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Special Report

A Closer Look into Foil Stamping and Embossing

by Jeff Peterson

August-September, 2004
Taking a closer look at our industry over the last couple of years from the position as the Director of the Foil Stamping & Embossing Association, I have seen a great deal of change. I have been privy to how these changes have affected the smaller trade finisher up to the large finishers and folding carton houses.

How Has the Market Changed?
Everyone will agree that competition has changed the foil stamping and entire finishing market the most. Due to the existence of fewer printing jobs and smaller runs, competition is at an all time high. This has driven down prices and created very small profit margins on most jobs.

In addition, more commercial printers have stepped into the finishing arena. Why? Frankly, because they can. Machinery prices have gone down so low that a commercial printer can afford to put a 40” diecutter on his floor and not have to run it continuously. Printers also have seen the pressure of quick turn-around times on jobs become such an issue that keeping as much of the job in-house as possible is viewed as a competitive edge.

Small Trade Finishers
For discussion purposes, small trade finishers are shops that have 1–5 clamshell-type presses or windmills, maybe one cylinder diecutter and one folder/gluer.

Although smaller-sized trade finishers have seen declines in business over the past two or three years, many have been able to keep profits and business at a workable level. Why? First, overhead is relatively low. Many smaller finishers have little debt and little overhead with employees and other expenses. Because many of the jobs are comprised of fairly short runs, printing customers usually do not price out every job looking for the lowest cost. Many small finishers have loyal customers they can rely on for regular business.

Large Trade Finishers
Large trade finishers will be defined as having four or more platen-style presses (40” or larger), two or more folder/gluers, a variety of clamshell and/or cylinder presses, and other finishing services, including laminating, mounting, and UV coating.

As with small finishers, large trade finishers have felt the pinch with an overall slower economy. However, there are several reasons why many larger trade finishers will be okay and business will improve as the economy improves. First, they offer a variety of services, so when one area may be slow, another area can help pick up the slack. In addition, many jobs are too large or complicated for a commercial printer who has brought in his own diecutting and maybe even foil stamping equipment. I also believe that one area where foil stamping, in particular, has stayed fairly constant and has even experienced growth is with folding carton work. Although more folding carton houses are adding foil stamping equipment, there is still a great deal of opportunity in the folding carton area and the larger stampers/finishers have been able to capture some of that business. From a bidding side, there are only a certain number of large trade finishers in the United States, so competition is somewhat limited for very large stamping jobs.

Stuck in the Middle!
Medium-sized trade finishers will be defined as having 1–3 platen-style presses (40” or larger), one or two folder/gluers, 5–10 clamshell and/or cylinder presses, and a few other finishing services.

From my perspective, this group has been most affected by the changing environment. And, this is the most prevalent member of the Foil Stamping & Embossing Association. Analyzing the current FSEA membership, medium-sized shops make up a whopping 70 percent of our current membership under the guidelines above. Although this is a larger percentage than the entire industry, it helps demonstrate the large number of finishers that are being affected by a changing marketplace.

So, the question is why have they felt the brunt of the changing graphic arts market? First, furious competition and little profit margin has been the number one culprit. Unlike small shops, many of these shops have a decent amount of debt and overhead. Little or no margins simply do not work. Also, the continued increase in commercial printers adding equipment hurts this group the most. Smaller printers are not adding finishing equipment so smaller finishers are still getting their work. Very large foil stamping or diecutting jobs are still being sent out to large finishers with several 40” die cutters. However, the medium-sized foil stamping and diecutting jobs can now be done in-house on the 40” diecutter that the printer has on the floor. In addition, many of the jobs that fell to the medium-sized shop have decreased, especially in the foil stamping area. Less foil is being used on products such as presentation folders and annual reports.

What Can the Finisher Do?
Based on these changes in the marketplace, our core FSEA membership, as well as other finishers that fall in the medium-sized range, must make changes to survive and prosper.

One suggestion is to consider more direct work and stop relying on jobs to show up at the back door. I personally believe it is time to fight back. The argument I always hear is that it will upset my current printing customers. I believe a good place to start is with advertising and design agencies. Approach agencies from the angle that you are interested in working with them on new potential jobs only. My belief is that your printers are going to be more upset if you are calling on end-user customers who have specific projects and printing jobs that are done on a regular basis. An agency has a variety of new jobs on a constant basis. We must begin creating relationships with end-users and agencies where they are contacting us about quotes, questions on stock and foil, and not having it coming to us second hand from a printer.

The bottom line, in most situations, the printer is not helping you sell your finishing services, and especially not foil stamping. I would estimate that 50 percent or more jobs that begin with foil and/or embossing in the design stage get removed before the job goes into production because the print salesman uses it to decrease the price and increase turnaround. We must start realizing that the print salesperson is not our friend! Maybe his company is a good customer overall, but the salesperson is not helping you! The production manager for an ad agency should have you on speed dial just like he has his printer. We must begin selling our services direct!

Another way medium-sized finishers can protect themselves is through diversification. I am seeing this in several areas. Certainly, UV coating and film laminating is a natural progression for many finishers. Adding these services can help grow your customer base and potentially add customers for other services as well.

I recently spoke with a member who has started a new division for POP displays. This is a natural transition for our industry as well. They have purchased a 70 plus inch diecutter, an 80” mounter/laminator and they are now in the large format POP business. They have been open a short time and are already out of room in their new facility. POP also automatically gets you started with working with end-users and agencies. And even better, you can bid on jobs for POP and bid out the printing for the laminated sheets to your current printing customers. This can help cement relationships with your current printers and might help smooth over any bumps with them thinking you’ve become more aggressive going direct to customers.

Binding services is another potential area of expansion. There have been a few mergers or acquisitions in the last year or so with binding and finishing companies. Again, binding is a natural fit with finishing services and I can see more of this becoming prevalent in our industry.

So, How Do I Get Started?
You have to market yourself. Here are some great suggestions to get started:

  • Begin sending out to your local agencies and end-users a monthly self-mailer or postcard on your services or special product offerings. For instance, the month of March you offer presentation folders at a reduced price.
  • Utilize the brand new 2nd Edition of the Designers Guide to Foil Stamping & Embossing to hand out to agencies and designers in your area. Consider creating your own label that can be included on the back of the guide so you can be contacted directly on foil and die questions.
  • Begin conducting seminars at your local Advertising Club meetings. Again, we have put together an excellent tool for you to use for this with the CD Presentation that includes a full script and outline to hand out.
  • Use published information or examples of foil stamping successes. (See Special Report in the May/June issue of InsideFinishing.)
  • Consider an open house. The FSEA can ship to you a quantity of Designer Guidebooks to hand out, as well as other samples of foil stamped work from our Gold Leaf Award winners.

How Do I Handle Objections from My Printers?
As I stated earlier, I believe the best place to start is with advertising agencies. Assure your printing customers that you are only talking to agencies about new jobs and not looking at taking any existing business that may be running through the printer. Another suggestion is to offer different pricing to end-users and ad agencies than you offer to your printers who are re-selling. You might consider a 10 percent discount for agencies and a 15 percent discount for printers.

If you do consider working more direct with the end-user or agency and a job includes printing and finishing, begin sending work back to your printing customers. As stated earlier, there is no better way to smooth over problems than to provide them business in return.

Start Evaluating Who Really Is a Good Customer
I was talking with one of our members who has put his foot down on bowing to his customers. Basically, he completely stopped it a couple of years ago. He has actually written letters to three or four of his printing customers at the beginning of the year telling them that he has appreciated their business in the past but would no longer be able to do business with them in the future. These were customers that always brought in the problem jobs, never had the artwork right, always shorted him on stock, and were bad payers. In a couple of instances, he received phone calls from the president of the company asking him to explain the letter. When explained, there were times that the owner didn’t even know a lot of this was going on. It ended up that the owner appreciated his honesty. In some cases, the printer actually came back – much more conscious of the projects and what should be provided.

This finisher has gone direct with many of his customers and although he lost printing customers in the beginning, those he works with now are educated on what they are doing and he has rid himself of those he doesn’t want to work with. He lets his competition lose money and fight over the bad customers, he’ll keep the good ones.

Stop doing business with those printers that cut you down with every job! Stop doing business with people who are constant bad payers! Stop doing business with people who supply bad material and bad information!

I don’t pretend to have all the answers. Every region, every market, and every situation is different. However, I believe that some of this information does or should apply to you. We’ve seen a lot of changes in the last two to three years in the finishing industry and I think we still have a great deal of change on the way.