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YOUR PRINTING OPERATIONS
RISKS, REWARDS AND RAMIFICATIONS
NEW ENGLAND NEWSPAPER OPERATIONS ASSOCIATION NEW ENGLAND NEWSPAPER & PRESS ASSOCIATION
President/ Publisher Telegraph Publishing Company, Nashua, NH
NEW ENGLAND NEWSPAPER & PRESS ASSOCIATION
New England Newspaper Operations Association
OUTSOURCING PRINTING AND INSERTING
Telegraph Publishing Co.
Change is inevitable - except from a vending machine. Robert C. Gallagher
UNIQUE CIRCUMSTANCES – ITEMS TO CONSIDER
Each newspaper has a set of conditions, opportunities and needs that make each unusual Take careful assessment of what those are and envision how they might change and not necessarily for the better. For many, outsourcing is not a viable option and would be a mistake. Don’t assume that you are the best option or that only you can do the job well Printing is a cherished legacy and something to hold onto, but don’t let it become a noose
OUR UNIQUE CIRCUMSTANCE – EQUIPMENT CHALLENGES
1984 MAN Roland double-wide press Little automation Good newspaper press but inflexible for commercial work High maintenance costs High cost to operate with high fixed costs We wanted to reduce the web width from 50 inches across to 44 - $250,000 If we were to do this, it would be a decision driven by printing, not inserting
OUR UNIQUE CIRCUMSTANCES – COLLECTIVE BARGAINING AGREEMENT
Expired at end of 2010 Expensive contract relative to other newspaper operations Restrictive manning clauses Contract lacked flexibility; so did the union Health insurance, workers compensation increases Concessions could be achieved but would they be enough?
OUR UNIQUE CIRCUMSTANCES - LIMITED COMMERCIAL PRINTING
Few customers Limited future with this press for additional commercial opportunities Limited non-overtime shifts on which to place additional commercial work Union inflexibility regarding certain jobs Starting up a crew for our single-wide press was cost-prohibitive
If you were starting a paper today, would you put in press and inserter lines? Are you in the printing business? If so, for how long?
WAS THE TELEGRAPH IN THE PRINTING BUSINESS?
No We produce and deliver news and other information, and we support that through various sales channels Circulation sales tells us that paid daily print products are less and less useful to our constituents Print readership continues its unabated conversion to free and digital forms Our traditional and loyal reader, as much as we love them, is aging and disappearing Print is not competitive for the younger reader
We didn’t want to outsource Significant reduction in staff Feared losing control of quality Feared losing responsiveness and communication lines Earlier deadlines Transportation issues (more susceptible to weather) Employee morale Reader reaction Other unanticipated logistical issues
Significant savings Allow us to focus on core business – content and sales Move future capital investment to growth areas of our business, particularly online, mobile and other digital media opportunities Reduce capital investment Properly size our physical plant, eventually – 85,000 square feet when we need about 20,000 Develop variable production cost centers allowing for circulation declines
THE PROCESS – WHAT DID WE WANT TO ACHIEVE?
We had systematic, production and financial goals in mind that would have to be met A plan was needed to sell off equipment Narrower web width to save on newsprint No meaningful impact on content from earlier deadlines Smooth delivery High production quality Accurate inserting Strong lines of communication and customer service Backup printing arrangements We wanted to migrate our commercial customers and retain those relationships
Our production vice president worked with me evaluating and, eventually, planning the move We contacted newspapers in our immediate region who we thought could handle our operation and narrowed it to three, then two We met with the press union several months before the expiration of the contract to let the bargaining unit know we were considering outsourcing When negotiations started we communicated with them what concessions would have to approximate in order to keep the printing in house We developed financial and production scenarios for each printer and a no-go option
We involved key managers from each department who would be affected and would have to lead the change I was communicating with my board of directors about this as a possibility; we needed to make a decision by November to coincide with our final budget approval and contract negotiations Announced to staff on November 30 our decision to outsource and to go to Seacoast Media Group for that service Covered the story on Page 1 Reached buyout agreement with press union on December 30 Printed last copy of The Telegraph at our plant on Friday, December 31 and covered this as a news story Printed first copy of The Telegraph at SMG on Sunday, January 2 Forty full- and part-time employees lost their jobs Our production vice president worked through the transition to SMG but he, too, decided to leave
LESSONS LEARNED – IMPACT ON EMPLOYEES
Painful, difficult decision for managers and particularly tough on employees
Some acceptance and some appreciation for deciding on this new path Some anger Fallout lingers well beyond the transition Crisis in confidence on the part of some employees
Community reaction was strong, too – something not to underestimate
LESSONS LEARNED – LOGISTICS AND PERFORMANCE
Communication is critical – there cannot be enough sharing of information and objectives You need strong HR Adaptation to another company’s culture and production ways and means is critical Patience is tested but necessary Production is inherently complicated and has evolved for each of our companies – don’t expect to escape reevolution Involved a lot of people in the transition and the followup
LESSONS LEARNED – OR MISSED
Don’t do it in the winter – if it can be avoided Readers, like employees, remember how things used to be Some members of the community will think you are going out of business
FINAL ASSESSMENT AND POTENTIAL OUTCOMES
We achieved our economic goals Good results from our printer Crystallized the mission for our operation, that we need to produce a newspaper, we just don’t need to print it Employees are resilient; the will find a way Forces you to do a process analysis of your production operation – even if you decide to keep printing and inserting in-house
Publisher & President The Day Publishing Company, New London, CT
NEW ENGLAND NEWSPAPER & PRESS ASSOCIATION
New England Newspaper Operations Association
June 9, 2011
• 2002-2008: Expansion
– – – – 100 Commercial Print Customers, 3 shifts, 7-days Multi-million dollar business and nice margins 29 periodical titles; pursued daily customers Considered building new plant solo or joint venture
• 2008-2011: Contraction
– Purchased our largest weekly print customer outright – Loss of customers to bigger, more modern competitors – Loss of customers to nonpayment or ceased operations 22 – Customers who stayed requested smaller orders
Choice: Print or Be Printed
• Sea Change in Newspaper Publishing Business
– Attempts to be the aggregating printer unsuccessful – 22-year-old press too old and small to compete – Capital investment maintenance, repair, replacement
• From Industrial Age to Information Age
– – – – Identity Crisis: 130 years of newspaper manufacturing Now, an information company with multiple platforms A defining moment to restate our core business Conclusion: Manufacturing not a strategic component
The legacy newspaper business will not recover revenues lost to the recession and industry restructuring. Costs must be permanently adjusted to reflect new revenue levels.
• • • •
Digital Ad Revenues
Print Production Costs
Create a strategic affiliation with another publisher to leverage assets and initiate mutually-beneficial efficiencies.
January, 2010 February, 2010 April, 2010 May, 2010 June, 2010 October, 2010 December, 2010 January, 2011 March 28, 2011 Overture from Providence Strategic Affiliation Approach Providence TMC to Day Proposed Day Printing to Providence Raised Logistics and Pricing Negotiated TMC Verbal Agreement Reached Printing Verbal Agreement New London TMC Project Launches
Providence Print Project
• Printing The Day
– 30-minute move-up – 1-hour press run – Complete papers to NL
• Weekly Projo Circular
– Package and label – 150-250,000 weekly – Multiple zones
• Daily Inserts
– Tuesday-Saturday – Sunday package
• Live run in Providence • Advance run in NL • Sunday inserts run in NL
• Product Mailing
– List Management – Individual labeling – Mailed from NL
Partnering with The Providence Journal provided investment capital needed to underwrite our digital growth initiatives.
By sharing resources and dividing duties, The Providence Journal and The Day each were able to reduce costs, add revenues, and maintain quality in manufacturing/distribution.
• Keep the Process Strategic in Nature
– – – – – – – – Keep discussions outside the budgeting calendar Only seek mutually-beneficial solutions Position yourself to be both the vendor and customer Don’t book the savings until after you have signed deal Still refining the logistics Technology transmission issues and refinements Monitoring and tweaking at-home delivery times Discussing other avenues of collaboration
• Ongoing Issues and Opportunities