News

You have to hold your nerve, according to Howard Matthews, Nemc Group chief executive, as he reflects on the near 20% margin the group achieved last year. “Despite such downward pressure on prices in the industry, we didn’t lower our prices. We held our nerve.”

Nerve is a central tenet of Matthews’s bold way of doing business. In a tight direct mail market, one beset with negative press and other challenges, he has needed it.

But the firm’s results speak for themselves. Since 2001, the Washington, Tyne and Wear-based company has grown from a small mailing operation, handling just a few pallets per day, to a 2,500m2 site with full-colour printing facilities, catering for blue-chip clients and with the capacity to handle 1m items every day.

Financially, Matthews’s philosophy has proved itself too. Last year, Nemc recorded an operating profit of £481,211 on a turnover of £2.5m, a margin of 19.4% that meant the company would have come third in the PrintWeek Top 500 in terms of operating profit margin. Its acquisitions boasted similar margins and the combined group turnover was £2.8m.

For Matthews, investment and diversification join nerve as the tangible foundations needed to survive in a rapidly changing marketplace. It is this diversity that led the company to rebrand as Nemc Group last year, from the now misnomer North East Mailing Centre. Matthews says the rebrand reflected the changing industry.

Continued development
Nemc has invested heavily over the years to boost its offering and keep pace with the industry. Parkdale Press was acquired in 2005 and re-branded as Nemc Design & Print, while Nemc Multimedia was acquired in early September 2007.

“We merge with companies who have a synergy with DM and are able to inter-trade with each other to offer our clients a full direct marketing package,” says Matthews.

He adds: “You can’t just be a mailing house or a litho print company now. Our existing clients also have a requirement in multimedia and, following intensive research, we acquired the multimedia division. This has strengthened our relationship with many of our clients.

“But we can’t stand still. We are in discussions with two further acquisition opportunities. Software is another area we must keep up with and our research in this area is ongoing.”

Matthews claims his refusal to enter into the price war that has plagued the sector was key to Nemc’s success. While others were crippling themselves and their service by lowering prices, he says Nemc stuck to its guns and kept its prices constant, despite the risk of losing clients to rivals.

“We did lose some business on the basis we were not prepared to compromise our bottom line,” he says. “However, most came back to us when they realised that a lower price usually meant a lower service.

“In this business, far too many printers and direct mailers spend their time looking at their rival and they lose sight of their own business,” he says. “We always just look at what we are doing and make sure our clients have the best service.”

Matthews’s commitment to the best interests of his clients has raised some eyebrows over the years. He prides himself on having a totally open order book and letting rival companies have a look around his operations whenever they choose.

He explains: “I am confident we offer our clients the best service in the market and there is nothing our competitors can offer that we cannot. Most of our customers realise that if a price is lower they are losing something.”

Honesty in business
Honesty, integrity and openness of business are essential to Nemc. Matthews recalls when a competitor installed an automatic envelope inserter. “I got on the phone to my client and told them they would be able to get a cheaper deal down the road. They called up our competitor and found that indeed they would and so moved their business. However, two years later we bought the same bit of kit and they came straight back to us when their contract was up and have been a trusted client ever since.”

Nerve may be the driver of Howard Matthews’s business philosophy, but it is backed up with a keen eye for the market and the willingness to take risks and invest. Nemc Group demonstrates that margins can be kept high in difficult trading conditions and, as Harry Potter once said, “Anything is possible if you’ve got enough nerve”.