Print Buying
Cuts in public sector could offer opportunities for gain in print
Suppliers to public sector authorities are coming under increasing pressure to cut prices, according to a number of printers.
Following last month's emergency Budget, government departments were ordered to reduce annual budgets by 25% before the next election.
In addition, local government is bracing itself for the autumn spending review, in which cuts in central grants of up to 40% could be announced.
As budgets are squeezed, public sector print buyers have already started looking to their supplier base for potential savings.
Iain Black, group sales and marketing director at Paragon Group, said: "There is a definite feeling coming from the public sector that we're in for a second round of price cuts."
However, while prices are coming under pressure, the scale of the cuts has meant that local authorities are actually being far more open with their suppliers than they have in the past.
"They are willing to take a much more collaborative approach," said Black. "They're telling us 'these are the savings we've got to make, now how can you help us to achieve that?'"
Adam Baxter, joint managing director of Cheadle, Cheshire-based transactional printer BurrBaxter, added: "There has been a complete and utter change in the psychology of public sector buyers in the last few months."
The company, which specialises in the low-cost production of payslips, has seen enquiries from public sector clients soar in recent weeks as the budgetary squeeze has tightened.
"Having had nothing for the first year – it's gone wild since the Budget," said Baxter. "This week, we've had six new public authorities contact us to send in specifications of their print – one came in that I've been chasing for several years."
BurrBaxter uses older equipment to produce print at prices that would be uneconomical on the latest million pound presses – this puts it at a distinct advantage in the current climate.
"The product we have is very green and the way we produce it means it's a bit cheaper and suddenly, if you're in the public sector and having to save however many thousands of pounds in your department, it's a question of having to find those savings in any way you can – or looking someone in the eye and telling them they've got no job," said Baxter.
"Several councils have said to us in the past week – give us prices, give us all the details so we can move [work over] to you so that somebody doesn't come in and make someone redundant."
Baxter: change of psychology in public sector buyers
Comments
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Ivan Ellovanich - 30 July 2010
You are not thinking that councils are just jumping on the 'stuff the supplier' bandwagon then? This approach is not sounding like the way to correct the balance of the economy to me, more the opposite. Get enough quotes in and someone will drop the bollock - should keep the job centres nice and busy!
John Simms - 30 July 2010
Really not sure this is the case. The government are facing unbelievable pressure to cut costs. There's a rule in place that anything over £1000 needs to be signed off by a minister and anything over £25k needs to be signed off by the treasury.
With that kind of restriction on spending I am amazed anyone is getting more work!
It sounds like, to me, people are scurrying around trying to find cheaper printers as I suspect they've been lazy and paying a premium with their existing suppliers.
Ivan Ellovanich - 30 July 2010
I am thinking you are right, we are saying same thing, just my use of English language it is a bit slanted.
'Not A Doctor' (NDCT) - 30 July 2010
[quote user="John Simms"]It sounds like, to me, people are scurrying around trying to find cheaper printers as I suspect they've been lazy and paying a premium with their existing suppliers.[/quote]
That's right. Giving jobs to mates at inflated prices suddenly doesn't look like the right thing to do when your budget has been decimated and your own job's on the line.
Bring it on, I say. The corruption in the public sector over the last five years has been blatant. One local sales rep near here was even taking the local school secretary to promotional nights at a paper merchants just to make sure she diverted the work to his company and didn't bother with quotes from anyone else. Chickens home come roost.
Marcus Doo - 03 August 2010
should pave the way for some nice innovative web2print solutions methinks
Stuart Mason - 03 August 2010
As more and more public sector authorities turn to framework agreements the pricing structure will suit the BUYER. We have already pulled away from two sizable Scottish Councils as both framework agreements saw the "winning price" at ridiculous levels. As long as there is irresponsible pricing in the market then public sector buyers can enjoy the SHORT TERM savings.
We've also noticed that our FSC, PEFC, ISO14001 accreditations and Carbon Balanced Papers mean nothing when the guy down the road with the 100 year old GTO and polyester plates is £5 cheaper. Another great public sector / government myth.
Not for us. Not spending another 40 hours of my life doing a PQQ and Tender so that we can work for single digit percentage profits.
Just look at the "big" printers with the £20m+ turnovers, then look at the bottom line... oops they're making less than us. Not so big now !!!!
- 05 August 2010
Printers looking through rose tinted glasses, me thinks. Unfortunately for printers, the medium term consequence of this will be that the government puts all their employee payment information on a password protected secure website - Hey Presto - no more payslips! IT savvy companies can grab the development and hosting of these systems - but there may only be one or two winners, and they won't be reliant on printing presses to make their money.
- 06 August 2010
Cuts in public sector print budgets means that in-plant print usits are either retaining as much as possible, or considering fuly outsourcing.
The ability of print buyers to achieve significant savings by seeking quotations from many companies is not sustainable, but perhaps this is due to overcapacity in the market. A short term solution possibly until the market capacity levels out.
The real issues for public sector procurement lies in Framework Agreements. Public funded units are under continuing pressure to use print frameworks and the danger here is that work moves from a local area, and in the case of a local authority, potentially outside the county and even out of the country. the Value Wales frameworks have companies as far afield as Leeds. What are the transport costs, let alone the environmental impacs of this type of intitiative? Local businesses suffer and therefore the only winner is the printer who gets the additional work which the framework directs at them.
This simplistic 'eggs in one basket' aproach needs to be looked at!
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