Companies in the banner and signage industry adapt to compete in the prevailing busines climate.
By Janice Kleinschmidt
In Jack’s time (the early 1800s), jumping over a candlestick without extinguishing the flame presaged good fortune. In Neil Baker’s time (the early 2000s), a more reliable way of securing good fortune is to shift gears.
“We have had two record years of growth,” says Baker, vice president of sales for Ultraflex Systems Inc., a fabric manufacturer based in Randolph, N.J. “The economy has caused us to be more focused on our core products. We have seen a decline in the midrange print shops or a consolidation and acquisition of those shops, though bigger shops, for whatever reason, continue to get bigger.
“We did something that the other guys didn’t. We scaled up on inventory, and a lot of our competition scaled back on inventory.” Sign and banner printers, however, are not ordering and storing quantities of fabric like they used to, “so vendors who have bigger inventory tend to get the jobs,” Baker says. “Customers are asking for more small shipments. We do more shipments today than three years ago.”
Milwaukee, Wis.-headquartered Olympus Group is a prime example. “We work with suppliers who can get us product quickly so that we don’t have to stock it,” says Andy Arkin, technical director. In an uncertain economy, short-term planning supplants long-range commitments.
And in this corner
Fabric manufacturers and sign and banner printers face greater competition today than a few years ago.
“With the down economy, there are companies that have lost revenue in their traditional markets who have added fabric lines to make up for lost business,” says John Evans, vice president of sales—graphics media for fabric manufacturer Herculite of Emigsville, Pa. “Some people lost 30 percent or more of their business in just one year. A company that may have been only selling equipment or ink has added fabric to their line as a way to increase revenue, and that moves them closer to our end of the business.”
“There’s more competition simply because there are more people in the mix,” Arkin agrees. “The price of equipment has come down, so it makes it easier for people to get into this business.”
Joshua Propp, product development and sales specialist for Value Vinyls of Grand Prairie, Texas, attributes increased competition for fabric manufacturers to a demand for lower prices and technology that makes printing more affordable. “It’s not just large print shops,” he says. “The competitive level continues to change.”
KSK Visual Ingenuity of Cleveland, Ohio, also has experienced increased competition for graphic design in the last few years. “Within the printing community as a whole, there are companies that are already a part of the graphics industry that are looking to expand their offerings to keep their doors open,” says Steven Gazdag, president. “From an external perspective, there are companies not involved with the graphics industry that are looking at possibly becoming a part of it. Either way, companies are investigating options as they look at determining what it’s going to take to survive. Additionally, there are alternatives to imaging on fabric that allow for different ways to create an overall look for a customer on certain projects. Our biggest source of competition is actually the number of alternatives that exist.”
Baker acknowledges that fabric alternatives can be a factor, but says, “Some of our signage, like menu boards, that we thought would go digital [electronic] have gone to a different substrate. Even though there are a lot of digital billboards going up, there are still a large number of people producing banners on fabrics. Electronics haven’t displaced as much business as we expected.”
Mike Richardson, director of sales and marketing—print media for Aurora, Ill.-based Aurora Specialty Textiles Group, says increased competition is simply the result of growing demand. “When you have greater demand for something, other people say, ‘Oh, look, there’s a demand over here, so we should get into it, too.’ Or if overseas, they see the demand growing in the U.S. and say, ‘OK, let’s go sell in the U.S. now.’”
“Importers have been and will be our biggest source of competition at least for the foreseeable future,” Evans says, noting in particular the weakened Chinese currency that has made that country’s products even more inexpensive than usual. “Many people say that currency is undervalued by 25 to 30 percent. Herculite and other manufacturers are competing on an uneven playing field. Things in the currency market always change, but that’s where we are right now.”
Dollars and sense
Riding out the economic slump, companies have been forced to look inward as well. “Herculite has always been lean and mean, but especially in the past two to three years we have been making internal improvements to reduce costs while maintaining quality,” says Evans, mentioning Lean Six Sigma principles and training. “We also have a company-wide energy saving program—everything from light fixtures to heating and cooling to office space.”
The company has invested in enterprise resource planning computer software to support those initiatives. “It’s able to pull information from each area of the company to make sure that every process—and every process is related—is the most efficient and productive that it can be,” Evans says.
Aurora Specialty Textiles embarked on the Lean program a year ago. “That has already paid dividends for us,” Richardson says. “It’s easy to cut costs by cutting people; but to become a better company you want to become more efficient.” For example, in an aim to cut equipment changeover time by 30 percent, the company directed a team of employees to spend a week studying that one aspect of production. And to become ISO 16001 certified, the company modified operations to reduce waste, recycling cardboard and as much scrap material as possible.
KSK started to experience the economic downturn three years ago and made provisions to “stay ahead of the curve,” Gazdag says. “We got the employees involved. We held company-wide brainstorming sessions devoted to ways we can cut back. We looked at everything from implementing a recycling program to adjusting inventory levels and becoming more strategic in when we place orders with suppliers to save on freight. We consolidated our production facilities and invested in cross-training our associates on the imaging technologies we offer. Our ideas turned into products and solutions for customer projects, so we were able to pursue new areas of business that we would not have necessarily considered a few years ago.”
In addition to investing more on research and development, Ultraflex has increased the size of its sales force. “Like all companies, we have sized ourselves for efficiency, which means doing more work with fewer people—except for sales,” Baker says.
“There’s a higher level of demand in the signage industry,” Propp says. “There’s a lot more just-in-time printing. Deadlines seem to be more demanding today than they were three years ago. I think every job counts a little more.”
Like Baker and Arkin, Propp says companies are accessing resources as they need them. “It could be cash flow, the spread of competition, diversity of products—it’s hard to pinpoint exactly,” he says. “Just like anything in life, it’s constantly changing.”