Thursday, 24 June, 2010

The price of print

I don’t remember reading an article as many times as I read the article by Sunita Paul ‘The birth and death of a small printing press’ — Indian Printer and Publisher, May 2010. This is something that I have thought about a million times and maybe more — it brings to mind what larger printers sometimes fearfully discuss — Where is this industry heading?

I also often wonder if printers are expected to be magicians – but on second thought, they actually are — to be able to continue working at the same or lower prices — when the cost of all inputs have risen many-fold over the years. This can only be magic.

I remember the time I joined the printing industry in the early 90’s — the competition was there but it would be considered healthy, unlike the dog eat dog industry of today. There are so many times that we sit down and analyse a cost sheet of a lost project bid, only to realize the prices that some companies charge are just enough to cover the costs. I wonder then, why run a business at all? Isn’t profit the motive of any business? For any business to stay healthy it has to be able to make enough money to sustain and grow in the medium to long term, or the business will have to wind up sooner than later.

I often wonder if printers believe that the machinery that they use has an unlimited life and the machine will last forever. Wish that were true. Every asset has a limited life, after which it needs to be replaced. What will happen when the time comes to replace the machinery – would the business have made enough money to be able to invest in a new machine?

As a company we work for some large international customers and very often they ask for a breakup of major components that make up the bulk of the cost and I remember asking a customer once, why was it important for them to see the cost sheet when all that mattered was the final price? To which came the reply that they were interested in suppliers who could continue to give them service year after year and if the supplier was not making adequate money he would not be there in the long run to service them, and this was not in their interest. A lot of time and effort is spent in building a stable team of suppliers and good companies do not wish to incur the cost associated with this over and over again. This is radically different from many of our local customers – who are only interested in the final price and not how it was derived.

Minimum wages were revised recently in Delhi by perhaps one of the largest single percentage increases ever. In any printing company about 70 per cent of the work force falls into the minimum wage category which means that there would be a very significant impact on the cost but when I wrote to customers where we have scales in place to reconsider prices — prompt came the reply: No one else was asking for it, and were we not aware that paper prices were at a all time high and that it was impossible to pay the existing rates – an increase was not even a possibility. In fact one customer even went on to say that he has been asked by his management to bring the cost down of books by 15 per cent, even while paper prices have gone up significantly — which meant that he was planning to renegotiate the rates!

Many printers do not even understand their costs — which I believe is the primary problem. Without understanding the costs they make losses for themselves and also create unhealthy competition in the long run. Unless printers correct this, we might have many more printers going out of business.

— Ravi Shroff, Nutech Print Services, New Delhi

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