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All in the hub: Print 21 magazine article

Friday, 14 March 2008
By Print21

Printing is a tough game to stay on top of when the capital costs involved are out of reach for so many small businesses. So is joining a hub a good way to survive? Mitchell Jordan finds out.

Investing in new equipment is a risk for any business – printer or otherwise. As a third-generation printer, Kerim El Gabaili is all too aware of how difficult it is to do. Rather than despair or give up over this dilemma, however, he sought out a new solution: collaborate. The chairman of Co-operative Sydney Digital Print (CDP) realised that many small businesses were suffering in the struggle to compete with other bigger companies and stood a greater chance of success by joining forces.

El Gabaili says that CDP, which opened in September 2006, was a way of "getting the benefits of expensive equipment to compete with people who can’t afford to buy $2 million worth of equipment." If printing is an expensive business, it’s also an ever-changing one and today’s new press is yesterday’s news, so why not take advantage of the latest and greatest while you still can, he says.

"Starting CDP was an opportunity to share technology that really needs to be exploited in a short period of time, because within three years all this stuff has got to go," he points out.

The no names printshop
Currently, the CDP consists of 13 Sydney printing business who each use the digital print facility in Auburn, which is staffed by three permanents and two casuals. With no sign or name visible from the outside, the two-storey building could belong to anyone and that, according to El Gabaili, is the whole point.

"There is no name on this building so that when people come here with a client it is as if it’s their company," he explains. "From both a client and marketing perspective, this can make them feel more comfortable of your capabilities."

While setting up CDP took a lot of time, El Gabaili says that the longest part of the process was screening those who were interested in becoming a member.

"Everyone is a potential member in the early stages," he says. "We had to filter through the people who were serious about making the commitment and those who weren’t."

There were a couple of companies that CDP knocked back but El Gabaili says the two main criteria are simple: "Number one, they must have a certain volume of digital work, and secondly, they need to be able to pay their bills on time," he says.

Each of the 13 printers involved have been able to do just that, and El Gabaili admits that this, in itself, is a rare feat indeed.

"It’s a small miracle that 13 printers can sit around the table and get on, and the whole reason why this has worked is because we’ve kept the egos out of it," he says.

Collective responsibility
Printing hubs have become an increasingly powerful tool in an increasingly global world, but those members involved in CDP are no more or less powerful than one another, says El Gabaili, who keeps a low profile for the sake of the group’s equilibrium.

"What we have is a culture of collaboration," he explains. "When you sit in a boardroom, it’s not just about you, it’s about the collective and that is fundamentally the way you should address all issues. It’s important to ask: ‘Is this the right solution for the group’, not ‘Is this the right solution for me.’"

Asked what makes both CDP and joining a hub such an attractive prospect for printers, El Gabaili replies: "If you think about it, the cost of membership gives you access to $2 million worth of digital equipment but more importantly it’s the experience."

The hub workflow operates through a process where jobs are prioritised on a ‘first-in’ basis with partner companies and customers guaranteed 24-hour turnaround. Prepress artwork is uploaded on to a FTP server, jobs are then printed, guillotined, finished, shrink-wrapped, parcelled and distributed from the hub back to the end-customers.

"It removes a lot of the headaches," El Gabaili says of the process. "The whole idea of sending something away, getting it back without any hassle and having the kind of margins that we are able to generate as a group is almost a dream come true."

Plenty of other printers are keen to share this dream, according to El Gabaili, who is in the process of signing up a fourteenth member. He reckons that 18 members would be an ideal target for CDP.

"This would be perfect for the type of volumes we want to achieve," he says.

A worldwide phenomenon
The well-known Worldwide Online Printing franchise has its eye on attracting a lot more than 18 new members. The company, which was established in 1995 to supply digital and offset print and related services to businesses across Australia, currently has 83 franchised centre owners and 300 staff spread across the board in production, sales, customer service and graphic design roles.

With four hubs located in Western Australia, NSW, Queensland and Victoria, Worldwide operates on a ‘hub and spoke’ model where any large digital jobs ordered from the 83 centres are printed at the nearest hub before being delivered back to the centre or directly to the client.

Paul Sowerby, national sales and marketing manager, (pictured) likens Worldwide’s business model to that of boarding a plane as a passenger compared to chartering a flight as the commanding pilot: it just makes sense to become a franchisee.

"It’s the difference between the hassle that comes with doing it all yourself or knowing that you’ve got a huge investment in front of you without the cost," he says. "There is no downside to hub and spoke."

Sowerby shares El Gabaili’s view that operating in a hub gives franchisees the benefits of equipment so often denied to independent owners.

"They have access to a level of technology beyond the reach of the small job printer," he says.

Sowerby lists a number of advantages to becoming a Worldwide franchisee, such as lower running costs, less administration work, national marketing, start-up training and continual support programs, and access to 70 print staff employed at the hubs.

"The financial commitment to hardware in printing is not insignificant," Sowerby says. "It’s one thing to buy a piece of equipment; but in this fast-moving world we live in you will no sooner buy something and then a newer piece will come along."

Come one, come all
Independent printers aren’t the only ones who are looking to be part of a hub, according to Sowerby. He believes that the hub model can entice entrepreneurs into the industry that would once have been denied to them.

"We have to go fishing where the fish are," he states. "We aren’t restricted to building the business to printers and most of our successful franchisees understand the importance of customer service and sales. These are areas where we go out looking for new franchisees."

To do this, Worldwide has dedicated a significant marketing budget to raising its profile as a franchise opportunity for potential investors.

"We actively market ourselves to building franchisees," Sowerby says. "We’ve brought a lot of new people into print who might have otherwise thought it was a dirty industry and allowed people to have the opportunity of being their own boss."

There are no black-and-white selection criteria for being a franchisee, but that doesn’t mean the gates of Worldwide are free for anyone to walk through.

"First of all, we ask franchisees to do some reflection and see whether it’s for them," Sowerby says. "Even someone who has lots of money might not be suitable; we ask individuals to sit down and have a long hard look at themselves."

Worldwide CEO, Mark Manderson, lists "new and existing franchisees with the entrepreneurial desire to use what we offer to create their own success and wealth" as the key driver for the company. So what does make for a suitable franchisee?

"It’s about having customer service and sales skills coupled with money," Sowerby answers. "If there are ticks in these boxes then we are happy to proceed."

The other side of the fence
Not everyone is keen to jump ship and ride the wave of hub printing, however. It’s true that printers literally can’t afford not to change, but there are some who deliberately chose to stay independent – for a number of reasons.

On a bustling York Street in the Sydney CBD can be found Sprinting, a company that has outlasted countless other shops and businesses in the nearby surrounds since it first opened in 1986. With a team of 11 employees, the company is headed by managing director, Robert Kohn (pictured) who is more than aware of the growth in hub printing and openly admits to seeing a number of positives about the model.

"If you’ve got 70 different outlets all contributing to one hub then of course there is going to be economies of scale," he says. "Certainly people will be exposed to the latest equipment and all that goes with it compared to one person like myself who is trying to compete."

Just as joining a hub isn’t for everyone wanting to enter print, the services offered by hubs are not suited to all those needing to purchase print, Kohn believes. He recounts a number of long and valued customers who have become like friends to all those at Sprinting, and because this is so, these people keep coming back for more.

"My advantage is having the flexibility of doing work for the customers right here," he says. "I have a number of people who want to come down and press check to ensure that the colours on the job are correct. We invite and encourage them to come here and build up a relationship which we try to foster just as much as the printing."

Too many cooks?

Kohn is aware of the "headaches" which El Gabaili and Sowerby associate with printing jobs, but he is also a believer in being actively involved in all work that comes through the door.

"We have few reruns here because everything is checked and rechecked directly from the person who takes the job and the customer," he says. "When there are too many people handling a job then there are more chances for things to go wrong. We can fix faults straight away, but in a hub you’ve got to do the job all over again, coupled with extra delay."

Kohn doesn’t ever see a day where the independent printers will be a thing of the past.

"We can’t do the huge volume that a hub can do, but we are still able to run a very profitable business by doing everything in-house," he says.

As to how much of a threat hubs place, Kohn concedes that it all really comes down to the customer and what they want.

"It’s just two ways of skinning a cat," he says. "There will always be independents who are successful."

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