In a presentation I made recently, I spoke about some of the reasons companies create in-plants: greater convenience, increased data security, consistency of the logo and brand, faster turnaround times, and, of course, competitive pricing.
Each in-plant has a parent organization and each parent organization has its own unique list of priorities, but regardless of their priorities, as the industry changes and budgets are cut, no one can deny the threats to in-plants from outsourcing or facilities management services. Itâs no surprise that after my presentation I had several conversations with in-plant managers about their struggles and the long-term prognosis of in-plant printing.
First some background. The printing industry is undergoing challenges impacting both commercial and in-plant printers. Over the last 2 years I have worked with in-plants that have remained in business and others that have been outsourced. One advantage of an in-plant is that it uses a business model that does not include profit and often has a lower cost structure because it may not pay rent or utilities, or charge tax. As a result, a well run in-plant with enough demand can save its parent organization between 10% and 30% of commercial printing costs.
But in-plants, like their commercial cousins, are struggling with the same two issuesâcyclical and structural changes that are reducing the demand for printed products. The cyclical change is tied to the economy, while the structural changes are from technologies that are disruptive to the printing industry, such as the Internet/email, cell phones, and e-books, among others. While a portion of the cyclical demand will return as the economy returns, the effects of the structural changes are more profound and the declines due to those changes may never rebound.
To assess the long-term prognosis honestly, you have to acknowledge that there are two different camps. On one side are the ânaysayersâ who believe that in-plant printers offering printing services are not sustainable. I sometimes get phone calls from people requesting an evaluation of their in-plant, but after hearing a description of the methodology of an objective assessment they may admit that they are not looking for an unbiased evaluation, but rather for ammunition to support their own agenda. I politely tell them they are talking to the wrong person.
On the other side are those who say that, as with commercial establishments, in-plant printers are evolving and will survive as long as they are responsive to their customersâ changing needs. The most recent market research supports the latter thinking and shows us that while there are signs of declining numbers of in-plants, overall they will remain a vital source of print production.
In February 2009, InfoTrends released a study of the in-plant market titled, âIn-House Production PrintingâCritical Trends for Corporations, Government, Education, and Non-Profits.â The report, based on responses from 376 in-plants, revealed that digital printing is quickly displacing offset in in-plants, data center Integration is growing, and in-plant production is increasing.
In two assignments I worked on this year I would say that this conclusion is spot on. In both in-plant assignments, I have seen digital printing displacing offset and data center integration becoming a motivating factor for keeping the in-plant operational. I suspect that the original impetus behind the statement that digital printing was displacing offset was a result of toner-based technologies, a conclusion I believe is further supported by high-speed inkjet presses.
The InfoTrends study also estimates the number of in-plants in the U.S. to be 52,078 and concludes that from 2006 to 2007 the number of in-plants declined by about 2.5%. The report supported the thinking that the success of in-plants will come from their ability to be responsive to their customersâ changing needs. When asked which new products and services they expected to show the greatest growth, study respondents listed the following areas: Internet-based services (Web-to-print), variable-data printing, cross-media marketing and digital asset management.
Howard Fenton is a Senior Consultant at NAPL. Howie advises commercial printers, in-plants, and manufacturers on workflow management, operations, digital services, and customer research.