Fabrication Outsourcing Yields Increased Revenue and Profits for Exhibit Designers and Producers

By Lisa Sinicki

TRENDS REPORT

Since emerging from the Great Recession of 2008, the more financially conservative business climate in the U.S. has led to a shift in the typical exhibit designer/producer business model. While the 1990s and early 2000s were marked by companies bringing more capabilities in-house and boasting “we do everything,” recent years have seen this reverse into a trend toward outsourcing.

OUTSOURCING TRENDS

The practice of outsourcing enables exhibit designers/fabricators to continue to provide corporate marketers with the ease of one-stop shopping — without taking on increased overhead or making additional capital investment. Commonly outsourced products and services include graphics production, audio/visual/experiential technology — and even exhibit design. But the biggest shift is that more exhibit companies are trusting part or all of their exhibit fabrication to trusted outsource partners.

TRUSTED PARTNERS

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• Companies can accommodate growth without increasing overhead or making capital investments.

• Companies of all sizes can increase their capabilities and compete with larger, more established companies.

• Exhibit houses can lock in their margins by outsourcing to firms that will guarantee pricing up front. This eliminates the risks of having to absorb losses from misquoted projects or cost overruns.

• Outsourcing can be highly profitable. The average purchase price of a custom trade show exhibit can run as high as $200+/square foot*. Some outsource fabrication companies can produce high-quality custom exhibits for around $60/square foot (with rental exhibits even less) — which, when marked up by the exhibit designers and producers, yields a significant profit margin. In fact, some exhibit designers/producers feel there is no reason at all to rent more space, hire more people, and purchase more capital equipment when they can have a trusted partner do all the work, maintain a strong margin — and then generate service revenue for the life of the exhibit.

*Source: EDPA 2019 Economic (Custom) Survey Results Report

In many ways, production outsourcing levels the competitive playing field — enabling the smallest exhibit houses to compete with the largest.

THE BENEFITS OF PRODUCTION OUTSOURCING

Benefits of outsourcing include:

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“ While cost reduction is good, cost certainty is better and outsourcing has long been available as a strategy to meet this objective. Outsourcing through a valued partner locks in margins and shifts that labor volatility risk away from you and to your partner. This model is also a good hedge against unbudgeted staffing needs during periods of heavy workloads and in managing overhead costs in the long term...” Dan Greene, long-time industry advisor and Principle at Nolan Advisory Services

Prior to the Great Recession, corporate marketers spent much of their time managing logistical details and overseeing how their exhibit houses got things done. Corporate downsizing and cost cutting resulted in smaller internal corporate exhibit marketing teams that instead focused their internal resources on exhibit marketing strategy and planning — leaving the tactical portions of their jobs to their exhibit houses. With corporate marketers’ focus elsewhere, they ceased to be concerned with what their exhibit houses produced in-house versus what they outsourced — so long as the delivered exhibit and services matched their design, quality, and price expectations.

At the same time, exhibit companies looked for ways to grow without overextending themselves in terms of facility, equipment, and personnel — as historically over extension has been the primary cause of exhibit company bankruptcies.

WHY THE GROWTH IN PRODUCTION OUTSOURCING NOW?

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The profile of companies using outsourcing includes both large and small businesses — many of whom are selecting outsource production as their permanent business model.

• Companies with no real internal production capabilities who have chosen outsourcing as their permanent business model. This includes solopreneurs (an entrepreneur who works alone, “solo”, running their business single-handedly, often using contractors for hire), start-ups, and even a few larger companies who choose to invest in sales, design, strategy, and account management rather than increasing their manufacturing capacity.

• Smaller shops with limited capabilities who leverage outsource capabilities to grow and compete with larger competitors — without increasing overhead or making capital investments.

• Medium and larger organizations that need to be able to accommodate volumes beyond their internal capacity during periods of peak demand.

Outsourcing adopters include:

Production outsourcing is a trend that is expected to continue long-term.

WHO IS USING EXHIBIT PRODUCTION OUTSOURCING?

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This trends report has been sponsored by Agam Group Ltd., a wholesale custom manufacturer of exhibits and displays for the trade show and event industries. As a trusted partner of exhibit designer/producer companies, exhibit brokers, and solopreneurs, Agam provides dynamic custom exhibits and kits for purchase or rental, fast quoting, free engineering, quick turnaround, and competitive pricing.

Contact Theron Williams at agammax@agam.com to learn more or receive a quote.

agam.com1.800.645.0854

6695 Business Parkway, Elkridge Maryland 21075 USA

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