Everything you can do to save costs
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To cut costs and to save money in the process of newspaper production throughout the value chain – from editorial to advertising, to administration, production, sales and distribution – is an issue for newspaper executives all over the world. We asked representatives of WAN-IFRA committees and expert groups to let us know which cost reduction projects they run today or plan to start in the near future and what effects they had or expect from these measures.
In the following, we publish the comments that we have received so far. If you have success stories in this area to report, additional suggestions on how to reduce costs, or remarks on the measures described here, please send your comments to firstname.lastname@example.org with the subject: cost reduction. We will add them here in the order in which they are received. Thank you.
From: Ahmad T. Salman
Deputy General Manager, As-Safir Newspaper, Beirut, Lebanon
Following are a few words about cost reduction philosophy at As-Safir Newspaper in Lebanon:
The high rise in oil prices during the last few years encouraged investments to be made in researching and developing alternative ways of producing energy (solar, wind, bio-fuel, etc).
Today, the financial crisis reflected by a significant drop in revenues, would encourage companies to invest in or research various ways to reduce their cost, to the extreme of re-innovating the way their business originally works.
“Need is the mother of all inventions” we say.
In Lebanon, where As-Safir publishes, a financial crisis has been there for a while (decades) prior to the world crisis, and due to domestic parameters; inflation was already “eating up” additional revenues, in case any were achieved.
Under such circumstances, cost reduction has always been an essential element in our strategy making process.
Automation and “computerization” (digital photo shooting, Computer-To-Plate, Workflow Computer Applications, etc.) are being implemented whenever we get a chance to “cheaply” finance them, or whenever their cost starts exceeding the initial investment; whichever comes first.
We also put in practice a set of policies, such as:
• limiting the number of pages per daily issue
• keeping raw material on inventory whenever prices fall
• controlling the daily rate of returned / unsold copies
• All such practices set a high priority for cost reduction in the decision making process, limiting the influence of other equally important parameters such as “state-of-the-art” status, optimizing overhead, etc.
• Anything that eliminates “waste” or unnecessary costs, whether operational or not, has been put into implementation.
It has been a case of 'Examine everything, eliminate anything which is not essential, question everything that is considered essential and re-negotiate any contracts'.
• We took the decision to maintain the pagination of the main products and retain all supplements. One supplement was so depleted of Ads that we incorporated it into the main paper as a section, but otherwise we have retained the publication package as before.
• All regular contracts have been re-negotiated. All maintenance, delivery, support programs have been risk assessed and agreements reviewed, terminated or re-negotiated.
• All bonuses have been eliminated.
• Staff were offered incentives to take career breaks, small payments to take a year off, higher for three years. There was no redundancy program but all freelance contracts were reviewed and terminated where possible.
• All pay reviews and increments have been cancelled.
• All expenses have been subject to revision, both in approval processes and in payments.
• All travel is subject to individual approval by the Group CEO.
• All new projects and initiatives have bee suspended.
• There is a zero capital budget with an 'emergency only' budget against which all expenditure must be approved by top management.
Apart from that it's business as usual, tight belts and preparing for staff shortages during the anticipated swine flu pandemic....
This is what we have done this year:
• Closed our free compact newspaper as early as February
• Cut approx 25% of editorial staff in our quality newspaper
• Reduced the number of pages, format (where possible, especially in magazines) and paper quality in the whole portfolio
• Cut all kinds of bonuses and special premiums (loyalty bonus, birthday cakes, special incentives)
• Cut fringe benefits such as meal vouchers and transportation allowances
• Cut all events, internal and external
• Reduce all marketing budgets to the max
• Cut honorary fees for text and photos by up to 50%
• Increase cover prices wherever possible regarding the competitive environment
• Renegotiate all major contracts (starting with rent of office space, newsprint to copiers)
What we did not do:
• We did not cut investments in our online division
• We did not cut salaries (which are in Romania anyway rather low)
From: Silvio Da Giau
Technical Direction, Athesis Publishing House / Printing Plant - Società Editrice Arena S.p.A., Italy
QUICK RETURN INVESTMENT
1. Automatic picture processing (Color Factory, Intellitune, ecc)
We use Color Factory and with this system we have reached a more even quality in the picture reproduction (less operator dependent), and we’ve reduced the processing time around 40-45%.
2. Ink repurposing systems (Allwan, PDF Server, and so on)
These kind of systems that reduce the usage of CMY inks substituted by black ink have a very high effectiveness and immediate savings.
In our experience (with Allwan), even setting the substitution parameter lower than suggested by the supplier (to avoid possible side effects on colour space), we reached an average reduction of 15-18% in CMY and an increase of 6% K. The ROI is approximately 1 year.
3. Outsourcing of not “core business” related services
Give an immediate saving due to the very different salary level and amount of weekly working hours.
We have already applied for receptionist, warehouse operators, ramp handling and bundles delivery to the kiosks; but we are planning also for the reelstands operators, mailroom low skilled operators (stacker, insert feeders, an so on), air conditioning and electric maintenance, administration in general.
DAY BY DAY SAVINGS
4. Ink/Water curves
Modifying the automatic curves set by the press supplier with new lower curves we have had a ink saving around 3-5%; of course the start-up copies are a little bit “bright” but the saleable copies are reached within the same amount of wastes and the behaviour of the quality during the run is more stable (perhaps we used to have an excess of ink and water at the start-up).
5. Centralized liquid consumables supply
Centralizing the supply of plates developer and finisher, dampening solution, cleaning agents and liquid in general, allows to use bigger containers (1.000 kg instead of 200 kg.) with lower cost per unit and less wastes left in the container; furthermore there is also less handling.
6. Conditioning / heating
For this issue I’m assuming that the printing site is “up to date” in the air conditioning, heating, lighting, electric and so on systems, like our plant.
Having (or implementing) “inverter motors” on Air conditioning units, pumps, compressed air and so on, there’s a general saving in electricity.
With a centralised control system is also possible to set-up different values for temperature, humidity and so on, on a time base.
As an example, in 2009 we have modified the temperature in the press room from 23° to 22° during the winter time and from 23° to 24° during the summer time, with a saving of near 5% in utilities (electricity and gas).
Increase the diameter or reduce the basis weight (if possible) could lead to benefits up to 5%.
From: Rita Sim
Executive Director, Sin Chew Media Corporation, Malaysia
We formed a special task force for cost reductions and savings.
We worked on the following areas:
1. Tight pagination control
2. Ink savings in production
3. Energy savings by reducing electricity charges
4. Waste control and circulation returns, print order were tightened.
5. Reduce headcounts and did not replace staff who retired.
Overall we saved about 10 to 15 percent in costs over 6 months period as biggest savings came from recent reduction in newsprint prices. We are still under pressure because revenue has dropped by more than 25 percent. This is a real worry because revenue drop cannot entirely be covered by costs reductions! Would be interested to know what others did.
From: Gunnar Springfeldt,
VP Development, Stampen Group, Göteborg, Sweden
Stampen Group is a group of newspapers and our focus right now is to share services and platforms between newspapers and printing plants. Within each company we naturally do the usual downsizing stuff.
Two major areas, and in a way the Stampen Group "reason to be", are printing and web publishing. V-TAB is reducing cost by sharing printing plants and optimizing printing capacity. The other one is our company Mktmedia, which develops concepts and platforms for web publishing and mobile services that no less than 45 Swedish newspapers are sharing (of which 25 belong to the Stampen Group).
The rest can be summarized in this list:
• Centralize prepress (within V-TAB)
• Reduce staff
• Increase "up-time", reducing time consuming tasks
• Reduce paper waste
• Reduce costs on the whole processes
• Editorial cooperation between newspapers
• Shared (b/w newspapers) and sometimes outsourced ad production
• Coordinating subscription services
• Centralized administrative processes (financials, HR and IT)
• Review, centralizing and renegotiating procurement and agreement, reduce number of suppliers
• Standardisation IT, lower support costs and license fees
• Automated IT support
If you would like to contribute to this collection of cost reduction ideas, please send your comments to email@example.com with the subject: cost reduction. Thank you.