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Recovery and the tough road ahead

Jun 1, 2009 12:00 AM

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Speaking at a recent users group meeting, Andy Paparozzi confirmed what most of us have long suspected: It's never been tougher to be a printer. Paparozzi, vice president and chief economist for NAPL, reported that industry total sales are down 14.5 percent for the first three months of the year — the steepest decline on record.

On the bright side, the economy might have bottomed out. Stimulus efforts (“massive global and unprecedented,” according to the economist) are starting to take root. But Paparozzi stopped well short of belting out a chorus of “Happy Days are Here Again.” “The recession's end only means the contraction has stopped,” he cautioned. “Recovery can take many shapes. It will be painfully slow at first because our economic problems are that deep and complex. We won't go from bust to boom.”

Rather than just cutting costs, freezing investments and hoping to hang on, Paparozzi urged printers to prepare for recovery by fighting recession fatigue. “Recession wears us down,” he explained. “When you are distracted, fearful and confused, it's hard to do your best work.”

Take care of your employees

One of the best things management can do in these difficult times is to recognize and reward employees. “Make [these efforts] public and personal,” urged Paparozzi. Meaningful rewards don't necessarily have to be monetary. Training is an excellent way to show employees you value their contribution and are interested in their professional development. And even a modest gift card for coffee, gas or a retail outlet can boost morale.

Although some managers may avoid discussing the recession with employees, honesty is the best policy. “Candid discussion reassures employees that management is on top of things,” he said. “As [former chairman and CEO of Cadmus] Wallace Stettinius observed, when it comes to employee communications, the truth is seldom as dangerous as the rumor.”

Recovery shouldn't be confused with restoration. The good old days aren't coming back. “The industry isn't being changed, it's being redefined,” said Paparozzi. “It's an historic opportunity for those who are prepared and a profound threat for the unprepared.”

Since 1998, the U.S. printing industry has lost 8,000 establishments, a decline of nearly 21.9 percent. Some printers are playing a waiting game, convinced if they can just outlast their competitors, all will be well. But complacency is a luxury no printer can afford.

For years, Paparozzi has urged printers to redefine themselves. “We are in the communications business, not the ink-on-paper business. The defining opportunity is helping our customers [solve their communication challenges].”

Cruelest month for Anderson Litho and EPI

April 15, 2009, was an unhappy day for two well known printing companies that closed practically without warning. Cenveo shuttered its Anderson Lithograph facility and merged its business with its ColorGraphics plant. Cenveo hasn't issued a statement or responded to phone calls. A letter reportedly sent to customers is the only official communication to date.

A prominent Georgia printer, The EPI Companies, also shut its doors on April 15. This printer was lauded for its proactive diversification strategy — it wasn't an “old guard” firm. To date, no official statement has been released. According to the Hays Financial Consulting website ( “The EPI Companies was one of the largest commercial printers in the Southeast and at one time had over 300 employees. After losing its largest customer, Home Depot Expo, the company could no longer sustain operations.”

Neither company was under its original ownership. If you are thinking of buying another company, remember what consultant Bob Rosen has often said: “[Successful acquiring companies] go far beyond just changing the names on the stock certificates. They're combining operations to build on shared strengths while squeezing out extra costs and reducing excess capacity. However, in all too many cases, these deals don't result in meaningful operating changes. The deals weren't bad ideas, but the disappointment shouldn't be a surprise. After all, unless a deal meaningfully reduces costs, increases sales and makes the new company better able to meet customer needs, then why should anyone expect it to improve results and create value?”

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