outsourcing your printing operations

8/4/2019 Outsourcing Your Printing Operations

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O

UTSOURCING

YOUR

PRINTING

OPERATIONS

R

ISKS

, R

EWARDS

AND

R

AMIFICATIONS

N

EW

E

NGLAND

N

EWSPAPER

O

PERATIONS

A

SSOCIATION

N

EW

E

NGLAND

N

EWSPAPER

& P

RESS

A

SSOCIATION


2/31

N.O.A.New England NewspaperOperations AssociationAN

E

N

P&NEW ENGLAND NEWSPAPER & PRESS ASSOCIATION

Terry Williams

President/ PublisherTelegraph Publishing Company, Nashua, NH

Featured Speaker


3/31

O

UTSOURCING

P

RINTING

AND

I

NSERTINGTelegraph Publishing Co.


4/31

Change is inevitable - except from a vending

machine.

Robert C. Gallagher
http://www.brainyquote.com/quotes/quotes/r/robertcga104504.htmlhttp://www.brainyquote.com/quotes/quotes/r/robertcga104504.html


5/31

UNIQUE CIRCUMSTANCESITEMSTO

CONSIDER

Each newspaper has a set of conditions, opportunitiesand 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.

Dont 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 dont let it become a noose


6/31

OUR UNIQUE CIRCUMSTANCEEQUIPMENT

CHALLENGES

1984 MAN Roland double-wide press

Little automation

Good newspaper press but inflexible for commercialwork

High maintenance costs

High cost to operate with high fixed costs

We wanted to reduce the web width from 50 inchesacross to 44 - $250,000

If we were to do this, it would be a decision driven byprinting, not inserting


7/31

OUR UNIQUE CIRCUMSTANCES

COLLECTIVE BARGAINING AGREEMENT

Expired at end of 2010

Expensive contract relative to other newspaperoperations

Restrictive manning clauses Contract lacked flexibility; so did the union

Health insurance, workers compensation increases

Concessions could be achieved but would they beenough?


8/31

OUR UNIQUE CIRCUMSTANCES - LIMITED

COMMERCIAL PRINTING

Few customers

Limited future with this press for additional

commercial opportunities

Limited non-overtime shifts on which to placeadditional commercial work

Union inflexibility regarding certain jobs

Starting up a crew for our single-wide press wascost-prohibitive


9/31

HAUNTING QUESTIONS

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?


10/31

WAS THE TELEGRAPHINTHE 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 productsare 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 lovethem, is aging and disappearing

Print is not competitive for the younger reader


11/31

POTENTIAL NEGATIVES We didnt 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


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POTENTIAL BENEFITS Significant savings

Allow us to focus on core businesscontent and sales

Move future capital investment to growth areas of ourbusiness, particularly online, mobile and other digitalmedia opportunities

Reduce capital investment

Properly size our physical plant, eventually85,000square feet when we need about 20,000

Develop variable production cost centers allowing forcirculation declines


13/31

THE PROCESSWHAT DID WE WANTTO

ACHIEVE?

We had systematic, production and financial goals in mindthat 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 retainthose relationships


14/31

THE PROCESS 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 theexpiration of the contract to let the bargaining unit know wewere considering outsourcing

When negotiations started we communicated with them whatconcessions 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


15/31

THE PROCESS 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 tocoincide with our final budget approval and contract negotiations

Announced to staff on November 30 our decision to outsource andto 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 toSMG but he, too, decided to leave


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LESSONS LEARNEDIMPACTON

EMPLOYEES

Painful, difficult decision for managers andparticularly 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, toosomething

not to underestimate


17/31

LESSONS LEARNEDLOGISTICSAND

PERFORMANCE

Communication is criticalthere cannot be enoughsharing of information and objectives

You need strong HR

Adaptation to another companys culture and productionways and means is critical

Patience is tested but necessary

Production is inherently complicated and has evolvedfor each of our companiesdont expect to escape re-evolution

Involved a lot of people in the transition and the follow-up


18/31

LESSONS LEARNEDOR MISSED

Dont 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 aregoing out of business


19/31

FINAL ASSESSMENTAND 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 dont need toprint it

Employees are resilient; the will find a way

Forces you to do a process analysis of your

production operationeven if you decide to keepprinting and inserting in-house


20/31

N.O.A.New England NewspaperOperations AssociationANENP&NEW ENGLAND NEWSPAPER & PRESS ASSOCIATION

Gary FarrugiaPublisher & President

The Day Publishing Company, New London, CT

Featured Speaker


21/31

Operating Agreement

NOA/NENPA ConferenceJune 9, 2011


22/31

Business Trends

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 ceasedoperations

Customers who stayed requested smaller orders 22


23/31

Choice: Print or Be Printed

Sea Change in Newspaper PublishingBusiness 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

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Action Plan

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Assumption

The legacynewspaper businesswill not recoverrevenues lost to therecession and industryrestructuring. Costsmust be permanentlyadjusted to reflect newrevenue levels.

Expand

Digital Content

Digital Ad Revenues Consumer

Revenues

Reduce

Print ProductionCosts


25/31

Strategic Alliance

Create a strategic affiliation with another

publisher to leverage assets and initiatemutually-beneficial efficiencies.
http://cts.vresp.com/c/?TheDayPublishingComp/b9ce4a05a4/69b2d36323/3d583dece1


26/31

Timeline

January, 2010 Overture from Providence

February, 2010 Strategic Affiliation Approach

April, 2010 Providence TMC to Day Proposed

May, 2010 Day Printing to ProvidenceRaised

June, 2010 Logistics and Pricing Negotiated

October, 2010 TMC Verbal Agreement Reached

December, 2010 Printing Verbal Agreement

January, 2011 New London TMC ProjectLaunches

March 28, 2011 Providence Print Project26


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Weekly Newspapers

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28/31

Partnership Responsibilities

Printing The Day

30-minute move-up 1-hour press run

Complete papers to NL

Daily Inserts Tuesday-Saturday

Sunday package

Live run in Providence

Advance run in NL

Sunday inserts run in NL

Weekly Projo Circular

Package and label 150-250,000 weekly

Multiple zones

Product Mailing

List Management

Individual labeling Mailed from NL

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29/31

Partnership

Partnering with The Providence Journal

provided investment capital needed tounderwrite our digital growth initiatives.


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Efficiencies

By sharing resources and dividing duties, The

Providence Journal and The Day each were ableto reduce costs, add revenues, and maintain

quality in manufacturing/distribution.


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Lessons Learned

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 Dont book the savings until after you have signeddeal

Ongoing Issues and Opportunities Still refining the logistics

Technology transmission issues and refinements Monitoring and tweaking at-home delivery times Discussing other avenues of collaboration

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