Production: Evaluating the Pros and Cons of Outsourcing

By: Jerry Simpkins

Originally, while considering an article on outsourcing, I thought an appropriate headline would be “Outsourcing Pros and Cons: Evaluating If Outsourcing is Right For You?” Then I reviewed the concept in depth, looked at the pros and cons, put myself in the shoes of the major players within our industry, and decided on a more fitting title—stop the presses… and start them elsewhere.

There was some pain while writing this article. All my “old school” views on having an on-site production operation, the smell of ink in a pressroom, the clatter of presses, the clunk of inserting equipment, the hum of lift trucks moving around preprints and dropping rolls of paper onto our presses…those truly were the days (or so I thought).

There is no question that coming up through the ranks in newspapers I’ve become attached to operations and that the more I read about the supposed demise of the printed product the more it chips away at my “old school reminiscing.”

I often think of how the inventor of vinyl records felt when the music industry moved to the eight-track tape; progressing to the cassette, CDs, the iPod, and on to our phones and computers. They most likely felt like the poor fellow who came up with the VCR.

My point is that change is constant and we all have a choice to embrace it, work within it, flourish, or hang on to “old school ideals” and risk it all. Sentimentally, many of us have put off exploring “alternatives,” such as outsourcing, to firm up the bottom line of our businesses.

Of course there are two sides to this issue. As I looked over a list of approximately 200 plant closings from 2004 to present, my thoughts were with the individuals who suffered through these changes, their families, their careers and the effect losing local jobs had on the communities. It’s devastating.

Many of the papers on a list were properties I myself had managed in my career; this just made things worse. I remember working with the individuals, their commitment to the title, and it pains me to see these changes. With that said, I consider the “what if” of things. What if the properties that outsourced to maintain financial stability didn’t consider doing so? Would more people have lost their jobs? I believe this would have been a very real possibility.

Enough emotion for now, I’m going to try to get to some of the facts.

 

‘Corporate Greed’ or Something Else?

Back around 1998, I worked at a large metro in California. We had a very busy composing department plugging away at designing ads for the daily, special sections, and helping sales to develop graphic sales proposals. I remember the day I heard that it had been decided to outsource all ad production to a company overseas. I didn’t completely understand why, until I started to look at the savings. This doesn’t change my feelings for those individuals being displaced, but I certainly understood the companies approach and the need to find more efficient and profitable ways to conduct business.

Yes, you read right. I said “more profitable ways to conduct business.” In one of the stories I researched for this article an individual left a comment regarding the article on outsourcing printing of the Toronto Star to Transcontinental Printing, stating “Corporate greed, greed, greed…”  My initial reaction to this comment was “Yup, could be,” but as I continued to read more and considered the alternatives, I think many of the large metros today are not making this shift due to corporate greed, but due to the fact that if they don’t, they will soon go the way of the vinyl disk and many others will lose their jobs to follow.

At this point it’s survival of the fittest and from what I’ve read, the Toronto Star estimates it will save $10 million per year by outsourcing their printing. That’s a tough number to argue with, especially if it means the publication will survive longer and continue to bring quality news, features, national and community events to its readers; along with sustainable jobs to the existing staff.

Several years ago when the Los Angeles Daily News moved printing of the Long Beach Press-Telegram and The Daily News from Valencia, Calif., then-Daily News publisher and CEO of Los Angeles News Group (now Southern California News Group) Ed Moss stated, “Outsourcing our printing will enable us to reallocate vital resources to our editorial and advertising sales efforts and refocus on our core mission of being the premium local content provider in the communities we serve.”

When the Austin American-Statesman announced its intent to outsource production, publisher Susie Ellwood noted that the savings were “significant” and pointed out one of the advantages of outsourcing is that when circulation drops, costs from the outside printer follow.

The Washington Times also outsources daily printing. The Washington Post prints the Times and according to president and CEO Larry Beasley, they have “a terrific relationship.”  I personally think this is a testament to how well outsourcing can work in such a competitive market.

In addition their national weekly edition is outsourced to a Chicago company who takes care of all their printing and mailing throughout the U.S. To me, this is smart management of available resources.

When I asked Beasley for his thoughts on outsourcing, he stated that he “feels it is imperative for most newspapers today to have a plan to outsource any way that is possible if they want to be here for the future.” If you’ve followed the dramatic turnaround of the Washington Times under the current management it’s apparent whatever they’re doing is working.

 

Consider the Alternatives

While financial security and cost reductions are necessary for survival, and solid reasons to make a move to outsourcing, another key in my research of dozens of properties that have made the move is quality. As our equipment ages, quality continues to suffer.

Many operations are running on a thin margin of profit, if any, and simply don’t have the capital to reinvest back into equipment updates. As a result quality at many of the larger metros has suffered. Outsourcing can allow a publication to improve quality overnight without the necessary investment in expensive press equipment and updating of imaging devices.

So, with all this doom and gloom, is there an alternative to outsourcing? I believe there may be, even at metro newspapers. There are several local/community publications in all our markets that continue to be successful putting out a printed product. These publications thrive on print, often have a very limited if not nonexistent web presence, and don’t have their own production plants or equipment. That’s where we step in.

Commercial printing can bring new life to many of our facilities. The hours that our presses sit idle are losing us opportunity and dollars. Although it can be a very competitive business, these smaller publications have to print somewhere. Why not on your press?

Furthermore, consolation of intercompany printing and adding commercial printing to our facilities while managing expenses is one way I feel our industry can remain profitable for years to come. Before you discount this possibility, I suggest you search E&P for my recent articles on commercial printing and on consolidation of print operations. If it makes sense to one print site, I’d be accomplishing my mission.

Another option, for large and small publications alike, is considering the amount of days you publish weekly. You’ll need less staff or could redeploy these resources to other areas of the operation, save hours on payroll, and reduce your general operating expense. In many areas of the country (New Orleans, Portland and Detroit to name a few), home delivery has been reduced to three or four days a week. In some of the markets I’ve worked in from coast to coast daily publications have dropped Monday delivery and/or other days of the week to reduce expenses.  I believe this will continue to be a trend.

 

Some Recommendations

Let’s face it: no matter how much we love print when there’s breaking news we either turn on the TV or go online for the latest updates. Print newspapers have lost the edge of “Extra, Extra” down on the corner. But we absolutely can retain the advantage of in-depth and quality investigative reporting of events when compared to other media.

By reducing publishing frequency and perhaps focusing efforts (and finances) on exemplary coverage and features in your Sunday package or weekend product, I believe you can increase readership and cut costs simultaneously.

Reducing publication frequency on typically slow news days during the week can reduce front office labor expense, materials cost, overhead, and all other costs associated with printing, while at the same time allowing you to eliminate non-productive days in production.

Sure, this can result in loss of advertising and circulation revenue, but the offsetting expense savings, properly managed and implemented, can drop dollars to the bottom line. In addition, this approach can bolster sales of your online product. If you have the journalistic quality that readers want and can’t get elsewhere (local coverage, features, investigative reporting, etc.), your web presence can fill the holes throughout the week and recover much of the advertising revenue.

Former print publications that have moved away from paper to a digital presence seem to have filled the gaps and remain strong. For example, the Capital Times in Madison, Wisc. moved from print to a digital publication in 2008 and never looked back. It continues to thrive with news, opinion, arts and features that keep readers coming back for more.

While I still love print, I believe a hybrid mix of print and digital to fill the gap can be instrumental in a daily publication.

If you believe outsourcing might right for you, I’d recommend looking at a couple of basic items.

  • Develop a spreadsheet listing all the expenses associated with production of your daily products. Include materials, labor, employee benefits, operational overhead (i.e. utilities, etc.), overhead such as H.R. expenses, business office expense associated with production inventory purchases, etc. Estimate as closely as you can. The influence this may have on your decision could either pay dividends or cost you dearly for a long time to come.
  • Decide what areas of production (if not all) you are going to consider. If it’s printing only, printing and mailroom operations, distribution to various locations for carriers, etc. Solicit quotes for services, keeping in mind the advantages/disadvantages with each outside printer you are considering.
  • You owe it to your readers and advertisers to make sure the quality is at least equal if not improved. If you can’t get by this, don’t bother moving on to the other considerations.
  • You need to be concerned with getting printed product into the hands of carriers and delivery times to your readers. You need to be able to rely on consistency from your printer. If you have to fit into a restrictive print window at your new printer, consider how that may affect your editorial department’s coverage of late breaking news, coverage of community meetings and events, etc.
  • Print Capabilities. Might you have to change the size of your paper with the new printer? Different presses have different cut-offs (length of the paper) and some can only accommodate certain web widths. A change can cost you advertising revenue. Also consider color availability. Depending on how many and what type of press units are available, you may either improve your end product or be further restricted in the amount of color available. How many pages can they print per section? How many sections can they print in a pass? Be sure these items are considered before making a commitment that could adversely affect advertisers and readers. Do they have the time and how responsive will they be to any special section needs?
  • Mailroom Capabilities: Does the new printer offer inserting? If so, how many pockets on their inserter, what size restrictions are there? Do they offer labeling and mailing services? Stitching and trimming for in-house booklets, etc.?

If you’re going to eliminate an area within the operation, make sure you’ve looked at all the expenses that may result.

This should get you started. There are dozens of details that need to be considered, but it really boils down to expense savings and maintaining financial health. Of course, I firmly believe that we need to consider how our actions affect our most valuable asset—our employees, but with that said, much as I might want to sympathize with the accusation of “corporate greed, greed, greed…” last I knew there aren’t too many non-profit newspapers and there is nothing wrong with a business making money and successfully operating in the community it serves. We’ve had some tough years, and if we are to survive, we had better be smart and react quickly, looking under every rock to consider new and innovative ways to preserve our business.

Outsourcing isn’t a new concept; for you, it could be one that works.

 

Jerry Simpkins

Jerry Simpkins is the general manager at Hi-Desert Publishing in Yucca Valley, Calif. Contact him on LinkedIn.com or at simpkins@tds.net.

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Published: August 22, 2016

3 thoughts on “Production: Evaluating the Pros and Cons of Outsourcing

  • August 22, 2016 at 8:09 am
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    Jerry- thank you for this article. Clearly the newspaper industry is facing a myriad of quantum changes. If these changes are not quickly address, the doom and gloom purveyors will be right. Outsourcing print is one of the tactical ways to face this challenge. But at a more strategic level, newspapers must examine their existing business model and ask if it is still relevant and viable. The problem is the “old school” model alone simply does not work.
    Any new business model should leverage the newspaper’s three primary assets: (1) The ability to collect, vet, and distribute “local news” (2) Being the most respected and trusted brand and source for “local news” (3) The ability to reach a large portion of the community quickly.
    The new model is not about brick and mortar, printing presses, 30% margins (that only a monopoly can enjoy). It is about these three assets.
    Fact is, people can get world national news from a variety of internet sources 24×7. They simply don’t need a newspaper for that. But, but there is only one way to get trusted local news and that is from the local news expert – the local newspaper.
    If you couple this single thought and expand the newspapers’ value proposition to include not only local news delivered 24×7 via the internet, but All Local Information, you have a formula that no outsider can duplicate.
    This is HubCiti’s model for newspapers. Without abandoning the existing model, newspapers can leverage these three key assets to be come, once again, the “hub” of the city. They can remain profitable by selling completely new, outsoureced, products and services to existing and new clients never before available along with their traditional offerings . Newspapers are the backbone of freedom and democracy. We can’t simply let them vanish. Roy Truitt, CEO, HubCiti, Inc., hubciti.com

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  • August 22, 2016 at 8:49 am
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    The one problem for employees who remain is – does the company really reallocate the savings to other areas? In my limited personal experience, not so much. They are spending money on trying to make facebook (and other social media) and websites profitable to replace the money they lose on declining print advertising.

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  • August 22, 2016 at 2:55 pm
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    For those in the newspaper business daily facing the challenges of retaining and growing revenues and profits I recommend an article, “Production, Evaluating the Pros and Cons of Outsourcing,” in Editor & Publisher’s online edition this week by Jerry Simpkins, general manager at Hi-Desert Publishing in Yucca Valley, California. I had the pleasure of working with Jerry years ago at the Longview (Texas) News-Journal and have great respect for his knowledge of the business and insight.

    http://www.editorandpublisher.com/feature/production-evaluating-the-pros-and-cons-of-outsourcing/

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