Rising Material Costs in the Printing Industry
Mr. Print Buyer’s Blog (06/11)
Today my print supplier informed me that I was receiving a price increase because they, the print supplier, had received multiple raw material price increases and was left with
no choice but to pass some of those increases along in their pricing to me. It was presented to me that they, the print supplier, had been holding off passing on price
increases for some time because they did not wish to jeopardize the profitable relationship our companies had been enjoying for years. I responded to them, my print supplier,
that I would take the announcement under advisement.
I was convinced that the alleged honest delivery of the bad news was a bunch of hooey and decided to do some ‘googling’ in order to go back to them, my print supplier
, and inform them that I had found no evidence of increasing raw material costs in the printing industry. Then I would unceremoniously kick them to the curb for yanking my chain.
All I ended up doing was eating some crow1. The cost of so much that goes into the production of printed product
was increasing worldwide; inks, papers, synthetics, printing plates, energy and transportation! If I had to sum up the major factors driving up these costs it would be two
things: the rise in crude oil prices and a shift in the supply and demand for the chemicals used to produce the printing industry’s various raw materials.
OK, so I wasn’t surprised to learn that rising crude pricing was an issue, but I just figured that might affect transportation and freight charges. In fact it has a
dramatic affect on synthetic materials as it is often itself a raw material in those products.
Without presenting an economics dissertation on supply and demand, suffice it say that there has been a perfect storm of global influences that have driven up the prices
of chemical-based raw materials (presented in no particular order):
So I sat down with my print supplier to discuss options that might mitigate the impact of the price increases. We went over factors that could affect my pricing such as
product design, alternate materials as well as changes in ordering quantities and patterns. While I wasn’t pleased to receive the pricing news from my print supplier, I
was pleased with the experience of working with my print partner to lessen the impact on my business.
- A de-stocking of raw materials since the global economic downturn in 2008;
- Inventories were too high and reduced over the ensuing years;
- As global demand begins to rebound, notably in Asia, the supply chain is not able to keep pace;
- Chemical industry consolidation has resulted in limited global capacity to produce products in the face of increasing demand;
- Unplanned supply chain interruptions and shutdowns due to natural disasters such as the earthquake and tsunami in Japan and events in the South-Central United States.
1per Wikipedia, “meaning humiliation by admitting wrongness or having been proved wrong after taking a strong
Grafika Toys for Tots Campaign 2010
Once again Grafika and its employees came through in collecting toys for the Marine's Toys for Tots campaign. Despite lean times for everyone, our employees dug deep to send some
Christmas cheer to those good boys and girls who deserved to have the spaces under their Christmas trees filled. Once again the Sales Team matched the efforts of the rest of the
company in order to spread even more goodwill. Great job everyone!
(L-R) an awesome Marine, Bob Spengler (VP), toys!, another awesome
Marine, Bernie Elzer, III (President)
Innovation During Tough Times
When Cheech and Chong made the movie “Things Are Tough All Over” in the 80’s, I don’t think they were making a social commentary on today’s economic and business climate. The
muse1 and moral of that film gem is, of course, a discussion for another forum. This article is about innovating when
things are tough all over and what that means to us at Grafika.
Muse (for innovation)
Muse: the goddess or the power regarded as inspiring a poet, artist, thinker, or the like2. At Grafika, we
pride ourselves on being a little bit of all of those; except for a goddess. We used the slow economy and creative ideas of our customers as our muse for innovating and developing new
printing techniques and products as a means to bring new and interesting products to market. Through the development of synergistic and trusting relationships with our customers
we have been able to help them, and us, to introduce products to their markets that do not yet exist. The interplay of creative and driven-to-succeed entities led us down the path
of discovering new product/sales opportunities and new production techniques to the benefit of all involved3.
OK, enough of the flowery talk, we are all in business. And a business exists to make money. “Necessity, who is the mother of invention”
4 is also a powerful muse. When our normal revenue streams slow we need to find ways to replace those lost or stagnant sales.
Moral (of innovation)
There is opportunity in almost any down market and success can be realized by those who look for, identify and exploit those opportunities. Innovative thinking and products are ways
to create or find new business and sales when times are tough.
While we cannot discuss the particular details of these new products recently developed and coming to market (because they’re just too exciting for most people to handle), they
are illustrations of the collaborative and innovative service we provide to our customers and that which keeps us excited and inspired to be part of the continually evolving
1 really good rock band (http://muse.mu/)
3 maybe even the world, but that’s for posterity to decide
4 Plato, The Republic (always wanted to quote him)