OPERATIONS

How the struggles of the news industry impact suppliers

From pre-press to post-press, vendors continue to partner with newspapers, allowing us to improve quality and efficiencies. As our industry experiences sharp declines in revenue and circulation, these changes affect our bottom line, and our suppliers have fought right along with us.

Through email, phone and personal discussions, I gathered six suppliers in a roundtable discussion to share their views on the partnership between our industries. One vendor did a great job of summing it up: Collectively, we need to continue to drive the message home that “print is not dead.”

E&P: Are you encouraged or concerned about the state of newspaper operations, and how does that affect your business?

Ken Kocolowski and Ernie Litynski (RBP Chemical Technology, Inc.): It’s no secret that the printed media market continues to decline. However, it’s really incredible to see the innovation that publishers create with a multi-medium platform. We can only support their direction.

Troy Foote and Mark Katz (Flint Group): Due to the reduction of print days, circulation, and page counts, we are concerned. It was trending that way before COVID. The consolidation of print will continue.

Jiggs Fey and John Ovanessian (Resolute Forest Products): We are absolutely concerned. Customer orders have contracted at a rapid rate and we have had to adjust accordingly.

It’s been a big decision on our part to shut a mill or shut down a line/machine. We have idled two mills indefinitely. We realize and appreciate the affect this has on our workforce, their families and…their communities.

Bob Veyera (Fujifilm): We continue to witness consolidations and right-sizing in our industry. Newspapers are still a valuable part of the communities they serve. In turn, we have reconfigured our sales territories and production requirements to meet market demand accordingly. Fujifilm is committed to the newspaper industry and continues to invest in new products and the future of print.

Jason Elliott (manroland/goss web systems): The newspaper market is changing at a dramatic rate and we are all saddened to see the closure of facilities and losses of friends from the industry. I am personally encouraged to see the bold change that publishers and production leaders are making to ensure their futures.

It is exciting to see this market reinvent itself, and I am encouraged that these same market leaders are coming to manroland

Goss to support them through this change. With open dialogue, we are also constantly changing how we support the market needs with services, obsolescence management, performance and format upgrades, and filling the gaps where other OEM’S have failed to support the market by providing the same level of support we provide to our own legacy customers.

Pete Medina (Novatech): We are very concerned as a manufacturer. This downward trend has forced newspapers to consolidate and cut back on investments. But let’s not forget the COVID restrictions as well. This has added a layer of separation from clients which limits the ability for vendors to assist our customers with their consolidation planning and site development. These things come with relationships with clients and our experience in product application.

E&P: What are you doing to make up for lost business as a result of the downturn?

Kocolowski and Litynski: We’ve taken an approach to consolidate purchases as a “master distributor.” While we see a downturn in print, we continue to diversify into our sectors while carrying over surface chemistry best practices and value-added activities. Simply put, we have institutionalized the same best practices in our processes—whether that’s ensuring the non-image area of a plate remains hydrophilic or that a cardiac stent is electropolished before emplacement into the heart.

Foote and Katz: To remain viable in this industry, we’ve had to make changes internally by right-sizing our operations to match current volumes.

Fey and Ovanessian: We have pursued alternatives expanding in lumber, pulp and tissue. We continue to invest in the quality of our paper, investing in mills allowing us to be able to be there for newspapers in the long term. Newsprint still represents a considerable part of our business.

Veyera: We made some adjustments in our workforce. We have increased employee training and carefully managed expenses.

Elliott: We are laser-focused on our goal of being the go-to support partner for the printing industry. As other OEM’S and market competitors dissolve, we will remain the constant and continue to become more relevant.

We continue to focus on employing and training our workforce, improve parts pricing and availability, and apply our knowledge and expertise to support other production equipment inside and outside of the pressroom.

Medina: We were lucky and started a change in early December 2019, prior to the onset of the coronavirus. Our company made the decision to invest in R&D rather than cut back.

E&P: Have you introduced new products or services to compensate for the downturn in business from newspapers?

Kocolowski and Litynski: We currently see increased cost and non-availability trends in the logistics market; thus, we have created chemistry that concentrates on offsetting freight costs. In essence, why should we all pay to ship excess water or plastic? Similarly, RBP continues to build industry partnerships to offer a true one-stop-shop to aggregate consumables. We are proud to say that we offer a diverse product offering—from reel room adhesives to press parts to mailroom supplies. Why should we all spend nonvalue-added resources fulfillment activities (multiple purchase orders, freight deliveries, and invoicing)? I think we can all agree that we would love to share in cost savings as partners mutually.

Foote and Katz: We invested in our Elizabethtown, Ky. production facility. We have invested in new web shop software that allows our customers easier access when placing orders.

Fey and Ovanessian: We continue to invest in other segments of our business, expanding as needed into other revenue streams. We recently purchased three additional sawmills in North America. As the business shifts, it’s necessary to shift into other commodities, such as paper, tissue, lumber and pulp.

Veyera: We introduced several new pieces of digital equipment and consumables products in 2020 and have some exciting developments to be released in 2021. We recently launched our Superia ZDN processless plate that is designed for cleaner starts and re-starts, longer run lengths, and is UV ink compatible. Fujifilm still has a sizeable technical support staff, dedicated to support our print customers. We are firmly committed to meeting the needs of the market with great products, support and service.

Elliott: One of the biggest changes I think we have made is our focus to supporting all makes and models of equipment, regardless of the original manufacturer. We simply didn’t do this before, but the fact is the market really needed it as support has vanished over the last decade and especially last year.

What has been interesting for us to learn is how relevant our expertise is to competitor’s equipment and even other markets. We hold ourselves accountable to a very high level and this is being recognized by the quality of our work and ability to execute flawlessly.

We are excited to release Maintellisense, a next-gen production tool that leverages artificial intelligence, Big Data, and smart data technologies to support equipment productivity and reliability. The tool allows users to predictively identify faults and potential breakdowns in advance of failure, increasing press uptime and reliability. It also has enhanced diagnostic tools for identifying common problems or occurrences that impact production performance and efficiencies.

Users can utilize the intelligence provided to resolve issues, positively impacting overall equipment performance.

While the tool is only available for some makes and models right now, we see huge potential to leverage the technology for other equipment in the future, allowing everyone to enjoy the value of this value-driven tool.

Medina: We have invested heavily in

R&D, searching for ways to make our clients’ existing equipment carry them forward. We have developed a complete software, controls and mechanical package that upgrades the

Quipp 350, 400, and 500 series stackers to be state of the art, OSHA compliant, and ready for a new long-term usage by our clients. It also makes all these models function alike and interchangeable with each other. We use off-the-shelf components to accomplish this, instead of custom-designed proprietary parts that only leave you one source. This is not a patch but rather a complete component upgrade that will sustain these machines for many years to come.

E&P: Have you noticed active print sites ordering fewer supplies due to slowdowns?

Kocolowski and Litynski: Yes, page counts and circulation have a direct correlation to chemical and consumable consumption.

Our objective is to build a partnership and understand future ordering patterns to create supply chain efficiencies for our partners.

Foote and Katz: Yes, we have experienced a significant reduction.

Fey and Ovanessian: Absolutely. Last year’s newsprint demands went down 26.2 percent in North America and declined 29.4 percent for North American publishers.

Veyera: Overall, yes. Advertising revenue has been reduced and there have been shrinking page counts. Inserts are down from store closures and the increase in online traffic. Several papers have reduced the number of print days and/or offered webbased editions only.

Elliott: We have leveraged technology to stay better connected to customers. While we miss the face-to-face connection, remote meetings have helped both us and our customers become more efficient. We are now connecting with more people each day than ever before and this results in more opportunities to support our customers’ needs and challenges.

With this increased communication, we have learned areas where we can create deeper partnerships with customers, especially in our parts business. As a result, we have made investments in our business to target specific areas where we can become more competitive and leverage our natural position as a one-stop-shop for all of your parts and consumable needs.

Medina: Yes, and they only order the very minimum required to maintain operations during these hard times. This can sometimes lead to downtime as a result of spare parts onhand shortages.

E&P: What effect will consolidation and/or less demand for material have on pricing in the future?

Kocolowski and Litynski: Fortunately, RBP has diversified its portfolio into other sectors. As such, we’ve used our economies of scale to leverage raw material purchasing power. Short term, we don’t foresee any major chemistry price increases in the main consumables, such as fountain solutions and blanket wash products.

Foote and Katz: It is already having an impact.

Fey and Ovanessian: It’s a matter of how much capacity retract; it’s all about supply and demand.

As metro newspapers have become smaller, there has been less of a need for rail shipments; trucking expenses have driven up costs of freight per ton over rail. In the 1970s, shipments by rail versus truck ran at 70/30 (percent). Currently those percentages have flipped, and currently, trucking represents 70 percent of our shipping, driving up costs across the country.

Veyera: There have been price increases in many raw material components. Energy and freight costs are increasing, and consumable volume for offset production has declined. So yes, pricing is under pressure.

Elliott: We are conscious of this challenge and we continue to manage it every day.

To be frank, we all have responsibility to manage this, but it is a bit of a chicken and the egg thing. Our pricing is quite simply based on volume. If we can make more parts, we can provide better pricing. It is simply economics.

To help overcome this challenge, we are aggressively growing in other markets such as packaging and the industrial service markets. As many of the parts we provide cross multiple markets, the loss in volumes we see from one market can be replaced by another.

In the same vein, it is important to note we are also taking the same strategy with our engineers and technicians. As we grow in other markets, we can hire new talent and cross-train our employees to serve multiple technologies, so we maintain a strong and sustainable bench of expertise. This strategy ensures we guarantee appropriate readiness to serve the newspaper market in all facets of our business for many more years to come.

Medina: Prices will rise on consumable goods. but will drop on capital equipment.

E&P: As newspapers consolidate and/or close print sites, how is this affecting your business?

Kocolowski and Ernie Litynski: We continue to monitor the newspaper industry closely. Strategically, our goal is to align with the future—regional production supercenters.

Foote and Katz: It affects inventory management as far as raw materials (oils, resins and pigment). It also affects logistics with the delivery of ink by tank truck.

Fey and Ovanessian: We are firmly committed to newsprint production and the newspaper business in general. We will continue to support and assist operations for as long as newspapers exist.

Veyera: Print production has been consolidating over the last several years and the COVID effect on print demand accelerated consolidation. In the midst of the pandemic, we saw print volume and consumables in the print process decline 20 percent to as much as 50 percent. On the other hand, some of the consolidation has increased volume to sites we supply.

Elliott: There is no doubt consolidation of the newspaper market has had quite an effect on our business. The most obvious point being that we simply support less newspapers today than we did five and 10 years ago.

With that, the dynamics of the market have also changed. We see this as an opportunity for change by finding new ways to support the remaining production centers that continue to operate and strive to thrive in this difficult market.

As production centers become busier producing other papers, their risk has also increased. Equipment performance and uptime are even more important than before.

Missing deliveries on one title can have a trickle-down effect to following production runs and that’s just not acceptable.

With budget cuts and loss of talent in the market, our role to support our customers continues to strengthen and become increasingly relevant. We need to continue to develop services like remote services such as Telepresence, so production centers have realtime on demand support when they need it. Maintellisence will revolutionize how printers protect production uptime and performance in the future. Lastly, we continue to invest in developing our talent so we ensure we can support the market with maintenance, service, and engineering activities, helping supplement the smaller maintenance teams that our customers employ today.

Medina: It has certainly affected our business model. We are manufacturers of goods, but due to economic hardships in our industry, we have become a facilitator of parts services and focused our efforts to developing solutions for the ever-changing print industry.

E&P: What do you see in the future of newspapers?

Kocolowski and Litynski: We can only support our partners and not the decisionmakers. While the model will change, a printed product still holds value.

Foote and Katz: Newspapers will be viable in the digital form for a long time to come. As far as print format, it will continue to consolidate, and commercial sites will pick up more of the printing for newspapers.

Fey and Ovanessian: We’ll leave that to the experts.

Veyera: Newspapers will continue to consolidate into regional print sites creating a new model for print production. The number of print locations will continue to be reduced as digital subscriptions expand. Newspapers are the voice of the community, and print is still a valued medium.

Elliott: I think the only appropriate answer is great. Nothing is easy in our business and we can’t afford to allow the challenges of the business to overcome us. Reliable partnerships will become more important than ever before to ensure mutual success and sustainability.

Without stating the obvious, we will continue to see the consolidation of newspapers and outsourcing of print. Production facilities' needs will change as they will continue to have to act more like a commercial printer. Productivity, production reliability, and sustainability will continue to become more important.

Our role in this transition will continue to become more important also. Production centers will leverage our expertise to supplement their need to keep equipment operating at peak performance and keeping the equipment young by addressing obsolescence in a flexible and sustainable manner.

Medina: The internet has made it somewhat like the struggles radio had when television was introduced in its early days. I believe newspapers will survive not as we know them, but at a national level. Consolidations and product marketing will find a sweet spot for print, and we want to be part of that new rendition of the news business. 

Jerry Simpkins has more than 30 years of experience in printing and operations in the newspaper industry. Contact him on Linkedin.com or at simpkins@tds.net.