Postie holds the key to more accurate mailing

To my mind, the only thing that can prevent digital print from the same commodity-based fate of litho is its effective use of customer data – AKA personalisation.

That’s a belief I clearly share with Snowball’s David Rolfe. But reading his comment piece got me thinking, slightly tangentially admitted, about something I saw last week.

Next to PrintWeek Towers in Hammersmith there are three empty houses, presumably owned by an opportunistic property developer waiting for the turnaround in the housing market.

I say that they’re empty because these houses have been boarded up and metal grills have been added to the ground floor windows and front door, making it pretty clear to even the most casual observer (ie me) that the houses are unoccupied.
Equally, the fact that the letterboxes of all three houses are jammed with takeaway restaurant menus and all manner of flyers strongly suggests that the residents are long gone.

So I was more than a little surprised to see a post woman walk up to the door of one of these properties, remove a handful of flyers to make some room, and then squeeze in a couple of letters – which were still more out than in the letterbox.
Overcome with curiosity, I had a closer look and lo and behold they were a couple of relatively expensive-looking targeted mailshots, one from a credit card company and the other from a car manufacturer.

Now, I’m no expert on the Royal Mail charter, so I’m not sure if this was an isolated case of a postie having a bad day, or a policy of Royal Mail that all post has to be delivered, but I suspect the latter.

Which begs two questions: firstly, couldn’t the Royal Mail staff be allowed to use their initiative and ‘return to sender’ any post addressed to clearly deserted properties? And secondly, couldn’t the Royal Mail, using feedback from it’s frontline troops, keep records of all empty houses and sell that data to mailing houses so that they can clean up their records?

After all, the real value in digital print is in the data so anything that reduces waste and increases response rates has to be good.

Digital kit boom belies transpromo’s take-up

About a year ago, I wrote a comment in the magazine questioning whether transpromo was really the ‘next big thing’ in direct mail or just a great idea that was in danger of not being realised.

The reason I thought the latter was, quite simply, cost. I didn’t think that financial institutions would be prepared to put their money where there mouths were and stump up for all-singing, all-dancing digitally printed full-colour statements.

However, what I hadn’t reckoned on was that many banks and credit card companies were already using transpromo. They just weren’t necessarily opting for full-colour implementations of the idea – opting for the more cost-effective mono versions instead.

After all, most transactional mailings are simply litho documents with digitally overprinted personalised mono text. And the mono technology employed is more than capable of producing personalised promotional messages.

Obviously there’s the small matter of getting the data handling right – ensuring that the right message and right offers go to the recipient – but as far the application of the print goes, it’s a doddle and mass adoption of transpromo is already here.
The fact that mono was leading the way is hardly surprising (although obviously it slipped past my radar last summer) and it can only be a good sign for the adoption of full colour transpromo when the financial services market starts to recover.
I suppose the only question is not ‘if’ full-colour transpromo will become a mass market reality, but ‘when’.

Obviously there’s always a danger in investing in technology to support a market that hasn’t really taken off yet, but I imagine that is being offset in most cases by the greater fear of being left behind, which could potentially lead to an even larger problem, and one that the industry is all too familiar with – overcapacity.

Surely it’s a concern that with so much digital capacity being installed to cater for the pending boom in colour transpromo, that the by the time it happens rather than being a highly lucrative value-add it could end up being a commodity.

Of course, being once bitten, twice shy I wait (and hope) to be proven wrong again.

Academy must deliver on ambitious promises

Below is a transcript of a discussion on printweek.com relating to the launch of Proskills National Skills Academy (NSA).
The questions were posed by user ‘Charles Hampshire’ and the answers/opinion by the well-informed stalwart poster ‘NDCT’.

CH: Oh my word. Another quango. What was wrong with Proskills?
NDCT: It has failed to do anything useful.

CH: Why do we need a virtual academy?
NDCT: We don’t.

CH: Who is going to pay for it?
NDCT: You are.

CH: Does that mean we have to go through NSAMPS [NSA] to get training for our staff?
NDCT: No. Find a successful independent trainer, not one that needs to be propped up by the taxpayer.

CH: Surely the best route is through our trade Associations, BSGA, PRISM, BPIF etc?
NDCT: No. See previous answer.

CH: What value does NSAMPS [NSA] add to the training offering to our industry?
NDCT: None.

CH: Will it or the Sector Skills Councils survive the inevitable cutbacks?
NDCT: Hopefully not.

While I don’t agree with many of the points made by NDCT, I fear that he speaks for most small print firms, who after all make up the bulk of the industry. PrintWeek has and will continue to support Proskills. However, describing the NSA as ‘virtual academy’ and a ‘training gateway’ may make it sound very impressive, but it doesn’t really explain what its going to do or how it’s going to run, and if it’s really going to work then the people that the NSA is designed to help need that most basic of information.

If the NSA is to succeed in terms of delivering tangible results and becoming self-funding, then Proskills has a massive task ahead to win the hearts and minds of SME printers. I just hope that it and we as an industry are up to the challenge.

Offsetting schemes will not help save the earth

Carbon offsetting is the Marmite of the environmental world – you either love it or hate it – as illustrated in our feature on the subject.

Personally I’m in the latter camp (although I am quite partial to Marmite). I don’t really see the benefit of going to all the trouble of auditing your carbon output, only to then buy ‘credits’ to offset them – surely that is the dictionary definition of chequebook environmentalism?

I’m sure that after the consultants have taken their cut that some of the money generated by these schemes does help support environmental schemes across the globe. However, if the measure of success, as it should be, is a reduction in the amount of carbon being released in to the atmosphere then a more holistic approach would be to actually cut the carbon being released at source in the first place.

Rightly or wrongly, the environment is a powerful marketing tool and it’s all too easy to disguise the size of your carbon footprint. That may tick a few of the client’s CSR boxes, but what is the real long-term benefit to your company or the environment?

Surely working to reduce your footprint makes the most sense, in both business and ecological terms, because not only does it save you money in terms of reducing waste, using less energy and generally running a leaner operation, but the reduction in carbon produced has a direct impact on the environment. By that I mean for every tonne you save, a tonne less is released into the atmosphere – simple.

Conversely, by offsetting your carbon you’re effectively paying someone else to clean up your mess. And for every tonne you ‘buy’, who’s to say how much the projects involved will reduce their carbon emissions by? To be fair it could be more, but the cynic in me says it will probably be less.

Equally, offsetting hardly encourages individual responsibility, and surely we all have to burden our share of that if we really are going to make a collective difference.

But before I toss the FSC-certified logs on the campfire, get out the guitar and start the opening bars of Kumbaya, my overriding problem is that offsetting just doesn’t make fiscal sense as it doesn’t benefit the company involved. Simply put, saving the planet shouldn’t have to cost the earth.

Pre-packs: defending the seemingly indefensible

In this week’s issue of PrintWeek Carl Jackson, national head of insolvency firm Tenon Recovery, mounted a defence of pre-pack administration deals.

While it’s easy to damn pre-packs out of hand, as many of you reading this probably do, I’m sure there are a handful of cases where they do offer the best solution for all concerned.

However, I don’t agree with many of the points that Jackson makes and I believe that, in the current climate, the negatives of pre-packs far outweigh the positives.

The argument that they can be good for workers, who will benefit from continued employment, seems flawed to me – certainly based on anecdotal evidence in our industry at least. The number of pre-packs that subsequently fail again, HS Printers, Buckleys, and Scorpio to name just three high-profile cases, clearly illustrate the point.

Equally, the justification that pre-pack administrations can stall the ‘domino effect’ of a company failing doesn’t really ring true either. While the demise of small trade printers and finishers as a direct result of a larger company pre-packing often goes unnoticed, we know it happens and I doubt there’s a UK printer that couldn’t cite an example.

Jackson also mentions that it’s the duty of an insolvency practitioner (IP) to assess whether a turnaround is possible for the afflicted firm before a pre-pack is signed off.

I wholeheartedly agree with that point, but the sad truth is that in many cases I’m sure it would be possible, purely because the company has conveniently jettisoned its debt and in a (unfortunately) largely commodity-driven market the subsequent pricing advantage will no doubt help secure its future, at least in the short term.

More importantly, I think the IP should look at the market that the afflicted firm works in. And if, as is so often the case, the resurrection of the failed company will only secure its jobs and a nominal payout to its creditors, at the risk of other companies going under and potentially even more staff and creditors losing out, then there’s a strong argument that they should just let it die.

In the current climate, it’s in the interests of the industry for the vast majority of failed businesses to stay dead and give those left a fighting chance of survival.

Facing up to need the for rationalisation

In one of its recent members’ bulletins, Unite warned of an increase in print businesses looking to make pay cuts.

A phrase involving a certain iconic sleuth with a penchant for deerstalker hats and pipes springs to mind.

The union’s concern is that unscrupulous employers are using the threat of job cuts to force through changes to pay and conditions.

Personally I don’t think scruples come into it. Right now pay cuts seem to be about commercial realities.

To be fair to the union, in its advice to workers it does say that “some employers face genuine difficulty and are seeking cuts as the only alternative to redundancies”.

However, the statement would be closer to the truth if the word ‘some’ was replaced with ‘most’. I don’t doubt that there are a handful of companies pushing though unnecessary cuts or pay freezes – but you could probably count them on one hand.

The sad truth is that in the current unique environment, a previously solid company could easily be brought down by a ‘perfect storm’ of a combination of credit insurance being pulled or reduced, credit finance being withdrawn, the reduction in the amount a company can draw on factored invoices, being forced to compete at unsustainable prices or plain old bad debt. So moves by employers to reduce staff costs or increase productivity aren’t likely to be a back door way to increase profits, instead they’re probably a necessity for survival in the face of weakening cash flow.

The fact that companies that fall into administration are increasingly staying dead rather than being reborn proves that overcapacity is still rife.

So measures taken by various companies, such as moving to a four-day week, reducing capacity by moth-balling presses or cutting headcount or salaries, while hardly welcome, are simple common sense.

At the time of writing, in the past seven days alone the number of print firms closing or calling in the administrators has reached double figures, which, from scanning through our archives, seems to be an unwelcome record.

And if that doesn’t highlight many print companies’ need for radical rationalisation, I’m not sure what does.

Giant merger puts both firms at risk of sinking

The need for consolidation in the UK web offset market is by and large accepted by all the major players, at least in terms of a way to reduce capacity.

However, the (understandable) problem is that no-one has the desire or inclination to spend a not-so small fortune on buying out a rival or rivals only to subsequently foot the bill of closing some sites to take out capacity for the greater good.

So it’s interesting to read some of the reports in the US following RR Donnelley’s bid for Quebecor World’s remaining operations, which on the face of it seems like a pretty good deal for the creditors, effectively matching Quebecor World’s own offering to them to take it out of Chapter 11 and then throwing in close to $400m (£261m) in RRD shares as a sweetener.

Interestingly in its letter to Quebecor it also transpires that RRD first made an approach to buy Quebecor last August, although the latter never replied, presumably it didn’t believe the offer was worthy of a response (it will be fascinating to see how that offer compared with the current $1.35bn bid).

There are a few hurdles to overcome before the deal to create a $11bn operation can come to fruition, not least the acquiescence of a frosty Quebecor board and the US and Canadian competition authorities.

Presumably RRD has tested the water with the latter bodies and is confident an accord can be achieved, and equally as far as the former group goes, surely the final decision will rest with the bankruptcy judge and creditors?

And I guess even if the deal doesn’t go through then, as one US industry commentator suggested, it could still be good news for RRD as it could raise the price of Quebecor to anyone else.

But assuming the deal goes through, will it be good news for US print operators that appear to be suffering from the same overcapacity concerns as their brethren this side of the pond, and is there a lesson for UK print in terms of consolidation?

I guess only time will tell, but with one US analyst comparing this deal to a merger between the Titanic and the Lusitania, then perhaps not. The suggestion being that the combined liabilities of two great sinking ships will only cause them to sink faster.

SMEs must get behind latest skills initiative

This recession will eventually be overcome. However, the same can’t be said of the print industry’s skills shortage, unless we take positive action.

So the joint approach by Unite, the BPIF and Proskills to skills minister Lord Young of Norwood Green to highlight the skills crisis in UK print was a definite step in the right direction. The fact that he offered to put his political clout behind the three organisations’ plan to launch an employers’ skills summit was equally welcome.

My only concern is that we’re going to face the same old problem – a barely luke-warm reception from the industry at large. Because if the summit turns to the same, albeit highly venerable, faces from the industry, agreeing that something needs to be done, the chances are that sadly nothing will be.

In the same way that employers of all sizes need to engage their workforce to implement any form of improvement in the day-to-day running of their business, the same is true of any industry-wide initiative. It needs the ‘buy-in’ of the industry at large.

And that’s the problem. The large firms that will no doubt fully support the summit, probably already offer impressive levels of training within their organisations, so they don’t need any convincing.

It’s small and medium-sized employers, who after all employ the vast majority of the industry’s workers, that need to get involved.

I’m sure that all the parties would agree that without the support of SMEs, any training initiative is dead in the water. And when the news is filled with job cuts, closures and general suffering, selling the idea of training to an already sceptical audience is difficult.

Don’t get me wrong, I wholeheartedly support this latest initiative and I agree that the recession is no excuse to push training even further down the agenda.

Equally, the problems of getting access to funding, of small companies finding the time to release staff for training and of getting the balance of the training content right, in terms of the respective needs of the employers and employees, are all problems that are in theory surmountable – if the industry pulls together.

But that’s the real problem: how to get the average print boss interested in training.

Printing firms can still turn a profit, honestly

A start-up and an MBO in the same issue of PrintWeek? Who would have thought it? It’s like a return to the heady days of 2007, when the Credit Crunch was just a glimmer in a few errant bankers’ eyes.

According to former AGI Media European managing director Andrew Scrimgeour, finance for mergers and acquisitions is available, for the right deals involving the right people – but unfortunately, anecdotally at least, this seems to be the exception rather than the rule.

Based on the same type of evidence, the government’s Enterprise Finance Guarantee and Working Capital schemes seem to be having little or no effect on freeing up lending to the print sector – hardly surprising when you consider that while on the one hand the banks are being encouraged to lend, on the other they’re being told to increase their cash reserves. The net result being that there seems to be very little evidence of the cash the government has injected into the banking sector trickling through to business.

But clearly there is some cause for optimism, as Scrimgeour’s MBO illustrates. Equally, the launch of Vertis on the old Goodman Baylis site by the latter’s founder and a number of industry big hitters is another cause for cheer. Although the cynic in me can’t help but wonder if the fact that Clive Parkes also owns the site meant that finance was not too much of an issue, even in the face of tumbling property values.

Equally refreshing was the profile of John Knight’s Anton Group – where the company’s respected chief executive talks about the importance of investing in the latest kit, which right now makes him the rarest of rare breeds.

So for any of you considering a move into printing counterfeit DVD covers and the substantial (presumably tax-free) profits that it appears to offer, after reading our story on the subject, don’t.

This week’s ‘good news’ stories hopefully go to prove that many industry stalwarts believe that there is still an honest buck to be made in print, even it’s not as easy as it may have been in days gone by. And with their combined experience, the chances are they’re right.

Silver lining for service in heavy metal fallout

If you’re a press manufacturer, last week seemed to be a time to bare the bad news. No less than three of the biggest – Goss, Heidelberg and KBA – announced substantial job cuts in the face of collapsing demand. In KBA’s case, the company’s president fell on his sword.

Any one of those announcements would have been big news in a normal week. Collectively, the news is positively seismic. The question is, how are these cuts going to affect the common or garden printer? On the face of it, the surprising answer seems to be hardly at all.

Chances are that most of the cuts – 2,500 at Heidelberg, 800 at KBA and the undisclosed (although presumably substantial) number at Goss – will be focused on sales, production and back-office functions.

So whereas the announcements, which all came in a 48-hour period, initially brought on a crescendo of gasps here at PrintWeek towers, looking at them pragmatically only a few days later, they barely warrant a shrug of the shoulders. At a time when print buyers’ spends are being slashed, the euro is whipping the pound’s behind and finance for capital expenditure seems to be rarer than hen’s teeth, it’s not surprising that fewer presses are being sold. The manufacturers have to cut their cloth accordingly.

Now, the single most important service a press manufacturer can offer a printer is, erm, service. It’s the most customer-facing of their operations, and one of the few cash-generative elements of a manufacturer’s business. In the face of all these cuts, service will presumably escape relatively unscathed.

Great news for printers, especially as many will continue to operate presses that in better times they would have replaced, leaving it to service engineers to keep them up and running. In fact, the cuts could also be good news for manufacturers over the long term. They will be forced to look at new business models, something more than hinted at by Heidelberg’s Jürgen Rautert in our exclusive interview.

The old adage that the ‘customer is king’ (or Der Kunde ist König) looks increasingly to become the manufacturers’ mantra.

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