Family friendly and ruthlessly efficient

Every family company has its stories. The Scotts, who run Industrial Printing Company in the regional New South Wales town of Lithgow, are no different. Patriarch and founder David Scott wore many hats in the early years, from working on the factory floor to processing artwork. Tales from those days are now part of family lore – such as how he would regularly handle three presses simultaneously, or pull all-nighters to get jobs done and then drive them to Sydney in the morning. He swears he once worked a 72-hour shift.

[Photos: Go behind the scenes]

These shared family memories are spoken of with fondness. Sentimentality is fine, but the Industrial Printing of today is also ruthless – in terms of production efficiency at least.

Trade printers have to be efficient. There has to be enough breathing space on the invoice for customers, print resellers, to add their own margin.

So how’s this for efficient: Industrial Printing doesn’t only work for commercial printers, it also supplies four other trade rivals. But don’t expect David’s son, Industrial Printing general manager Steve Scott, to mention any names. He’ll only go as far as revealing that the work in question is forms printing, a sector in which margins have been falling as volumes decline.

The company has actually seen its forms work rise as competitors abandon the sector. Industrial Printing continues to produce the forms so efficiently as to hit a price point that may see end clients accept not one but two mark-ups, says Scott.

“We’re very selective in what work we can do for other trade printers. In most cases, it’s work that we’ve got better equipment or a better process for, so we’re more efficient. There are definitely certain types of work – for instance a barcoding system that we have inline. If one of our competitors doesn’t have that, we’re obviously a lot more efficient. It allows them to still offer it to their clients and it works out well for them.”

Forms work may keep the presses rolling, but it’s not how the company wants to be defined. “Our bread-and-butter work isn’t high-margin work, because everyone can do it. The high-margin stuff is the stuff that not everyone can do,” says Scott.

Industrial Printing is increasingly concentrating on that high-margin work to make the best of a difficult market. These days, the focus is on profits not turnover. That explains last year’s investment in a Kodak Prosper S5 imprinting system, which has enabled variable data printing to be done on an Edelman web press. The printing is done inline, personalising the print at offset speeds.

One profitable growth area is personalised ‘stickies’; Scott says Industrial Printing is one of only four or five Australian firms to produce these Post-it Note-style products. Another growth area is printing on synthetics, an expensive substrate that few companies have the confidence to touch. The synthetics are used to produce industrial tags that are resistant to water, chemicals and tearing. Sometimes, they feature variable data, which offers a healthier margin. “We’ve worked out that we can do quite well with synthetic stocks,” Scott says, before quickly adding a caveat: “It’s only high-margin if it’s done well and without waste.

“We’ve got a client that started a whole new branch of their business because of those synthetic tags. We’re their only supplier as far as we know… They caught on to the fact that this was a product they could offer to their clients and use us as a supplier. From that, they’ve started a new product range. It’s outside their general print. They now call it a ‘synthetic stock range’. I assume it’s quite lucrative for them.”

Stickies and synthetics may be growing markets, but carbonless forms continue to dominate. Business forms generate 80% of turnover – of that, 86% is book-based work and the other 14% is continuous stationery. Sheetfed and general colour printing provide 15% of revenue. Digital is responsible for 5%, a figure set to rise.

Industrial Printing first moved into digital in 2006 with a Ricoh Aficio Color 5560. The company feels that digital offers potential for higher margins than its traditional offset production, says Scott. “In a lot of ways, it’s easier to find staffing for the digital area. It’s probably more diversified in terms of what you can do, such as variable data. There are more capabilities and avenues to head down with digital.”

That commitment to digital was shown in March when the firm took delivery of its second Ricoh Pro C901. The $105,000 investment paid immediate dividends: within four days, a $10,000 order had been received for 400 160pp perfect-bound full-colour books. The key was the guarantee of a fast turnaround. Industrial Printing has a second C901, which it installed in April 2012, making it the only regional printer to run two of the machines.

Plenty of presses

The offset line-up includes two Edelman Form Prints, two Edelman Junior Prints, two Morgan continuous printers, an Edelman Web Print 485, a Komori Lithrone NL528 with coater, a five-colour Didde Starcut, a Manroland 202, a two-colour Heidelberg GTO 52 and a one-colour Heidelberg GTO 52. There is also a Lüscher XPose CTP system on premises.

More machinery might be on the way. Scott says Industrial Printing is considering buying a shrinkwrapper in the second half of 2013. He will be at PacPrint month to cast his eye over other pieces of kit.

“We like to keep our finger on the pulse and to see what new technologies are coming out. You’ve got to keep ahead of the game. I’ll be checking out wide-format printing and see if that’s an offering we could give to our clients at some point. It’s also nice to see what equipment our competitors are using.”

The hardest part may not be researching the purchases or even financing them, but finding somewhere to put them. Industrial Printing’s 3,450m2 factory is jam-packed. There are plans to erect a 36×18-metre building in about two years, which would add another 648m2 of space.

Major employer

Industrial Printing has a headcount of 45, which makes it a major employer in a town of 20,000 people. Despite that, Scott says it flies under the radar – partly because it is situated in an inconspicuous street and partly because it does very little work locally. Almost all of its clients are Sydney-based; Lithgow’s only other printer, CW Print, handles the bulk of the town’s work.

Industrial Printing might have better local name recognition if it was based in Mt Victoria, the 1,000-person community that can be found 25km away. That’s where David actually started the business in 1966. Printing is in the family’s blood, explains David. His own father ran a small Sydney operation called No Delay Printing. He drew on his old man’s advice, along with a $3,300 grant, to go out on his own. “I operated for two years at Mt Victoria as Blue Mountains Press then moved to Lithgow because of better facilities and transport connections.”

The change of location was accompanied by a change of name.

Industrial Printing has always specialised in printing forms like timesheets and docket books, he says. In 1975, it purchased its first rollfed press, a Didde Apollo, which had a one-around 21.6cm (8.5 inch) cut-off sheet size. The strategy was to compete against rivals that had GTOs.

“Most commercial printers doing forms work had Heidelberg GTO sheetfed offset presses… In those days, we had a huge advantage through printing speed and ability to buy carbonless paper on reels at 65% the price of cut sheets. A big move forward was purchasing our current building in 1980. We sold our house to finance a deposit and lived in a makeshift flat in one of the bays.

“The larger premises allowed us to store and handle paper reels more efficiently. This move marked the beginning of the business moving forward. We chose the name Industrial Printing Company to indicate the nature of our product. We wondered at first how we would ever use all the space, but over the years we found the necessity to make more additions. The current factory is seven times the size of when we moved in.”

Industrial Printing must be one of the few printers in Australia that can say its factory floor is connected to a family home. David and his wife, Joy, who co-own the business, still live out the back. David no longer works 72-hour shifts; these days he has a part-time role that focuses on product development and improving production efficiency.

Industrial Printing has always been a family concern. All of David’s three children have worked there, although Steve is the only one still on the payroll. The business has also employed members of David’s extended family, such as his nephew, Trevor Clark, who is the chief financial officer.

David says the company benefits from those family ties. “Bigger companies aren’t owner-run. They employ managers and they often bring them in from outside the industry. If their strategy doesn’t work, so what? Who sucks the lemon? When it’s family-owned and -run, the people making the decisions have a vested interest in the outcome.”

Steve Scott points out that the family atmosphere makes the factory floor a happier place and helps keep staff turnover low. Training schemes have also been put in place so workers can run multiple machines, perform different roles and feel more valued, he says. At the same time, a keen eye is kept on making the workflow as automated as possible. “We’re continually trying to improve and develop our machinery so we can do more work with the same staffing level.”

Production muscle

Industrial Printing will continue to specialise in trade work for the foreseeable future. That production muscle may become increasingly important if, as David Scott notes, a trend for outsourcing continues to grow.

“There are a lot of printers now that don’t print. A lot of printers are finding that we become their production arm and we manage their work,” he says.

“In a previous era, a typical commercial printer would deal directly with his customer, from quote and print to delivery, and produced a wide range of products. Now most printing is handled by print brokers and print managers who source printers who are specialising in each type of product. Small and midsize general jobbing printers are now the exception.”

Although David Scott enjoys reminiscing, he doesn’t want the business he founded to be stuck in the past. “We might be one of two business forms printers in Australia, but we’re not thinking that way. We’ve tried to get into more value-added work.”

The message is clear: Industrial Printing must continue to evolve if it is to succeed.

Steve is optimistic about the future, but concedes it won’t be easy. Minimal profit is forecast for 2012-13, mainly due to rising costs and a $112,000 hit it copped in the Geon collapse. However, profitability is forecast to rise in 2013-14. The company has recorded a profit every year since it was founded in 1966, he adds.

“In five years, I see us maintaining our place in the market and strengthening our value-added work because there is only a certain price-point you can go to with general printing. Our philosophy is that we’ve never ‘made it’. We’ve got to continually improve. The reason why a lot of other businesses shut down is that they don’t invest in their machinery and staff and it gets too hard for them. We have to keep looking for new products for the market to keep looking forward.”


 

FACTFILE

Established 1966

Staff 45

Based Lithgow, NSW

Original location Mt Victoria

Original name Blue Mountains Press

Offset Two Edelman Form Prints, two Edelman Junior Prints, two Morgan continuous printers, Edelman Web Print 485, Komori Lithrone NL528 with coater, five-colour Didde Starcut, Manroland 202, two-colour Heidelberg GTO 52, one-colour Heidelberg GTO 52

Digital Two Ricoh Pro C901s


 

Business briefing

• Industrial Printing is a Lithgow-based trade printer that also does work for four other trade suppliers

• Industrial Printing is a family operation. The two owners, David and Joy Scott, live in a house connected to the factory. All of their three children have worked in the business

• It has turned a profit every year since being founded in 1966

• Turnover breakdown: business forms 80%, sheetfed and general colour printing 15%, digital 5%

• The firm is increasingly focusing on high-margin work such as variable data printing, synthetics and personalised sticky notes

• It first went digital in 2006. In March, in installed its second Ricoh Pro C901, making it the only regional firm to have two of the machines

• The company’s 3,450m2 factory is bursting at the seams. There are plans to erect a 648m2 building in about two years

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