Day 5, Bill Ruesch recession-recovery diary

Dear Reader,

Some may wonder if I’ve been sitting on my hands the last two years. My previous blogs could lead you to that conclusion, but you’d be wrong. For a quarter century (doesn’t that sound painfully long?) I semi-specialized in direct mail printing. Most of my customers were either DM agencies or in-house marketing departments of companies communicating with their customers through the mail.

We all know what happened when the recession hit and companies en masse pulled back on direct mail. We could see it coming. The Internet was making promises of delivering tons of new business at a fraction of the CPM. The post office, thinking in government logic, decided to bump up their rates to solve their cash flow problems. This awful triad of recession-fear–the Internet rainbow–and postage costs all but killed direct mail.

I said we could see it coming and we could, but no one thought it would happen so fast. It was literally almost overnight. One day DM was thriving, the next, BOOM the bottom dropped out.

In an effort to prepare my business for the coming crash, I had already been looking in new directions. I asked myself what I love, and determined that I love books. Wouldn’t it be nice to help authors print books and get samples for my personal library in the bargain? Yes, but moving into new markets takes time. It requires making new connections, and building trust.

To shorten the time I decided to begin blogging. I reasoned that the Internet would provide me with a minimal cost platform. It does, but the competition for attention is overwhelming.  I read somewhere that 17 thousand new blogs are started every day–e v e r y day.  That’s over 6 million a year!

There are many, many Internet “gurus” that for a fee, promise to show you how to drive readers to your site and earn you more money than God while you are sleeping peacefully on your yacht. I don’t know about you, but I shy away from these kinds of promises. I may be old-fashioned, but I truly believe that if it sounds too good to be true it probably is.

The problem still remains, how do you make an impact on the Internet when the odds are so staggeringly against you? The answer for me is to keep chopping at the tree. No one knows how many cuts it will take before it topples, but for certain it will never come down if you don’t wield the ax.

Day 4, Bill Ruesch recession recovery diary

Dear Reader,

The name for a watch without hands--broken.

I remember when the Rocky and Bullwinkle cartoons were first aired. I remember when pagers were the hottest thing. Why, someone could reach you even if not standing near the telephone. Yup, telephone answering machines, faxes, cell phones, digital watches,and personal computers have all be introduced during my lifetime. I tell you this to remind us all that this world is very different from the past–even the recent past.

The very first American web page went up in December, 1991. 1991, that’s only twenty years ago! Twenty years–I have sweat shirts older than that. Before that, everything was routed on a very limited basis through Switzerland.

How long has it been since you’ve seen a door-to-door encyclopedia salesman? What about a vacuum cleaner salesman? The world changed and selling has changed. Old fashioned selling methods don’t work as well as they used to–if at all. The trick is to keep the things that do work and toss those that don’t.

What still works? Human contact works. Through all the levels of wires, glass, and ceramics, the effective salesperson has to find a way to connect eye-to-eye with the customer. For repeat business there is nothing that can replace the personal touch. Without it, the customer is buffeted by every other company willing to buy their business with discounts and premiums.

In an Internet world how can you create a sincere personal touch? I’m going to have to mull this over. Do you Dear Reader have any thoughts on this?

Don't be so quick to place the marker.

The Internet has been buzzing with reports of the demise of printing. The book industry in particular has been all aflutter about The Kindle, The Nook, and iPad. Are they right? Have electronics finally won? Is printing dead?

I am old enough to remember all of the predictions of a paperless office. Computers were supposed to eliminate the need for paper. Instead, printing flourished at a time when the era of paper was sure to be over.

It is different this time. Although I think it is too early to write off printing, I do believe that the boom we saw with the advent of computers won’t repeat. The business climate has changed, not only for now, but also for the future. There are several reasons for this:

• Direct Mail Advertising has been wounded–not fatally, not yet.

1. The first arrow to strike was postal charges. Unfortunately, the post office has a blind spot when it comes to pricing. They don’t understand that there is a direct correlation between rising prices and declining customers. The higher stamps cost, the more people turned away.  The US post office has been the greatest friend email could ever have.
2. The second arrow was the Internet. Websites provide options that ink on paper can never duplicate and at incredible prices. Electronic advertising has eliminated much of the need for media. No paper. No ink. No presses.
3. The third arrow was the recession. Companies of all sizes hunkered down behind walls of cash refusing to spend until the customers were ready to buy. The customers, of course, having lost jobs, having had salaries decreased, and in a tightening credit market find themselves unable to buy. It’s what is known as (with apologies to our neighbors south of the US) a Mexican standoff. Where were the easiest places to cut their budgets? Printing, particularly direct mail.
4. The fourth arrow is book readers. Book readers are coming on strong. I myself, love books. I have a well-stocked home library, but there are books I can get free and others that I would like to be more portable. I, the defender of printing, will get a reader for myself. Actually I already have one in my iPhone, but every book bought electronically is a book that isn’t printed.

• Form Printing and Envelopes have taken one to the chest.

1. Nearly everyone uses on-line forms to pay bills, buy something, or get credit. It’s quick, user friendly, and no one has to buy a stamp or wait several days for delivery.
2. The changes is bill paying greatly reduce the need for envelopes. From the millions upon millions of envelopes purchased by the financial industry alone to a bare trickle.

• Catalogs, Newspapers, and Magazines are dropping dead in their tracks.
  

1. Pundits warned us of the paperless office, but they didn’t tell us about the paperless home. Who could have predicted a family breakfast scene without the father figure sitting behind the daily news? Oh sure, we still have many of the same magazines, but their page counts are down to half or more. And their sell price has gone up. They raise prices and just as surely decrease buyers.
2. Catalogs are experiencing the same problems as magazines. It costs too much to mail, so they reduce their page count. The point where catalogs split from magazines is the Internet. Newspapers and magazines have served for hundreds of years as paid information sources. Information on the Internet has been free. People expect the Internet to be free and therefore they are unwilling to pay. Catalogs never had, and never will have a paid subscriber base.

I could go on, but I think you get the idea. Printing has changed and many of the changes are permanent. All that being said, I’m optimistic about the future. There are innovations introduced all the time to make printing, better, cheaper, and faster. The Internet for all its puffery and bluster has been proven to be less effective than direct mail as an advertising medium. Yes, you can get a great CPM (cost per thousand) but there is such a massive overwhelm that customers have learned to tune the advertising out. If you want a buyer to pay attention to your message, put something in their hands.

Is it too late to turn it around?

It happened again in my area. Two more printers, and I’m not talking micro-shops, but printers with 40″ multi-color presses, full binderies, etc. closed their doors. These were plants that just a couple of years ago were thriving, hiring people, buying equipment, and taking care of business.

What happened?

We all know what happened.

1. The US economy tanked. The US government, Banking, Financial interests, and Real Estate speculators combined to nearly drive us into full-blown depression.  The harm dealt to the printing business was both instantaneous and long-term. The instant effect was that companies, all kinds of companies, got scared. They pulled back their printing orders because that was the perceived easiest way to cut expense.
2. The banks got scared. They decided to circle their wagons and cut off loans to the printers. The printers, that are generally small businesses, have shallow pockets. In an economy of falling sales they needed the banks more than ever. Help didn’t come.
3. Direct mail campaigns were scrapped or delayed by marketers who turned to the Internet for cheaper CPM. Was this a wise move? We’ll see. Early wisdom points to DM as still a very viable tool. In comparison to the Internet, DM yields higher response numbers. Will enough customers return to save printing?

Is Printing a Bellwether Industry?

The United States IS heading toward becoming a third world economy.  If anyone wants to know what living in America will be like in fifty years, all they have to do is look at how the Chinese live now. This is the legacy we are leaving to our grandchildren. Think about it, manufacturing jobs have been fleeing our shores faster than a cat with its tail on fire. Our country has huge balance of trade deficits, and enormous national debts. It doesn’t take a genius to see that if you aren’t making any products, there aren’t any products to sell. Apparently the only products we can produce and sell are hamburgers and fries, and they don’t export very well. How long will it be before our citizens will have to go to other countries to seek employment?

This Brings Us to the China Question

What happens when we chose to buy from China, India, Mexico, or Pakistan?

1. We put American citizens out of work. I had a very kind, considerate person whom I have known for a quarter century, or more, say to me that Americans can find other jobs. Even if they have to work for minimum wage there are other opportunities. Maybe they are just lazy. Maybe they could. Just maybe they could go to work for minimum wage when they used to earn much more. What will they be able to spend their minimum wage salary on? A home — nope. A new car — nope. How about college education — no way. Minimum wage isn’t even enough to survive on, and barely surviving is what they do in third world economies. Every well-paying job that is eliminated hurts the entire economy and drags us step-by-step into inevitable decline. If you think Katrina was a disaster, just wait and see what a US economy will be like without a middle class.
2. What about Chinese families don’t they need to be employed too? Sure they do, and we all feel for them, but if we take the food out of the mouths of our children to feed theirs, our children will starve. Can you visualize it, a neighbor, or a relative’s children dying because the work they could have had went out of the country? We have a global responsibility it is true, but our first responsibility is to our family, then our neighbors, then our communities, then our states, then our nation and finally the world. We’ve been doing it backwards!
3. Isn’t it too late? Don’t we already drive foreign cars, wear foreign clothes, and shoes? Even Hershey chocolate is now made in Mexico. If we are already buying these things out of the country why not buy printing out of the country too? Anyone who accepts this line of thought needs to go back and read point No.1. This is the moral equivalent of saying that since murder is committed regularly in our cities it is all right to commit murder. No it isn’t. Just because a terrible thing has been happening doesn’t make it right! Moral people do whatever they can to stomp out wrongs, they don’t justify them and they don’t, for heavens sake, participate in them.
4. Business people who buy from China forget what they saw when China hosted the Olympics. The world was only allowed to see what the Chinese government wanted reveal. They even censured the Internet. What is China hiding? They wanted us to believe that everyone was happy. That the country was clean, prosperous, and healthy. Is it? The loss of our jobs and the expenditure of our dollars don’t go to the people who really need it. It goes to the upper class, just like it does in the US. We discovered that when we bailed out the big banks and they rewarded themselves with BIG bonuses! The difference is we are allowed in this country to see the disparity between rich and poor, but the poor in China are hidden by the government.
5. Don’t forget that Chinese businesses are guilty of serious crimes and injustices in their rush to grab all they can at the expense of their disadvantaged employees and helpless competitors.

• They pay very poor wages bordering on slave labor — pennies per hour
• They employ children. Impoverished children must work to help support their destitute families.
• They use toxic materials like lead based paints and inks. Remember the problem with Mattel and the recall of millions of lead painted toys?
• They substitute cheaper materials for the specified ones like in the wallboard fiasco.
• They have very foul working conditions.
• They have few, if any, environmental concerns or laws.

Is it moral to send work out of this country to benefit another, especially when you know that their workers are subjected to the rankest of conditions and living on poverty wages? They gave me a good price, and everyone else is doing it, aren’t very good excuses. Those American business people who are buying from the Chinese and are destroying the economic future of this country for a good price should hang their heads in shame. The karma they are creating will return, if not on them, then on their children or grandchildren. What moral person could live with that over their heads? I know couldn’t.

So is buying Chinese printing killing US printers? Yes it is, and it is killing our very way of life. Short term expediency will never justify the long term harm. Think about it. Think about it very hard and then choose to buy American. Our very way of life depends on it.

Printers who let their hostility get the best of them are fools,

because printers who are likely to survive this recession and move successfully forward must find ways to reinvent their relationships with Print Brokers. Brokers hold the key to doubling or tripling your business without creating additional expense. The problem is that most printers don’t know what to do with print brokers. They aren’t part of the sales team and they aren’t customers either. What are they? Any attempt to pigeon hole them into either role will end in failure and frustration.

The first thing to do is embrace brokers and stop kicking them in the teeth.  I know this may not make sense to you. Some of you are going to accuse me of overreacting, after all your company doesn’t mistreat brokers — right? Some will say I’m whining, and some won’t consider the issue of print brokers at all. There are a lot of misguided printers who staunchly refuse to work with brokers. That might have been okay in the past, but it won’t serve you well in the future. You can’t afford to turn your back on sources of instant new business.

Haven’t you noticed how tough times are? Printing, particularly offset printing, has been besieged on all sides. I’m sure I don’t have to tell you how the pigheaded, self-serving banking industry has hurt all of us. Have you tried to get a loan lately? Nor do I have to explain about the impact of digital printing, foreign competition, and the Internet. You already know about these things. You are experiencing unprecedented cash flow problems and shrinking markets. Even your best customers have cut back with no real promise that they will ever be at former levels again.

I hear moaning from the Industry that good sales representatives are hard to find and that your sales people keep pressing for ever lower prices to make them competitive. You get upset and believe that they aren’t really trying. A really good sales rep can sell even under the most adverse circumstances — right? If you truly believe that why don’t you put on your salesman’s hat and find out for yourself? Maybe you did. Maybe you took a day, or a week, and went into the field. Maybe you proved to yourself that it isn’t so bad, but let me tell you, selling in this economy is like fighting an uphill battle day-after-day-after-day. It can wear down even the heartiest rep. Your sales team, is running on fumes, and another sales meeting, another motivational talk, and another seminar isn’t going to dramatically change anything.

What can you do? I would like you to take a moment, if you will, and consider re-vitalizing your sales efforts with the help of Print Brokers. Why Print Brokers, because they are FREE! Printers don’t have to house them, pay salaries, benefits, or reimbursements. That should be incentive enough. FREE, FREE, FREE — what’s better than that?

The problem is that most printers I’ve talked to either barely tolerate brokers, or despise them. Why? I think there are five main reasons for this:

1. Print Brokers own their own customer list. The printer doesn’t. Suppose a house sales rep brings in an account, since they were working on the company dime the customer technically belongs to the company. This isn’t true with brokers. In fact if you go after the broker’s customer it can lead to a nasty fight.
2. Print Brokers are legally a middle man. Printers fume if the broker can’t pay them because the customer didn’t pay the bill. On the other hand, how can you hold the broker responsible when they don’t receive the product? You don’t punish your in-house sales team like this. You must find a compromise. How difficult can it be to secure your interests in transactions without leaning on the party who is least likely to have the means to pay you? Think about it.
3. Print Brokers can take the print jobs to someone else if they want. Usually they move things around to save money, time, or be more convenient, but they don’t even have to have a reason, they can just do it.
4. Print Brokers are employed by their customers — not the printer. In the event of a disagreement the printer has little leverage over the broker. The broker knows which side his bread is buttered on  and is most likely to defend the customer’s point of view over the printer’s.
5. Print Brokers are not constrained by territories. Printers often feel threatened by brokers because they see their own customers as potentially vulnerable to the broker. Sales reps especially are very protective and guard, as they should, from any possible threat.

In my next post I will give printers some ideas that will allow them to work around the conflicts and make better broker relationships which will benefit both printer and print broker.

80% living on 20% leftover’s

Déjà vu?

I learned just this year that the CIA (Central Intelligence Agency) publishes a report (link) on the Internet about the United States. I was reviewing the section on the economy that was updated on August 13, 2009. In the middle of the report is this statement, “Since 1975, practically all the gains in household income have gone to the top 20% of households.” Furthermore, “The onrush of technology largely explains the gradual development of a ‘two-tier labor market’ in which those at the bottom lack the education, and the professional/technical skills of those at the top and more and more, fail to get comparable pay raises, health insurance coverage, and other benefits.”

No middle class–no small business

For 34 years the American middle class has been steadily shrinking. Where will we be when the middle class is gone? Will we be safer, healthier, or wealthier? When you think about it, small business, the backbone of the American economy is in serious danger. As the split widens between the haves and the have nots, who will buy the products and services of small business? It won’t be the big corporations, that’s for sure. What will this country be like when the splitting stops and 20% of the population control 80% of the wealth, and 80% have to live on what’s left?

Americans slipping slowly down the drain

The CIA report also says, “Long-term problems include inadequate investment in economic infrastructure, rapidly rising medical and pension costs of an aging population, sizable trade a budget deficits, and stagnation of family income in the lower economic groups.”

Printers probably the first to go

Why do I bring this up? My career has been spent in the printing business. Most printing firms in the United States are small businesses. When the middle class is gone, and small business owners disappear, what will happen to printing? The answer is obvious.

How can government help turn the tide?

• Educational Needs. Provide educational opportunities to all citizens who want it. A college education shouldn’t create a lifetime burden of student loans. Free education would benefit us all.
• Health Care. Make sure all citizens have access to good health care. We have the most expensive health care in the world and some of the most unhealthy citizens. One reason is because care is delayed until the need is critical.
• Ban Lobbyists. Cut access of  corporate lobbyists and make sure they have only the same access to lawmakers as any other citizen. Our survival as a nation depends on fairness for all. Special interests cannot be allowed to rule. When special interests rule, the public loses.
• Regulate Compensation Packages. Create an Executive compensation commission to review and regulate public corporations. Companies who are vital to the national interest and deemed too big to fail have to be subjected to intense scrutiny. Just as the SEC requires annual reports, compensation must be examined and regulated if necessary, to protect our common interest.
• Recover Pension Funds. Create a collection mechanism to recover money from executives of corporations who raided or otherwise harmed vested pension programs. It is unconscionable that an employee be left penniless after working a lifetime for benefits, while the upper echelon retires comfortably.
• Banking Transparency. Make sure publicly held corporate executives cannot secrete their fortunes in secret accounts. Transparency in banking is necessary only for those who have the power to wreak havoc on the economy and cause recessions.

I know, some of these suggestions will strike some as being un-American. Maybe you are right, but when any sector has the power to harm the whole, it has to be considered a public threat. The demise of the middle class is a public threat and must be treated as such.

When I first began selling sheet-fed printing in the early 1980′s, my company Progressive Printing, printed an announcement flier for me. Before then I didn’t have much experience with paper other than commodity sheets used on web-offset presses. Think of magazines, catalogs, and newspapers. In the sheet-fed business a whole new world of paper opened up. I was so ignorant of paper that I didn’t understand that the paper my announcement was printed on was an expensive sheet. I didn’t know it until the office manager looked at it and said, “Wow, they must really like you because this is Cranes Crest.”

“Huh,” I said, “What is Cranes Crest?”

It turns out that Cranes Crest is made from 100% cotton fibers and is most often used on upper end letterheads and such.

Nothing more was said about my flier paper, but I realized that I had a whole lot to learn. Luckily for me a paper specifier from Zellerbach Paper Company conducted a mini-seminar in our offices. He covered paper fundamentals. His name was Mark Lander and even though he is no longer in the business I can still recall almost word-for-word some of what he taught us that day. Some of the lessons I’ve adapted and use as 60 second sermons when a customer needs to understand one aspect of paper or another.

I learned about paper because I felt I had to learn to do my job. Most people, including graphic designers find paper stocks they like and pretty much stick with them. There is nothing wrong with that approach. After all we can only hold so much information in our heads at one time. Because I took mastering of paper seriously, I found that my customers trusted my opinions and sought my advice.

If you are one who would like to know more about paper and don’t know where to go to get educated, let me give you some ideas.

• Check the yellow pages, or call a printer to find out who your local  local paper merchant’s are.
• Ask the paper merchant if they hold educational classes and attend if you can.
• Be sure to get swatch books and begin building a library of paper options. If you are a frequent user of printing papers they may be willing to furnish you with a whole paper cabinet, at no charge. Ask.
• Find out how they treat new paper introductions. Do they hold paper parties or bring mill reps around to the various buyers. Ask if you can get on the invitation list.
• Research paper on the Internet, some specialty papers may not be carried by your local sources.
• Many of the paper mills have websites that allow you to sign on to their news-feeds. Sign up, this will keep you ahead of the pack.

One service provided by most paper merchants that I’ve found to be particularly helpful is their willingness to create paper dummies. If you have a project with multiple pages there may be weight issues to consider. Your choice of paper could cost or save you a ton of money in postage expense. I’ve often had dummies made and taken them to the business services department of the post office to have it weighed so we would know for sure if we would pay a higher or lesser price. Often postage on a direct mail campaign will cost more than the printing and design of the pieces.

In a future blog I’ll get into paper weights and finishes, so hold on more is coming.