2009 Summer

Cadillac Looseleaf Products: Loose Leaf Goes Digital In Detroit

August 21, 2009

by: Dianna Brodine

It’s rare to hear good news out of Detroit these days. Concerns about the automotive industry hang over the city like a dark cloud, and Detroit has become the media symbol of the downturn in the nation’s economy. However, Cadillac Looseleaf Products, Inc. isn’t letting its suburban Detroit location slow it down. The company, which celebrated its 80th year in 2008, is moving forward with a multimedia approach to traditional loose leaf, expanding beyond the paper boundaries of binders and tabs to organize information in new ways for its customers.

We were the first ones in the recession so we’ll be the first ones out of it. – Suzanne Medinis

Cadillac does minimal work for Detroit car companies, perhaps saving it from a deeper impact as a result of the auto industry collapse. Cadillac President Kurt Streng, however, believes things aren’t as negative as painted by the news. “I almost feel it was worse eight years ago. Business-wise, it was worse because there was no new business on the vine. The strong survived in 2001 and there were a lot of guys who were smart enough to prepare for the future.”

Streng continues, saying Detroit has been in a recession since 2001, with unemployment rates steadily climbing over the past eight years. The lessons discovered by smart business owners included tighter budgeting, continuing business as normal, and effective marketing of services. “The people who continued to sell with a smile on their faces, they’re making it,” explains Streng. Suzanne Medinis, controller, chimes in. “I always say that Detroit is either high or low – business is either booming or at rock bottom. But people are optimistic we were the first ones in the recession so we’ll be the first ones out of it.”

Cadillac emerged with strength from 2001 and has taken advantage of the lessons it learned. “You keep working hard, position your company for growth, and keep your eye on the trends,” Streng explains.

We’ve never considered ourselves a bindery. – Kurt Streng

Watching industry trends was a key factor in Cadillac’s transition from traditional loose leaf services to a more robust way of looking at ways to organize information. For decades, Cadillac, located in Troy, Michigan, was a provider of binders and tabs for conventional loose leaf information presentation and storage. However, Streng believes the company has always had a larger view of itself, saying, “We’ve been around this business a long time and, typically, binderies stay binderies. We’ve never considered ourselves a bindery, and that’s allowed us to migrate.”

That migration was primarily customer-driven. In the early 1990s, in response to the needs of existing customers, Cadillac added full service collating, diecutting, and finishing to its line-up, and soon after, fulfillment and distribution. Streng explains that fulfillment and distribution are a natural extension of information packaging: “Part of what we do is build product so that it can be delivered. With that in mind, it has to survive delivery.” By bringing fulfillment in-house, Cadillac can now work structurally on the delivery, reviewing substrate and decoration techniques and evaluating its impact on the company’s choice of delivery methods.

Medinis also points out the additional control that in-house fulfillment provides. “Other binderies are traditionally sourcing delivery out. But from my perspective, we could not only save time and shipping by bringing it in-house, but we could control everything right here, reducing lead time.”

Additional changes were in store when Cadillac saw the market moving away from paper-based information storage. “Catalog binders were moving on,” says Streng, “and instead of walking away from those customers, we knew we could produce the catalog binder virtually.” Cadillac began producing CD sleeves, along with the print collateral. From there, it was a logical step to digital printing.

It’s about letting people purchase what they need to use. – Suzanne Medinis

Cadillac purchased a Canon ImagePRESS C6000 in 2008. The ImagePRESS produces digitally printed pieces that for short-run production of books, brochures, or customized CD packaging. It also has the capability of producing customized manuals, print on demand projects, and other 1:1 marketing pieces. Using web and digital print technologies, Cadillac has provided custom solutions that work for its customers.

Says Streng, “CD sleeves, text, binders inserts, tabs’ it’s all interrelated. Digital print offers an affordable way to get full graphics and exceptional quality at an affordable price.” Noting that his customers’ budgets are tighter, Streng points out that digital print allows Cadillac to offer unique solutions on a value basis, while also reducing the chance of mass-printed inventories growing stale.

“Some of our people thought we were stepping on the toes of printers,” says Medinis. “But it’s not about that – it’s about letting people purchase what they need to use, rather than purchasing binders they don’t need right now.” Streng chimes in, “A big part of our business is the trade and finishing side, with print product coming in the door and needing to be collated, bound, and shipped back. There are a lot of printers without digital print capabilities and we’ve offered a safe environment for them to go out and sell digital print and bring it back to a trusted source.”

The key, says Streng, is that Cadillac is simply taking its customers’ needs one step further, helping them to organize and present information in new ways. Now, rather than providing just the binder and tabs, Cadillac also can help to create customized, variable data to populate the binder. “Communication needs to be authored, produced, packaged and distributed,” explains Streng. “Through its many forms we take to market to allow our customers to effectively get their message across.”

We’re in the organization business. – Kurt Streng

Cadillac Looseleaf Products has a full service multimedia department to assist customers with the design technology-based information packaging solutions. Whether the need is video production, CD-ROM and DVD authoring, animation, or web sites, Cadillac’s staff of 35 employees is able to help. This multimedia approach may seem to be a departure from the company’s primary business model; however, Streng believes it goes back to the very roots of what the company provides in terms of information organization. “A binder or a web site – there’s no difference. When a user pulls up the first page of a website, that’s the binder cover. And each button that a user pushes is an index tab. A website is essentially an electronic ring binder,” he explains.

That outlook coincides with the transformation in the way information is collected and disbursed. “The buyer of tomorrow is well aware that there is more to learn and more to pass on with less time. Cadillac has responded to this by immersing our customers into a multimedia experience that complements our bindery and production shop,” says Streng. Services include digital video, photography, and web site production, and the facility has a sound booth as well as blue and green screen capabilities.

Whether multimedia or paper-based, Cadillac remains in the organization business. Customers approach the company with information that must be compiled, presented, and stored. Through a series of questions, Cadillac helps to determine the best way to package the information. What does the customer want the end user to walk away with? What type of environment will it be used in? How appealing does it need to be? How will it be used?

Cadillac will continue to introduce custom and cutting edge technology forms to deliver information, but as a complement to traditional loose leaf packaging. “We will always produce ring binders, diecut, collate, punch, and bind,” says Streng. “Considering the electronic versions of that production allows our customers choice in media form. Once we learn what our client does, the challenges he faces, and where he wants to go, we can start plugging in the variety of offerings we have.”

We are like none other. – Kurt Streng

Cadillac considers itself print, product, and virtual media packagers – perhaps the only company of its kind in the country. “It’s kind of a running joke around here,” says Streng. “We are like none other.” In this economy, that has allowed Cadillac to go virtually anywhere and sell a product that is appropriate to its customers’ needs and budget.

What Cadillac offers is experience – experience in taking information and the need to communicate it effectively, and transforming it into a solution for its customers. By remaining small and focused, Cadillac operates as a family business. “I still believe in a handshake,” explains Streng. “I still believe that there’s good in the words that people say. We operate our business that way, because you’ll forget about the product and the price down the road, but if you have a sour taste in your mouth, you’re probably not coming back.”

Pay It Forward with Needed Training and Preventive Maintenance

August 21, 2009

by: Steven Calov, Heidelberg USA

Difficult economic conditions and depressed sales of new bindery equipment have imbued issues relating to maintenance and training with fresh urgency. Although binderies will always be production oriented, they also should understand that their ability to improve production efficiency and reduce their total cost of ownership is tied to decisions they make about preventive maintenance and the care they take to ensure their operators elicit nothing less than peak performance from their equipment.

Faulty Assumptions Can Rue the Day

Regrettably, many customers tend to regard employee training as a form of overhead instead of a mission-critical investment. It’s a logical misconception: because the equipment is under warranty already, problems must always be the fault of the machine. While this is often true, it is not necessarily the case.

Especially when – as now – the trend is to hold off replacing equipment until economic conditions improve, lack of attention to training and maintenance can have serious consequences. Say a seasoned bindery operator leaves or moves on to another position within the plant after passing on his operational knowledge to his successor in the job. Say it happens again. And again. The net effect of this progressive degradation in the expert knowledge needed to keep that piece of equipment running efficiently can show up in slower speeds and dramatically lower productivity. In fact, as well-intentioned employees pass along training from one to another, it is not uncommon for the quality of the information to degrade until it is dangerously far removed from the manufacturer’s recommendations.

Save the Live Jobs for Later

To get the full benefit of manufacturer-provided training, it’s best to hold off running live jobs until a machine is fully up and into production. While it may seem desirable and efficient to combine post-installation training with live jobs, the decision to do so could well force additional training down the line at additional cost to the customer. Training is intended to give the crew an opportunity to gain experience and achieve a reasonable comfort level with the equipment. Activities that distract operators from that goal can be counter-productive. Otherwise, the crew may run into difficulties and start pointing fingers, complicating an otherwise easy transition from training to production.

Best Trained Employees Do the Best Job

Everybody says it – “Owners must invest in their employees” – but what does it really mean? Today’s bindery employee must possess an increasingly sophisticated skillset, including knowledge of how paper moves, the principles of lean manufacturing, and the efficient use of bindery personnel. Given the range of available training opportunities, there is no reason for a bindery’s productivity and profitability to suffer for want of an appropriately skilled operator. Heidelberg, for example, provides a variety of intermediate skill and refresher training courses at its Print Media Demonstration Center in Kennesaw, Ga., as well as through its Print Media Academy. After all, a warm body can make a machine run, but it takes a well-trained professional to make it sing. These days, it is a business imperative for production equipment throughout the plant to be warbling arias.

Preventive Maintenance: Whose Job Is It?

The phrase “unplanned downtime” generally denotes a business liability to be avoided at all costs. The default position for many binderies, unfortunately, is to keep machinery running, then limping, if necessary, toward the finish line. Machine maintenance is presumed to be the manufacturer’s job when, in fact, the reverse is true. Regular preventive maintenance, performed during periods of “planned downtime,” will ensure consistent high-quality production, optimized equipment settings, and higher throughput, thereby protecting the investment and increasing its resale value.

While the largest binderies may have dedicated maintenance departments, smaller companies have the same needs, although their resources may be more limited. Busy plants of all sizes, in fact, should give serious attention to establishing a dependable rhythm of preventive maintenance.

It likely will cost more to troubleshoot than to invest in a program of regular preventive machine care. Lack of regular preventive maintenance causes machines to run at slower speeds, sacrificing efficiency and productivity for “one more day of operation” before the inevitable breakdown. In the end, neglecting preventive maintenance hurts customers because it’s more costly to fix things when they finally break. Heidelberg Systemservice currently performs about 80 percent repairs, 10 percent preventive maintenance, and 10 percent rebuilds of existing equipment. Given these percentages, it’s common sense to conclude that customers can and should do much more to prevent problems in the first place.

A Change of Focus

Over the years, Heidelberg’s service organization has sought to shift its emphasis from reactive repair to proactive preventive maintenance. Uptime can be maximized and breakdowns minimized by following a regular schedule of inspections with a detailed checklist.

The sale of any piece of equipment inaugurates a long-term partnership with the customer. Likewise, the printer who owns that piece of equipment also inaugurates a long-term relationship with that machine, which means maintaining it on schedule, servicing it when service is needed, and supporting it with manufacturer-branded parts and consumable supplies that have the same reputation for quality as the hardware itself.

Be Prepared

Maintenance and operation are both part of the training process. Customers need to invest the money in maintenance to reduce unplanned downtime and in ongoing training to guarantee optimum performance of both machine and employee. Printers and binderies should work hand-in-hand with their equipment suppliers on issues such as maintenance, training, and fine-tuning of equipment in order to optimize production speeds and capabilities and avoid problems down the road. No one knows when an economic turnaround will come, but savvy customers should position themselves now to be first out of the gate for the recovery by making sure their employees have the skills they need to take advantage of the upturn. Viewed in this way, maintenance and training can be seen as windows of opportunity to prepare for success when the economy rebounds.

Steven Calov is postpress product manager for Heidelberg USA, with particular expertise in post press stitching and perfect binding. He is a graduate of New York City Technical College, where he earned a degree in Graphic Arts Production Management. He has worked with Heidelberg for 19 years. Contact him at Steven.Calov@heidelberg.com.

Best Practices for Paper Cutter Knives

August 21, 2009

by: Woody Powers II, Jorson & Carlson

A knife supplier or servicing company with expertise in knife quality, knife handling and product application, as well as the know-how to install cutting knives properly, can provide useful best practices to improve cut quality and increase knife life. In most cases, implementing new procedures will increase quality and production time by eliminating costly knife change time.

Fundamental Questions for Cutting Jobs

When cutting products such as books, labels, and letterhead, it is paramount that operators abide by strict fundamentals to achieve optimum cuts and production. Questions to ask before making the first cut include the following:

Has the job been coordinated with prepress, press, and bindery to supply the most efficient layout for all involved? Are the right paper weight and paper size being used for the job? Too much trim can cause excess waste and deflection problems, like back bone chipping on a perfect bound book.
Is the correct equipment being used for the job? Is proper maintenance provided for the equipment per OEM recommendations?
Will the cutter, folder, stitcher, or perfect binder produce a product quality that is acceptable to your customer?
Does the operator have the knowledge needed (and the ability to engage that knowledge) for the job given to him?

Good housekeeping, proper job layout, good machinery, the right paper, and the correct cutting knives, ground by a professional knife grinding service, will provide a quality finished product.

Increasing Cut Quality

A full-time bindery with multiple shifts should be using inlaid knives manufactured with 18 percent tungsten alloy or – the ultimate in wear resistance – carbide. Both of these out-produce carbon steel cutting knives. Many people are confused by the term “18 percent tungsten” – it is not carbide, but rather an alloy steel with 18 percent tungsten mixture. The term “carbide” also is misrepresented and misunderstood. There are different grades of carbide. One of the best, most wear-resistant grades is MG28, an ultra-fine grain.

Using upgraded metallurgy maintains the desired cut quality for a longer production time. Never upgrade knife quality to improve cut quality. There are companies that sell coatings or offer to rebuild old knives; however, there are no substitutes for upgrading the metallurgy to improve longevity.

Proper Installation

Proper installation of cutting knives is very important in achieving longer lasting cut quality. Changing knives quickly will not improve quality. A job done right will improve quality and longevity, while also allowing distortion-free cuts.

When changing knives, never place a new knife on the cutter bed. This will ensure a knick-free knife is installed. Instead, always place the knife on a piece of chipboard or on a changing table with the cutting edge facing away. Using Kevlar gloves, clean the knives with a solvent to remove any oil, dirt, etc. Visually check the knife edge for imperfections. The same cleaning procedures must be applied to the cutting machine where the knives are mounted. With 3-knife trimmers, clean the holders where the knife is mounted. Remember that any surface upon which the knife is mounted becomes an extension of the cutting knife. Any paper, dust, or grease trapped between the knife and the machine can cause problems.

When installing guillotine knives as per OEM instructions, always back off the knife setting adjustments so the knife will not cut through the last sheet of paper. When tightening mounting bolts on larger knives, always start tightening from the middle out to the sides; smaller knives tighten from one side to the other side. Using this procedure nearly ensures that a bow will not be trapped in the knife, causing deflection in the cut and making it hard to seat the knife. Make the final knife adjustment in the cutter as needed – just enough to cut through the last sheet of paper.

When using cutting sticks, make sure the stick is properly seated in the stick channel. Cleaning this channel is very important in getting an even setting of the knife. If the channel is not clean, the blade will be damaged on the first penetration. Once the blade has been seated to the cutting stick, do not cycle the knife lower into the stick to get a cleaner cut. If needed, change the stick. If this needs to be addressed often, a blade change is needed.

Knife Grinding

When the knives are dull, send them to a qualified knife grinding service. Just as bindery equipment has evolved, so has grinding equipment and the techniques used to sharpen knives and remove burrs.

A grinding service that grinds the knives first, and then hones the knives by hand is using an older, outdated procedure. With this process, the degree of sharpness depends on the pressure exerted by and the steadiness of the person honing the knives. This will leave scratches, marks, and back bevels on the face of the knife, which can lead to knife deflection problems and product marking.

The new knife grinding technology incorporates state-of-the-art grinding equipment to grind and mechanically hone knives on the same machine. This guarantees burr removal and precise blade sharpness, ensuring consistent repetition from knife to knife.

With the help of the right vendors, implementing new procedures will increase quality and production time by eliminating costly knife change time. A few simple changes can help bindery owners improve quality without spending a lot of money by using the equipment on hand.

Woody Powers II has served as the president and owner of Jorson & Carlson since 1992, after beginning employment with the company in 1964. Jorson & Carlson is a third generation company, which began in 1917. It is a full service company specializing in precision grinding, with six locations in the United States. For more information, call (800) 656-7766 or email sales@jorsonandcarlson.com.

Custom Binding: Dedicated Customer Service Meets DIY Convenience

August 21, 2009

by: Renée Varella

Today’s loose leaf market offers a range of options for consumers who want it all – whether that be the convenience of ordering custom binders through a strictly “do-it-yourself” online service or the attraction of learning about all of the custom features available from an experienced customer service rep. In this article, The Binding Edge explores different ends of the custom binding spectrum, starting with Avery Signature Binders and its exclusively online service and then highlighting the more traditional customer service approach from American Thermoplastic Company.

A Tale of Two Binders

Avery Signature Binders, based in Brea, Calif., is a division of Avery Dennison Corp., which got its start when R. Stanton Avery manufactured the first self-adhesive label in 1935. Today the company provides pressure-sensitive materials, retail information services, and office and consumer products. The company’s Signature Series allows customers to go online and order any quantity of personalized binders, even just one – with logo, photos, and graphics printed on the cover in full color – and the binders are guaranteed to ship within five business days. Customers handle the transactions totally on their own; the company responds to questions primarily via email.

“We’ve been looking at personalization and trends in the marketplace,” said James Johnson, director of global business development for Avery Signature Binders. “Our concept is based on ‘mass customization’ – consumers want very personalized products at mass production prices.” He said that Avery built the business based on the principle of giving people the opportunity to produce short- run, no-minimum orders, which has brought new people into the marketplace. “We’ve gotten tremendous customer feedback,” he added. “Our latest survey indicated that 90 percent would ‘definitely purchase again,’ while 10 percent were ‘likely to purchase again.'”

American Thermoplastic Company, based in Pittsburgh, Pa., manufactures custom-imprinted binders and related loose leaf products for business, industrial, and educational accounts. In 1954, Aaron Silberman started providing local businesses with foil stamped vinyl products. Thanks to the addition of four-color digital process printing in 1998, customers can order smaller quantities and design different variations and special messages on their products that can change from copy to copy during a print run. A customer service team works with each customer, even those who start the ordering process online. American Thermoplastic’s QuickShip program sends custom-imprinted binders to customers in six days, and stock items can be shipped within 24 hours.

“We’re serving customers with slightly different needs,” said Steve Silberman, who succeeded Aaron, his father, as president of American Thermoplastic in 1986. “We think there’s value in the customer being able to talk to a customer service representative. Customers may not end up with everything they want if they don’t hear about their options.” He added that customers who need exactly what DIY companies offer may be satisfied. However, he gave the example of a customer who ordered a 1½” binder when what she really needed was a 2″ binder. “Through our customer service process we can help customers figure out exactly what they need,” he said.

Customer Service: A Balancing Act?

Both American Thermoplastic Company and Avery Signature Binders offer the consumer a variety of custom binding options, speedy turnaround and competitive pricing. However, their approach to customer service highlights certain differences.

For Avery, the biggest advantage of its do-it-yourself option lies in taking away the expensive part of the process: interacting with the consumer. “What was initially costly and time-consuming is now easy,” Johnson said. “Our online system helps consumers find a photo they like, type in their text, and upload their logo. It also helps them along the way – for example, if they try to size a low-resolution logo too big, a warning message will pop up, telling them they need a higher-res logo.

“Our software is designed to help consumers help themselves,” Johnson added. “They like the ability to play with the layout and design, see a 3-D preview of their finished product, and get their pricing questions answered without having to send someone their contact details and wait for a call back or, worse, fill out a form for a quote.”

According to Johnson, Avery is looking for underserved consumers – those looking for six to 10 custom binders. “Ninety-seven percent of our orders are for less than 25 binders,” he said. “However, about 50 percent of our total volume comes from orders of more than 25 binders, because customers liked the service.” Avery also is targeting those who prefer to do everything online, with Johnson noting that 98 percent of his customers never communicate with a customer service representative.

For American Thermoplastic, walking consumers through the custom binding process is paramount – with a level of attention not available through an exclusively online system. American Thermoplastic’s Silberman said his customers want to be taken care of by a knowledgeable customer service person and need products that are not off-the-shelf. “Someone who places an order every few years doesn’t know all of the options – for example, that they can put their business card on the front of their binder, or have a variety of pockets or a DVD holder,” he said. Silberman added that each company has a different mindset when it comes to an online ordering system: “At American Thermoplastic, we’re interested in how to get customers the options they need, such as matching digitally printed index dividers v. a plain binder with a certain set of specifications.”

Johnson said Avery’s take on the customer service issue is this: “If you’re not ready for the next wave of business – how to communicate with this new generation who expect to handle the entire transaction themselves – you’re going to be in trouble.”

Transaction Land

One element of Avery’s process that Silberman admires is that the entire transaction is handled through Avery’s website. “The process accomplishes a number of things for the seller: the customer has to take responsibility for the final product and has to pay for it upfront. That’s everything we dream about – we don’t want customers to call back and say, ‘That’s not what I wanted,'” he said. “Avery has figured out how to do it all online, and I applaud them for it.”

In fact, Silberman was so intrigued by the process that he went to Avery’s website, went through all of the options, and bought a binder for himself. The only catch: “I intentionally put in typing errors and put the text off-center to see if someone would catch it, but they did not,” he said. That’s why Silberman believes it’s important for his company to offer customers a level of oversight that exclusively online systems don’t provide. “For us, many times a customer will send in artwork or do something else that doesn’t work. So we always call the customer and ask, “Are you sure you want this word spelled that way or want this text off-center like this?”

Avery’s Johnson agreed that not having a traditional proof process could be a disadvantage for some customers, noting that with Avery’s system, “what you see on the screen is what you get.” Even so, Johnson said customer complaints to Avery are the exception. “A few customers have thought the computer misspelled a word after they’d given their approval of the job, but most customers will eventually come clean,” he said. “If there’s a mistake, we’ll usually offer a discounted remake or make a new binder for a customer who ordered just one binder.” What’s more, Avery will make the occasional customer service exception: “One customer needed help and asked me to do a web conference with her and walk her through the process of ordering custom binders through our website,” Johnson said. “Now she orders 10 binders a week from us.”

Johnson acknowledged that Avery’s digital printing process doesn’t offer economies of scale, so prices aren’t negotiable. In addition, Avery doesn’t churn out thousands of binders or match PMS colors. “My suggestion is that the customer order one binder – if we nail the color on it, I tell the customer that we can guarantee that the rest of the binders will be just like it,” he said.

While Avery does serve the home application market with such materials as scrapbooks, recipe books, and school binders, Johnson noted that law offices and financial companies are especially well-suited to the process offered by Avery Signature Binders. “These companies can create the background of their binders once, use Avery’s text merge tool to customize their binders, and binders can be produced with an individual name or company on it,” he said. “The variable data can be anything, even white. Consumers really like the actual quality of our binders (printing on vinyl vs. a laminated look), and some don’t care about price. Those are nice customers to have.”

The Road Ahead

Despite some differences, Silberman and Johnson are anticipating future needs – and share the attitude that the loose leaf market offers plenty of opportunity for progressive companies. “There’s a place for a lot of different manufacturers and different products out there,” said American Thermoplastic’s Silberman. “My hope is that customers will be able to figure out which kind of supplier they need.”

Johnson of Avery agreed, stating his belief that there will always be a need for custom binders. “When Avery looked at the market 25 years ago, we saw the rising popularity of the clear view binder and got out of the silkscreen binder business altogether,” he said. “We don’t see what we’re doing now as taking away that business.”

In response to the changing demographics of today’s young consumers – many of whom are enamored of new media offerings like the Apple iPhone and Twitter – American Thermoplastic may eventually offer a way for customers to place orders completely online, something the company’s sales reps are currently doing. That said, American Thermoplastic’s Silberman doesn’t consider younger consumers to be all that different from other customers. “Even young people tuned in to social media really want special attention paid to their needs and to how their product looks,” he said. “I suspect that younger customers may be even more demanding of attention and want binders to reflect who they are.”

Avery’s customers tend to be small business owners, with a slight majority of customers female and a bit younger than average. “We plan to aggressively go after the younger market, which lends itself to school binders,” Johnson noted. “We’re also getting ready to enter a relationship with a very large social media network where we’ll put our application into the middle of a community of users, so people can create binders for themselves and sell them to others.”

Stay tuned for future updates in the loose leaf market – with its ever-changing landscape of technological innovation and strategic marketing initiatives.

Perfect Binding Technology Follows the Digital Flow

August 21, 2009

by: James Tressler, C.P. Bourg, Inc.

Nothing has changed the face of perfect binding technology faster or more completely than the digital technologies used to create, prepare and print pages.

Page layout and text editing software, digital photography and image editing, Internet distribution, job prep, and short-run digital printing – all are powerful forces pushing the limits of what can be perfect bound. In turn, perfect binding technology has risen to meet these market challenges with advances in products, processes and adhesives that will spur the market to bind more – and more kinds – of books better, faster and less expensively than ever before.

The technologies underlying these changes have been at work since the 1980s. But it is only recently that we have reached a tipping point, where market forces spurred by the convergence of multiple digital technologies all of a sudden seem to have quickly and conclusively leapfrogged traditional binding methods.

The Commoditization of Print

For example, the market for on demand book publishing is soaring. Bowker¹, the official International Standard Book Number (ISBN) agency for the U.S., recently projected that 285,394 titles were produced in the U.S. in 2008 on demand, a “staggering” 132 percent increase over the 2007 total of 123,276 titles. Equally startling, the 2008 level reflected the second consecutive year of triple-digit growth in the on demand segment, rising 462 percent above 2006 levels.

Based on the preliminary figures from U.S. publishers, Bowker said 2008 could prove to be a “watershed year” in which titles produced on-demand and short-run – which it defines as print runs of less than 100 – exceeded the number of traditional book titles entering the marketplace. And that’s before adding consumer and corporate titles that often escape ISBN classification.

Data gathered for the Printing Industries of America Digital Printing Council² bear this trend out:

Between 1980 and 2007, the number of commercial publishers mushroomed from 10,000 to nearly 95,000.
During that time, the average number of books per order dropped from 18,963 to 3,055.
By 2007, 30 percent of all books published were printed digitally.
From 2000 to 2007 the publishing market grew almost 50 percent, from $21 billion to nearly $33 billion.

Clearly, book run lengths are collapsing while the number of titles – and the overall market – is expanding, if not exploding. Consider the experience of Tennessee book manufacturer Lightning Source, Inc., which claims that from its inception in 1997 to 2008 it delivered more than 50 million books on demand with an average run length of 1.8 copies.³

This evidence is not surprising when you consider that books printed digitally don’t need to be inventoried or warehoused, never go out of print, can be produced on demand in whatever quantity needed, and can be requested, sold, and distributed through more channels.

Digital Impact

The trend toward digital is reflected in diverse ways – from the business habits of corporate enterprises looking for ways to showcase their image or streamline their operations, to the increasing numbers of “micro publishers” and vanity press, to average consumers flooding printing e-tailers with requests for a few photo books of the family vacation.

Digital printing has unique characteristics that significantly affect binding and finishing technology:

Dramatically shorter runs. Although average run length is between 100 and 300 copies, books of one are commonplace, as evidenced by the experience of companies like Lightning Source, Shutterfly, Snapfish and Lulu.
Different processes. Unlike offset inks, which are absorbed into the paper’s fibers, digital inks and toners in effect are less durable coatings placed or fused onto the surface of the paper.
Different papers. Digital production increasingly involves color ink or toner printed on coated, double-sided (C2S) covers and coated text stocks of varying weights.
Different sizes. Even though digital formats are smaller than offset (at max 14.33 x 22.5 inches), their range is optimal for one-up page production and adequate for 2-up and 4-up production of longer-run, smaller format documents.
Collated output. The bindery needs to keep digital output in sequence or risk ruining an entire output stack.
Variety. Digital printing is able to print any number of books and pages one after another on demand for almost any purpose imaginable – from college course packs to corporate histories, product manuals to weekly in-store shopping guides, and photo books to family genealogies.

The Internet also is exerting influence by making it possible to sell, accept, track, arrange to ship, and bill jobs electronically. Meanwhile, the more challenging economics of the past decade have translated into generally higher costs for everything from labor and energy to storage and shipping – everything except for printing, which has become a commodity.

Finishing Just in Time

So, what do these trends have to do with binding and finishing in general, and with perfect binding in particular?

For print buyers, print on demand is more efficient, less costly, and lower risk. With digital printing, economies of scale are largely irrelevant so there’s little reason to produce more copies than needed – a boon for companies trying to eliminate storage costs. The resulting phenomenon of smaller runs and just-in-time manufacturing to avoid overstocks and remainders is being repeated at publishers, retailers, and corporations across the country.

Meanwhile, consumers as comfortable handling computers and digital cameras as they are a perfect bound copy of National Geographic or a John Grisham paperback now see the practicality of instant self expression in self-publishing photo books and family genealogies.

With the commoditization of digital printing and consumer demand on a collision course, the bindery is emerging as a “value added” service – whether it’s found in a corporate, commercial, or trade setting. The bindery able to offer “finishing on demand” offers something they never had or needed before: opportunity.

Within this context, perfect binding has emerged as a familiar, quick-turnaround, professional-looking bookbinding method that has a future as bright as a camera’s flash.

Nimble Equipment and Automated Processes

What’s new in perfect binding technology to meet these market challenges?

The fast pace and individuality of digital printing technology demands equally nimble binding and finishing technology. The biggest beneficiaries are systems able to bind or finish documents efficiently in short runs from one copy to several hundred.

On-line variations following the debut of the Xerox DocuTech actually emerged before off-line units. The first on-line signature booklet maker (the C.P. Bourg SBM-1) was introduced in 1990; the first single-clamp perfect binder (Bourg’s BBF2005) appeared in 1995. On-line systems are matched to the output from the digital printer and by definition are fully automated to allow a single person to operate the print and finishing operation. Since then, a number of off-line single-clamp systems have appeared.

With print run lengths tumbling and experienced help harder to find, automated job setup and changeovers are important features for any binder, but they’re critically important for systems used for producing short-runs, and especially books of one.

On these systems, computer technology married with advanced mechanical engineering techniques have produced systems capable of automatic operation such as milling and jogging, and measuring the thickness and length of each book block both to determine glue application and automatically center covers of different sizes one after another. Touch-screen terminals with icon-driven operating menus for fast and easy job setup are now the norm, and job changeovers have evolved beyond the need for adjustment tools.

Rounding out the equipment advances are closer attention to operator ergonomics and safety features that keep hands safely away.

Aggressive Adhesives

Polyurethane reactive (PUR) adhesive is the big story here. A tenacious, hot-melt, solvent-free adhesive that reacts to moisture in the air, PUR is resistant to a wide variety of inks, varnishes, oils, and solvents, as well as temperature extremes, and handles lay -flat applications with ease.

Although PUR was developed in the 1980s, the technology was recently reformulated, making it better suited to quickly and aggressively bind the coated stocks and delicate inks and toners used in color digital printing. Reformulated PUR pull-strength and flexibility is superior to other adhesives. And even though full strength is reached in eight to 24 hours, books bound with the new PUR formulation can be trimmed within two minutes and shipped the same day. In short, PUR is perfect for binding longer-life books that use heavier weight, larger size, or specialty papers and have heavier ink or toner coverage.

The more aggressive PUR adhesive requires a sealed glue tank to prevent unwanted contact with moisture in the air and a tightly controlled precision delivery system, both to prevent premature curing and to avoid waste and cleanup associated with misapplication.

PUR also is more expensive than other adhesives. Pound for pound, polyvinyl acetate (PVA) or ethylene vinyl acetate (EVA) can bind almost twice as many books as PUR. However, because PUR is more effective for binding color digital printing smothered with toner, inks, or fuser oil and “knits” much better to the fibers of coated papers, it allows the bindery to charge considerably more per bind.

What’s in Store for the Future?

With short runs increasing, look for automation to affect every aspect of binding and finishing equipment, as well as binding and finishing workflow. For off-line production, content and cover-driven workflows will gain prominence. And with demand for PUR on the rise, look for fully automated in-line PUR perfect binders with the ability to handle larger page formats and thicker spines than those currently available.

With digital production driving nearly every aspect of binding and finishing today, it’s a good time to ask where your customers are headed and how you plan to track them. Now more than ever, binderies need to be looking to non-traditional suppliers, markets, and approaches to find the binding edge.

James Tressler is director of branch operations and Mid-Atlantic regional sales manager at C.P. Bourg, Inc., a leading technology developer and supplier of in-line and near-line document feeding, binding, and finishing equipment. His career in the binding industry spans nearly 20 years. C.P. Bourg can be found on the web at www.cpbourg.com.

References

Bowker Reports U.S. Book Production Declines 3% in 2008, but On Demand Publishing More than Doubles – (http://www.bowker.com/index.php/press-releases).
PIA Digital Printing Council “Marketing 4 Digital” Report on Book Publishing, 2007.
See Case Study at oceusa.com.

Financial Metrics for Managers

August 21, 2009

by: Gerry A. Michael, CPA, CMA, MBA

It’s pretty clear that this is not a “happy time” in the graphic arts industry. We’ve seen the economic climate this bad before, but knowing that things have been worse before is little consolation to a company in the midst of the battle now. The simple fact is that in the next few years, a lot of companies in the industry are likely to be gone. And as my company sees it, the bindery and finishing sectors of the industry will be hit even harder than the rest of the industry. That’s not being alarmist or pessimistic. It’s simply a fact.

Surviving in a Difficult Economy

The difficult economy, combined with the changes in the marketplace that the industry has been struggling to respond to for decades, means that the number of firms in the industry is likely to contract. Some firms are probably not going to make it. But in previous downturns, once the economic storm clouds clear, the firms that have weathered the storm enter a period of robust growth and strong profits. Difficult business times seem to produce stronger companies. But is it really that simple? Probably not.

What’s the difference between those that survive, and those that don’t? Obviously, the answer to that is complex. Success or failure can’t be attributed to just one thing, and in my experience, sometimes it comes down to simple luck. But one thing I have observed over the years is this: Successful firms know a great deal about themselves, they understand the keys to their own success, and they are able to react quickly to change.

Basically, they know what’s important, and they measure it, monitor it, and react to it with speed and confidence. What is it that gives these firms an apparent advantage over others? They tend to use relevant, timely, and accurate information about themselves and the environment in which they operate to improve the quality of decision making, to provide early warning of impending difficulties, and to find and take advantage of opportunities for improvement. Put another way, they know what “metrics” are important, and they use them in their business.

The Problem with Financial Statements

So which metrics are most important to owners and managers? That’s a trickier question to answer. One of the biggest reasons is that my own profession, public accounting, has hijacked the entire accounting world! Simply put, CPAs don’t try to produce information for the use of management. The approach of all Certified Public Accountants is the maintenance of an accounting system and reporting philosophy designed to meet the needs of the public, not management. And practically every accounting system in existence today has been developed based on these principles. Where did we go wrong?

The answer requires a long and detailed review of how accounting evolved in the business world, from its origins over 5,000 years ago in ancient Sumeria. In fact, some scholars actually believe that the oldest known writing was developed to help ancient bookkeepers communicate commercial matters! Accounting has evolved to meet the needs of the time, focusing first on simple merchant (“retail”) accounting systems, often using barter, then adapting over time as the economies of the world changed and became more sophisticated. But then, about 200 years ago, something quite dramatic happened. Business entities began to seek investors and lenders to supplement the capital of the owners, as businesses became both larger and more complex. These investors and lenders began to impose reporting requirements on the businesses, requirements that would enable them to compare one investment opportunity to another. Enter the profession of Public Accounting.

Now, understand that I’m proud of my profession and I have great respect for the work that we do. The profession imposes very challenging and demanding requirements on its practitioners. It’s just that I also realize that there is nothing about being a CPA that qualifies a person to advise management. Actually, that’s the arena of Management Accounting, and it is best done by a Certified Management Accountant, or CMA. Even the accounting profession acknowledges that there is a difference!

What this means for an owner or manager is that financial statements are inadequate tools for managing any business by themselves. While it’s important to have statements that are both accurate and timely, they don’t provide what is needed for managers. What traditional statements (income statement, balance sheet, and statement of cash flows) do help to determine is how the organization performed as a whole over a certain period of time. What they don’t do is help management understand why the performance was what it was and how it can be changed. The entire focus of financial statements in public accounting is the “fair presentation” of the results of operation for the company in total. Little analytical or diagnostic information is presented, nor is it intended.

Choosing the Right Metrics

So what type of metrics should be used? Forgive the classic consultant’s answer, but “It depends.” However, there are criteria for management information that can definitely be stated as relevant in all cases.

Timeliness – is the information current? This should mean a matter of days, not weeks. What data is reviewed each week?
Relevance – does it measure things that count? Labor dollars are hard to manage, but not labor hours. Which is being looking at?
Usefulness – does it serve a purpose going forward? For instance, what good is looking at gross profit margin when it includes both fixed costs (rent) and allocated costs?
Action-focused – does it support a plan of action? In other words, can the results be changed through management action?
Repeatable – often overlooked – can the metric be measured at different times with the same qualitative values? Only then can the effects of change be monitored.
Reliability – sometimes thought of as “accuracy” – does it really measure what it purports to measure?

Based on those criteria, what are some of the things I think every manager should look at on a regular, consistent basis? Examples might include the following:

Planned Capacity Utilization – What percentage of bought (i.e., paid for) direct labor hours are actually charged to a job, not including time on reruns or above estimates? This is critical in any manufacturing company, and especially for firms in all phases of graphic arts. A company has to sell the capacity it is paying for to succeed. When it doesn’t, the company has excess capacity and needs to react to it, either by reducing capacity (layoffs) or by pricing more aggressively.

Price Realization – This is calculated as actual job prices divided by “target” price for the same jobs. Management has to price to the market, but also should track the cumulative effect of market pricing, to be able to predict the financial results.

Estimate Turnaround Time – How much time elapses between a customer’s request for an estimate or quote and the company providing one? This should be in hours, not days, and it can be tracked more easily than management might think.

Job Turnaround Time – Perhaps more obvious, but how much time elapses between the order and job shipment?

On Time Rate – This may be the most important metric for managers. What percentage of jobs are shipped on or before the original promised date (rather than the date the client accepted after the first deadline was missed)?

The above can be powerful tools in the hands of managers who are willing to use them. They address some of the most critical issues in the industry today:

How well does the company serve its customers?
How well does the company use its resources?
How well is the company pricing its product or service?

Notice that not a single one of these metrics can be found in traditional financial statements. But the data should all be available with minimal extra work, and it should be generated internally.

One final note: Sometimes when I present this to clients, their response is disappointment. They seem to want a longer list of things to watch, as if the more information a manager looks at, the better the company will do. I disagree. Looking at a large number of reports is not only a waste of time in my experience, but can provide conflicting information, thereby eroding the value of the whole process. Focus on a small number of metrics, make sure they are understandable, and stay with them.

These are just examples and should only be used in conjunction with more traditional reports, since understanding the effects on the company as a whole remains important. But a change in those reports only occurs when management metrics such as these are employed, and that should be everyone’s goal.

Gerry Michael, CPA, CMA, MBA, is president and co-founder of GA Michael & Company, PS, a Seattle-based CPA and consulting firm specializing in the graphic arts industry for over 25 years. Michael has been a frequent speaker at industry meetings, including the recent BIA Mid Management Conference in Las Vegas, and is author of numerous articles on industry financial issues. In addition to public accounting services, his practice provides merger/acquisition, valuation, and strategic planning services to its clients in Washington, Oregon, and California. His firm’s website, www.gamichael.com, includes many of his past articles, and he can be reached at gerrym@gamichael.com.