Scottish Print Report

Discounting in retail is one thing. Discounting in marketing services is another.

Much has been made in the trade press of the constant battle faced by the advertising and design agencies of this country, and how price is playing a bigger and bigger part in who wins what account. But ad agencies and designers don’t seem to be affected nearly as badly as Scotland’s printers.

With client budgets falling, everyone is being forced to be more competitive, but have the printers north of the border taken it too far?

“I’m sure that everybody would say we’re all cutting each other’s throats and it’s hard to keep a hold of business,” says Nick Thomson, managing director of Thomson Colour Printers. “What’s happening is that we’re not making the money we need to re-invest and buy new equipment.”

This is key to the problem of under-cutting. By its very nature, the print industry needs to continually upgrade its equipment in order to compete on a national, or even international, basis. However, by constantly cutting costs, some companies are already finding trouble keeping up with the demand of new technology.

Thomson continues: “The main thing is we’re not reaching the prices we should be. The most important thing is to be able to invest, to buy better equipment, but that’s not happening. They’re just cutting the prices and hoping they’ll still be there next year, which is frightening.”

“In order for the print industry to move on you have to re-invest and you can only do that if you reach the bottom margin,” says Bob Dalgliesh, managing director of M&M Press. “If you don’t get your bottom margins you’re not going to be able to invest in new equipment.”

But why has the situation got this bad? What’s behind this problem?

One of the main factors seems to be a loss of large Scottish print buyers.

“I think it’s a fairly serious threat,” remarks James Stewart, managing director of Print 2000. “There’s an over-capacity, and a fairly serious over-capacity, that’s being caused by the decision of the big print buyers such as Motorola to buy print elsewhere. There are no big print buyers in Scotland, and that’s the major problem.”

The print buyers who remain, however, obviously aren’t going to complain about print prices continually dropping. This in itself is contributing to the problem. Thomson says: “It’s difficult. I think the other aspect is what buyers are looking for and how they buy their print. I think that a few years ago the buyer’s priorities were: quality, service and then price. That’s changed now and I think price is now the most important. You can’t blame them; if somebody’s offering you a job for a lot cheaper than you’re paying ...”

The people within a company who are actually buying the print can be a factor, as well. As creative director of Pure Design, Mick Dean has a lot of experience with client-side print buyers.

He says: “You will sometimes find that the financial officer in a company makes the print buying decisions, and when that happens they are bound to go for the cheapest option. The problem is that a financial officer will rarely be able to tell the difference between a good and bad piece of print and so will just go for the cheapest. The crucial thing is that cheap doesn’t mean best.”

With so many print companies currently operating in the country, there could also be a strong factor of “too many cooks spoiling the broth”.

Fewer potential clients coupled with too many printers spells trouble for the Scottish print industry. Even with constant under-cutting to win business, some printers are bound to fall by the wayside. However, is this necessarily a bad thing? Would a smaller number of printers allow the industry to resume a more sensible pricing strategy?

“The market is a great leveller in itself,” says Dalgliesh. “The market creates supply and demand. If you’re not professional in the way you do business and just keep cutting and cutting then you will go out of business.”

Stewart comments: “We’ve all done management courses on supply and demand. It’s the law of the jungle; survival of the fittest and the weak will fall away. The industry will definitely decline.”

But even after the Scottish print herd has been thinned, how will the industry manage to raise its prices?

Dalgliesh may have an answer. He says: “I would definitely agree that people are under-cutting each other too much these days. There are actually times when I walk away from it. I think more people should do that from time to time to try and get that message out there into the marketplace.”

Another cause of the recent problems is, of course, the internet. In times of budgets being cut and people almost always looking for the most cost-efficient method of communicating with their target markets, online has become increasingly popular as a marketing tool.

Although good news for Web design and programming agencies, it’s not a terribly good development for those working in the more traditional industry of print. In times of cutting costs, hundred-page brochures and reports are quite often being replaced by comprehensive websites and e-bulletins.

“All the IT stuff, the internet, that does have an effect on us, there’s no doubt about that. Where you would previously ask for a brochure, now it’s just point, click, and it’s there in front of you,” says Stewart.

The problems currently being faced by the print industry are certainly not unique to this sector. Service providers, whether they are printers, consultancies or agencies, will almost always be facing an uphill struggle to convince their clients that if you really want quality, you have to pay for it.

Interestingly, although all agencies face this problem, none of them seems to have any sympathy for their own service providers when it comes time to commissioning work.

Dalgliesh observes: “We’re all running faster and faster. I’d like to know where we’re running to. We’re all somebody’s customer somewhere down the line and we’re all somebody’s buyer somewhere down the line. Yet we’re all doing this to each other.”

This is reinforced by Dean, who notices a distinct similarity between the problems facing the print sector and those facing his own. He comments: “I think any industry damages itself in the long term through under-cutting. It’s a short-term gain for those winning the tender but the long-term effect is pretty obvious. It drives prices down and undermines the industry. The parallels are pretty clear between the industries. I could just as easily be talking about design or, I’m pretty sure, advertising. It’s up to each industry to get together and make sure they don’t decline.”

As with the other marketing services providers in Scotland, perhaps it’s time that Scottish companies invested in Scottish resources. And, more importantly, paid those resources what they’re worth.