Reprographics 101

A wise guy (not to be confused with a wiseguy) said to me in 1984….. “success is a matter of making more right decisions than wrong decisions, provided that your good decisions (successes) outweigh your wrong decisions (failures.)”

I unequivocally agree with what that guy said. And, I feel very lucky that, during the two extended careers I had in the reprographics business/industry, I’m “proof positive” that that statement is true. As I look back, I really do believe that my successes outweighed my failures, and that, for the most part, I did not repeat my mistakes.

[I hate to use the word “I” when I talk about my experience in the business, for you cannot grow or manage any reprographics company without a TEAM. And as one of my close friends (ex-partners) always so aptly put it, “there is no “I” in Team.” But, for this particular blog-post, I’m going to use the word “I”, because most of my failures were not attributable to “the team” (or to my partners), but to me (I) as an individual. And, besides, the word “I” takes less keystrokes than does the word “we.”

I decided to do this blog-post not because I’m using my blog as a confessional or to repent, but simply because my blog-site may, from time to time, be visited by a younger generation of reprographers, and, as an “old guy”, I’m hoping that some of them will read what I say, and, thusly, learn from what I say ….. so that they don’t make the mistakes that I did.

So, what were my 5 biggest bad decisions in the reprographics business?

My biggest bad decision:
This particular mistake cost us a small fortune. (And, had it occurred earlier in my career, it would have learned enough to avoid my 2nd biggest mistake. Often, “timing is everything,” as that saying goes.) In mid-1986, I bought a company, 500 miles away from our then core operations. At the time we bought that business, our core operations were rocking and rolling, we were very profitable, and we had a significant pile of cash, due to being profitable and because we had completed an IPO only months earlier. Also, we had, over the years before, completed several acquisitions and three different mergers, all of which were successful. So, because we wanted to expand beyond our core area, we listened with great interest when a friend called to ask if we were interested in helping him out. What we learned was that he had two other partners and that there was a complete lack of communication (and I guess trust) between the three partners. The company was losing money. And, the squabbling amongst the then partners was causing a distraction, a loss of focus if you will. So, what did we do? We bought the company. And, we kept the former majority owner on as the President of our new subsidiary. As a part of the deal, the other two ex-partners “retired” from the company, with one-year non-competes. The partner we kept was the principal technology dude. One of the partners who retired was the principal sales leader. (I have no idea what the third partner’s strength was.) (Now, I’m going to digress for just a minute. It is now 2009 as I write this post. It was 1986 when we bought that company. In other words, some 23 years have transpired since we bought that company. I go to the IRGA most years (except for a few years after my first retirement in mid-1988). Every time I go to the IRGA convention, I always bump into the ex-partner, the “sales leader”, from the company we purchased back in 1986 … AND —- he never fails to say these words to me (in his funny accent) …..”you know, Joel, I am the partner you should have kept on to run the company; had you kept me on, it would have been very successful.” Well, some might call that “rubbing it in”, but all it does is make me laugh and smile, for the guy who continues to say that (and I’m positive he will say it again if I make it to the IRGA in Pittsburg this year) is one of the reprographics industries nicest, smartest guys. Years after we bought his company (the one that was my 2nd biggest mistake) we became industry friends. Most reprographers know him and feel the same way I do about him; he has had terrific success over the years with the 2nd company he started, and he started that company from scratch, which is something that many of us second-generation owners did not have to do. Okay, lest I digress any further, let me get back to the story.] Buying that company (the one 500 miles from our core operation was not the mistake, at least it was not the biggest part of the mistake. The mistake was pushing forward very quickly to expand the geographic scope of the company we had purchased. Within one year, we had four locations instead of two. And, we poured money into those new operations that we should not have, such as building an FM that had a very expensive engineering photo-lab within. Our fast expansion may not have been a problem if our sales efforts had been terrific. But, remember, we did not retain the ex-partner “sales leader”, and, although we were led to believe that the President was the key driver of customer relationships, that just wasn’t the case. Well, maybe he was the key driver of “customer” relationships, but if you key on the word “customer”, you will know where I’m going with this. If you want to expand a company, you’d damn well better know how to convert prospects to customers, i.e, you better damn well be really good at new business development activities, i.e., good at converting “prospects” to “customers.” Okay, lessons learned: (1) make sure you interview all “selling” partners independently of one another; do not just interview the majority partner. Doing so will not guarantee a good decision (as to who should be retained and who should not or whether you should buy the company), but, at the very least, you’ll have more of the picture. And, if there are different stories, and you can’t reconcile the differences, should give you lot’s of reason to pause and think a lot more before you jump into the water. (2) fast expansion can be very, very expensive and fraught with distractions; and, if you don’t have a sales leader who can make it happen, you’re going to be hard-pressed to generate sufficient sales to cover the costs of operating your expanded business. What’s that old saying, “haste makes waste”? I bought that company because I, as look back, was, I guess, suffering from “visions of grandeur”. (Or, as Danny DeVito, one of my ATF actors, put said it in one of his movies, “you’re DELUSIONAL.”)

My 2nd biggest bad decision.
In early 1987, I bought a company that was not even close, geography-wise, to our core operations (which were, at the time, in the Wash DC – Baltimore area). I bought that business because I was, at that point, still suffering from “visions of grandeur”. Before we bought that company, I had taken the time to evaluate its financial condition, its assets, its liabilities, its financial statements and had come to the conclusion that its problems (it was losing money and had lost a ton of money over the prior three years) was attributable to the significant losses that company had incurred from a branch operation (120 miles away from its main operation), by then closed. I bought that company using a “bulk purchase of assets”, which is a method of buying assets “on the cheap” – basically, you purchase the assets that you want, but you don’t have to take on any of the debt, winding up with those assets free and clear (most of the company’s creditors ended up getting about $.10 on the dollar, but that was their problem, not mine.) I thought I was being smart. As I realized only several months later, I had been totally stupid. Buying that business was one of my top 3 biggest mistakes. There is one very good lesson I learned from buying that business. Kind of simple. If a business is losing money, there has to be a very good reason why, and there are often more reasons than just one. In this particular case, we were “banking on” the key-customer relationships that the Owner/President had (and, he stayed on with us after we purchased the company) and on his knowledge of and experience in the business, and on his passion for the business and leadership skills. WRONG, WRONG, WRONG. Boy, did I get that one wrong. After we purchased the company (and the company had no debt, for we paid cash for its assets), the company continued to lose money. Within a few months, I knew I had made an absolutely stupid decision. One of the “key problems” was the lack of leadership. Finally realizing what the major problem was, we terminated the President and installed the two young VP’s (Sales and Operations) as “co-GM’s”.) While we probably could have turned that company around, our board had already voted to “throw in the towel”. Our 2nd in command at the time, said, “we should just close it, cut our losses and be done with it, it is too much of a distraction and a drain on our core business.” Instead of closing it, we did manage to sell it. (I often wonder why in the world the company that bought that business from us bought it. For, they would have gotten the customers and business anyway, without having to pay a dime. Well, I guess that shows you that others make mistakes as well, and, just so you know, the company that was dumb enough to buy that “pig ‘n a poke” from us was one of the largest reprographers in the U.S. It is nice to no that you’re not alone, when it comes to making dumb decisions.)

My 3rd biggest bad decision was directly related to my 2nd biggest mistake.
Right after we bought the company I mentioned in the previous paragraph, our President of that company convinced me that we should enter into a lease on a new space that had to be substantially built-out to our specs. (Because of redevelopment, we had to move out of our existing production center, but we knew that going into the deal.) While we never did move into that new space (it had been committed to, but was not ready to move into by the time we sold the company), it proved to be a very costly build-out (we had photo-labs back then, not cheap to build-out and they require lots of floor-space) and, in order to keep the cost down, we had committed to a long-term lease, guaranteed by, yep, you guessed it, our parent company. Lesson learned: avoid “Taj Mahal’s.” like the plague. My definition of a “Taj Mahal” – overdoing it. If you want a palace, become a King (or Queen.) If you want to run a profitable, lean-mean fighting machine, do everything you can to keep the floor-space to a minimum and “no gold fixtures”. While your facility does need to be very functional and clean (at least, clean in the customer waiting area and in the conference room), it does not have to be or look like a palace. Frugality, I think, being the key word. If you have the choice between “Class A”, “Class B” or “Class C” office space, choose the latter. Invest your money in people and technology, not in a “Taj Mahal.” [Because we, the parent company, guaranteed the lease, selling the company, instead of closing it, allowed us to (thank goodness) transfer the liability for the new facility to the company that bought our subsidiary. Which is why I was desperate to sell the company, not close it.] I decided to write about this mistake (committing to a Taj-Mahal-like facility) even though we actually avoided the expense of that mistake (because were sold the business and, with that sale, the expense of that mistake.

My 4th biggest bad decision:
My 4th biggest mistake was the commitment I made to enter, through the formation and funding of a subsidiary, the business of selling CAD systems. (Several of my friends who were also involved in ReproCAD made this same mistake.) Our subsidiary offered: CAD systems (primarily Bausch & Lomb), CAD operator training (we hired one CAD- proficient architect and one CAD-proficient engineer), and we also provide “plotting services”. While we did not lose any hard dollars on the sale of CAD system stuff, we wasted a ton of money on salaries, fancy office space and travel expenses, and, of course, we wasted a ton of time. When we realized that what we had committed to was not going to work, we scaled the business back to “just” a plotting service bureau, and, well, then we made money. One of the team members that operated the plotting service bureau, Ed K, is now, some 24 years later, a head I.T. dude at NRI’s operations in Washington, DC. (Very knowledgeable guy.) In the book, “Good to Great”, the author talks about the “hedgehog” concept, basically, sticking to your core business, sticking to the business you know and the business you can do really well. Had I read that book 25 years ago, I may not have made the mistake I made. Well, probably not.

My 5th biggest bad decision:
My 5th biggest mistake was making my 4 biggest mistakes all within a period of about 15 months. As you might imagine, that period in my business life was very frustrating, agonizing and heart-wrenching. We went from making money to “break even” (N.I.-wise), and that was very embarrassing because the reprographics industry (and business at our core operations) was quite healthy at that time. TG we recovered from those bad decisions.

One of my friends asked me, one day when we were talking about our successes and failures, if I thought taking my company public (in 1985) was a mistake, considering the size of our company back when we did the IPO. Well, it was probably a mistake, due to our small-size at the time, but certainly not within my top 5 or even 10. [And, I wouldn’t give up that experience (completing an IPO and being a public company) anyway.]

Okay, finally managed to complete this post, even though the negative-nostalgia aspect was certainly not pleasant. Most, but certainly not all, of the bad decisions I made happened during my first extended career in the reprographics business. We were fortunate to not repeat these mistakes during my second extended career in the business. (That does not mean that I did not make mistakes during my second extended career in the business; it’s just that the mistakes I made during my second extended career were not as big (or dumb).

There have been 59 “unique visitors” to my blog-site, so far.

And, so far, my blog-site has been visited by people from 3 countries in Europe, and, in the U.S. by visitors from quite a number of different states, spanning from Maine to Florida, from Illinois to Texas, and from Wash, DC to California.

I started posting on February 27th.

On or about March 1st, I started e-mailing people to let them know that I started a blog-site. I’ve only announced my blog-site to a few people (all are reprographers or recently retired from the reprographer community.)

In order not to materially distort the number of visitors to my blog-site, I purposely did not announce my blog-site to all of my former NGI associates or to all of my former Rowley-Scher associates. Only 2 people at NGI (primary owners prior to ARC’s purchase of NGI) and only 2 people who were formerly with Rowley-Scher (ex-partner and one VP) have been notified about my blog-site.

Please kindly refer my blog-site to your friends and associates in the reprographics community. You never can tell when I’ll finally post something that’s good information.

To those who’ve let friends know about my blog-site, thank you, much appreciated.

I mentioned in an earlier post that I might, at some point, expand on what these companies are all about, and I’m going to get into that now, before I completely forget. I HAVE NOT SPELL-CHECKED OR REVIEWED MY TYPING (After typing all of this, my hands were ready to fall off!)

One initial comment: I mentioned in a previous post the importance of joining the IRGA. In the larger scheme of things, membership in the IRGA is very inexpensive, and the benefits you (and your business) get from being an IRGA member are valuable.

My second initial comment: Beyond belonging to the IRGA, there are huge benefits to be had from being a member of a “sub-group” (or should I say a “sub-association”) in the reprographics industry. I will talk about those benefits in this post.

My third initial comment: Simply for those of you who are not familiar with The PEiR Group, ReproMAX or RSA, at the end of this post I’ve copied into this post the “about us” information that appears on each’s web-site, including their web-site addresses. I urge you to visit all three sites to learn more about them.

My fourth initial comment: I’ve never been to an RSA meeting and my former companies were not RSA members. Therefore, I don’t know as much about RSA as I do about the others. Some of my industry friends’ companies do belong to RSA. Perhaps one of them will e-mail me to add to what I say about RSA or to clarify or correct what I say about RSA.

Okay, that’s it for the “initial comments”; thank you for your patience!

Comments about RSA

It is my understanding that the RSA has been around for many years; I don’t know how many, exactly, but it may well be over 40 years old by now, if not older. There used to be a group called “ASA” (they were referred to by some as the “Ammonia Sniffers Association”), but, a few years ago, ASA and RSA merged, with the RSA name continuing on. Since the diazo printing process is virtually non-existent (i.e., obsolete) in North America and since the only people probably still “sniffing ammonia” are those who use ammonia and Windex, I guess it is very appropriate that the ASA name is no longer used. Based on what I can tell by its membership, RSA member companies, which consist of reprographers and equipment and supply dealers, are, for the most part, smaller companies in our industry. (Based on the information posted on RSA’s web-site, the average RSA member-company does approximately $1.36 mil in sales per year.) About the term “smaller companies”, that’s not a knock on RSA. There’s certainly nothing wrong with keeping a company small. America was built on the backs of small businesspeople, they are the backbone of American business [and all would likely be in good shape now if were not for the greed and incredible stupidity of our country’s large investment banks (now dead and gone) and banking and financial institutions.]

Although I don’t know this as fact, I’m pretty sure that RSA operates a “buying co-op”, meaning that the individual RSA member-companies group their purchasing power to get better deals from the industry’s vendors. It is my understanding that most, if not the vast majority, of RSA member-companies are or were in the “supplies” business (that used to include drafting supplies, flat-files, drafting furniture, reprographics equipment, media and toner/developer/ink. When I first got into the reprographics industry in 1970, the company I joined was in the “drafting supplies” business. I got rid of that “department” only three months after I got into the business. I convinced my boss that selling supplies was a distraction to our core business of reprographics services. As I look back, that was one of the better decisions I made, for getting rid of our supplies business did allow us to focus on reprographics services. I’m sure that many companies in the reprographics industry have developed very successful and extensive supply businesses – companies such as Charrette,, Deiterich-Post, Ridgway’s are examples. Many years ago, before CAD and before the “digital revolution”, the supplies business was robust, but, nowadays, much of the stuff that used to be sold is obsolete. (“Hey, hand me the Skum-X, a Stab-Me and a leadholder!”) Associations.

RSA has developed an e-plan room product, they refer to it as their “National Plan Room” and I guess it was designed to compete with ARC’s PlanWell product, ReproMAX’s DFS and PDM products and with other e-plan room products out there. I would imagine that any e-plan room that achieves large number of placements (a large number of using companies) benefits all members, if not their customers. However, I’ve visited some RSA member-company web-sites, and it does not appear to me that RSA’s National Planroom product is used by all RSA members. I wonder why not, and I wonder what less than 100% acceptance by RSA’s member-companies means.

To me, the two primary benefits of belonging to a reprographics industry sub-group are the knowledge you gain from networking with others who are in the same business you are in and the purchasing power benefits of being a member of a buying co-op. RSA offers both of those.

Comments about ReproMAX

I mentioned in a previous post that both of the former reprographics companies I was with were ReproMAX members. Our first company, Rowley-Scher Reprographics, was a ReproCAD stockholder (ReproCAD is now ReproMAX) and our second company, NGI, was a ReproMAX “associate”. Nowadays, ReproMAX has “partner-members” and “associate-members”, kind of a “two class” system. That two-class system creates what I refer to as “dysfunction.” I hope ReproMAX has found a way to eliminate the two-class system since I last attended a ReproMAX meeting. I was a co-founder of ReproCAD, so I know many of ReproMAX’s original member-companies pretty well, since we had 3 or 4 meeting each year in the early formative years of ReproCAD. The idea for ReproCAD was spawned by Dick Wittrup (a great guy, he used to own Carich Reprographics in Dallas, TX. A few years before Dick passed away, he sold his company to Thomas Reprographics, finally succumbing to Bill Thomas’ persistent efforts over many years to buy Carich Reprographics. About ReproCAD’s founding – Dick and I were sitting in the back of the room at a MiniMAX meeting in Chicago, I think it was the summer of 1983, when Dick raised the idea of ReproCAD – him wanting to see MiniMAX extend its efforts into CAD systems and plotting and MiniMAX’s management not wanting to go there – so, after that meeting, we contacted several friends in the industry, including Sol Magid of NRI in NYC, Paul Koze of BPS in San Francisco, Bob Neely of Neely Blueprint in Jackson, MS, Bob Blair of Blair Graphics, Los Angeles, John Wilmsen (and yes, Rick Bosworth) of Service Blueprint in St Louis, etc. There were others, as well, for the first 15 member-companies of ReproCAD were all (and equal) shareholders. Later, we opened up the membership to “non-shareholder” member-companies. Around the fall of 1984, ReproCAD hired its first full-time President, a young man by the name of Mark Sirangelo. [(Mark left ReproCAD a year later to join Rowley-Scher as its CFO and later was elected R/S’ COO. Today, Mark is the Chairman and CEO of Space Development Corporation (Some would say that reprographics isn’t rocket-science; well, ReproCAD’s first full-time President is now in the rocket-science business, among other things.)] There were several fronts that ReproCAD “attacked” in its early days, including CAD systems (sales, support and training; all of that failed miserably), cooperative buying (that worked great) and discovery of equipment we could all use and, if we wanted to, sell (that worked “half-right”.) And, the main benefit of being a ReproCAD member was the networking that took place and the friendships that were developed. Back in those days, we had only one ReproCAD member per market-area, and, back then, few of our companies were “multi-market” companies anyway. And, because of that, we openly discussed business growth strategies, including the FM business (which, back then, was primarily a “staffed” thing.) Case in point – Carich Reprographics in Dallas and Rowley-Scher in DC did staffed FM deals with HOK offices in those cities (deals that lasted many, many years) and NRI was already doing a staffed FM for HOK in NYC. We did not fear competition from our fellow-members (at least I don’t think we did.)

Now, many years later, ReproMAX is quite a different organization and is much larger than it was back in 1988 when I first retired from the reprographics business and industry. ReproMAX still acts as a buying co-op for its member-companies. But, the main “thrust” of ReproMAX, these past few years, has been the development of ReproMAX’s e-plan room products – ReproMAX DFS and PDM, products developed by Adenium Systems – and the deal ReproMAX did with McGraw-Hill. About the deal ReproMAX did with McGraw-Hill, that deal involved scanning, planroom services and printing services. However, being an “associate” member of ReproMAX was not all that great because, while we did do some scanning of jobs that originated in our local market area (and what we got for doing that scanning work was “bupkis”, we did not do much printing to speak of [(it is my understanding that the bulk of the printing work and revenues from printing went to ReproMAX partner companies (or to A/E Graphics Complex, the R/M partner-member in Houston.)] And, about ReproMAX’s e-plan room products (DFS, PDM, whatever), ReproMAX-associate-members were not allowed to buy every product that ReproMAX-partner-members were allowed to buy. In my opinion, that created “dysfunction.” The reason for that (partners being able to buy all products, but not all associates being able to buy all products) happened, I guess, because ReproMAX changed at some point and decided to allow more than one ReproMAX member in “a market.” So, to protect their turfs, the partner-members who were in business in a markets where associate-members co-existed, maintained their competitive advantage (ReproMAX planroom/document management software-wise) over the associate-members in their market areas. The dysfunction that I spoke of? Well, what sense does it make for ReproMAX, the organization, to nationally advertise and promote ReproMAX PDM if not all ReproMAX “members” could sell or offer the services of PDM? If an organization is trying to create a nationally-branded product, but some of that organizations “member” companies do not have access to that product, that makes no sense at all, at least it does not make sense to me. (But, what do I know, anyway?) As I said earlier in this post, I hope that ReproMAX found a way to eliminate the two-class system and that all ReproMAX members, whether they are “partners” or “associates” have equal access to the same ReproMAX software products.

One disadvantage, as I see it, for ReproMAX vs. ARC is that ReproMAX, which is an amalgamation of separately owned companies, cannot truly compete with ARC on the “national” FM deal front. I’m not stating fact, simply my opinion. I do know that ReproMAX approached HDR about doing a “national” FM deal, but ARC was the only company that HDR really negotiated with. (Omaha is an interesting town; visit it someday.)

One of the big benefits of being a ReproMAX member is the fact that ReproMAX is populated by many of the reprographics industry’s larger companies (subtracting, of course, the former ReproMAX member companies that by now have been “picked-off” by ARC through ARC’s robust acquisition program.) The benefit of a smaller company joining ReproMAX is the benefit one gets from learning from the “wisdom” of owners and managers who are with the industry’s larger reprographics companies. A company that manages to grow large did not get there simply because it was lucky.

Comments about The PEiR Group

Well, last but not least, we come to the PEiR Group, which is wholly-owned by American Reprographics Company (ARC.) When I first heard about the PEiR Group, I wondered …. “why in the world would any non-ARC company become a member of a trade organization that is owned by the industry’s largest reprographics company (ARC), a company that competes with all of us?” Well, that “question” just shows you how dumb a person can be! (I’m referring to me, of course.) Today, a whole bunch of reprographers are members of The PEiR Group. Reprographers who compete head to head with ARC are PG members, and reprographers who don’t (at least yet) compete head to head with ARC are members.

Why? Because there are benefits of being a PG member; some of those benefits are similar to or the same as the benefits of being R/M and RSA members. But, there’s a big diffrence. ReproMAX does not allow every company that would like to join R/M join R/M. PG, unless it has changed since I retired, allows any company to join. Any company that wants to acquire PlanWell can acquire PlanWell, and PG members get a discount. Not every reprographer can get ReproMAX DFS/PDM. Like the other industry sub-groups, PG offers the power of a buying co-op. ARC’s purchasing power, being the reprographics industry’s largest company, is enormous, and some of that purchasing power is used to benefit PG members. ARC’s strategy, regarding PlanWell (and other ARC-developed software products), is to make them available to any and every company, a strategy that enhances ARC’s “national branding” of ARC-developed software products. I think it is obvious to all, but I’ll say it anyway, one of ARC’s goals, vis a vis selling PlanWell and other ARC-developed products to everyone who wants them, was to (is to) recoup some of the costs ARC incurred (and continues to incur) to develop and support its software products. Why else would any company that’s developed software products sell those products to competitors?

Like ReproMAX (and, I think RSA), the PEiR Group offers training and education for its reprographer-members. When I was with NGI, I had the opportunity to attend one PG executives conference, and one of the subjects the PG team covered was “best practices” for financial management. I personally didn’t learn a thing, but I did think the information was useful for some of the younger attendees and for the smaller companies that were represented at the meeting. In spite of the fact that I’ve been doing FM’s since late 1983, I attended two different PG “FM Sales Training Schools”, both of which were held in Las Vegas. While I did not learn anything new (basically, I went to those FM Sales Schools to see what ARC was teaching to my competitors!), I thought that the information shared by PG’s team leaders was valuable information for novices starting out in the FM business (and, even for those who’ve been in the FM business for a while.) Shaun Meany led both of the FM Sales Schools I attended, and Shaun, not surprisingly, did a very admirable job. For me, the highlight (of both FM Sales Schools) was Stan Jernigan. Stan, formerly a Sales Management person with Ford Graphics, San Fran, is a very gifted, talented presenter. If you’ve never heard Stan Jernigan speak about “sales”, he’s worth the price of admission. (Stan may be completely retired by now, but I’m not sure about that, because I haven’t yet found his e-mail address.)

Although I doubted ARC’s PEiR Group strategy, it looks like The PEiR Group has proven to be a winner for ARC.

Okay, that’s it for my specific comments about ReproMAX, The PEiR Group and RSA. I may later amend this post, but probably not.

BELOW, YOU WILL FIND MORE INFORMATION ABOUT EACH OF THESE GROUPS, WHICH INFORMATION I COPIED FROM THEIR WEB-SITES.

RSA – Reprograhics Services Association (RSA) (www.rsacorporation.com)

The RSA is a network of independent businesses operated by stockholders of the Reprographic Services Association(RSA), a cooperative business entity incorporated in the United States.
Presently the corporation consists of 147+ leading design support locations with over 3000 employees and net annual sales exceeding 200 million dollars.

Strict guidelines, including financial, technical and ethical standards are required and must be approved by the corporation before a dealer can be a member of the RSA team. The integrity of RSA dealers is reinforced by the RSA Corporation.

Through RSA Corporation meetings with manufacturer’s R&D staff, RSA dealers are abreast of the latest technology to support the design profession. RSA dealers offer their clients solutions to problems congruent with the technologies of today and

ReproMAX (www.repromax.com)

Simply put, ReproMAX delivers digital asset management through our exclusive use of ReproMAX DFS, digital reprographics, large and small format printing and document services of the highest quality, in the most demanding business settings, to the widest range of industries and disciplines around the globe.

ReproMAX is a privately-held technology corporation, dedicated to promoting excellence in Digital Asset Management and advanced reprographic services to the many marketplaces we serve, which include:

• Architectural
 • Engineering
 • Construction
 • Legal
 • Owners / Developers
 • Graphic Artists and Design Professionals
 • Convention Services
 • Facilities Management On-site Services

ReproMAX is the largest, strongest and most aggressive international network of independent, innovative reprographic companies. Our affiliates are all market leaders with longstanding reputations for their commitment to quality and exemplary customer service. We currently serve over 350 locations around the world.

From millions of large format construction drawings, CAD plotting and architectural renderings to complex, large format color design, long term facilities management and large scale project management and cost management, ReproMAX members consistently serve their customers needs with exemplary quality, attention to detail and the highest levels of customer service.

The PEiR Group (www.peirgroup.com)

We are a trade association for independent reprographers and reprographic vendors. PEiR’s mission is to create a large, unified group of successful reprographers able to influence and advance the industry. We will achieve this by improving the profitability, quality, technology and professionalism of every member through educational programs, strong vendor relationships, and a close relationship with the best technology developers in our industry.

Sample Agenda (from recent Executive Conference held in Las Vegas)
• Managing for Success in a Recession
• Financial Management Best Practices
• Vital Factors (key performance indicators)
• Financial Analysis and Management Tools

To access February posts you may need to scroll to the bottom and click on “older posts”.

Early on, shortly after I began this blog-site, I did a post to provide my “background” information. I’ve just amended that post because I forgot to mention one of my prior jobs in the reprographics industry – my stint as the COO of T-Square (the T-Square based in Miami, which, today, is owned by ARC.)

Please kindly help me out. When I retired from my last reprographics company, I did not take my e-mail contact list with me, nor the tons of business cards I’d accumulated over the prior 10 years. Because of that, I’ve not been able to let many of my friends and acquaintances know that I’ve started a blog. So, if you would be so kind as to send my blog-site address to your friends and associates in the reprographics business, I would certainly appreciate that. I’d like to thank those of you who’ve visited my blog. Since I’ve only informed a limited number of people that I’ve started a blog, I’m pretty amazed at the number of people who’ve already visited my blog.

In 8th grade, we were required to take a course in “Civics” (how our government works in the U.S.). Although much of what we learned bordered on the mundane and was kind of boring, that course was taught by a very interesting teacher, so in the scheme of things, that made the course not all that bad.

Even before that, and I don’t remember exactly when, I read the “Gettysburg Address”, a speech given by President Abraham Lincoln. The Gettysburg Address was one of the most famous speeches ever given in the U.S. In that speech, President Lincoln said these words…..

“……and that government of the people, by the people, for the people, shall not perish from the earth.”

Well, I don’t know how or why it happened, and, perhaps I took those words out of context, but I’ve always taken it seriously, my entire business life, that we, the people, own the government, and, therefore, government agencies are accountable to us, the citizens (and I’ve also used the word “taxpayers.”)

Because of that, it became my habit, over the many years I was in the reprographics business, to stick my nose (sometimes very deeply) into procurements put out by government agencies for reprographics services (and any other procurements related to our business.)

There are some companies in our industry who do not compete for government sector business. Perhaps this is one reason why – – – when I joined NGI in 1997, Nick Korman, one of the founder-owners of the company, said “we don’t go after government business because the prices are too cheap, making the work not profitable, and, besides, government customers are slow pay.”

I’m going to digress for just a minute: Nick Korman, for those of you who never met him, was a veteran in the reprographics industry; before co-founding NGI in Tampa in 1986, he was involved in Trukmann’s Reprographics in New Jersey (Trukmann’s is a ReproMax partner and owned by Paul Korman, Nick’s younger brother.) Nick, was a truly wonderful person, great guy. Sadly, Nick passed away in 2007, at a very young age.

To get back to the story ….. I said to Nick that my experience in doing business in the government sector was extensive (that’s because I was first in business in the Washington, DC area, where lots of government agencies are, of course, located) and that, based on my experience (what I learned over a period of many years), government sector work can be profitable, and, besides, government agencies don’t typically go bankrupt (meaning, virtually no credit risk.) Not long after than conversation, NGI did begin to get involved in government sector business, generally through bids and proposals, and our government business, over the years I was with NGI, was not insignificant. (This is not to imply that I’m smart, for I’ve never considered myself to be smart. Like many of your, I’ve made my share of good decisions and suggestions as well as my share of bad decisions and suggestion (and some were absolutely stupid.)

Many of you in the reprographics industry who have “played” in the government sector, know that some (based on my experience, most) bids can be “played with” to your advantage, if you know how to play with numbers and if you take the time to play with the numbers. Also, sometimes it’s not just a matter of playing with numbers, for there are times when playing with the terms and descriptions and evaluation processes (as expressed or set forth) in the bid document is (are?) equally important.

It is not uncommon for people who work at Purchasing Departments at government agencies to compile procurement (Bid or Proposal) documents that are out-of-date, inaccurate as to terms, inaccurate as to estimated quantities and, yes, sometimes, just plain stupid (!!!) with regard to the services the government agency is intending to buy or with regard to how the bid is structured. And, when a procurement is stupid, that allows one to take advantage, if one knows how to do that.

I’m not the type of person who would walk up to another and throw a sucker-punch. When I found a government procurement to be lacking (in one way or another, referring back to the previous paragraph), I often took it upon myself to send a letter to the government agency to critique the procurement. And, sometimes, I sent several letters, Most of the time, my letters were either ignored, looked upon with disdain, or both. Government agency purchasing people do not like to have their procurements criticized! But, the fact of the matter is that very rarely will you ever find a government agency purchasing person who has expertise in the field of reprographics. One would think that government procurement agencies would ask for assistance in putting together their bid documents – to get up to speed on current reprographics processes being offered and to determine which reprographics processes are obsolete. But, rarely does that happen. One would also think that government agencies would do the homework to come up with realistic estimates of quantities. But, rarely does that happen. Anyway, getting back to the letters I sent to “help” government procurement people put out smarter Bid and RFP documents, that was how I justified later taking advantage of the procurements we bid on. If they are not going to listen (kind of like an advance “fair warning”), then why should I not take advantage? In other words, my letters were, in essence, a warning that I (or someone else, one of my competitors) was going to throw a punch. If, after that warning, they were not interested in putting their guard up, why should I care?

Let me give you some real-world examples of how I took advantage of bid procurements in the government-sector reprographics market:

Back in the early1980’s, we won a major bid for a very large, long-term, multi-year project. Our bid-price to staple-bind large-format print sets was $3.00 per set. This was at a time when we did not, nor did any of our competitors in that market, charge for staple-binding large-format print sets. We got to charge for that service simply because they listed that service as a line item in the bid procurement. They did not have to do it that way, they could have written the bid specs to say that binding was to be included, not extra. Most of our competitors bid “no charge” for that line item, since that practice was customary at that time in our market area. This customer submitted a lot of orders, and, aside from the occasional big orders, we would get orders for lots of sets of just a few drawings – progress prints if you will. There were many orders where our charges for staple-binding sets exceeded the charges for printing services!

In the late 1990’s, we won a good-sized bid with a different government agency. I still remember (and will probably never forget) the phone call I got (about our first “small-format” order) from one of our sales reps in that market; she called me to ask me “is this right?, I don’t think so, it looks ridiculous, so that’s why I’m calling to check with you.” I asked our sales rep what the order was for, and our sales rep replied, “we received a floppy disk that contains a spec book with 800 8 ½ x 11 pages, and our customer has ordered 10 sets, black & white prints on plain white bond paper. According to the information you sent us about the bid we won with this government agency, we are supposed to (allowed to) charge $4.00 per page for “processing” and then $.10 per print for all of the 8,000 prints. Joel, that’s going to come to $4,000!, that seems outrageously expensive, is that what we are supposed to generate the invoice for?” She also asked “how in the world did we get this work at those prices?” I told, her, “yes, your calculations for what we are to charge (what we are allowed to charge) for that order are correct, but don’t forget to add charges for collating, covers and binding.” If a customer called to get a quote for a job such as that one, our quote, back then, would probably have been around $.05 per copy = $400, plus covers and binding. We got $4,000 instead of $400. How did that happen? Well, it happened because the government agency put out a completely ridiculous bid document. As I recall, more than 100 different line items, most of which would never be ordered, were listed in the bid document, the estimated quantities, we were sure, bore no resemblance to reality, and the line items, themselves, were written as though the bid document writer had no clue as to how to call for reprographics services. That bid was easy to play with. After the bids were submitted, I requested copies of all of the bids that were submitted, and I noticed that one other bidder, like me, “played with” the bid. But, the other bidders did not. Let me reveal to you just a couple of the completely ridiculous line items that were in that particular bid document. Sepia paper prints, 8 ½ x 11, estimated quantity 5,000. Sepia paper prints, 8 ½ x 14, estimated quantity 5,000. Another section of the bid document contained xerographic services, 8 ½ x 11, 8 ½ x 14, etc. To include small-format “sepia” print services in a bid document in the late 1990’s was moronic. But, they did, and, after “fair warning”, we took advantage.

About three years ago, a government procurement agency in one of our markets put out a bid for “blueprinting” services and approximately 75% of the line items in that bid were for “blueprints” of various sizes (and some of the sizes were very odd.) There was also one line item for large-format digital bond prints on plain paper. I wrote a letter, three in fact, to the procurement department, explaining that “blueprints” were obsolete. My letters were completely ignored. We played with that bid. We won that bid.

In the decade were are now in, one of the government agencies in one of our markets put out a bid that used a “point score” system to determine the “most responsive bidder” rather than use only “lowest total cost” as the evaluator for selecting its contract vendor. So, one not only had to be concerned with total cost, one also had to figure out how to maximize one’s point score. In that particular bid, you got 5 points for bidding on every line item of service listed in the bid. One of the line items in that bid was for “Bubble-jet color prints.” Some of you younger people will not even know what that line item meant, for a Canon large-format Bubble-jet copier has long been obsolete (I haven’t seen one since 1998.) We got our 5 points, because we inserted a price for that service, indicating that we could provide the service (we really could not, but there was, of course, a completely acceptable substitute for that service). Our competitors indicated “service not available.” They did not get their five points. It was really stupid for the government agency to include in that bid an imaging technology that was, by then, well obsolete, and, had the government agency paid attention, it would have called for the “correct” current imaging process and all of the bidders would have scored the same 5 points. Sometimes, the little things do matter. You have to be aware of that.

I should also tell you that my criticisms of government procurements were not always done by letter. On several occasions, I went in front of boards at their public meetings. In one particular RFP procurement for a staffed copy center and hundreds of convenience copiers, the government agency released the RFP, received proposals, evaluated the proposals and recommended an award. My company was not involved in the first round of that RFP process (and there was not supposed to be a second round!) After all proposals were submitted, and during the evaluation period prior to recommendation for award, I requested and received copies of all of the proposals that were submitted. When I realized that the low bid was $6 million and further knowing that that cost was at least $1 million more than this government agency really had to spend on what they were going to buy, I was outraged …. after all, this agency spends taxpayer dollars. I wrote several letters, and I went to “speak” in front of the County Commissioners at their bi-monthly public meeting. Subsequently, the recommendation of the County’s Purchasing Department (to approve the $6 million award) was rejected by the Commissioners, the Purchasing Department had (was basically forced) to amend the RFP document, and, after the amended RFP document was issued, proposals received, and proposals were evaluated, the County did end up making an award that was for substantially less than $6 million. And, the award was made to a different vendor than the County’s Purchasing Department had originally recommended. (My company was a sub-contractor to the prime vendor that won the award.)

Since I was active in “government sector” bidding and proposing from around 1977 forward, I could go on and on and on about examples of what I observed in bid documents and procurement processes and what I did. But, that’s all for now. I might, at some point later on, expand on this post.

There are several points I would like to make about government-sector business:

• There are opportunities to make money in the Bid-RFP government sector end of our business. And, never assume that all government work is “low-price” work. Also, you cannot be a bidder or proposer unless you are aware that a bid or RFP exists. This requires active prospecting.
• Government agency business represents little, if any, risk on the collections end.
• Volunteer your expertise to those in government who are responsible for preparing procurements. Help them update their Bids and Proposals with respect to current imaging processes and the terms our industry uses to describe services and units of measure. Work with them to arrive at realistic estimated quantities. If they ignore your assistance, which they probably will, well, at that point you’ve given them fair warning, and you are then entitled to take advantage.
• For those of you who complain that government agencies are always slow-payers, you need to research how to provide your government customers with the paperwork they need to pay you within terms. Generally speaking, it is your fault that they are not paying you within terms.
• Before you bid (or propose) do your homework. The Federal Government and all state, city and county governments in the U.S. have laws or statutes that permit you to obtain copies of documents they have. Don’t ever let any government agency tell you that you can’t have something that you are entitled to have. (They are allowed to charge you for copies of documents, but that’s the price of doing your homework.)
• Read the entire Bid or RFP document thoroughly. And then again.
• When you have questions about a procurement or about the procurement process or procurement documents, put your questions in writing and submit your letter (or e-mail) to the procurement department. Don’t be hesitant to demand a response. Government agencies are obligated to respond.
• Do not be afraid to criticize a procurement (Bid or RFP) document. You have the right to do that and there will be times when you will feel the obligation to do that (on behalf of your industry, your competitors or your fellow citizen/taxpayers.)
• When you are not getting the attention of a Purchasing Department, don’t be afraid to go above that department’s head (unless that’s not permitted by the terms of the bid document.) You have the right to do that.
• When something smells foul, raise a stink! You have the right to do that.
• If you think SBE, DBE, MBE, WBE preferences in a Bid or RFP are unfair, unreasonable or whatever, then make your feelings known, don’t be silent.
• Always request copies of all of the Bids or Proposals that were submitted and keep them in your files for later reference.
• Last but not least, when there are things to play with in a Bid or RFP, play with them to your advantage.

Many people in our industry believe that it is “politically incorrect” to criticize government or government agency issued procurements. Since I’ve never been politically correct, I never let being “politically incorrect” bother me or get in my way. After all, they (government agencies) are owned by us and work for us…..as President Lincoln said, “government (is) of the people, by the people, (and) for the people”.

The reprographics industry, like many industries, is “populated” by large companies, medium size companies, and small companies. The reprographics industry, being a rather small sub-industry of the much larger printing and graphics industry, does not have a lot of large companies, but there are a lot of small companies. In using the terms “large, medium and small”, simply from my own perspective, a “small” company is one that has fewer than 30 employees, a “medium” company is one that has more than 30 employees but fewer than 100, and a “large” company is one that has 100 companies or more. Prior to the current recession impacting the industry, small, medium, and large would equate, annual-sales-dollar-wise to $250k to $3 mil for small, $3 mil to $12 mil for medium and more than $12 mil for large. Those $ sales-volume ranges are based on a mix of factors and, certainly, “average pricing” is a major factor. A larger company with lower overall average pricing would likely have annual sales revenues less than $12 mil. Without question, many people in the industry would not agree with my opinion about the “cut-off’s” for small, medium and large. No problem; everyone is entitled to their own opinion.

Based on Sales in the U.S.:
– ARC, of course, is the largest company in the reprographics industry. ARC has dual HQ’s in California. Sales for Year 2008 were around $700 mil.
– Thomas Reprographics, I think, may be the second largest company in the industry. Thomas is based in Dallas, TX.
– ABC Imaging, I believe, is the third largest company in the industry. ABC is based in Washington, D.C.
– NRI may well be the fourth largest company in the industry. NRI is based in New York City.
– If we consider Service Point U.S. as a standalone business, SP may be in the next position, or SP may be number four, which would push NRI down to five. SP US is based in Boston, MA.
– (I did not provide, nor will I estimate, Year 2008 sales for Thomas, ABC or NRI. Even if I knew what their Year 2008 sales were, they are privately-held businesses, and it would not be right for me to talk about that information.)

Based on “World-Wide” Sales:
– ARC is the largest.
– Service Point (considering its extensive UK and European operations) comes next. SP is based in Spain. SP’s consolidated 2008 sales, Y-T-D through Q3 2008, were reported to be around 174 mil Euros; at today’s exchange rate that would be approximately $223 mil in US Dollars.
– Thomas Reprographics is probably third.
– ABC is likely fourth.
– I have no idea what to say after that, since there may be some large companies in Asia or Europe that I’m completely unaware of.

Acquisition Activities of the Top 5 U.S. Reprographers:
All of the five companies I ranked in U.S. reprographics industry have not just grown organically, but by acquisition as well.

– ARC – frankly, I’ve lost track of how many acquisitions ARC has completed since it started acquiring companies. I’m sure one could refer back to ARC’s SEC filings, read through them, then come up with a total. Perhaps it has been more than 70 by now. ARC did not just acquire “one” business per market it wished to enter. In quite a number of different markets, ARC completed multiple acquisitions.
– Thomas Reprographics – Thomas has completed quite a number of acquisitions in Texas, [the biggest one, so far, was A&E The Graphics Complex, formerly owned by members of the Gremillion family (excellently run business)]; Thomas has also acquired companies in Arizona, Florida and Minnesota.
– ABC Imaging – ABC has also completed multiple acquisitions, but, from what I know about ABC, ABC has not acquired as many reprographics companies as the other “members” of the top five reprographers in the U.S. I believe ABC’s very first acquisition was Topel Imaging in Washington, DC [Topel was consolidated into ABC’s operations, and Blain Topel, one of the hardest working young men I’ve ever known in the industry, is a VP (I think of Operations) at ABC. Blain is the son-in-law of Gary Rowley, one of my ex-partners from my Rowley-Scher days.] ABC has also completed acquisitions in the UK, in Dubai and in Denver. ABC has probably completed a few other acquisitions, but I’m not aware of those. My SWAG estimate is that ABC’s organic growth has been far more significant than its acquired growth. A key to ABC’s growth was a national FM deal it won with HNTB, the latter one of the largest A/E firms in the U.S.
– NRI – NRI has completed multiple acquisitions; NRI has acquired companies in Boston, Washington, DC, Philadelphia, and New Jersey.
– Service Point US – SP has also completed multiple acquisitions in the U.S., but it appears that they’ve not completed any acquisitions in the U.S. the past few years. (On the other hand, SP has been very acquisitive in the UK and in Europe. SP, the European based company, actually entered the U.S. market by acquiring the former Charrette Pro Graphics operations.)

Similarities among the Top 5 U.S. Reprographers:
– All have extensive “FM” (On-Site) business segments.
– All have completed multiple acquisitions.
– All operate “muti-market” operations.
– All are IRGA members.

Other comparisons:
– ARC owns The PEiR Group. Quite a number of ARC’s acquired companies were formerly ReproMax partners and associates.
– Thomas Reprographics is a ReproMax partner.
– NRI is a ReproMax partner.
– ABC may be a member of GlobalGrafixNet (kind of a PEiR-Group-like organization primarily in Europe and the UK). ABC’s webs-site does not mention membership in GGN, but GGN’s web-site does say that ABC is a member of GGN (and, the only U.S. member.)
– Service Point owns GlobalGrafixNet.

As you may be aware, the “other” publicly-traded company in the reprographics industry is Service Point. Service Point is HQ’d in Spain and, while Service Point does have a sizable presence in the U.S. (Service Point US, based in Boston), most of SP’s revenues are generated by operations in the UK and in Continental Europe.

Service Point’s”results” page is at this web-address:

http://www.servicepoint.net/en/results.asp

There are also some interesting “investor presentations” on that site (those may be on another page on that site), which may be of particular interest for those of you who study the reprographics industry.

They must have a different reporting schedule for Spanish public companies (Service Point is listed on Bolsa, the Spanish stock exchange), because, when I looked for Service Point’s Q3 2008 results, I could not find them a few weeks ago. But, the other day, I did find them. Press Release for Q3 2008 results is dated Nov 2008, but I’m pretty sure that press release was not posted until recently.

I’m anxiously awaiting Service Point’s full-year 2008 results.

Service Point’s stock price closed at around .53 Euros yesterday afternoon, which, at today’s USD/Euro conversion rate would be around $.68 per share in US Dollars. Sounds cheap, huh? Well, I don’t know about that; I think SP has about a gazillion shares outstanding.

One of these days, I might get around to comparing ARC’s numbers (B.S. and Income Statement and EBIT, EBITDA and price-per-share) to Service Point’s numbers (but I seriously doubt I’ll get to that, even though it might be an interesting exercise.)

I think I read somewhere that SP has in the neighborhood of 800 FM’s (that would include U.S., Europe and UK and wherever else SP operates.)

Well, this post is a yet another “brief” follow-up to previous posts about ARC’s stock price.

This afternoon, ARC’s stock price closed at $2.86 per share.

Once again, the only appropriate acronym for that is OMG!

At $2.86 per share, that price-per-share computes ARC’s “market cap” (total market value) to be around $131 million.

A market cap of around $131 million now values ARC at around:

– – – 18.6% of ARC’s 2008 Sales
– – – .975 (less than 1) x ARC’s 2008 EBITDA.
– – – 53.6% below ARC’s y/e 2008 Book Value

I am further stunned at this development, especially considering that ARC’s stock price fell to $2.68 during the day.

Why is ARC’s stock continuing its slide? A friend asked me that question this evening. My response was that stock (the price of a stock), like anything else you can buy, own and sell, goes up and down based on demand. As to ARC’s stock, there are obviously more sellers right now than buyers. Motley Fool very recently said that ARC’s stock is going to “bounce back”. Morningstar Research still recommends ARC’s stock (I think MSR still shows a $30.00 “fair value” rating for ARC’s stock.) I’m too stupid a person to ever listen to investment research people or stock promoters. However, it does “feel” like ARC’s stock is definitely “undervalued,”; this opinion simply my own and based on historical reprographics industry company values. And, to bring me back to earth, several business economists (I read the NY Times Business section on Sundays, great read) so much as said that “current times are unlike anything most of us have ever experienced”, so I guess that means that prior history is now irrelevant!