Printers are doing it for themselves

By PrintWeek Team, Friday 19 August 2011

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It may not be for everyone, but bringing finishing in-house can offer higher margins and a means to add value

In-house or not in-house? That’s the question that many printers are weighing up at the moment when it comes to their finishing requirements. Historically, it’s a conundrum that few companies would consider. The capital outlay needed to purchase a new piece of finishing kit was prohibitive, and then you had to either employ an extra member of staff with finishing experience or train up an existing member of staff, which could prove costly both in terms of time and money. Plus many pieces of finishing equipment eat up a lot of space on the factory floor.

But over the last decade or so the cost and footprint of finishing kit has reduced significantly, as has the level of expertise required to operate the machines efficiently. As a result, printers are no longer considering just bringing standard post-press processes in-house, such as laminating, some are taking on more complicated tasks like perfect binding and case binding.

So what are the key benefits of tackling post-press in-house, how complicated can the printer go in terms of their finishing offer and where does this leave the UK’s rapidly dwindling band of specialist trade finishers?

 

Common themes
For printers who have gone down the in-house route, the thinking behind their decision covers a vast gamut of different issues, but there are a number of common themes that crop up time and time again. ‘Control’ is a word frequently used by printers who have opted to bring one or more post-press processes in-house. Take Philip Dodd, managing director at Healeys Print Group in Ipswich. He brought perfect binding and laminating in-house so that he could have greater control over the process.

"The more control you have the better your customer service," he explains. "We’re facing increasingly shorter lead times from customers, but by bringing finishing in-house we’ve got better control of how long things will take so we can factor it in."

It’s a scenario that’s familiar to Graham Lovegrove, owner of Crawley-based Treetop Design and Print. Lovegrove recently invested in a guillotine and two Stahlfolders (a Ti 52 and a ST 100) from Heidelberg, thanks to increasing client demand for speedy turnarounds.

"Print is getting faster and faster so we need to have the facility to finish jobs in-house," says Lovegrove. "Previously we were printing jobs on one day and then we had to send it out the next day for it to be finished. As a result we always had to build a day or, depending on the size of the job, several days into the equation. It’s much easier and quicker if you can do it in-house."

There are numerous other upsides as well. One of the most enticing is the potential return on investment. "Even though it’s a bit more of an investment for us, the life-span of the machine is much longer than the period in which you pay for it, so it’s a good return on our investment," says Lovegrove. "Plus we make more money doing it in-house than outsourcing to a trade finisher. If you can do it in-house you can manipulate your costings differently so financially it is a very viable area for us to be in."

A primary concern that’s commonplace among printers who are reluctant to go down the in-house route is how much time the machine will be inactive for. Dodd admits that this was an issue that he studied long and hard before deciding to take the plunge on his perfect binding machine, which he accepts is quite an unusual investment for a company of his size. "On the majority of ancillary finishing equipment that we’ve put in, we don’t have 100% utilisation so we had to weigh that up against the service aspect," he explains. But in the end, the decision was an easy one to make. "It’s only recently that somebody in Bury St Edmonds, which is 45 minutes away, has put in a perfect binding machine so you’d have to add three to four hours to a job," says Dodd.

It was also through necessity rather than a burning desire to get into finishing that Healeys bought a Jupiter laminator From Encore Machinery. "A local trade finisher who gave us a very good service decided not to do laminating anymore so again, we could have farmed it out to a company in Bury St Edmonds, but when we looked at the capital investment we thought that if we did a bit of external trade work for local printers it would make the investment worthwhile," Dodd adds.

 

Benefits for manufacturers
While it’s provided a fillip for printers it’s also helped equipment manufacturers, particularly during such sticky economic times. Mike Biggs, managing director at Encore Machinery, says that sales to printers represent a growing part of the company’s market today.

"Margins have been squeezed so tight on their normal printing activity that everybody in the industry is searching for a way to add value, so they’re looking at work that they might previously have outsourced and they’re thinking ‘we could be making some money out of that rather than sending it out’," explains Biggs. He adds that the biggest markets in terms of printers bringing post-press in-house, is perfect binding and laminating, thanks in large part to how accessible these processes have become in recent years.

"In the past PUR perfect binding would be a £100,000 investment but now we can supply a system for about £30,000, and that’s a machine that’s 6ft long, not 6m long. That brings this type of equipment into the realm of a printer," says Biggs.

So what do the trade finishers make of all this? The majority of them accept that on the face of it, bringing finishing in-house looks like an attractive prospect, but once you dig a bit deeper it can be a bit of minefield, according to Jennifer Deacon, marketing manager at Celloglas. "Far too often we’ve seen printers invest in equipment because they’ve won a customer, but then that machine sits idle for most of the time," says Deacon. "In addition printers don’t have the necessary skills and resources to invest in bringing new products to the market like we do."

There are also a lot of hidden costs associated with bringing finishing in-house, cautions Luke Hastings, managing director at trade finisher Reflections. Investing in the new equipment in the first place and taking on board extra staff to operate the machine, are clearly going to add to business overheads, but printers also face the additional burden of buying and holding extra stock.

"If you use a finisher like ourselves you can probably negotiate 60-day terms as a given but if you’re going to buy one roll of laminating film every week you’re probably going to have to pay upfront for that on a credit card. You won’t get any terms," explains Hastings.

Another common mistake that many printers make is falling into the trap of believing that if you spend £10,000 a year on laminating and then buy a £10,000 laminator to do that work in-house the investment will pay for itself over the course of the first year. However, Hastings says that it never quite works out like that.

"There have been a lot of printing companies that have chased the in-house dream, but they don’t always benefit from it. Nine times out of 10 the companies that I’ve seen that have brought processes in-house are the ones that have gone bust. There’s a lot to be said for businesses sticking to what they’re really good at."

Thankfully for trade finishers, the majority of printers accept Hastings’ viewpoint. Most printers who bring post-press in-house only tend to invest in a couple of basic machines "We only do fold, stitch and trim because we thought that we were farming out too much of that sort of work," says Treetop’s Lovegrove. "We haven’t got laminating, perfect binding, cutting and creasing or foil blocking. All of those jobs still go out to trade finishers."

It’s a similar scenario for Philip Dodd at Healeys, who still outsources jobs that require finishes such as case binding and spot UV. "It makes sense for us to bring laminating and perfect binding in-house because it enhances our offering, but it’s not for everyone. A printer just down the road from us who is four times bigger than we are still puts perfect binding out to trade finishers because his rationale is ‘if I can’t run it for 24 hours a day then I’m not going to buy it because I’ve got the buying power to get the best prices in the marketplace’. So I can understand that point of view as well," says Dodd.

It’s clear that bringing post-press processes in-house is not for everyone and even if the current trend continues there should still be plenty of niche work kicking around for specialist trade finishers to mop up. But for those printers who do decide to go down the in-house route Lovegrove says it’s imperative that they conduct extensive homework about what they’re buying before taking the plunge.

"You have to really study it and make sure that the equipment you’ve bought fits with the type of work that you’re doing," advises Lovegrove. "You can’t be good at everything and one machine won’t do everything so you have to make sure that your core business is covered by the machine that you buy."

If you follow this simple edict, bringing post-press in-house could prove to be a pain-free and potentially profitable process.

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