As the newspaper industry grapples with the definition of the “new normal,” each newspaper organization must continue to review all aspects of its business to increase profitability while maintaining the product’s integrity.
One area that newspapers must consider during this process is printing and production and how outsourcing could cut costs in the wake of declining advertising revenue. Several factors should be considered to determine whether it makes sense for your company.
Consider the age of the production and packaging equipment. Older equipment generally means more repairs and maintenance costs to keep production running smoothly without interruptions. Print quality on older equipment certainly will not be as high it would be on more modern equipment. Outsourcing to a production facility with more modern equipment may improve the quality of the delivered product without having to make a capital investment.
Many companies contemplate reducing the web width of their printing press (if they have not done so already). While the costs to change web width could be offset by savings in newsprint, a pre-decision analysis should be done to evaluate the cost benefit of making the web width reduction as compared to outsourcing the printing and production function. The timing of such an investment may play a part in the decision to outsource.
Outsourcing will allow a company to reduce its labor force, resulting in significant savings in wages, payroll taxes, and benefits. Additionally, company personnel will not have to manage the production process, and in certain instances, it will alleviate the need to negotiate and deal with labor unions.
A significant dilemma in deciding to outsource is the impact it will have on the morale of your organization. The challenges come from not only laying off individuals who have been long-time employees, but also the simple fact that your company no longer produces the newspaper at your own facility. Many newspapers are located in small, tightly-knit communities and are integral to those communities in part because of the individuals who work at the paper. As such, there may be some resentment towards a company that moves its production outside of the community.
Other items to consider are logistical in nature. The location of the outside printing company is important so that the timeliness of delivery is not impacted or that impact is minimal. Also, consider the outside printing company’s disaster recovery or back-up printing plan in case it is unable to print. Does the outside printer have more than one press available to print your paper? If not, does it have arrangements with another production facility? These are some of the questions that must be answered before you can move forward in an outsourcing arrangement.
While a majority of newspapers have always printed their own newspapers, outsourcing has become a trend in the industry because it allows companies to reduce cost and focus on other areas of the operation. The economic benefits to using outside companies to print a newspaper may outweigh the negatives associated with outsourcing, which can allow you to increase profits in the future and remain more competitive.
Richard Snyder can be reached at Email or 215.441.4600.