Production: Managing Expenses in Today’s Competitive Newspaper Market

Before we start, let’s be clear, budgeting isn’t fun: sifting through prior year actuals, accessing variances, evaluating needs, determining what we can do without, trimming expenses to stay in-line with revenue, weighing labor expense, measuring benchmarks and determining adjustments relevant to page counts and circulation variations.

In today’s competitive market, the one who takes a hard look at expenses, ties spending directly to revenue and implements a solid plan stands the best chance of success.

With budget season upon us, we need to explore every option to reduce and control costs. Outside of the givens of waste control and web reductions, there are those who believe it’s overkill getting down into the weeds and evaluating little things that can add up to big dollars. Sure, there’s a lot of work and some pain involved, but it’s our job and responsibility to move the company ahead and protect the assets of the franchise.

The items covered here are what I’d refer to as “common sense savings,” while they may seem insignificant when they stand alone and don’t receive the same attention as big dollar items like paper waste, combined these small ideas add up to significant annual savings and perhaps will help you meet budget expectations.

I’ll forewarn you that you may read this and feel this is going too far, but to others on the edge of profitability, they will hopefully benefit from the ideas presented on this page. Enough pennies will eventually add up to dollars.

Turning Off the Lights

I really hope you’re saying “duh,” but before you discount this suggestion, take a look at your electric bill. The same employees that flip off the light switch when leaving a room at home won’t give it a second thought in your building. Watch for awhile and you’ll see for yourself. Walk by the empty conference rooms with lights burning all day. There’s more savings here than you might think and some cost cuts can be accomplished through the use of improved hardware.

Replace office light switches with occupancy motion detectors; yes, there’s an up-front investment, but the ROI is well worth the initial cost.

Reduce lighting in low traffic areas and open hallways. Many of the newspapers I’ve worked at we’ve replaced four bulbs in the fixture with two, virtually cutting electric usage in half.

Evaluate the cost of installing new ballasts as your old ones fail. A quick online search states that generally speaking a T8 bulb is 40 percent more efficient than a T12 and a T5 is more than 50 percent more efficient. I’m not suggesting you replace all the ballasts and bulbs in your building, but merely suggesting that you access your current situation and make appropriate choices.

Most of the time improvements like this can fall under capital improvements, easing the burden on your operating budget. Be sure to check with your utility company to see what programs they may have for high efficiency retrofits as well as bulbs and ballasts.

Lastly, the cost savings that can be the most difficult to control—people. I can’t count the number of times I’ve went in on a weekend and found dozens of lights shining with no one in the building, or walked by an office at 7 p.m. only to find the door locked and lights on inside. I can guarantee that if you go to their home it’s not lit up like a landing strip, but because it’s at work, most don’t apply the same rules. If you don’t have the funds for occupancy sensors, then all you can do is coach your employees and hope that it sticks.

Eliminating an Employee Perk

I’m expecting some groaning here. I personally consider bottled water as an employee perk. Last I knew, although tap water has had challenges in some cities, it isn’t going to kill most of us to drink it.

Depending on your location, you’re paying upwards of six dollars for a five gallon bottle of water. In addition, many vendors charge monthly rentals for dispensers. If you think this doesn’t add up, take a look at your monthly expense for bottled water. I predict you’ll change your mind. I will say most publishers I’ve suggested this to look at me like I just succumbed to demonic possession, until they see the savings first-hand.

It’s a quick spot to find several hundred dollars monthly. Depending on your employee count it can be even more. Annualized I’ve seen this perk add up to $10,000. Personally, I can think of more important things I need in my budget, like plates and strapping.

To prove I’m not totally heartless, there are less expensive alternatives to bottled water. UV units are a simple and economical alternative to bottled water. They filter tap water and deliver cold or hot water without bottle water costs. And I’m not even going to get into the workers comp claim when someone loading a bottle on the dispenser throws out their back.

If your employees simply must have bottled water, tell them to bring their own to work (sorry).

Negotiating with Outside Service Providers/Changing Vendors

Most service providers we deal with have been with our companies for a long time and if you ask your employees, they’ll tell you “That’s who we’ve always used.” That’s right along the line of asking about processes in production and hearing “Because that’s the way we’ve always done it.” Both answers rub me wrong.

Granted there are usually good reasons we use the same outside plumbers, electricians, HVAC company, etc. First and foremost, they’re used to our equipment and work well with us.

If that works for you, that may be fine, but isn’t it fair to your company to get the best deal as well? I’ve found that if you keep calling the same service providers they can grow complacent and prices don’t remain competitive. Call them on it and negotiate cost. Review invoices, hourly charges, manning, and call other companies that you can rely on to see how they compare; there’s nothing wrong with shopping around. Most of our employees might call three plumbers or electricians to save on work done at their home, but if it’s at work, they just all one—the one who we always call.

Most operations pay for more press rags than they actually use. Be certain to check inventory on a regular basis, and if you’re not using them, reduce your order with the vendor.

Cleaning Rags and Uniform/Rug Services

Go through your production area and take a look at how many press rags you actually use on a weekly basis. Whatever amount of rags you receive weekly, you can almost always reduce this number. This number edges up during busy times and when the need drops the vendor is not going to come to you and suggest you cut back; they’re going to keep bringing you the same number of rags and not say a word.

Uniforms can be another area that quickly gets out of control. Monitor monthly invoices and make certain that you’re being charged appropriately. The vendor will continue to bring uniforms until you tell them to stop. I have actually seen uniform charges for employees who haven’t worked for the company in two months. If your supervisors don’t stay on top of uniform vendors, they won’t police themselves.

Strangely, another thing employees like to do when they leave the company is keep uniforms for prosperity. Guess who pays when uniforms go missing? When you hire individuals who are provided uniforms, make sure to have them sign off acknowledging that they will be returned upon separation. However, check out your local laws, in many states there isn’t a lot the employer can do, such as hold or deduct from their final paycheck, but at least it gives them something to think about when they separate.

Floor rugs are another item that can get out of control. Vendors love to give you all you want, for a fee of course. Manage your rugs seasonally. In the winter when floors get slippery and you need additional rugs get them, it’s better than having someone fall. But when the season changes, make sure to notify the vendor and get those extra rugs taken off your bill.

Keep uniform costs in check by making sure your production crews manage weekly inventory and notify uniform companies when employees leave the company.

Buying in Bulk/Quantity Discounts

Every vendor I know of provides quantity discounts, so take advantage of these when possible. You may not be able to order four pallets of strapping because you don’t have the storage space, or it may be that you don’t have the dollars budgeted in that month. There are ways to work within your budget and still find discounts.

First, talk with your vendor and be very clear on what point quantity discounts kick in. For example, you may order 48 rolls of strapping monthly because you always have, but if you were to order 50 could fall into a higher volume discount slot. I’ve seen this happen time and time again. Most vendors would be happy to sell more and are happy to provide this information, but more times than not you have to ask.

If you don’t have enough money budgeted in a particular month, sit down with your business office and discuss spreading the expense. There’s usually a creative way if they realize it, and it saves the company money in the long run.

Buying supplies in bulk can save big money. Ask suppliers what point volume discounts kick in and adjust your purchasing habits to maximize savings through active volume purchasing.

The Big Three: Press Draws, Page Counts and Labor Savings

The big three don’t really fall into my theme of “down in the weeds.” These represent significant savings to any property. But to some, including myself, page counts and bodies generate great pain when we sit down and discuss them.

Press draws are basic and not at all painful. Actually these fall into the category of operational efficiency. Most daily papers have pre-runs for the Sunday package. While it’s hard to predict the draws for early runs (comics, TV, etc.), I can’t overstate the importance of managing numbers to closely match the mains. If you fall short, you’re either going back to press (if time allows) or sending incomplete papers into the field. If you’re over, you’re wasting time and newsprint. Either way, it doesn’t work.

I once worked with a publisher who would come unglued if we were more than 150 pre-runs over weekly. Drove me crazy at the time, but once I looked at the waste beyond this 150 I couldn’t agree more. This is a good target to aim for.

Do the best you can to manage your pre-runs and access results on a weekly basis. This is one area, as an industry, I truly feel we don’t do well and need to do better.

Page counts—this is where the pain begins. We strive to provide our readers and advertisers with high quality news reporting and investigative journalism. Besides informative community coverage, many of our feature and opinion pages help to generate reader interest, preserve reader loyalty and maintain circulation. As necessary cost savings chip away, and the need arises to eliminate many of these feature pages to better manage news hole verses ad space, we risk compromising the product that brought us success in the first place.

While the days of sitting for hours with the Sunday paper have changed, let’s not lose sight of what brought readers to us and what will help to grow our circulation.

This is a double edge sword. Step carefully into this area of savings, but again do what you must to preserve the profitability of the newspaper at the same time. It’s a tough choice.

Now labor savings, I recommend making wise choices. It should be obvious to us all that the largest savings outside of newsprint is labor, but this cost reduction comes at a price. It’s getting tougher to land qualified newspaper talent, and I believe this is going to affect the quality and future of journalism as well as print quality and in turn, profitability.

Manage well, be fair and keep your eye on the end game.

While some of you may appreciate my “down in the weeds” cost cutting ideas, others no doubt are convinced I’ve lost my mind, my heart and my common sense. For you I say: newspapers are a business like any other. I’m honored to be part of an industry that brings together communities, preserves journalistic integrity, offers a valuable service to advertisers and readers alike, and provides a living for thousands nationwide. But when the day comes to an end we’re like any other business. If we don’t make money, we don’t survive. So if you think my penny pinching approach might be way off base, you’ll find no apology here. After all, it’s survival of the fittest.

Jerry Simpkins is vice president of the West Texas Printing Center, LLC in Lubbock, Texas. Contact him on LinkedIn.com or at simpkins@tds.net.