Rarely a week passes by without news of print supplier layoffs, financial losses and plant closings. Look no farther than fourth quarter 2012 earnings reports, as illustrated by RR Donnelly & Sons Company’s loss of $326.7 million attributable to soft demand.
One way to overcome soft demand is to look beyond traditional commercial markets and develop new markets that are dependable. According to Deborah Snider, senior vice president of e-LYNXX Corporation, the best of these is the United States Government Printing Office (GPO) – the only federal agency authorized by Congress to manage printing for the executive, legislative and judicial branches. The GPO awards more than $300 million each year in work to private sector printers.
When managed strategically to win GPO work consistently, Snider said the GPO is an excellent secondary market for printers of all sizes and capabilities.
“To win GPO business, you first must be qualified by the GPO as a GPO print supplier,” she explained. “Then you have to become familiar with GPO’s competitive bidding process. You also must know GPO’s numerous rules and regulations for everything from how to bid on a job to how to package and deliver the final product to how to submit an invoice. Additionally, you need to make sure that you are seeing every GPO job that is put out for bid in the print categories for which you have been qualified. And most importantly, you must have access to historical GPO data that will give you a competitive advantage when competing against printers who are just as motivated as you to win GPO work.”
Most successful GPO printers partner with a full-service GPO bid service firm. A full-service firm will assist the printer with GPO qualifying, paper work handling, specification interpretation, proposal preparation, bidding process management, assistance through the production process, change order negotiation, invoice preparation and collection, and cutting through the government red tape. The firm also will provide full representational services, accurate information, market intelligence, past price histories, and access to all available GPO jobs and programs. The most effective GPO printers have two things in common – (1) they use a full-service print management firm to ensure their success and (2) they maximize usage of production capacity to offer the GPO attractive low, yet profitable, pricing.
Open capacity is a unique opportunity to build profitability. Once a printer is at breakeven, every value added dollar brought in thereafter goes directly to the bottom line. (Value added is defined as all of the dollars left after a printer pays for out of pocket costs for paper, ink, plates and outsourced services.) For example, if a printer is charging $120 per hour for a Digital Press that runs 70% of the time, and the printer is at breakeven, then 100% of all value added dollars brought in during the 30% open capacity will yield profit… even if the same Digital Press is sold for $50 per hour instead of the normal $120 per hour. The alternative is to bring in no revenue and consequently no profit by allowing the 30% downtime and the equipment and operators to sit idle.
Successful GPO printers win GPO work most often by scheduling that work at off-peak times when they can lower the pricing by 50% or more and not disrupt their normal flow of commercial business. Before GPO work, a printer can average 2.5% profitability on 70% production utilization. Add GPO work through services of a full- service print management firm and the bottom line grows to about 14%.
“The right print management firm will be your best source for jobs unless you have a full-time person on staff who specializes in GPO jobs and knows where to go to find all available GPO work,” Snider said. “The GPO sells a comprehensive list of jobs open for bids from all of its offices across the United States. Only one full-service GPO bid services firm buys this Bid Subscription Service from the GPO.”
That same firm, Government Print Management, maintains the largest repository of GPO jobs data in the industry. Its active databases of job histories, bid results and other competitive information have proven invaluable as printers prepare their bids to win.
“While winning GPO work may seem like a lot of effort, once you get established you will wonder why you have never developed this revenue stream in the past,” Snider concluded. “GPO work is money in your pocket.”