Tuesday, October 14, 2008

EHG: Government and Selling Print

As readers of this blog know, I believe that the growing market for Print in Europe and the USA is no longer in advertising/marketing. Instead it is in EHG, education, health and government. It seems to me likely that the professional print buying that we are seeing at the Federal Level will move through other levels of government.

Given the money being spent by State and City governments and the increased necessity to do more with less, there should be a growing opportunity for standards based, professional print manufacturers to fill their unused capacity. Unused capacity is found money. Going forward, printers are going to have find as much money as they can.

This morning I found a press release at WTT.com that lays out the challenges of selling to the Federal Government. It's a hard problem, that is getting a little easier. But solving hard problems is exactly what creates value. Creating value is what leads to sustainable profits.
How the Government Printing Office Can Increase Profitability
Source: Press release issued by the company, unless otherwise noted.

(October 13, 2008)Founded in 1813, the U.S. Government Printing Office's core mission is Keeping America Informed as it supports the work of the executive, legislative and judicial branches of the federal government. . . . Further, as required by Title 44 of the U.S. Code, all federal agencies are required to use GPO to procure their printing.
"Keeping America Informed" is the sweet spot for Print. "America" includes everyone. When informing "everyone," Print is a "must have," not a "nice to have."
Unlike most federal agencies, GPO operates much like a business, as it is not only reimbursed by its federal agency customers for the cost of work performed, but the GPO also receives from its federal agency customers a service fee which is based on a percentage of the work procured. Additionally, the GPO sells printing to its customers and this is done at the huge GPO printing facility in Washington for work that is not outsourced to the private sector, such as the Congressional Record, Federal Register, and U.S. passports.
The Congressional Record and the Federal Register will probably move to the internet. But that's what the federal government does in house. Doesn't affect the outsourced market.
For all outsourced work . . . $400 million in jobs the GPO awards each year. The good news is only about 400 or so printers are active bidders, allowing room for additional competition. Printing for the government can fill an important gap for a printer and can generate income that otherwise would not be there. It is a win-win for the GPO and the printer.
This is the different, sustainable business model: scheduled use of presently unused capacity.
Meanwhile $400 million of print buying is not bad. Add to that State and Local governments, and it can add up to real money.
But first, a printer must become a "qualified" GPO vendor in order to be awarded work. A printer must properly register with GPO, provide equipment lists and other detailed information, and submit stellar samples that can pass the muster of a rigorous GPO quality review. All of this is not easy and entails the assistance of a professional that knows the GPO business inside and out.
Professionals are available to guide through a complicated sales process. These days it's not that different from long term contracts with major corporations.
Once approved the printer still needs to grapple with the rules, regulations, paperwork, and red tape. Dealing with the Federal Government and its GPO is not easy for a novice want-to-be GPO printer. A printer must be able to read and understand the subtleties of the solicitation, specifications, contract terms, quality assurance guidelines, paper specifications, terms and conditions, and other requirements. This is no small undertaking.
Once this learning is earned it is the competitive advantage. Since most printers will not invest the time, the competition is limited. The problem is similar to that of selling to a large school district.
Doing work with the GPO is much different than working with corporate accounts. When a mistake is made, the printer cannot take the GPO to lunch and sweet talk its way out of the problem. The printer must know the rules and follow them exactly.
Standards based production is another new learning for many printers. But again this is not so different from working for a major corporation.
. . . Printers in the know are in general the profit leaders in the industry. Take Gateway Press in Kentucky, P.A. Hutchison in Pennsylvania or Corporate Express with its national footprint – all are profit leaders, all rely on the GPO for a portion of revenues, and none do work at paper cost or below.
What do these profitable printers have in common when it comes to GPO success? Here are the three most important things that they know:

• Open capacity is a unique opportunity to build profitability.

• Knowing the customer is as important in successfully accomplishing GPO work as it is in accomplishing work for any major commercial customer. . . . Therefore, successful printers understand the importance of working with a GPO expert in order to maximize profitability.

• Obtaining GPO bid opportunities that are highly competitive is relatively easy. These are readily available for a fee from a "GPO bid service" or for free directly from GPO on its Web site. Having those more profitable GPO bid opportunities available with sufficient time to bid is a different matter. Just like in the commercial marketplace, GPO bid opportunities are more profitable when fewer potential bidders see them; these opportunities offer fast turn-around in the bid process, the manufacturing process, or both. Also, there are the matters of amendments to which a response must be made before bid opening, how to assure 21-day pay so a printer does not have to wait for extended periods of time on its money, having access to past histories of prior jobs, reports on competition, and promptly obtaining accurate results of bids. Only an expert in GPO can fill these voids.
These experts exist. As for fast bidding turnarounds, this means a well organized, systems oriented bidding process. Again, not so different from working with major corporations.
The bottom line is this. If a profitable printer averages 4 percent profitability before GPO, partners with a professional government print management firm to avoid the long and expensive curve of learning to do work with GPO, and then adds the appropriate work, that printer can increase its profitability by 10 percent or more by utilizing what would otherwise remain idle downtime.

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