Special Preview of Thursday’s E&P ‘Virtual Expo’ — from Upgrading to Outsourcing

By: Jim Rosenberg and Mark Fitzgerald

Regardless of geography, ownership or circulation, newspapers faced rising costs and diminishing revenues even before the recession ? which is only making publishers’ problems worse. Printed editions and workforces can only be cut so much, but publishers can make decisions and investments that bring further savings or support additional business. Some may benefit from both; either is desirable.

The trick is squeezing out efficiencies and opportunities by upgrading existing equipment at home, when possible, and exploiting expertise elsewhere, when preferable. E&P will highlight these moves in its first Newspaper Industry Virtual Expo on Jan. 22. Here, we explore the strategies that will be featured in a keynote and three panels: outsourcing, process improvement, smart software, add-ons and enhancements. In all likelihood, newspapers not frozen in panic will adopt a mix of measures ? where budgets and business plans permit. You can sign up for free here.

Newspapers Send Out, Take in Work
When it works, outsourcing should benefit both parties, allowing each to focus on and invest in what it does best. It can even save one newspaper from making a major capital expenditure, while saving the same sort of investment made by another newspaper.

At upwards of $10 million, the Raleigh, N.C., News & Observer’s post-press plant-and-equipment project ? completed two years ago to add “”a lot of horsepower to go very late with our classified packaging,”” according to Operations Vice President Richard Rinehart ? is now at the service of a different revenue stream.

The paper’s strong automotive category eventually followed the industry trend. Today, the classifieds have diminished sufficiently to fit into the main run, Rinehart says. But while the N&O can still handle its sister community paper’s inserting more efficiently than that smaller paper, external opportunities are about to pick up the slack of the internal efficiencies.

The N&O will handle Sunday inserting for The State in Columbia, S.C., beginning with the Jan. 11 edition, and the Raleigh paper is talking with other, unnamed North and South Carolina papers about doing the same for them, says Rinehart.

At the same time that it takes in others’ work, the N&O outsources some of its own: Chicago-based Affinity’s offices in Asia make up its display ads, while Penske Logistics in Reading, Pa., trucks its copies to distribution centers and drop-off sites.

Some papers looking at daily inserting and TMC products, says Rinehart, may find efficiencies outsourcing to Raleigh, especially with its inkjet labeling. “”For smaller papers,”” he adds, “”it may make sense to take on all of their work.””

Now with two 28:1 Harris 1472s, a new, 40:1 Muller Martini SLS3000 for Sunday work (where hopper loaders allow one person to manage two inserts), Burt Technologies scheduling software and a Cannon Equipment cart-loading system, the expansion resulted from the recognition that “”inserting was still a huge growth area,”” Rinehart recalls.

Columbia’s 130,000 color comics sections, which serve as insert jackets, and the inserts themselves (25-35 million per month) will be delivered directly to Raleigh from their printers. The State will truck inserted comic sections the 200-plus miles back to Columbia.

For Rinehart’s counterpart in Columbia, “”it was still a go even with the higher fuel charges”” that prevailed when the arrangement was worked out last year. Whereas the State has relied on a pair of outdated Harris 1372s for inserting, Raleigh’s new operation is extremely sophisticated and very well managed ? “”and somewhat underutilized,”” says Phil Haggerty, who last May returned to the State as operations chief after spending 15 years in Fort Wayne, Ind.

“”They can download our information,”” Haggerty adds. “”It gives us sub-ZIP inserting for advertisers, should they require that.””

Haggerty expects to see newspapers execute more such agreements. Echoing many others, Rinehart remarks, “”I don’t think people are going to be making any capital investments unless they’re bringing in new work.””

The Frederick (Md.) News-Post is bringing in new work. Like the N&O, it took a major project into production just as the industry’s prospects were dimming. In fact, it was an even bigger project ? a new headquarters and production plant. But also like the N&O, it starts the new year with a new newspaper customer, taking on some of the printing of The Examiner’s Washington edition. Like the State, the Clarity Media free paper found more capability in its partner than in its own older equipment.

Also this is the year, Montreal-based printer and publisher Transcontinental enters the U.S. newspaper market when it begins printing Hearst’s San Francisco Chronicle on huge new heatset-equipped Colorman XXL presses in a new production facility.

But looking across the industry, outsourcing has reached into every department, including ad production, call centers, tech support and back-office operations.

Efforts to outsource ads in the 1990s were local operations, whereas today the work can be accomplished across the country or around the world. Gannett Co. now outsources “”a little over 3,000 ads per month”” to 2AdPro in India, with the goal of outsourcing all sites’ ad production, according to U.S. Community Publishing Production Vice President J. Austin Ryan.

Newsrooms are outsourcing beyond the traditional wire services, syndicates and supplementals, looking, for example, to other publications for business sections. Large Canadian chain Canwest has taken even page layout and copyediting largely out of local hands and centralized the work at The Hamilton Spectator in Ontario.

Photo toning at Gannett and, to a less-centralized extent, the New York Regional Media Group represents a similar in-company outsourcing of what has traditionally been a local operation. The aim was to “”consolidate the work and gain economies of scale”” while marketing the capabilities to others and saving them money, adds Gannett’s Ryan.

Though it won’t always necessarily be desirable, Ryan adds, “”anything that goes digitally, theoretically, can be done somewhere else.””

Tighter Operations in Tight Times
Sun-Times Media Group (STMG) knows all about getting smaller. With its financial strength sapped from within by the alleged looting of hundreds of millions during former Chairman Conrad Black’s reign ? and from without by the harsh newspaper advertising climate ? the parent of the Chicago Sun-Times and dozens of other Chicago-area papers in the past two years has reduced its printing facilities from five to three, and its press lines from 13 to nine. It folded or consolidated community papers, and shed jobs in all departments.

“”Whatever could be outsourced, we’re outsourcing ? ad production, inbound classifieds call center, circulation call center, delivery has been outsourced,”” says Rick Surkamer, the longtime operations executive who is now STMG’s chief operating officer.

But as battered as it is by the economy, the fact remains that STMG is still putting out a lot of product, and it cannot simply operate with less equipment ? it must optimize what it has. Perhaps no other newspaper group in America could justify making no more capital expenditures better than STMG, the publisher of a second-place metro daily that also owns suburban papers that are in ferocious fights with such strong family groups as Paddock Publications and Shaw Newspapers.

“”We’re still making capital investments,”” says Surkamer. Certainly, STMG is not spending freely. All projects must have “”hard-and-firm [return on investment],”” he notes. Yet it hasn’t shied away from bigger investments that optimize the capacity and efficiency of its equipment.

For instance, as STMG was cutting down the web width of its flagship Sun-Times and other tabloids, it purchased nine Advantage CLS computer-to-plate imagers from Agfa for its three remaining plants. It also installed a plate-sortation system from Acutech, and took other measures to automate workflow. Lines of sticky-note applicators were also added.

STMG presses now run more like commercial operations, Surkamer explains. “”The days of taking a press down for two shifts for 30-day maintenance is gone,”” he says. Crews work quickly within windows that do not disrupt production. And not only is equipment not breaking down, he adds, “”productivity is up substantially.””

But Surkamer, who often takes a macro view of the newspaper industry, argues that operations will not be truly optimized until there is more standardization of newspaper products, something always resisted by the sales side. “”We produce an awful lot of products,”” he says. “”I think we’ve optimized ourselves into a corner.””

At The Eagle-Tribune in North Andover, Mass., Operations Director Jim Falzone has reached the same conclusion. When he arrived at the Community Newspaper Holdings Inc. (CNHI) paper, his first task was to centralize production with three sibling dailies, saving $200,000 annually in labor costs.

But what was needed to really optimize the presses and inserters was not so much new equipment or control systems, but a change in scheduling. “”We had weeklies spread out all through the week, and every one had a reason why they wanted to publish on a certain day,”” Falzone says. This year, though, the papers all shifted to Thursday publication, at Falzone’s urging ? but not his command. He got editorial buy-in with a simple argument: “”I said, if we don’t save money ? it’s editorial jobs. They’re definitely more open than ever to realizing the importance of the expense side of the equation.””

Some expense-cutting, though, demands a certain level of investment. Consider lighter-weight newsprint, which essentially became an industry standard as newsprint prices began to climb more than a year and-a-half ago. But the newsprint comes with its own problems. Levels of ink that are normal for standard newsprint not only risk show-through, but also the water levels can weaken the web, and ink left on rollers can wrinkle the web.

The Miami Herald this year added ProImage’s OnColor ECO ink optimization software, and reported an ROI of less than three months. The bottom line: Overall ink cost fell as much as 25% during the Herald’s test period.

“”In these resources-stretched times, that’s a really welcome savings,”” says Craig Woischwill, vice president/operations for Miami Herald Media Co. The system has worked as advertised in reducing set-off and web wrinkling, he adds: “”We’re really pleased with it so far. It tends to be slightly cleaner in the final print.””

Software Solutions for Hard Times
Gerald J. Taylor had a grand vision of a single platform that would integrate publishing, advertising, circulation and business functions at The Dispatch in Moline, Ill., where he is publisher, and at its Small Newspaper Group sibling dailies nearby in Kankakee and Moline.

Taylor is also head of the technology task force at privately owned Small, which in May signed an agreement to install Digital Technology International’s solution for that grand vision at all its papers ? a project with the potential to incorporate 300 seats in four states.

After considerable deliberation, Taylor made the decision to start installing the circulation part in two Illinois papers, the flagship Daily Journal in Kankakee and The Times in Ottawa. They would solve at least one problem ? a legacy circ system homemade by someone who no longer even worked at Small.

“”The timing was nothing less than stunning,”” Taylor says with a laugh. “”There’s nothing,”” he adds, “”like spending a jillion dollars”” just when the newspaper industry hits the skids.

All across the country, newspapers that had not yet made such commitments are snapping the capital expenditure purse shut. But even in these hard times ? and maybe especially now ? an investment in new- generation software is exactly what a newspaper needs.

Despite the somewhat rueful laugh, Taylor concluded that a harsh economy demanded the efficiencies and quality of service the DTI system promises. “”We decided this was no time to have a legacy system that was showing less dependability all the time,”” he says.

At The Virginian-Pilot in Norfolk, meanwhile, Business Systems Analyst James Allen hears from a lot of nervous newspaper executives wondering whether they should emulate the Landmark Communications daily, which has invested more than once in self-service advertising software from Wave2 Media Solutions.

“”I’ll tell you exactly what I would say because we’re kind of a flagship for Wave2, and I get the questions all the time,”” Allen says. He starts with this fact: Its first application, for classified ads, paid for itself in the first year.

“”If they’re thinking of spending money in this kind of climate, the inevitable next question the publisher is going to ask is, how are we going to mitigate cannibalization?”” Allen says. His answer: Limit inventory if that’s a concern. But realize that while self-service software may let a contract advertiser get more ads, it frees up salespeople to capture new accounts, and designers “”to do the creative stuff that ultimately has a bigger price point than the ordinary stuff.”” And 90% of retailers using self-service are new advertisers, he adds.

Across the country, where the collapsed California housing market seemingly still looks for a bottom, Freedom Interactive just last month launched 40 real estate sites at The Orange County Register and the rest of Freedom Communications’ markets.

“”I lobbied to move ahead”” despite the climate, says Linda Fisk, Freedom Interactive’s vice president of marketing and ad products. The problem for Freedom papers was that their print real estate classified was competitive, but their interactive offerings were losing share to better sites operated by national competitors. “”It’s very unfortunate when a national competitor can do better than you in your own backyard,”” she says.

Gabriels Technology Solutions designed and maintains a solution that uses a single portal to offer rich, neighborhood-level content customized to be uniquely local for each of the 40 markets. “”We were able to save on the investment,”” Fisk reports, “”because with Gabriels we were buying functionality and search capability one time ? but serving 40 markets, rather than buying 40 different iterations of the vertical.””

Vendors, too, are reacting to newspapers’ new economic reality. The classified ad software maker Ranger Data, for instance, has eliminated all upfront fees and licensing payments for a per-month charge of $60 per station for its outbound call system. “”We’re very, very fortunate that our products are designed exactly for these kinds of times ? extremely affordable and a revenue-generating system,”” says President and Chief Operating Officer Tony Marsella.

Upgrading a Downsizing Industry
It’s only reasonable that an industry asking fewer people to work smarter and harder should expect the same of the tools it gives them to accomplish the task.

Upgrades, including add-ons, ordinarily cost far less than new capital equipment, can boost efficiencies and even afford new-revenue opportunities. Typically, when the Gannett Co. considers upgrades, it looks for revenue return on investment, “”but not as strongly”” as expense reduction, says J. Austin Ryan, the company’s U.S. Community Publishing production vice president.

Enhancement of what’s already installed may wring out efficiencies or opportunities, but it won’t always allow further cuts to already depleted staffs.

Management and staff can do only so much, says Janet Owen, production manager at The Register-Guard, Eugene, Ore. “”If you’re going after the labor,”” she says, eventually “”you come to a breaking point … and you’re going to have to get new technology.”” New-revenue opportunities, she adds, can be limited by newspaper-specific equipment, and upgrade benefits vary by department.

Mailrooms, for instance, remain labor intensive. As part of a larger post-press systems upgrade, the Register-Guard has new Harland Simon controls on its old inserters. But any effect on staffing, Owen cautions, may only be seen in comparison with the old controls’ maintenance needs. As for actual inserting, preprints still need to be fed into machines, although multiple-head arrangements can help. For onserting, she notes, one person can feed many heads if preprints are in good shape.

With so much labor-saving technology deployed in recent decades, Owen recognizes that “”there’s some diminishing returns after a while.”” Nevertheless, for those who can justify the expense, she thinks “”there’s more to be had on the back end ? on the mailroom side.”” Citing experience with new Ferag equipment at the Minneapolis Star Tribune, Owen notes that “”if you’re running 28,000 [per hour] and you’re netting 26,000, you’re going to be cutting shifts.””

Familiar pressroom enhancements and additions range from new controls and presetting systems to digital inkers, spray dampeners, blanket, web and roller cleaners, and inline stitcher-trimmers or gluers. The Ocala, Fla., Star-Banner saw improvement when it replaced spiral brush dampeners with the same 10-nozzle spray-bars The Gainesville Sun adopted, according to New York Times Regional Media Group Operations Vice President Bob Urillo. So did the group’s Spartanburg (S.C.) Herald-Journal’s smaller press, which now prints three dailies, when it moved from four- to eight-nozzle bars. All the papers also converted to Goss digital inkers.

Gannett is “”looking at three-around technology on presses for expense savings as well as revenue”” from added color positions, says Ryan, referring to conversions permitting two-around presses to print three shorter pages around a plate cylinder. And where it offers product enhancement and savings, he adds, “”we’ve looked at color register systems at a number of our sites.””

To support new products, ultraviolet ink-curing units cost less and occupy less space than heatset dryers while enabling presses to surpass ordinary coldset printing on paper superior to newsprint.

The Tuscaloosa (Ala.) News has run UV ink on one tower for five years. Along with its stitch and trim capability, the 32,000-circulation daily can produce coupon books, its own and sister papers’ special products, the cover of another publisher’s magazine, and auto dealer ad inserts.

Page and/or color capacity can be boosted by modifying and stacking floor units, putting a new tower on an old press line, or adding comparable pass-along equipment ? like Goss Colorliner equipment from The New York Times’ former Edison, N.J., plant that’s now in the busy pressroom of The Ledger, Lakeland, Fla. When maintained as well as Edison’s presses, Lakeland-based Urillo says, such “”repurposed”” equipment costs “”pennies on the dollar”” compared with the cost of new equipment.

Among other things, Lakeland can now print the 2008-acquired Winter Haven News Chief and add color to what had been day-side printing at the group’s Sarasota Herald-Tribune ? which had upgraded its own press with new controls and autoregistration, eliminating four night-shift operators, improving quality, and delivering “”a very healthy ROI,”” says Urillo. Lower cost and higher quality were big factors in sealing the deal to print The Bradenton Herald,”” he adds.

Other efficiencies aiding Sarasota’s arrangement with the nearby McClatchy daily: upgrade to Aragon System Products controls and Kanasa Twister multifeeders for the old inserters, increasing the number of pieces per pass and thereby reducing the number of runs required. Similar improvements supported consolidation of the Gainesville and Ocala post-press operations at the latter’s mailrooms.

Prepress can upgrade from film imagesetters to platesetters, reducing materials costs, effluent and labor, while speeding platemaking and improving print quality.

Wherever a material-savings ROI can be identified, “”we’re absolutely going to look at that,”” says Ryan. Most Gannett sites now run CTP, and with production consolidation, says Ryan, “”we will be cascading some of that equipment into sites that don’t have it.””

At the Times regional group, “”we got a jump on some of that stuff”” three years ago, Urillo recalls, noting that the move to CTP at many sites coincided with upgrades to Presteligence NewsXtreme workflow software and elimination of some manual tasks.

Papers already converted to CTP can add efficiency with autoloading, software-driven plate sortation, even retrofittable plate-mounting robots for some presses, and opportunity, with commercial-resolution line-screens and high-end register systems.

Farther upstream, Gannett and the Times regional group use Agfa IntelliTune automatic image-toning software at sites that handle their own papers’ work and offer the service to others.

While “”committed to our digital future,”” Ryan says, Gannett recognizes that print remains the important revenue base.

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