is to shut down some of its old long-format capacity and focus on what it hasn't got, in the shape of those extra millimetres that add up to thousands of pounds of paper waste.

Will housewives' choice mean price rises for Japanese kit?

2008-10-31T12:02:00Z

Japanese housewives, apparently, hold the key to the future competitiveness of the country's exporters. It's all to do with the so-called "carry trade" in the Japanese yen, and the fact that Japan's vast savings pot (some $15,000bn according to the Financial Times, a whopping amount by any measure) has traditionally controlled by the nation's women. With Japanese interest rates at rock-bottom for years and years, savers have put their money into foreign currencies in order to gain better returns.

The global market turmoil has seen an unwinding of these carry trade positions, and the yen has soared to such an extent that even the G7 has expressed concern about the currency's volatility. Today Japan's interest rate was cut for the first time in seven years, to 0.3% from 0.5%. In Japanese terms, this was a pretty momentous move.

Why do we care? The yen recently reached a 13-year high against the dollar. Although it has slipped back a bit since, it is still at a level that will make life more challenging for Japanese printing equipment manufacturers who have benefited from setting their pricing using a far more advantageous exchange rate for a decade or more. All of which, I imagine, will be music to the ears of eurozone manufacturers who've been tussling with £/€ exchange rate issues of their own.

Hope for SMEs battling with intransigent banks

2008-10-30T11:27:00Z

Listening to chancellor Alistair Darling being interviewed this morning, it seems as if some progress is being made following the prime minister's pledge three weeks ago that he would "insist" on banks providing support to small- and medium-sized businesses on normal terms during the extremely abnormal times we're living through.

The wheels are being oiled and UK banks can now get their hands on some £4bn of additional funding from the European Investment Bank, meaning a much bigger pool of cash is on tap. The idea is this will effectively restore the amount of money available to what it was last year, before the world went mad. Darling pledged that the funds will be accessible "very quickly", and he's meeting with bank bosses later today to discuss it all.

Meanwhile, business secretary Peter Mandelson has been charged with setting up a group with small business representatives and banks to ensure this all happens as envisaged. Will be interesting to see who sits on that. No doubt he, Darling and Gordon Brown are acutely aware of the political disaster in prospect if thousands of small businesses fail over the next few months. The Federation of Small Businesses reports that 40 firms a day are going under at present.

Of course, these measures won't mean that if a company is a complete basket case the banks will bail it out just to be nice. But it should mean that banks can take a more normal view when it comes to extending finance facilities to SMEs. "The money is available now, on advantageous terms. It is in no-one's interest that businesses go down because banks refuse to lend them money. If it is a good business prospect they ought to listen to them with a sympathetic ear", stated Darling this very morning. Whether it means recent controversial increases in overdraft fees and lending terms are revoked, I don't know. It would be nice to think that could happen too.

So, dear PrintWeek readers, I wish you fruitful conversations with your lenders. And if it turns out they are ignoring Alistair's urgings, please get in touch.

Hard to see how Heidelberg can afford job security in Germany

2008-10-28T15:09:00Z

I know we're living in crazy times, but have you seen Heidelberg's share price? It's down at €6.69 as I type, and has recently descended to a new ten-year low of €6.64. A year ago the stock was at €29, and just two years ago the company spent the best part of €140m on a share buyback at an average price per share of €33.42. Ouch.

Heidelberg is stuck between a rock and a hard place, with massive fixed costs (I don't think foundries come terribly cheap) and a double-digit drop-off in sales as customers cancel or postpone their heavy metal investments in the face of economic uncertainty and difficulties finding finance. The other issue being a switch in spend to the type of printing kit that Heidelberg doesn't actually sell. Here on the small island, the strengthening of the euro against the pound has also adversely impacted on sales. The same is, of course, true for fellow German press manufacturers Manroland and KBA, but for whatever reason Heidelberg is bearing the brunt of the financial market backlash.

The group will announce its half-year figures on 6 November, together with a full forecast for the financial year. In its latest statement Heidelberg said that its agreed package of cost-cutting measures "... will be expanded according to the economic development". Looking at the recent announcement from Xerox and the thousands of jobs that will go worldwide there, it's hard to believe that Heidelberg will be able to sustain "the no job losses in Germany" measures agreed in the summer of 2007. This formed part of the group's arrangement with its workforce about safeguarding the future, which was set to run until 2012. The world is a very different place today.

Catalogues demonstrate power of print

2008-10-27T11:19:00Z

I am awash with catalogues. Two more have just arrived in the post this morning, from The White Company and The Cotswold Company. I have catalogues offering gifts for him, gifts for her, nature gifts, charity at home, charity abroad, museum gifts, Christmas cards a-plenty, clothes, things to beautify the home for Christmas (Lakeland has even managed to make cleaning the oven look like a jolly task), silly stuff, techie stuff, kids stuff, traditional stuff, beauty stuff, ethnic stuff, gardening stuff, eco stuff, jigsaws, food, booze and of course the granddaddy of them all, the Boots Christmas Catalogue. In fact just about the only seasonal item I don't have a catalogue for is indigestion remedies. If I get my act together, I'll be able to complete all my Christmas shopping from the comfort of the settee.

In true print anorak style, I've been paying attention to what's been landing on my doormat and falling out of magazines and the weekend newspapers. The most ubiquitous catalogues in the Francis household thus far are Gifts for the Girls and Presents for Men, from Devon-based M&G Presents. Would love to know what the print run has been on those, and can but hope that the catalogues have been printed here, rather than trucked in from the continent.

I'm encouraged that, despite the rise of the e-tailer and the ever-increasing shift of adspend online, getting products into someone's hands via a tactile medium remains a powerful sales tool. The "flick-to-click" model whereby consumers are spurred into ordering online after receiving a catalogue would seem to be generating a suitably acceptable response. And with a printed catalogue the products are still accessible to those consumers who are unable or uncomfortable about ordering online, and prefer phone or post.

While catalogues nowadays may be smaller in format or pagination, there are more of them. I receive a lot of email marketing from brands that also send out catalogues, but only a handful of companies eschew print altogether in favour of an online strategy alone. Do hope they remain in the minority.