Mastering Budgets

Post-pandemic cost management will be key to industry survival

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Throughout my many years in the newspaper industry, I’ve strived to be a forward thinker. Spending time on what was or could have been doesn’t get us too far both in our industry and life in general. Over the last few years particularly, we’ve all been challenged to maintain an optimistic outlook for newspapers.

A few years back, I decided that things were settling in. While things weren’t robust, we were beginning to find the true benefits of consolidation and going through yet another round of cost reductions as we again found inventive ways to reduce expenses. Losses to our subscriber base seemed to be slowing, and it appeared there was light at the end of the tunnel. Still, with all our challenges, most of us believed that we had built some of the best teams in the business and if there was any way to get back on the right track, our team would be the one to find it.

Then, the COVID-19 pandemic struck and any progress we were making came to a screeching halt. Businesses were closing left and right, and advertisers cut back on everything nonessential, which unfortunately included advertising in our publications. Looking at the bright side, there were some benefits to our subscriber base as we became a nation of shut-ins. Readership jumped for many of us and the newspaper industry as a whole did an absolutely amazing job of covering COVID, a subject that no one could get away from over the last 18 months or so.

Through all this, we endured. Suddenly, growth was no longer our primary mission—survival took its place.

This brings me to innovation in the production operations areas of our industry. The changes that have taken place throughout my career have been nothing short of breathtaking. From trimming and waxing galleys of type and pasting up copy on a grid sheet to paginating on a personal computer, from shooting pages onto film in huge horizontal camera and burning plates to simple output to a CTP unit, from hand bending hundreds of plates a shift to automated benders with vision registration systems—our industry excelled at technology. Over the last few decades, newspapers have dramatically outshined many (dare I say most) industries with their technology and innovation.

But then we hit a point where it all seemed to stop.

I’m not saying we don’t see new technology in our printing and production processes., but I am saying that I have not seen a lot of it over the past few years and certainly not at the breakneck speed we need for survival.

The innovation and advances we made in all our production areas over the last few decades were not simply by mistake or dumb luck, they were a direct result of vendors who partnered with our industry and were driven by demand to make these innovations. As any business would have it, they profited from bringing newer and better technology to newspapers, and they saw us as a strong ally who made up the lion’s share of their business. As a result of our existence, their companies continued to develop new technology and solutions that moved our industry forward. We owe a lot to these vendors, and it seems that now is the time to pay that debt.

Working with Vendors
To some degree, we’ve always been able to negotiate proposed price increases from vendors. We often played the game of pitting one vendor against another like we’re bargaining for a used car. Newsprint companies used to float out a “feeler” in the market and then pull back on a proposed price increase when they realized it couldn’t stick. In our industry, we have relied heavily on negotiating and been very successful keeping prices in check.

We also have been assisted by PAGE Cooperative to help control pricing. PAGE went to bat for our industry since its inception and is now very active in assisting our industry to control costs.

Post-pandemic, that all appears to be changing dramatically, and it is quite possibly the last nail in the coffin for many of our properties.

Yes, that’s a pretty strong statement, yet one that I believe to be very accurate.

I’m not blaming vendors; they certainly have a right to expect to remain profitable and have a responsibility to their owners and shareholders.

Whether we like it or not, vendors are going through their own challenges, struggling with increases on consumables, rising labor costs, and the miscellaneous expenses associated with providing newspapers goods and services. It’s really unfair to look at them as the “bad guys,” yet for many of us that’s just what we’ll do.

Some of our vendors have options for other revenue streams and can reshuffle their sales to minimize the impact from our industry. Others are tied so tight to newspapers that I honestly feel their challenges mirror ours and things could be grim for them in the future.

As our industry continues to consolidate print locations, some paper companies will move to aggressively expand into other more profitable markets, such as packaging or industrial service markets. To be fair, they have had to adjust accordingly to preserve their business as well.

Since the start of the year, we’ve been inundated by price increases from vendors and with the current economy, I’m not encouraged things are going to stop any time soon. Again, I understand to some degree that they have to do what they need to survive, but I am a bit frustrated due to the fact that there is simply no place for us to pass it on to.

One primary vendor announced four newsprint price increases and one increase to specialty paper. In addition, there have been an ink surcharge, a plate price increase and increases in the cost of press chemistry.

These increases can no longer be absorbed by newspapers and are leading to increased consolidation and insurmountable financial challenges. Newspaper operations that have commercial operations have some flexibility and may consider increasing prices to their customers, providing them with at least some option; however, when price increases are piled on newspapers, they literally have nowhere else to apply the cost overruns and that will accelerate the rate of failures throughout our industry.

Cost-Saving Measures
Our advertisers are in the same boat we are and can’t (or won’t) accept higher costs for their ads. Circulation declines continue to chew away at revenue in most newspapers (especially smaller publications) so that isn’t a way to increase revenue to cover ballooning expenses. On top of that pile, the expense of higher labor costs and employee shortages—and you have a challenge many newspapers may not be able to survive.

So, what’s the solution moving forward? My strongest suggestion is keep doing what you’re doing. We’ve become budget masters; managing our operations as tight as possible and finding every available option necessary to maintain quality while reducing costs. The innovation of newspaper people simply amazes me.

I still chuckle a bit every time I think of one reader’s comment to a previous article I wrote on cost cutting calling me “Captain Obvious.” Believe me, I understand the reference; over the years, we’ve become almost too good at reducing costs. I’m going to make a few very brief suggestions here (most, if not all, are fairly obvious and you probably have them in place at your shop). With all the cost saving approaches you’re taking on a daily basis, these may be just part of your everyday operation.

General Maintenance. This applies to all areas of the operation. Whether its mailroom, pressroom, delivery fleet or building, the old saying, “An ounce of prevention is worth a pound of cure” applies here. Changing out press oil, greasing bearings, replacing wear parts pays dividends. Sure, it’s expensive on the front-end, but it’s usually a lot cheaper than avoidable repairs and excessive downtime.

Plateroom. Take an extra minute to look over pages before outputting. While this certainly seems obvious to most, we often are in such a hurry that we go on autopilot and assume that the person who produced the page (most often the newsroom) sent us a perfect page, only to find out that there’s a missing graphic or glaring error after the plate is made. Plates aren’t cheap. Obvious point made.

Press. Put some extra effort into focusing on start-ups. Whatever your start-up procedure is, make sure it’s done right. Some of us roll-up for 50 copies, adjust color registration, ink/water balance, check page numbers / plate placement, etc. Set/adjust our ink keys and off we go, while others like to adjust on the run. Both have their advantages and disadvantages, and everyone has their own process on start-up. Review your start-up procedure and make sure it’s the best way to save copies.

 Some of the more costly issues that can be avoided on start-up can easily be missed. We’ve all seen start-up go right back down because someone webbed the press wrong (i.e. missed a roll). Just this past week in my shop, a veteran press operator put the wrong color plate on press, and it cost extra to roll-up waste and put two new plates. Mistakes absolutely happen, but what I’m simply saying is slow down and double-check yourself.

Another thing to watch on press is your counts. Sometimes counts get mixed up; you pull some bad copies out of the line with a water issue and have to make up for the lost copies. You’re not going to make up for those copies exactly, so you add on a bunch more just to be safe. I understand, but being wise, organized and calculated beats generalizing on your counts. Outside of labor, paper is our largest expense and needs to be managed appropriately.

Mailroom. Make sure to communicate well with the mailroom. We’ve all seen our mailroom miss the good copy break on occasion. Make sure one hand knows what the other is doing.

Also, make sure your equipment is set up correctly before the press starts. Review the settings on your stacker, make sure the strapper is loaded and ready, and above all else, have your inserter ready to go and inserts properly staged. The largest expense in the mailroom is labor and it adds up quick. The best way to save on labor is to manage processes and anticipate issues on the front end.

Delivery/Fleet Vehicles. It’s simple: maintain your fleet and treat your vehicles like they’re your own. Get the oil changed, don’t let your employees drive them like they stole them, and address small mechanical issues before they become big problems.

Jerry Simpkins has more than 30 years of experience in printing and operations in the newspaper industry. Contact him on LinkedIn.com or at simpkins@tds.net.

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