Production: Is Consolidation Right For You?

By: Jerry Simpkins

Print consolidation

My first newspaper job was at a small daily in the Hudson Valley area of upstate New York. Like most newspapers at that time our “ad takers” would go from business to business and provide advertisers with the honor of being able to run an ad in our newspaper. We didn’t push a new special section every other week, didn’t have ad sale “specials” at the end of each month to meet budget, and actually sold off of the rate card.

We were able to occasionally raise rates, enforce deadlines to advertisers, regulate ad content and run a profitable business. We were part of the community and well respected as the primary source for news and advertising.

To spite our meager circulation numbers, absolutely no outside commercial work, and people tripping over each other in the newsroom, we had our own press and mailroom onsite. How on earth did we support the entire newspaper with only a small daily pressrun? ROP advertising sales! But soothing as it can be to reminisce, those days are now far behind us and simply put, either change or fold up your tent and go away, right?

Well there is another way—consolidate operations and regionalize printing.

If you have more than one property in your group, which is the case in most newspapers today, consolidating can be the best way to save dollars in your operation. But how do you go about making that decision and is it right choice for you?

It’s actually fairly easy to determine, but much more difficult to execute.

Before we get too far down the road in this article, there is one very important item we have to look at, which side are you on? You’re either being acquired (moving your printing) or doing the acquiring (the new printer). Even when you’re part of the same company, that is the mindset, so that is the basic terminology I’ll use here. It’s really that simple.

I can tell you which side I’d prefer to be on, but you don’t always get your wish, so my first word of advice to all personnel is: always do nothing but your best; perform at your highest level. You can’t predict what tomorrow will bring so bring value to your employer each and every day when you have the chance. While you can’t control the changes in newspapers that affect your career, being the best at what you do helps secure your place in the new regime.

Moving your printing to a sister publication

The easy part for any publisher is looking through the books at all the expenses associated with running your own production operation (hint, it’s expensive). Of course you’re not going to be able to eliminate all those expenses; you still have to pay someone for printing your paper.

For an intercompany move, expect to pay cost plus 10 to 15 percent, which is a typical charge. Although a lot of publishers feel it should be “at cost,” it simply doesn’t tend to work that way. Additional management and organizational overhead isn’t free.

Weigh the costs between what your new printer (sister paper) will be charging you and what it costs now to run your own production operation. Depending on how efficiently you’ve been operating, the move might not seem like a slam dunk, but more often than not, it makes good financial sense to roll multiple facilities into larger regional print groups. I’ve been part of this trend several times and 99 percent of the time found the move to be very cost effective.

I’ll detail savings in a moment, but first I’m going to touch on what is for many the most difficult part of the consolidation process: people. It takes me a short time to review financials and make an intelligent business decision on anything “newspaper,” but only takes about five seconds before the human side of me swoops in and challenges my entire thought process. Don’t fault me until you have to sit across the table employee after employee and explain to them that their job is being eliminated. This is the downside of consolidation, but it’s also part of making your company stronger and more likely to thrive.

On the bright side, there can be many upsides for employees throughout a consolidation, such as the potential for new opportunities in the sister facility.

When printing moves to a new site, that location will most likely need additional help, providing potential opportunity for your best people to make a move. Whether that need is for stronger management, better schedulers and organizers, or simply additional operations personnel, chances are new opportunities will present themselves to the right people.

Print consolidation

General considerations

While it most often makes perfect sense to move printing to a central facility, it comes with new costs to that property. Additional labor, higher utility costs, additional maintenance costs and many other incidentals such as additional cleaning services, wear and tear on equipment, and even additional security and management for extended hours.

Let’s look at deadlines. Often many of our dailies share similar timeslots/print windows. Depending on size, just about every morning publication closes around midnight, goes to press at 1 a.m., to carriers at 3 a.m. on the street and completing the delivery cycle before 6 a.m. You must take into account how deadlines will be altered to accommodate two (or more) publications vying for the same coveted timeslot. Since the incoming publication is most likely to be required to change their timeslot, deadlines need to be determined and agreed upon up front.

Likewise, any changes in paging capacity, page size, color configurations, preprint capabilities, and quality need to be considered as well.

Another consideration is the potential lost revenue for commercial work. This can affect both properties. The receiving property may have a lucrative commercial job that prints in the timeslot that the sister paper will now be printing in. Depending on how agreeable that commercial account may be to moving, the job could be lost. On the other side, the facility that is now moving their printing may have commercial jobs that will spell lost revenue as they move to the sister publication, possibly benefiting the new printer.

Special sections are another thing to consider. Can the properties share any special sections making each more profitable? Similar sectioning with plate changes for various versions of a special section can cut expenses between multiple publications, but often a unique section is needed and can take up key time slots in the print schedule actually adding expense to the franchise.

An obvious benefit of consolidation/ regionalization is the blending of staffs. Consolidation goes far beyond the operations area. Instead of a full-blown business office in both locations, properly managed and staffed you’ll now be able to handle multiple publications out of one facility. Of course the same goes for all areas of the operation. There may also be benefits to consolidating some ad sales and editorial on special sections, but in the end, the big savings comes in on the operations side.

Management isn’t excluded from some pains of consolidation. You’ll only need one production manager, one pressroom manager, mailroom manager, business manager, building supervisor, etc. Publishers aren’t a protected class in this either. Often all that may be needed in the downsized operation is a good ad manager or general manager to run the operation.

Keep in mind that depending on new print location verses old, many individuals may not want or be able to commute. Some of your best people you’d like to have at the acquiring printer may take the route I’ve seen all too often and get out of the business altogether.

These are simply considerations to take into account. Consolidation/regionalization is very workable and can save a tremendous amount of expense when executed properly. Centralizing printing certainly isn’t a new concept and continues to work well in many properties across the country.

Accessing the need for new equipment

Publishers will need to take a look at current equipment, such as press units, color towers, inserters, labelers, post-it note applicators, CTP units and prepress equipment to determine the need for expansion. Taking on sister publications may require additional equipment and capital outlay.

On the other side, the company will have to figure out what to do with the equipment (pre-press/press/mailroom) that comes out of the downsized facility. Often equipment is beyond its useful lifespan, which was one of the primary considerations for moving printing in the first place. This equipment can be sold to a used equipment vendor to be refurbished and resold, can be moved to the new printer if useful in the operation and still in good working order, or painful as this may sound, be scrapped.

Publishers will also have to look at the need to downsize the physical facility. A facility without a production operation can now be nicely fit into a smaller building, saving additional expense. I’ve seen this as a real upside. Many older newspaper buildings are run down and relocating your sales staff and editorial into a bright new location can help take away some of the sting of downsizing. Consider storefronts and strip malls. Keep in mind parking, accessibility to foot traffic and general customer convenience.

Getting supply vendors on board is usually not a big challenge. Frequently there can be major gains in pricing when consolidating occurs. Research volume discounts, savings from a single delivery point, and now is also the time to renegotiate pricing. Contact preprint shippers well in advance of the move so preprints ship to the correct (new) location. Expect there will be a few glitches in this process to start, and you’ll be transferring a few misdirected pallets between facilities until things smooth out.

On the operations side, the shutdown will take some effort and reorganization. Remember, you’re probably dealing with individuals who are a bit “under-motivated;” expect to be challenged. Hopefully you’ll have a handful of employees who are moving to the new printer, have a positive attitude and realize the big picture.

Timing supply inventory is another challenge. Having enough paper, plates, ink and necessary production supplies on hand is critical, but at the same time you don’t want to close down the shop with thousands of dollars of material that you may not be able to transfer to the new facility due to a different plate size, or similar challenge. A partial tank of unused ink can be a major problem if your sister location isn’t using the same ink vendor.

A huge part of the evaluation process revolves around location. Matter of fact this is probably the first thing you’ll look at if you’re even considering consolidation. If you have to drive 100 miles between facilities daily you should probably reconsider consolidation, although there’s no set distance or time, it’s whatever you can make work. I’ve worked in companies that wouldn’t regionalize with an hour between properties and others who did regionalize daily pubs with two and a half hours between properties (and it worked flawlessly).

Figure out how you’re going to deliver bulk product for carriers to pick-up. If you’re close enough for carriers to pick-up at the new printer, consider yourself one of the lucky ones. Chances are you’ll have to have papers bulk dropped to a pick-up point for your carriers in your community. I’ve rented warehouses, storage facilities, and distributed off pallets on the back of a truck. Plan this in advance, and of course, meet with your carriers to keep them comfortable with the changes and provide reassurance.

Going forward, budgets at both facilities will be a new adventure. These should be established early in the process before anything is said to staff. After all, the financials are a major part of the overall decision and need to be carefully analyzed and finalized early on. It’s important to make sure this is the right financial move for the company before upsetting staff, families, advertisers and your entire community.

Speaking of community, consider how your readers and advertisers will take the news. Most readers and subscribers are a very loyal lot. They are committed to our communities, do business in our communities and tend to be very supportive of their local newspaper. They will likely take the fact that you’re printing outside of town pretty seriously. From my experience, it usually doesn’t sit well at first, but as long as you continue to give them the strong l-o-c-a-l coverage they depend on they will come over to your side. Involve your community and don’t underestimate reader reaction. It can cost you the franchise.

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: February 22, 2016

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