Orange County’s biggest printers are optimistic, expecting another year of strong sales. Some are expecting to see increases of 15% or more in business. Still plaguing them: the rising costs of doing business in California. Like other industries here, printers are doing their best to operate lean. But they’re finding it harder to pass on cost increases to clients. Then there’s hiring. For many, it’s a big challenge to find quality, top-notch workers. The Business Journal’s Jessica Lee recently chatted with local printers. Here are their edited
comments.
What is your outlook for your business this year?
Warren Dow
President, Chief operating officer,
Trend Offset Printing Services Inc.,
Los Alamitos
While the printing industry’s economic landscape continues to be challenged, Trend is poised for continued growth in 2007 due to the significant capital investments we have made over the last 18 months in new state-of-the-art manufacturing equipment and technology. Additionally, our plant in Florida will install a new 8-Unit GOSS M600 press and Mueller bindery equipment in the fourth quarter of this year.
Kent Barkouras
Chief executive,
MyPrint Corp., Irvine
I could not be more pleased with the business opportunities we have this year and beyond. The successful launch of the eTools 3.0 software application last year has allowed us to add more than 18 new customers in the past year and we expect to add an additional 30 in the next 12 months. We also are expanding our fulfillment and distribution footprint to include facilities in Dallas, Kansas City, Denver, Minneapolis and San Jose by the end of 2007. Finally, we are continuing to scale our vendor base and utilize both our new buying power and the capacity that exists in the print on demand, print and signage industries.
Don Chew
Chief executive,
K & D; Graphics Printing & Packaging Inc., Orange
Our company’s outlook for business this year is quite good. Our sales are currently running over 15% ahead of last year.
Jim Joyce
Chief executive,
Dual Graphics Inc., Brea
We are constantly growing by adding improvements and products such as digital and variable data printing. Our business base is also growing and current clients are increasing their use of our products and services. We expect greater than a 15% increase this year.
Patrick Steele
Chief executive,
D.M. Steele Co., Fullerton
We are excited about the upcoming year(s). We recently moved into a beautiful, 38,000-square-foot facility and increased our capacity by adding another Heidelberg six-color 40″ press, an additional direct-to-plate system and the room to stay focused on a large amount of fulfillment,pack-outs, etc. We have positioned ourselves to maintain the high quality and quick turnaround reputation our existing clients are accustomed to while comfortably increasing volume. We also are looking forward to the fact that many businesses have really gotten back into the “green” movement as of late. There are new paper certifications out there and a number of our clients have really taken interest in pursuing these options along with soy inks, etc., in producing their catalogs. It is refreshing for us to sit in production meetings with our clients and have them focus on environmentally safe options in manufacturing. 2007 appears as if it will be a great year for quality based printers with environmentally concerned clientele.
Tarek Korraa
General manager,
Orange County Printing, Irvine
Very good,we are bullish about the immediate future. We’ve added significant technology, capacity and space in the last year and our clients are responding. Coupled with the vast range of products and services we can provide our market through our Consolidated Graphics sister companies nationwide, our opportunities are virtually unlimited, with room for growth vertically and horizontally.
Do high gas, labor, insurance and other costs here have a more pronounced impact on the printing industry?
Dow of Trend Offset Printing:
Absolutely. Today, being a “lean manufacturer” is not a plus,it’s a must. The printing industry is highly capital intensive both on the heavy equipment side as well as the consumable side. Therefore, we are sensitive to escalating costs in insurance, oil, gas, aluminum, paper, labor, etc. These costs continue to increase every year and we cannot just pass these added costs along to our customers. We have to be extremely diligent in controlling our costs and continuously improving our efficiencies.
Barkouras of MyPrint:
For the industry, I am sure that energy cost increases have affected gross margins, especially with those companies that cannot pass along increased delivery and distribution costs. We did realize a marginal increase in our labor costs; however, I am extremely pleased that our output per employee has increased by over 30% in the past 12 months. We now have one of the highest revenue-per-employee ratios in the printing industry.
Chew of K & D; Graphics Printing:
Gas, labor and insurance are always affecting us. OC is really an expensive place to own a business. Printers are either closing down or they’re moving out of California to places like Texas or Arizona because they can’t afford to operate here.
Joyce of Dual Graphics:
We are affected like other businesses. The most influence comes from the investment in technology, and customers’ needs for fast performance and reduced costs.
Steele of D.M. Steele:
I wouldn’t say they have a more pronounced impact on the printing industry than any other industries. I believe all industries are feeling the effects.
Korraa of Orange County Printing:
To this point, it has not. The demand for products and services seems to outweigh the costs involved. Additionally, our corporate office has worked with our suppliers on slowing down increases in costs.
Is it hard to find workers? How do you go about finding them?
Dow of Trend Offset Printing:
Finding and retaining skilled labor in our industry is one of our top challenges. Additionally, the cost of living expenses in California make it increasingly difficult to attract top talent. We use both traditional and non-traditional methods of finding new talent. However, our main focus is to train, develop and organically grow our employees and as a result we have dozens of employees who have been with us for over 20 years.
Barkouras of MyPrint:
I used to think that it was difficult to find highly skilled workers in the printing industry. Now that we also are heavily engaged in software development, I have changed my opinion. Fortunately, my public relations firm Hilary Kaye Associates has done an excellent job of keeping MyPrint’s name in the public eye, so most people now are aware of us and what we are doing.
Chew of K & D; Graphics:
Yes. We mostly find new employees through referrals from current employees.
Joyce of Dual Graphics:
Because of our position in the marketplace, high-quality personnel find us. We are a healthy company with many long-term employees who often refer other experienced, hard working individuals. We also train and promote at many levels in our company.
Steele of D.M. Steele:
It can be hard to find employees who are versed in our style of printing. The higher quality the print, the fewer candidates there are. Also, employees in printing tend to be loyal, as do companies. We generally get our employees through word of mouth. We have been in business since 1980 and we know a lot of quality professionals in the industry.
Korraa of Orange County Printing:
Recently, it has been challenging to find skilled labor. Our company’s financial good health, however, is attractive to candidates. They want to work for a company that they know is going to be around for a long, long while.
Will there always be a printing industry in OC? Is it at risk of moving elsewhere in the long term?
Dow of Trend Offset Printing:
I believe there will always be a significant share of total printing industry shipments coming out of California due to the size of the economy and the need for timely shipments in this region of the country. In particular, Southern California and Orange County has a strong and vibrant publishing community to support local businesses. Trend Offset Printing’s largest printing campus and corporate headquarters is located in OC and we are very proud to have the opportunity to support and be a significant business partner for the community.
Barkouras of MyPrint:
Sure, there will be. There will always be the need for printed materials. There has certainly been a decline of the traditional commercially printed materials over the past five years. I am thankful that we changed our model several years ago and offer the ability to not only offer commercial printing, but digital print-on-demand, signage, web printing, fulfillment and distribution services. We now offer a complete supply chain model that is driven by our state-of-the-art software eTools. This has allowed us to capture greater revenue from our new and existing clients.
Chew of K & D; Graphics:
Yes, but there will probably fewer printing companies because of the extra cost burdens for printing companies that operate in Southern California like the Air Quality Management District compliance cost.
Joyce of Dual Graphics:
There always will be a printing industry in OC. There may be fewer printers as technology makes it easier to do business globally and far away locations may be cheaper doing business. Providing quality and effective products, and focusing on true service, will keep printing here in OC. Everyone still uses printed products everyday to advertise, explain, entice, educate and basically, sell their products. The need for time sensitive, reliable quality will always drive clients to have local printers.
Steele of D.M. Steele
:
I don’t believe printing will ever leave OC. There is so much industry here and we are continuing to grow every year. The majority of companies don’t have the time, trust or patience to deal with printers that are in another state or another country. And think about it, almost every company you drive by in OC buys some form of printing … and that’s what makes this a great industry.
Korraa of Orange County Printing:
The rising costs in our region are disconcerting, but I cannot see printing being forced to move outside OC in the short-term. Our major clients are here. They want to work with reliable partners that are primed, qualified and nearby. As long as there are other industries in OC, there will be a printing industry to support them. It would take a drastic turn of events for commerce of all types to be compelled to migrate elsewhere.
What kind of steps have you taken to boost efficiency?
Dow of Trend Offset Printing:
We continue to invest in new technology and work on continuous improvement for each and every manufacturing process. Trend has always been a leader in adopting new and innovative technologies in our industry that ultimately translate into greater overall efficiencies for us, in addition to providing high value for our customers. Also, we maintain a high focus on performance and use key operational metrics to analyze and track our performance against goals.
Barkouras of Myprint:
Several years ago, we took huge steps in enhancing our facilities with the most advanced technological equipment in the printing industry today. As a result, we have been able to realize a multitude of efficiencies. In the past 12 months, the greatest improvement has been in the reduction of selling and marketing expenses due to the successful launch of eTools 3.0. We are winning most of our business through word of mouth, with recognition by large trade publications and by the efficiencies we create for our customers that use our products and services. The printing industry has relied on the efforts of experienced sales people to win new business and work as account managers, while paying significant amounts of commission for these efforts. We have been fortunate to eliminate a substantial amount of these traditional expenses and improve our bottom line.
Chew of K & D; Graphics:
We emphasize training for our employees and constantly invest in new equipment to boost our company’s efficiency. Our next major investment for the next year is a 12-color long perfector press with in-line UV coater, in-line flexo coater and a roll stock feeder. The standard price for this type of press is about $12 million. We expect to be able to increase our annual sales by $10 million using one working shift once this press is in operation for four years.
Joyce of Dual Graphics:
Maintaining and updating technology and improvements in our workflow, are increasing efficiencies. We also encourage a closer ‘partnership’ with our clients and vendors to improve their results.
Steele of D.M. Steel:
We have always boosted our work flow efficiencies with very stringent quality control. It takes a bit longer for us to produce our products due to extra QC steps, but nothing stings like a re-print and/or late product due to a lack of attention during production.
Korraa of Orange County Printing:
We have added new equipment in all phases of production, from prepress to the pressroom to bindery that will significantly boost speed and output, as well as keep us ahead of the competition.
