Thomas Schonbucher is a consultant in the newspaper and commercial printing industries.

Newspaper productions have experienced cost development not only due to increased labor costs, but also because of their continuous strive for better quality products.

The question arises whether there is a limit to these cost developments? Can we afford to continue to operate tomorrow the way we operate today?

The quality improvement efforts are efforts of newspapers of different sizes in every corner of this world. All production facilities are, sooner or later, confronted and concerned with quality, quality assurance and production cost management, not to say cost reduction efforts.

I want to put to you the challenging question — is it possible that there might be a limit to quality research and/or quality improvements because they are costing the newspapers, as a business, millions of dollars with very little return?

There are four aspects that count most in the newspaper business — quality, time, cost and sustainability.

We can place the question in a hypothetical graph, which has some very real implications for the accountants, the managers, the owner and the shareholders of your newspaper.

Looking at the left side of Graph 1 (above), we have to ask the question: When do we reach the point where the production costs cross the point from where continuing the business simply no longer makes sense?

For the purpose of exploring newspaper production cost controls and actual production expenditures further, we need to itemize some of the subjects. On the one hand, we can divide the subjects into cost measures that are under the direct influence of production managers and his/her team, and on the other hand, into those items that are determined and/or influenced outside the production area.

For the moment I am only interested in what might be managed from within. First let me list the costs experienced in any newspaper production facility and exclude all consumables, as they tend to distort the overall result. Table 1 (top right) displays the cost distribution according to operation, maintenance and others.

Within newspaper production we tend to judge success by tonnes of papers per year, copies printed, ink used and many other factors. In any operation, the human factor makes a major contribution to the result, that is, to the success of the operation. However, it is also a factor that we tend to trivialize immensely by generalizing the issue.

I conducted a survey to investigate the effectiveness of the people required in today’s modern and complex newspaper productions. This survey was not just applied and used in Australia but in other parts of the world. The results show that the overall performance of people, judged by management and staff is below 50 percent of what would constitute a perfect 100-percent performance.

In Graph 2, we see the average production effectiveness in a medium to complex production facility is 41 percent. If one denotes the need for perfection and determines the expected maximum performance of the survey to be 100 percent, then the current performance is rated around 65 percent. This is well short of what one would expect in a production environment of such a sensitive industry.

The effectiveness measurability of any operation is not a defined method or formula and certainly not as straight-forward as measuring time and costs. Effectiveness is, to a degree, a subjective judgement of the operation.

To measure effectiveness, I asked several people involved in management, operations, and repair and maintenance tasks to express an opinion in an extensive survey.

In a production environment with equipment older than 15 years, the actual degree of effectiveness is clearly higher.

Less complex equipment and experienced operational staff might reflect more effectiveness compared to a new facility where the latest technologies entail completely different expectations of both the staff and the new machine. Re-equipping, that is purchasing new prepress and/or press and processing equipment, will open the gap between required knowledge and actual performance, mainly because adequate knowledge is often lacking.

The relationship between the size and the complexity of the production equipment is of importance and needs our attention. While the operator’s effectiveness survey compares the current performance of various newspaper manufacturing facilities with each other, one needs to remember that there are always considerable differences between plants. These differences have, in the past, prevented companies to work directly together.

The resulting effectiveness of any operation is associated with specific local equipment and operational complexities. Nevertheless, the answers in the survey have automatically included the specific local conditions and complexities.

This allows comparing the effectiveness of a smaller operation with a medium or large operation. The resulting effectiveness assessment of an operation aims to change the current performance by defining the desirable future performance under the given organizational circumstances, stable or changing equipment configuration, age of equipment and other influential components.

The aim is to achieve a manageable change process to ultimately feature an operation of high flexibility, high quality, high effectiveness at sustainable costs.

In Graph 3, Plant 1 reflects high complexity and therefore a much higher need for skilled people than the second one. Plant 2, with its lesser complexity, achieves a higher degree of operational effectiveness. An interpretation error one could make at this point is to assume that big means complex and small means higher effectiveness. This might not be completely untrue, however, the complexity gap relates more to the simplicity of the operational requirements, that is, the absence of modern equipment.

The people investment

Why all this extensive research into people working in a newspaper printing facility and their effectiveness?

The answer lies within the high labor costs due to high salaries and/or wages that form the overall high expenditure percentage.

Every business expects equipment to perform at its best to obtain the maximum return on its investment. People are as much an investment as equipment.

Looking at the high percentage of labor cost in regards to the overall costs of production, it may become obvious that people must be fine-tuned and managed, and be given the right tools and right environment in order to become high achievers.

In Table 2 and Graph4, the topic of addressing the optimisation of labor can be split into two different subjects:

1. New technology brings along new requirements. Management and staff at a newspaper facility will be required to be considerably more effective in the future than they are today. Continuing with the prevailing people management style will result in an expensive operation with raising labor cost, but without getting the return on the investment from the labor. The result is a constant unpredictability of the production outcome. Like a vicious circle, longer operation hours are compromising the hours allocated for maintenance, resulting in further deficiencies.

2. The number of people employed vs. the number of people needed is often discrepant. We all know that circumstances, union pressure, inheritance and many more reasons lead to overstaffed production plants.

Therefore, one of today’s management tasks is to optimize the number of people employed. Optimized operation levels are far more effective overall than overstaffed operations. History also shows that ideally balanced workforces have less accidents, fewer sick days and less day-to-day issues, which substancially impact overall performance.

The most obvious link between labor related effectiveness and other operation expenditures is training. Training accounts for only 0.32 percent of the overall operations expenditure. This figure may not be 100-percent true, as the actual salary and wages cost during training sessions are absorbed by the general operations budget.

However, even if a more realistic training expenditure would be 2 percent to 5 percent, it is in no relationship to the 73 percent of the overall labor costs.

Not necessarily more, but better, training is the key to success. An initial training investment resulting in an increased expenditure would mean that more money is required rather than less. Indeed, the old wisdom “spend a dollar to make a dollar” applies.

We also know from the survey that the people working in the printing facilities in question believe that their organization could improve with better training, an improved infrastructure, increased availability of information, and better communication and documentation. Any manger in any newspaper production facility must be able to translate this into direct cost savings activities.

The largest savings in any industry could be achieved by employing the correct number of people for the required task.

In an ideal world, the number of people would be determined by process requirements. In reality there are various other factors, which determine the actual number of people employed. These are historical workplace agreements, social considerations, union pressure and many more.

The nature of our industry brings along a non-linear workload characteristic over 24 hours, changes from a low to medium activity to peak output requirement.

In other words, while in other industries a steady output of production equipment is expected, we want our production equipment to produce not at all for some hours in the day to peak performance for a relatively short period of time. This characteristic of the industry is reflected in the number of people employed in a newspaper facility.

However, I have noticed that for smaller newspaper facilities it seems to be easier to manage people according to the workload, while larger newspapers are more generous or more inflexible in reducing the number of hours worked at times of inactivity. Larger newspapers tend to allocate different work to their excessive staff with questionable success.

The cost development within the newspaper industry needs to be addressed in order to maintain the newspaper as a viable business. If future cost increases are not addressed, quite possibly the entire business will be pushed to the edge of viability. Obviously, some productions will survive but others may disappear.

In this column I have also tried to explain that production may not necessarily depend on revenue gains to keep a newspaper alive, but that it can maintain a profit margin from within.

Getting more for our money by creating a much higher effectiveness of our operations and maintenance staff is most likely the biggest gain we can achieve.

The partnership between newspapers, consumable manufacturers and equipment suppliers must become fairer and must be based on equal terms. I am positive that if the problems are addressed now, we can create a true possibility to have a sustainable and viable business for many years to come.

Thomas Schonbucher is a consultant in the newspaper and commercial printing industries.