When is an in-plant not an in-plant?

Posted on by Greg Cholmondeley | 5 Comments »

Labels_in_MotionJust before Thanksgiving I visited a printing company called Labels in Motion. Labels in Motion is a label printing company which uses a Xeikon 3500 to service a wide range of industries such as food services, industrial, beauty products, cleaning supplies, marketing and others with their number one client, by far, being Xymogen – a health supplement company.

Labels in Motion uses their digital Xeikon press to produce a wide range of labels – some of which even include unique QR Codes. (The QR Code story is interesting all on its own in how they use unique codes on each label to stop 90% of the illegal internet sales of health supplements by tracking individual bottles back to the original customer.) Labels in Motion has sales and marketing staff as well as production team. They have clients across the country and specialize in high quality, short run, fast turnaround work. In short, they are definitely a digital printing service provider. They are also owned by Xymogen and are housed on-site in Xymogen’s production facility. So, they’re really also an in-plant.

I find this to be a very intriguing business arrangement. Most of the in-plants I know exist at the pleasure of their parent companies and are not considered separate business entities. While this leaves the day-to-day management of these operations up to the in-plant manager, the business decisions – including those about facilities management – are made by individuals or committees who have other priorities. Many in-plants do supplement their revenues by “in-sourcing” work but serious constraints are often imposed by their parent companies and few hire marketing and sales resources. Basically, in-plants struggle to be profitable – but not too profitable – in a business environment which would be all too happy to get out of the printing business. The only reasons they exist are to ensure that the parent company is getting the best price and the highest priority for their printing needs.

On the other hand, printing companies exist to make a profit and, while many rely upon one or two key clients for 80% of their work – that is a very dangerous approach. All it takes is a decision by one customer to switch vendors and they are out of business.

Now, consider the Labels in Motion / Xymogen model:

  • Xymogen has a controlling interest in Labels in Motion
  • This guarantees that their parent company will always get best pricing and priority
  • It also makes it highly unlikely that Xymogen would switch label vendors
  • It also frees, and encourages, Labels in Motion to be a true printing business

I have a special place in my heart for in-plants, having managed that segment for digital press vendors over the years, and having established a great many friendships in that space. I invite my in-plant colleagues to consider this model and to share their opinions. This “client-owned printer” model may well become the next evolutionary step for in-plants. Also, let me know if you would like me to introduce you to someone at Labels in Motion to learn more about how this is working. It is always refreshing to visit a company which is innovative in its business models as well as its offerings.

5 Responses to “When is an in-plant not an in-plant?”

Comment from Bob Neubauer
Time December 5, 2014 at 10:38 am

You’re right that this is an excellent model for in-plants, as it makes them a profit center for their parent company, while ensuring the company the best pricing and prompt service.
Several companies follow this model with their in-plants: Allstate has a very large in-plant that does substantial business for clients outside of the company; Aflac’s in-plant goes under the name Communicorp and functions as a commercial printer.

Comment from Gary Watts
Time December 8, 2014 at 6:20 am

I have worked in the printing business for 45 years, I am a partner in two small commercial print/copy shops and have managed an in-plant printshop for a local college for 15 years. The reason I am telling my background is so that you won’t think that I am just someone having a hard time with business and looking for someone to blame. I have no problem with private company owned in-plants in-sourcing jobs to help support the parent company but I am furious about all of the tax payer money I see going to fund shops in public institutions that I have to try to compete with to stay in business. How can I compete with a shop just up the street with much the same equipment I have but entirely government funded? I have to pay for my equipment, space, overhead, marketing and all the rest. Is Capitalism dead or are we just watching it be raped?
End of RANT.

Comment from Greg Cholmondeley
Time December 10, 2014 at 6:35 am

Gary, I hear your pain and agree with you when public institution in-plants in-source work from non-government entities. I am thrilled that public schools and government agencies have in-plants for their own work because using taxpayer dollars to save taxpayer dollars makes lots of sense. I also applaud public sector in-plants in-sourcing work from other public sector entities (e.g. a school district doing printing for the city government). Again, it’s all about working together to reduce government costs. However, I draw the line at publicly-funded in-plants going after work outside the public sector. At that point they are no longer reducing taxpayer costs – they are competing with the very constituency they are meant to serve with an unfair advantage. Most public sector in-plants I know have in-sourcing policies which recognize this and limit in-sourcing to other public sector organizations.

Comment from David Smith
Time January 12, 2015 at 9:48 am

I have experienced this model working first hand for several years at Aflac’s wholly owned subsidiary Communicorp. The danger with this model is that the parent can actually become the profit leader and in effect subsidize the printing company as it struggles with commoditized commercial accounts. The partnership becomes a win-win, when the printing entity brings new technology, business process re-engineering and a strategic advantage to customer communications programs.

Comment from Greg Cholmondeley
Time February 25, 2015 at 6:08 am

Great points, David.

Write a comment