Depending on your perspective and where things have personally taken you, this past year has proven to be fairly eventful for our industry. Driven by the all too familiar newsroom layoffs, newspaper closings, cutbacks, broad range RIFs and consolidations, it’s been pretty much business as usual. But this past year truly hasn’t been just more of the same old/same old, and rolling into 2019 the landscape continues to change for many.
While last year may have seemed to some like just another year in the media industry, we also saw several new challenges take place. Some were similar to what we have been faced with in the past and others were new “surprises” out of left field. Let’s take a look at some of them.
If you had asked anyone in our industry a year ago about the reality of newsprint tariffs, they would have thought you were dreaming. Newsprint tariffs simply were not on our radar. In prior years the “game” seemed to be one newsprint vendor throwing out a $50 per ton price increase and then pulling it back when the other vendors didn’t follow suit. Once in awhile, everyone jumped on the bandwagon and the increases stuck, but none of this had a thing to do with tariffs. But in 2018, tariffs impacted our industry more than any other increase in consumables for as long as I can remember.
When it came to light that these tariffs were actually going to happen, most media companies re-explored budgets and started looking for places to cut (sad but true). We’re still suffering from these cuts: jobs were lost that will never return; profit margins for some vanished; and I even have some compassion for the newsprint companies who, like us, after years of absorbing the higher cost of doing business are faced with yet another challenge brought on by something or someone they have no control over.
Now, going into a new year, we are faced with budgeting what is for some a 15 percent increase to paper expense. This is no small challenge for us to overcome. Several smaller newspapers will be making some tough decisions in the upcoming year—cutting workforces, reducing page counts, bypassing necessary production maintenance, looking for alternative outside print options or outright selling off to one of the larger media conglomerates.
In a previous E&P production article (“Are Newsprint Tariffs Protecting Production Jobs or Are They Just Another Nail in the Coffin?” May 2018), I wrote, “Those of you who know me well have probably never once heard much ‘politics’ come out of me (it’s not my style), but I wholeheartedly agree with a statement by The Daily Signal that ‘an America first policy is the one that supports the job-creating investment of a dynamic economy. Taxing newsprint is a backward-looking, America-last, investment-last, and jobs-last policy.’”
Going into 2019, I’m still scratching my head and trying to figure out how these tariffs have helped the newspaper industry. Perhaps someone much smarter than me could explain that to the small papers closing their doors or the journalist who is now out of work. Something needs to change on this front in 2019 or we’re going to simply dig into a deeper hole.
As if the newsprint tariffs didn’t hurt us enough in 2018, an import tariff of 10 percent was imposed on aluminum. A majority of this country’s newspapers and commercial printers rely on aluminum plates for their presses. If manufacturers in this country have to pay tariffs on imported aluminum, they will have limited choices on how to offset that expense. One is to reduce their profit margins. While that is not likely to happen, our plate suppliers will in turn pass the price increases on to newspapers to offset this additional expense.
If American manufacturers elect to purchase domestic aluminum (we’re told the true purpose of these tariffs), vendors will most likely raise their prices to maximize profits because they will not have to be as concerned with competition; i.e. lower priced imported aluminum.
Either way, guess who pays? The additional expense for plates will be added to the inflated newsprint costs and in turn—you guessed it—additional labor reductions will occur in our industry in 2019.
While I truly remain bullish on our industry and hopeful for future growth, and while these additional tariffs may be seen as benefits to politicians, they will most certainly hurt the publishing industry as severely as anything that has occurred since the first newspaper rolled off Ben Franklin’s press.
The Labor Force
When is the last time you tried hiring someone for a skilled position at your facility? Our country has seriously gained on unemployment in 2018. I’m tremendously pleased for those individuals who, after an extended period of unemployment, are now gainfully employed. The trouble is most of them are not coming to our industry.
When we jettison some of these very talented folks for the industry, they become frustrated and disenchanted that much more with newspapers. Often they move out of newspapers altogether and the talent that has taken us this far is lost forever. I can’t tell you how many stories I’ve heard of a fantastic press mechanic who was let go due to budget cuts and subsequently moved on to work in another industry.
It should be no surprise to anyone in our business that trying to hire a press operator is next to impossible. We’ve all experienced the challenge of trying to fill this critical position and after months of looking, we settle on an unskilled individual who at least shows up to work most days, then the hit or miss training begins. The low unemployment rate in this country has brought a challenge to maintaining a skilled labor force like we’ve never seen before. Couple this with the fact that we don’t offer the stability and future growth opportunity we used to and the problem gets even worse.
And that’s just in the pressroom. Mailroom jobs (the same ones that we used to be able to fill easily) are now becoming more and more challenging to recruit for. Pay seems to be the major barrier here. Many of our mailroom folks see an increase in pay only when the minimum wage goes up. This is shortsighted on our part, and you’d think we would have learned by now that this area needs to be developed as much as other areas of the industry.
I recently heard of a newspaper that conducted a job fair to fill mailroom positions. After a full day of recruiting, only a handful of people even showed up, all unskilled labor, and one unqualified individual even applied.
My point is we are no longer an employer of choice. We can’t—or choose not—to compete with others for qualified labor. Our quality suffers, our accuracy suffers, our margin suffers, and for some reason, we don’t seem to get why. We need to be willing in 2019 to up the ante and invest in quality talent.
When it comes to temps, I’ve discussed it with several publishers and operations executives many times. I’ve got nothing against good/quality minded and ambitious temps. Some temps can be very good and are just down on their luck—I’ll hire them all day long. But for the most part, I find that temps simply don’t have the same company mindset that employees do. Ask most temps to load two pockets on an inserter, and then get ready to load them yourself because they’re not coming back from lunch.
In a property I was at during the Thanksgiving preprint rush, we needed to add additional hands to assist with pre-packing. My mailroom manager convinced me we’d need at least 10 temps. He also convinced me with past performance from the temp agency we needed to request more. Usually I’m fairly logical calling in temps, but with a huge project ahead, I went with what I considered a bit over-the-top approach. We split the need between two different agencies and ordered 15 temps from each for a total of 30. I was anticipating a total of 15 to 20 to show, but in the end, only six showed up between the two agencies. Of those six, over the next three hours, five of them bailed out; they were too tired; it was too much hard work; it wasn’t worth the money, etc. We requested 30 temps to help with our packages, but we ended up with just one person hanging in there all night.
In the upcoming year, we need to fill these mailroom positions with qualified, well-paid, hardworking employees, and then treat our employees like we honestly want to be an employer of choice. It may cost us up front, but I guarantee it will pay major dividends in the long-run.
Management is no longer the exception to the labor challenge. Qualified and talented publishers and managers from other parts of our industry are exiting in search of greener pastures, moving out of our business, and finding alternatives in other lines of work. I believe that we have a serious labor crisis in the industry that needs to be addressed at an individual property level.
Closing Printing Sites/Consolidating Operations
Shutting down a production operation is painful to some, while it’s all in a day’s work to others. In 2018, many organizations made the tough decision to shut down their aging presses and move their printing outside. I predict in 2019 this trend will continue.
I have been part of orchestrating such moves several times in my career. Last year, I was part of two major shutdowns that made financial and operational sense. I am thankful that each time I have been on the right side of those moves. Unfortunately, because these moves make financial sense, it still doesn’t make them any less emotional on those individuals who have been displaced.
Often the need to shut down a press operation comes from lack of maintenance on the press. Presses are very durable and while iron does wear, often irreversible wear comes from reductions of workforce resulting in lack of proper maintenance and lack of investments in the equipment. This normally comes from budget cuts, some which are critical to keep small shops afloat. Other times the internal expenses grow so out of control that it becomes less expensive to print outside. From there, the choice is easy to make.
In February 2016, I wrote an article for E&P (“Is Consolidation Right For You?”) detailing the advantages or/and pitfalls of consolidation. I recommend reading it over if you are considering moving print operations or consolidating in the near future.
Growing Commercial in 2019
In 2018, the trend of building commercial printing continued to grow at newspapers across the country. The days of running a single daily newspaper are long gone, and at many properties, jumping on the commercial/outside printing bandwagon early in the game has turned out to be a tremendous benefit.
Printers who have made the commitment to calculate capital expenditures based on solid ROI’s, maintain adequate strength and quality in their workforce, and aggressively sell commercial printing have made options available and financially feasible for outside publications to move to their printing.
This trend is sure to continue and expand into 2019. Many newspapers have found greater margins in outside printing than in the daily newspaper itself.
Lessons we’ve learned in 2018 can transcend into the New Year and help us to grow and profit. The industry is in a whole new world and working under entirely new rules and challenges. With tariffs, budget cuts and an onslaught of never ending challenges eating away at our profits, we need to learn from our mistakes, capitalize on and benefit from our successes, and carry into 2019 what we know works, while accepting and letting go of what hasn’t.
Jerry Simpkins has more than 30 years of experience in printing and operations in the newspaper industry. Contact him on LinkedIn.com or at [email protected]