Newsletter Archive: Book Printers and Publishers November 2022

Paper, People & Pricing: Book Printers Share their Strategies at thINK Ahead 2022

A highlight of every thINK Ahead Canon inkjet user conference is the opportunity to learn from other print providers who share the same challenges and goals. This year was no exception, with lots of conversations focusing on how companies are strategically responding to shifting realities and disruptions in the marketplace.

During a session for book manufacturers entitled Writing the Next Chapter on Revenue Growth, Kirby Mathias, a plant manager at Baker & Taylor Publishing Services; Joe Matthews, CEO of Independent Publishers Group; and Edward Jo, partner and chief operating officer of Entourage Yearbooks, shared some strategic moves they have taken to harness opportunity, overcome challenges, and drive organizational growth and profitability.

The Digital Imperative

Presenter Lisa Cross, principal analyst at NAPCO Research, solicited their thoughts on the general direction of the industry and their businesses in the past year. Unanimously, the panelists pointed to digital printing as an imperative for growth.

“Our growth has been strong for the last three years,” said Mathias. “What’s helping that? I think the simple fact that we already have a digital platform on our floor. We have inkjet technology—the whole Canon fleet including a new varioPRINT iX, upgraded software, everything that helps us out. We do traditional printing as well, but our growth, that's coming from digital.”

Jo reported a similar situation. Conceived as a next-generation company specializing in short runs of both printed and digital yearbooks while raising the bar on turnaround times and customer service, Entourage Yearbooks has been a totally digital operation right from the start. But, according to Jo, initially it didn't have in-house printing capabilities. “That soon changed,” said Jo, “because we had to print the jobs nobody else wanted to do—the ones that were too small or too fast.” The company currently has a 20,000 sq. ft. production facility—with a new Canon varioPRINT iX for printing photobooks or yearbooks—but outsources the lion’s share of yearbook production for its nearly 6,000 customers to other digital printing partners. Deciding to focus on digital printing technology has served Entourage well, especially in the current environment.

Unanimously, the panelists pointed to digital printing as an imperative for growth.

“During the pandemic, schools were actually closed, and we did take a little dip,” he said. “But it was a lot less than we thought. Yearbooks are a lot more resilient than we were thinking, and this year we're poised to hit almost triple-digit growth. A lot of buyers used to get their stuff done overseas, but now they're looking for alternate sources. Everybody wants a US solution in their back pocket. When that ship doesn't arrive on time, they want to turn on that digital switch.”

Matthews agreed that having a digital fallback was and continues to be “absolutely essential” for publishers. “We did have about a nine percent lift in book sales in 2021 and 2022, because everybody was stuck at home reading books,” he explained. “Now, our sales are a little bit down and we still have the supply chain problems. But circumstances continue to feed our digital print facility, which includes the Canon ColorStream for large volume runs. It is sort of the bright star in our portfolio of businesses because the demand is ever increasing. Availability is king now,” Matthews said

Dealing with the Challenges

During the session, Cross presented a range of questions about the forces impacting the panelists’ digital printing operations today and what they are doing about them. Paper, people, and pricing rose to the top of their lists. Here are summaries of some of their experiences and strategies for dealing with these issues.

Paper Shortages
MATHIAS: It's not the most creative idea, but we have strategically consolidated and prioritized our paper offerings. We created paper SKUs for available stocks and a graph of what stocks we were eliminating as a way of letting customers know their options. And it's been very beneficial. Instead of bringing in every stock under the sun, now we have an abundance of what works and what most people want. It's either or. They want the book, so they do it. And it's helped us very well on stacking up our paper in the background.

MATTHEWS: We also went around and found similar PPI papers that we might need to get if we ran out of our primary papers. And then, sure enough, supply chain disruptions. So, we would flip to these alternate stocks. And we didn't have to do too much adjusting the book file. As you know, production departments inside of publishing companies are notorious sticklers for certain qualities. But they've lost that fight because, once again, it’s availability. Do you want a book or not? We're telling publishers you just have to be really flexible in your paper choices.

JO: We had a bit of an advantage with the paper situation because we're our own customers. So, we asked ourselves is it glossy or matte? Okay, glossy it is. The decision's done. It’s not like a box of chocolates; you knew what you were going to get! And we were able to handle it more easily because we also had access through our printing partners. One of the great things that happened during this paper shortage is we got better at communicating with our partners. It's not only a business partnership. We get to be personal friends with these people. And we found out it's more localized shortages for us. One of our partners might not have a roll. And one partner might not have B2s. So we’re able to coordinate swap outs. And the paper shows up, so everybody gets his box of chocolates!

People Challenges
MATTHEWS: People talk about paper as being the critical factor. But it's not true. Publishers can be flexible and they will switch to alternative formats. It's labor. We got lucky in the sense that our warehouse is on the west side of Chicago with no other warehouses around it. I felt like that was a disadvantage in the past because some of my competitors were located in areas with lower labor costs. Now, there's a leveling of the playing field from the pandemic. Everyone has to pay that 15 to 18 bucks an hour to entice people to work there. At the office, we did have some turnover with all the big five publishers in New York going remote. They came and grabbed some of my best marketing and publicity people. It was tough, but again, a leveling of the playing field. And our core people, our most senior staff stuck it out. So it's been mixed for us when many warehouse operators have really struggled with labor.

JO: During the pandemic, our business went down. And we actually made the choice not to furlough or lay off anybody. And honestly, when it first happened, we were estimating a 50 percent loss of business with the schools closed. But I think it's paying back dividends now. People remember the company stuck with them during the hard times. And as a result, we didn't lose a lot of our core people during the great resignation. Of course, we're always trying to bring more people on. It's challenging. You have to pay more.

MATHIAS: We also didn’t lay anyone off. Our challenge has been just getting people into the facility to work even for first shift, let alone second and third. What we're doing is just embracing who we have and trying to make their lives better—bonuses, pay increases, different incentives, anything that's realistic. That's our game changer, right now. We're not in the middle of nowhere. We are surrounded by multiple warehouses looking to hire similar workforces. At one point, I found the company across the street had put a "Now Hiring" sign on our front lawn with their phone number! in the last month I've probably scheduled 20 interviews. Maybe four show up. I'll hire two of them and one of them just ghosts us.

Pricing Pressures
MATTHEWS: The book business is generally recession proof. But we are not an inflation-proof industry, and books are a price sensitive category. Imagine you’re a publisher with 20 million books in stock and they already have prices printed on the back. Now, there's nine percent inflation. How does that sound? Or you’re releasing a book and you need copies in stock a few months before publication, but you don’t know what your actual material costs at the time of production are going to be. Oh, and the list price is already printed on the back of the book. So how do you know if you’re going to make money? For that reason publishers are just increasing the price of books. Facing our own challenges as print providers, we’ve also had to raise prices—6 percent increases, three times, over the last 18 months for us. There’s no easy answer. Except to stop printing prices on the books!

MATHIAS: I'm in a similar situation. We started prepping for a $200,000 book run, which to some isn't a lot but was about eight truck loads of paper. How do you tell the customer—who's supposed to pay 50 percent down—what to pay, when you are likely to get price increases in the following weeks? How do you write that up when in six months the other 50 percent could go through the roof? It's a very volatile world right now, and everyone needs to understand that. The book market is very strong, but for you to be part of that strong industry you have to pass on price increases, not just because you have to but because you can.

JO: The biggest pressure for us on pricing has been supply chain. But there's the good and the bad. The bad is, obviously, it makes it very challenging to produce and price a book. The good is those books aren't coming from China anymore. Customers used to make decisions just on cost. Now they want the insurance. You just have to let the customers know it’s going to cost more. People are expecting it. We’ve actually had customers say, “Aren't you going to raise your prices?” Be honest and transparent. You don't have to give up the margins.

A Reason to thINK

Opportunities to learn together like this session are what make thINK—the industry’s largest independent community of Canon inkjet users—and the annual thINK Ahead conference so valuable. To learn more about becoming a member visit thINKForum.com.