People not profits pays for print firm

Flagstaff Print and Mail has a pretty unique approach to business: hire as many people as possible, reduce the automation, and don’t worry too much about the profits. Strange, perhaps? But Flagstaff isn’t strictly a business – it’s a charity.

Based in the Wollongong suburb of Unanderra, Flagstaff Print & Mail (FPM) is just one division of the Flagstaff Group, which comprises a wide array of businesses including laundry services, document management, rural fencing, food preparation, and paper, plastic and cardboard recycling.

The difference is that Flagstaff’s labour force is predominantly made up of people with disabilities, who it refers to as ‘PWDs’. The company has more than 250 people with disabilities on its books, as well as 100 support staff. Flagstaff’s ethos is about providing “meaningful employment” for people with disabilities. It is one of more than 600 organisations across the nation designated as an Australian Disability Enterprise (ADE) by the federal government. As such, Flagstaff’s employees with disabilities must be eligible to obtain a disability pension, which qualifies the company
for government funding.

FPM general manager Paul Beckett says the company is “by no means a government slush fund”. Its operations alone offer offset and digital printing, graphic design, pre-press, finishing, and mailing services, with most of the heavy machinery handled by qualified operators and most of the employees with disabilities performing offside
or finishing work.

“We’ll put ‘PWDs’ in any function possible,” says Beckett. “We’re constantly looking for [ways we can include them], from stringing tags on items to running a $250,000 colour press, if they’re capable.”
Flagstaff Print & Mail was born in 2004 when the Flagstaff Group approached Beckett and current Flagstaff chief executive Steve Beard to ask whether they would want to make their printing company, BCH Printing, part of the group. Beckett had set up BCH in 1990, with Beard joining in 1992. A decade later, they had built a business that had won three Illawarra Chamber of Commerce awards, including ‘Illawarra Business of the Year’ in 2002.

The Flagstaff Group saw BCH as a good fit for their existing mailing business. The company was co-opted into the group in 2004 and Beckett and Beard signed up to two-year contracts. Five years later, both Beckett and Beard are still at Flagstaff.

“The board calls it a reverse takeover,” Beckett jokes. “I still love it, it’s a great place to work and there’s purpose in what you do.”

Altruistic focus
FPM may have more of an altruistic focus than many printers, but Beckett says its business practices are as solid as any other, even if the goals are a little different. “Obviously we have to generate profits, which we do very well,” he said.

“But it all goes back into the business. It’s not fat shareholders in here taking the profits. If we make a million dollars, that doesn’t pay for someone’s BMW, it goes straight back into the business.

“It’s a great business model. It also allows us to be cashed up so we can look at bringing other businesses into the group. We’re always looking at how we can buy labour-intensive businesses and put PWDs in there. We’re trying to expand the business not to create profit, but so we can employ more PWDs,” adds Beckett.

Indeed, finding room for more people with disabilities is a near-constant pursuit for the company. Where most businesses are looking to create efficiency and reduce staff costs through automation, Flagstaff looks at how it can add people with disabilities into every area of the business. “We steer away from automation wherever we can,” adds Beckett.

This is best illustrated with the company’s CTP operation, which is not designed as an inline process. Rather, FPM had Heidelberg specifically engineer the Prosetter 74 as two separate machines so that an operator with a disability can be employed to hand-remove and hand-feed plates. “Instead of having an online processor where the plate goes straight in, we’ve got the processor offline so the plate gets fed in and automatically centred,” Beckett explains.

Heidelberg equipment makes up most of the company’s offset kit, with Flagstaff also running a four-colour GTO 52 press, a two-colour Speedmaster 52 press, as well as single-colour GTO 52, KORD 64, and Cylinder presses.

Digital comprises two Fuji Xerox Docu-Color 5000 presses and two monochrome Nuvera Pro 120 presses. On the finishing side, the company houses two Polar guillotines, while the mailing operations feature Pitney Bowes automatic inserter. But, as FPM sales manager John Risso puts it, “our major equipment is the people”.

“We don’t have the firepower that would get us a large contract,” Risso says. “The equipment we have is not necessarily at the top end, rather, we have kit that suffices. Our people do it all by hand, they’ll collate it, fold it, stitch it, drill it, all by hand. That’s the strength of Flagstaff, and that’s what we’re looking for.”

This approach hasn’t affected the company’s ability to perform, however, and it has the client list to prove it. FPM’s blue-chip client list includes the likes of  BHP Billiton, Video Ezy and Bluescope Steel, as well as being a preferred supplier to Corporate Express. They manage to attract such business, Beckett claims, by appealing to the corporate conscience as well as the hip-pocket.

“It is one of our best leverages when we go out to corporations,” he says. “The challenge is there is a bit of a stigma about it being a ‘sheltered workshop’, so we’ve got to prove that we’re more than that, that we’re a strong competitive business.

“The product we deliver is as good as anyone. We’ve got the same equipment as anyone else, the same skill-sets. We’re performance-managed to the same extent, and perhaps more than in other companies,” adds Beckett.

Beckett claims the benefits of the charity/business model strongly outweigh the challenges, citing the tax-exempt status of the group as one of the chief advantages, though it does pay GST.

Beckett estimates that only 10% of the company’s turnover can be attributed to government funding, with much of the company’s funds being tied up in HR.

As part of its efforts to help develop its employees, reviews are held every six months, which allow employees to request additional training, or to be moved into a different area of the business in order
to enhance their skill portfolio.

Growing skills
“The goal is to skill them as much as we can with a view to helping them find work in open employment, as opposed to a sheltered environment,” Beckett says.

“That doesn’t happen a lot because they feel more secure in this environment. Otherwise, they’re going into the big, wide world at the bottom of the rung, so they usually end up staying here where they can be at the top of the rung. Most staff here are very longstanding – some people have been here for 40 years.”

Also, while the group has strong links into the local community and boasts a board of directors featuring management figures from some of their main clients, such as BHP, Beckett maintains that this doesn’t provide FPM with any sort of unfair advantage. 

“We still have to compete for their work,” he says. “We still have to be competitive, we have to be productive. You get an ‘in’, but you still have to provide quality work.”

The company is now actively trying to recruit new clients, but sometimes hits a wall in overcoming the ‘sheltered workshop’ perception.

“Until they get referred, they don’t think we can do it,” says Risso.

“A referral is the best way to get in,” agrees Beckett. “The overall market doesn’t see us as a player. We’re our own worst enemy on that one because we’ve failed to effectively market ourselves in the past. We’ve never had reps, for example.” 

Indeed, Risso was appointed in March of last year to help spearhead a client recruitment drive, a move which quickly bore fruit as the company added 60 new customers in Risso’s first six months. Risso previously worked as a sales manager at Kalamazoo and Salmat, before going into business for himself with NSW Business Forms, which folded at the end of 2008.

“Prior to [Flagstaff] putting me on as sales manager, the bulk of work was referral-based,” he said. “A lot of the work was generated through the board of directors, who are very well-credentialled people with connections in the industry. They helped through their contact base to bring in a significant amount of work.”

The charity card
However, playing the charity card isn’t enough for Risso to clinch a deal. “It alone doesn’t help us win work,” he said. “When you talk to someone with the ability to purchase, like a financial controller, they’re just going to look at the bottom line. Price is the key, the disability angle is an added bonus. A company can say ‘we’re getting it at the best price, and we’re getting a bit of kudos as well’. I can’t get in the door solely on the back of [being an Australian Disability Enterprise].”

Beckett says an increasingly strong focus on cutting costs in the industry may see the company move more into the print management sphere. “We’re finding that we might be better off getting the larger work, sending it out to the market and just doing the finishing component.”

“Both Paul and I would like a model where we can service any size client, and out of that we could choose what work we bring in-house and what we outsource,” he adds. “The old loyalty to the local printer is dying out, as people focus more on the bottom line. Bigger organisations that are more likely to support companies such as Flagstaff as they can use the corporate social responsibility angle.”

In the meantime, both Risso and Beckett derive the most satisfaction from seeing people with disabilities being given the opportunity to work. Beckett also claims to make an effort to get out among the people on the shopfloor as often as possible. “When they step up to the plate and end up beaming, that’s what gets me out of bed every day. That’s why you do it, so you can put a smile on someone’s face.”

Company overview

Headcount: 360 (Group), 48 (Print and Mail)
Net profit: $510,582 (2009)
Location: Unanderra, NSW
Market sectors: Corporate and government printing, finishing, design, mailing.
Major clients: BHP Billiton, BlueScope, Video Ezy, Corporate Express
Established: 1966 (Group), 2004 (Flagstaff Print and Mail)

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