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Habits of profit leaders

Nov 1, 1995 12:00 AM

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good financial management skills are just the first step to success

You know the names. You've seen the awards. You are well aware of the reputations.

These are the printers who have made it. Made it, that is, to the upper echelons of the industry. Companies whose names are synonymous with success, whether worldwide, nationally or simply in their own communities.

These are the businesses that constantly seem to be thriving, no matter how deep the recession, how high the inflation or how keen the competition. Of course, they experience inevitable difficulties and pitfalls, but these organizations always seem to find a winning solution.

Are these companies blessed from above? Do they have some magical formula that ensures continued prosperity? What is their secret, and can the rest of us get in on it?

Although there is no one magic formula, some common threads weave through many successful businesses.

"The best firms all have strong profit orientations," notes I. Gregg Van Wert, president of the Teaneck, NJ-based National Assn. of Printers and Lithographers (NAPL). "These companies and their leaders are in business to make money, and the truly successful ones do so because they are well-managed financially."

However, these progressive firms understand that attaining and maintaining a healthy profit margin involves far more than a constant pursuit of new business. A focus on internal growth policies is equally important to profit expansion, even though the efforts initially may require significant financial investment.

"The keys to this financial success lie in staying ahead of the curve in technology, and surrounding the firm with strong employees," Van Wert continues. "An atmosphere also typically exists in which employees can grow while helping to increase the business' bottom line."

"One of the biggest factors that makes a successful leader is his or her relationship with workers," agrees Don Duncanson, president of Miami-based, five-time NAPL Management Plus winner Dynacolor Graphics. "To get the most out of people, a manager cannot be a dictator. A company must provide education to employees and make them an integral part of a business development plan. Empowerment fosters horizontal management, encouraging people to think, create and speak up."

The focus on employee development certainly is evident at Friesen Corp. (Altona, Manitoba), where the firm has established what it calls its "in-house graphic arts college."

Similar to many printers these days, the company was having trouble finding qualified employees. However, the problem was doubly tough at Friesen due to the its rural, sparsely populated location.

"We have been growing like crazy and needed capable employees who would be properly equipped to move forward with us," offers David Friesen, president of the company. "Thus, five years ago we hired an instructor and set up a program accredited by the Graphic Arts Technical Foundation (GATF) and a local community college. We take on six new students each year and teach them all about the graphic arts process and our specific operation. At the end of the program, they get a diploma, and can apply for a job here or move on somewhere else."

Luckily for the printer, 25 of the 30 students who have graduated from the program obtained jobs at Friesen. Not only do they start their jobs with a thorough knowledge of every stage of the production process, these students are familiar with the organization's business philosophies and corporate culture.

As a result of this training focus, a positive cyclical effect is created at the company: the better trained employees are, the more quality work they can produce, the faster they can produce it, the more profits the company makes and, finally, the more money that can go back into training.

Once employees are found that fit nicely into a company's business, the successful company leader knows that fostering good relations with workers is one of the most important keys to profitability.

David Harding, president and owner of Indianapolis-based The Printing Co. (and winner of NAPL's Hall of Fame Award), credits much of his firm's progress to the way it manages people. Although this management style may require significantly more time and effort, Harding stresses that the payback in productivity and, thus, profitability is well worth it.

Indeed, the financial statistics bear the exec out. The operation grossed approximately $5,000 a month in 1983, with monthly sales today exceeding $350,000 a month.

"It's amazing how many businesses are based on fear and keeping employees in the dark," Harding offers. "It's a post World War II philosophy that says do your job well immediately or you will be fired. These days, in order to be successful, printers must communicate with their employees, working with them to make improvements and keeping them up to speed in the decision-making process.

"In the long run, a firm puts more of an investment in a person than it does into equipment," he continues. "If we don't spend enough time bringing a person along, patting them on the back once in a while and making sure they are a good fit with our company, it won't matter what equipment we have. Nothing will work as well as it should."

To help ensure that the firm doesn't lose sight of these enlightened management techniques, Harding employs a full-time personal coach who works with him and his management team to help keep them on track.

"Managing empowered employees is something that we likely never will perfect, but will work to improve throughout the lifetime of this business," he concludes. "It's simply not in most entrepreneurs' natures to say 'Hey, you did a great job.' However, an owner shouldn't get so obsessed with making money that he or she is no longer fun to be around."

Another common element found at many winning firms is a willingness to take a few chances in their businesses. "You want leaders who will take well-informed, calculated risks," offers Van Wert. "Sure, there are those who are intuitive risk takers. By and large, however, the winners are the firms that carefully research the risks and make a decision based on solid information.

"Additionally, the leaders of these firms need to be able to separate themselves from the business to the extent that they think about future risks and create a vision," he continues. "Top execs need to be able to measure the progress of the organization against that vision, without getting too bogged down in the operational activity. It's often very easy to miss new markets, opportunities and technologies, some of which may entail risks, but all of which may present tremendous benefits."

Neenah Printing of Neenah, WI certainly is not a company that shies away from taking risks when they are warranted. James Lueneburg, general manager of the organization, agrees that a willingness to take chances is an absolute necessity for success in the '90s.

"It's healthy, not to mention essential, to take risks at times," comments Lueneberg. "Sometimes, a company has to get into new markets and establish new niches, conducting trials and working with different customers. You can't go into the new year thinking everything is business as usual; you always must look for new opportunities to make money."

Indeed, this frequent Management Plus winner takes its own advice to heart. According to the exec, the printer has tackled some projects that provided wonderful returns, while others did not pan out as expected. However, he stresses that failures must not be deterrents to future bold moves.

"A company must be willing to put seed money into some areas that may not be obvious parts of its market," Lueneburg notes. "If one or two of these succeed, some very profitable business could be generated for a long time. Additionally, when risks fail, you have to cut your losses, get out and move on. However, bad experience absolutely should not make a firm gun-shy from being aggressive in the future. You have to keep plugging away or risk falling behind the competition."

Image Systems of Menomonee Falls, WI isn't in any danger of falling behind anyone. In fact, this progressive graphic arts company has assumed a leadership role in new technology. Not only was it an early adopter of ISDN lines, allowing it to connect electronically to customers, it also was the first installation of the Heidelberg GTO-DI and the Screen computer-to-plate system. Additionally, it also will be the first site of Heidelberg's QuickMaster DI.

According to George Fiel, president of the company, a leading printing company today can't wait as long to make decisions and take chances as was possible a few years ago.

"In the past, a printer could wait a year or two to adopt a new technology and still be on the leading edge of the curve," Fiel offers. "Now, however, if you wait longer than six to 12 months, you can be outside the window of opportunity to gain a competitive advantage. Decisions must be made more quickly than ever, and a firm must take chances simply to remain in business.

With so many critical decisions to be made and so many monumental consequences that could result, is it wise for a printer to go it alone, to stay ensconced in its own secretive cocoon? Printers are notorious for their reluctance to show weaknesses to or seek advice from their industry peers.

Sure, certain business practices always must remain well-guarded secrets. However, the real winners in the industry realize that only by sharing experiences with colleagues can true progress be made.

Acorn Press of Lancaster, PA has experienced phenomenal growth during the past decades, attributing much of its expansion to a policy of openness. To this end, the firm is involved in a peer group of non-competing printers from around the country.

The group, consisting of printers of similar size, markets and production capabilities, typically meets in conjunction with industry events around the U.S. Everything from employee relations and marketing strategies to new technology and economic performance are discussed, with all participants coming away with something they can apply to their operations.

"We always must be interested in what outsiders think," stresses Donald K. Roseman, president of Acorn Press. "This association has been extremely beneficial in fostering our success, and the fresh perspectives we receive often address things we've overlooked in our own business plans."

Many Acorn employees sit on the boards of county charitable and cultural organizations, which also has served to improve the firm. "Even when we're discussing issues and business practices unrelated to printing, at some level we are considering how they can be applied to stimulate growth at Acorn," Roseman says.

Other printers also believe in looking beyond the boundaries of the graphic arts industry for examples of business practices to apply to their own companies.

"We learn something we can use each and every time we visit a business in another industry," offers Lueneburg of Neehah Printing. "For example, a major company in our area operates 19 successful car dealerships and three major hotel resorts. They've allowed us to observe and document many of their business practices. From this, we've adopted a lot of their innovative customer focus strategies. It's been a great benefit."

The printing division of Branch-Smith (Fort Worth, TX) also subscribes to this philosophy through its membership in a regional business consortium.

"Quality is a general subject, so you don't want to pigeonhole yourself in your own industry's idea of what it is," offers David Branch, president of the division. "Except for specific technology areas, a printer definitely can look at other industries to discover better ways of doing things. They may be doing things better than you'd find at the printer down the street.

"Our consortium consists of companies from a wide range of business areas, from car dealers to lubricant manufacturers," Branch continues. "These companies are very different from ours; they have absolutely nothing to do with printing. However, as we walked through the steps we all take toward achieving quality in our processes, employees and results, we discovered we weren't that different after all. As a result, many of these other companies' practices are in use at our plant now."

While there are many common threads woven throughout the fabrics of these thriving firms, all employ their own unique business strategies and philosophies to achieve their goals.

It's easy to see that, whether large or small, the formula for becoming a successful industry leader involves far more than throwing piles of money into the business. In the final analysis, investing in the care of employees, taking reasonable risks and heeding the examples of other successful businesses may be the real keys to scaling the peaks of success in the printing industry, and business in general.

As filmless workflows increasingly dominate the industry, printers must understand digital proofing solutions

Digital proofs produced directly from electronic mechanicals will enable tomorrow's filmless workflow. The market history of these proofs indicates they'll do this very well.

On the East Coast, for example, Philadelphia's Centennial Printing purchased its first Digital WaterProof system from DuPont nine months ago. Vice president of manufacturing Joe DeLarso St. explains that the graphic arts company plans to transition to computer-to-plate production within the year and will need to rely on digital proofing. Introducing digital proofs to clients for checking color and position prior to running film is Centennial's way of setting the tone for the future.

On the West Coast, Cupertino, CA-based Linotext uses Iris prints as contract proofs for Heidelberg GTO-DI press runs. "What else would you use besides a digital proof?" general manager Fred Buck asks rhetorically. "There is no film to make an analog proof."

In fact, throughout the country, printers with in-house electronic prepress departments, as well as color prepress shops that supply printers with electronic mechanicals or composed film, use digital proofs in various ways - from design comps to customer contract. Similar to Centennial, many companies anticipate a digital universe without film, but are finding that, even in a film-based world, digital proofs provide a quality solution to the challenge of today's pricing pressures and compressed turnaround times.

Of course, not all digital proofs are created equal, nor are they meant to be. The Electronic Prepress Section of Printing Industries of America (EPS/PIA) issued a Special Report on Direct Digital Color Proofing in 1994. It cites more than 50 direct-digital color proofing (DDCP) devices that fall into three technology groups: dye-sublimation, continuous-tone ink-jet and halftone laser/electrostatic.

In addition, there is an ever-expanding list of laser color printers and color copiers priced from less than $1,000 to more than $30,000. These digital devices routinely are found in service bureaus, ad agencies and design studios. In a recent study conducted by Strategies for Management (Harrisville, RI), 60 percent of designers used color printers for comps or proofs, while 59 percent indicated they used color copiers.

"Designers who use color copiers linked to computers think of these output devices as printers," explains Dr. Joseph Webb, president of Strategies for Management.

Of the three technologies listed in the EPS/PIA report, today only halftone laser/electrostatic systems generate proofs that simulate halftone dots. They require the greatest capital investment - typically $200,000 or more. Continuous-tone ink-jet systems are in wider use, with prices from $30,000 to $100,000. Dye-sublimation devices, the technology most widely used, features list prices ranging from $1,000 at the low-end to $25,000 at the top.

Let's start with digital contract proofs. Kodak's Joe Runde explains that the company's Approval system, with more than 100 U.S. installations, uses a laser to inscribe dots with assigned color values onto a donor material, which subsequently is bonded to the final paper stock. When the proof is removed from the finisher, the donor material is peeled off. Since its introduction in 1990, this system has been touted as being able to produce a contract proof.

At Colorbrite, a Minneapolis color trade shop specializing in prepress for the packaging industry, the Approval is used to proof files destined for both offset and flexographic presses. David Baudhuin, chief executive officer of the 100-employee, $12 million company, points out that Colorbrite offers a range of proofing alternatives, from optical proofs made with powders to optical electrophotographic, digital continuous-tone and digital halftone (Approval).

"We need to supply whatever customers demand," Baudhuin explains. "But the trend clearly is toward digital proofing. It cuts our need for intermediate film and reduces turnaround time and costs."

He also notes that since the Approval uses the same marking engine as Colorbrite's Scitex Dolev imagesetter, the dot structure of the proofs matches final film output precisely.

Screen's TrueRite proofing system, using Approval imaging materials, consists of the TC-P 1080 exposure device and TP-80 laminator. Announced at Seybold Boston in spring 1995, the system is available as a standalone proofing device and also is a vital component of Screen's complete computer-to-plate (CTP) solution.

"Although the TC-P 1080 is the result of the joint marketing venture we announced with Kodak," says Richard Way, product marketing manager at Screen (USA), "the proofing engine was produced by Creo to Screen's specifications. TrueRite produces four pages, with halftone dots, four times faster than the parent technology. For many printers, the only acceptable contract proof is one that has a halftone dot structure. This is a proof of film - with or without film."

"Also," Way continues, "the TC-P 1080 is device independent, meaning we only RIP files once for both proofing and output, whether that output is film, direct-to-plate or direct-to-press. If the customer approves the proof, the file does not have to be RIPed again. If digital proofing systems have their own RIPs with totally different algorithms for screens, there will be a difference between the proof and final output."

Another system, the IntelliProof by Optronics, produces large-format, full-color proofs with laser-generated halftone dots. Based on the company's ColorSetter 4400 laser imagesetter, the IntelliProof also can be used to generate color-separated films.

Knudsen Printing, a Denver-area sheet-fed printer with 75 employees, installed the system to proof and output high-quality color work. "We installed the IntelliProof not only to save conventional proofing time and costs but also with an eye toward the future," says company president Nancy Knudsen. "And the future in the printing industry is direct-to-plate."

Ink-jet systems also have taken a dominant market position, but can they be used as contract proofs? When larger-format ink-jet printers were introduced as proofing devices for the graphic arts world in the 1980s, their output was marketed as being of sufficient quality to show clients intermediate or random color for approval prior to film output.

Over the years, however, technology improvements and marketplace realities have given these systems a claim to contract proof status, both for film output and CTP work-flows. Although ink-jet systems cost a good deal more than dye-sublimation printers, the consumables cost is so much lower that printers would be well advised to evaluate both technologies.

In 1987 Iris Graphics, Inc., a Scitex Co., introduced its 3000 series. "We introduced a new technology that allowed us to vary dot size to get a high perceived resolution," explains Peter Alpers, director of marketing communications and public relations. "The result is a virtual continuous tone.

"Since then, the world has shifted. The printers have been refined to provide increased reliability, ease of use and calibration. Other improvements are 'firmware' upgrades such as a board device that supplies dot placement options so users can attack things such as a rainbowing artifact in the mid-tones of an image."

This year, Iris is replacing its Smart Jet 4012 with the new Realist 5015, although the SmartJet will be manufactured throughout the year. The Realist 5030 is replacing the Iris 3024; the company no longer will build this model, but will be selling off inventory.

Direct Digital Design, a 75-employee color prepress and multimedia design house in Kansas City, KS, is one longtime Iris user that has experienced digital proofing's evolutionary acceptance. Owner Red Gazlay explains that the company opened in 1989 as a totally electronic facility and used Iris printers from the beginning. Since most of Direct Digital's clients produce four-color catalogs using both gravure and web offset printing, Gazlay is already familiar with prepress for "direct-to" technology - in this case, direct to gravure cylinder.

"About 40 percent of our jobs are delivered as film to a printer," he says. "Since many gravure shops have moved into direct engraving, we send files on optical disks with Iris prints as the contract proof. For offset printers, we calibrated the Iris to a 3M Matchprint, since many printers have that system. Then, we submit film plus an Iris proof, and clients run a Matchprint. Although initially they all were leery, after making test prints many customers have said, 'Don't worry about sending film proofs.'"

In addition to the Iris printers at Digital's plant, the company also has installed two Iris 4012s at client sites to expedite remote proofing. Gazlay explains that the workflow involves first pulling Iris proofs on-site from the customer's QuarkXPress files. Then, running Scitex Echo software, the file is compressed and transmitted over an ISDN line. Typically, the file is approximately 40 MB, compressed to 3 MB to 4 MB and transmitted at 1 MB per min. The file automatically decompresses at the client's site and is printed on the Iris.

Gazlay maintains that unless a moire is very slight, it can be seen on a digital proof, but he stresses that certain procedures are crucial. For example, he cautions that calibration and regular monitoring with a spectrophotometer are imperative to maintain consistent, reliable output that works as a contract proof. He also points out that because the opacity of Iris inks difers from that of printing ink pigments, it's important to calibrate values using a densitometer.

At Centennial, a three-shift, full-service commercial operation running high-quality multicolor 40- and 28-inch sheet-fed work, the DuPont Digital WaterProof ink-jet system was chosen as a complement to the analog WaterProof system already in use. DeLarso Sr. notes that the 140-employee shop added its electronic prepress department in 1990.

"Although we use digital proofs to pave the way for computer-to-plate, by going to digital proofing for random color we eliminated film waste and labor time," DeLarso reports. "We've halved our time on random proofs. At first, some clients had trouble accepting digital proofs, but we spent time training our salesforce how to look at digital color. Now, our clients have confidence that digital random proofs will match the final analog proof."

DeLarso also points out an unexpected internal bonus - a measurable increase in the color skills of the company's scanner operators. Prior to adding digital proofing, a batch of scans was produced, then proofed by another department. Color corrections were made by the next shift of scanner operators.

"Now, the scanner operators are running the digital proofs at the same time," DeLarso explains. "They see the results of their work first hand and are getting to color faster."

Dye-sublimation proofers represent yet another technology that will work for printers in digital applications. Typically, these devices produce four-color proofs to 11 x 17 inches from PostScript files. They can show color breaks, layering, positioning, and, in some instances, trapping and overprinting.

Thirty-one percent of ad agencies currently use dye-sublimation printers, according to the Strategies for Management study. Webb warns, however, that dye-sub proofers can range from less than $1,000 to as much as $30,000.

Castle Press, a high-quality sheet-fed commercial printer in Pasadena, CA, has used 3M's Rainbow Color Proofing System for the past nine months. The Rainbow, which captured a 1995 Graphic Arts Technical Foundation InterTech Technology Award, includes proprietary software and dye-sublimation technology to produce continuous-tone proofs from PostScript files. The system also can accept Scitex CT and other file formats.

"We purchased the Rainbow to produce a working proof to show our customers," says Castle's president, George Kinney. "Since our service includes design, we anticipated using the system for comps, interim proofs and internally as a quick check for color and color breaks. It was well received immediately.

"About four months ago, we received a software upgrade that improved the type quality generated on the proof. Now, while our agency customers (the ones looking for every nuance in the film) still prefer a film proof for final contract, most of our commercial customers sign off on a Rainbow. All our customers sign off on a blueline as well. On press, we have no trouble running to the Rainbow."

Although experts agree film will be with us for some time, the drive to an all-digital work-flow seems inexorable. While some printers will invest in systems that generate halftone dots so they can have a "proof of film - with or without film," others will choose the increasingly sophisticated ink-jet and dye-sublimation systems. Whatever your decision, you have many alternatives.