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I've been working on the railroad

November 30, 2006

Johnson's World

Engaging a consultant? Odds are you’ll hear something like this: “You know, railroads thought they were in the railroad business. They didn’t realize that they were actually in the transportation business.”

As soon as those words leave your consultant’s lips, insist that his fee be cut by half.

The saying in question is supposed to be metaphor for our business. When we hear “trains” and “transportation,” we’re supposed to substitute “printing” and “communication,” then act to obliterate all references to print, ink and paper from our sales and marketing pitches.

Don’t fall for it.

I’ve been a train fan for as long as I’ve been a printer. I’ve seen both industries face great challenges. And I remember the massive damage done when America’s railroads forgot for a moment what business they were in.

The similarities between the rail and print businesses are striking, if we don’t carry them too far. Both have been, since their very inception, high-labor, high-overhead, low-profit margin businesses, with each burst of prosperity followed by a wave of bankruptcies when the economic winds shifted.

Lesson No. 1
Technology alone won’t solve the problem. | In the 1950s, railroads were feeling pressure from other modes of transportation. In one decade, the railroad industry dramatically changed the machinery used to conduct business, switching from steam locomotives to diesel-powered engines. In the 1960s, printers did the equivalent by switching from letterpress to offset. Setting aside sentimental affection for locomotives and handset type, transition promised big advantages to both industries. And in both cases, the promise of the new technology was not fully realized.

Diesel engines meant lower fuel costs, higher speeds, fewer stops and less maintenance, but lower labor costs were not realized because workers continued to sit in the cab, doing nothing.

Today, replacing small offset presses with digital print technology might shave minutes off your makeready, but it won’t help if it still takes an hour to write a job ticket.

Lesson No. 2
Ancillary services aren’t the cure-all. | As things worsened in the rail business, an air of futility seemed to permeate the industry. Forty years ago, it was accepted as fact that you just couldn’t make money in railroading. The only answer, it seemed, was to diversify; to become “full-service providers” and “transportation consultants.” Sound familiar?

Railroads bought trucks and changed their names. The Peoria Valley Railway became the Peoria Valley Transportation Corp., just as Fred’s Printing is now likely to become Fred’s Graphic Media. Only sign painters noticed.

Railway holding companies quickly discovered that, name change or no, when customers needed drayage they turned to trucking companies, not to a railroad that also owned trucks. The rail folks also learned they didn’t understand trucking, which is vastly different from running a railroad. They found out that although over-the-road freight was killing rail traffic, it wasn’t exactly a cash cow. What’s the point of shoring up one low-margin business with another?

Lesson No. 3
Think creatively. | Trains don’t haul petroleum anymore. They’ve lost the business—lock, stock and barrel—to oil pipelines. If printing industry consultants had been on hand, they would have advised railroaders to enter the pipeline business. After all, “You aren’t a railroad, you’re a petroleum logistics organization,” or some such blather.

Happily, the railroads weren’t fooled this time. Realizing they were in the “tank car on rails” business, their job was to keep the cars full. Tank cars are plentiful today—they’re filled with corn syrup. The railroads saved their business and protected their traditional turf transporting bulk agricultural products.

Lesson No. 4 Accept reality…and work with it. |
Government-subsidized streets and highways had a negative impact on railroads. But a century earlier, government aided and abetted the railways’ right-of-way acquisitions. In fact, over-reliance on government subsidy and regulation badly hurt the railroads because it shielded them temporarily from market realities. Barge and riverboat firms complained railroads could go where there were no waterways; railroads picked up traffic even though, pound for pound, rail was more expensive. Railways complained that trucks could go where there were no tracks; truckers picked up traffic even though trucking is more expensive.

Monks probably complained Gutenberg was hurting their scribe business…just as we grouse about the Internet. Railroads began to return to health when they embraced this fact, and then moved to do a better job in their core marketplace.

How about you?

Steve Johnson is president of Copresco (Carol Stream, IL), a pioneer in digital printing technology and printing on-demand. E-mail him at steve@copresco.com.

To read more of Steve’s Johnson’s World columns, visit our Johnson’s World Archives.

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