Rod, let’s talk about issues most businesses supporting the OOH industry have dealt with coming out of the pandemic.
I think most printers would agree it’s been a very difficult 6 months as far as getting material and finding enough labor to help get product printed and out the door. And, of course, the cost for both has risen dramatically to complete this painful trifecta.
The industry has enjoyed a 20+-year run where the price for billboard production has followed an unabated downward slope. With today’s inflationary pressures, that has definitely come to screeching halt from our standpoint. Thankfully, our customers have been amazing in terms of understanding these challenges and helping us by absorbing some of the cost increases.
In terms of getting your work force up to full capacity, was this a challenge and what strategies worked for Circle Graphics?
John, this has been a primary focus and biggest challenge. At full capacity, we have approximately 2,000 employees across our two divisions and multiple facilities across the country. We rely on both staffing agencies and direct hire programs to meet our needs. And still, like other companies, we’ve had trouble on-boarding and retaining associates in this environment.
We have increased our hourly rates anywhere from 20%-30%, which, of course, means existing associates are also impacted. This summer we provided food trucks for lunch and afternoon treats, which employees appreciate. I’ve even noticed some loud music from time to time in the factory – you have to do what you have to do!
It’s too early to say yet whether the government’s elimination of the stay home incentives will improve things.
Finally, I would say that this situation has led to an acceleration of some automation plans which we are bringing forward from the back burner.
Where are you now in terms of capacity and ability to turn around orders from customers for posters and bulletins?
John, you bring up another dynamic we are seeing, which is increased pressure on velocity.
I think we are doing a tremendous job of managing client expectations and over communicating when we anticipate not being able to meet our own already quick turn times.
Why? Art seems to be coming in later, we are seeing more requests for rushes and a larger reliance on expedited shipping. We are hearing big brands are reluctant to contract as far out as they did before the pandemic to allow themselves more flexibility as this virus runs its course.
Our overall volume is back to 2019 levels but the shorter lead times are requiring a more strategic and concerted effort between our three facilities. So in short, we are seeing increased demand for our capacity in more concentrated time periods.
In this labor environment, we have really had to leverage our investment in automation, especially around poster production and our two Big Blue machines you saw on your recent visit.
We currently provide a two-day production turn and are in in the process of developing a one-day turn on posters with a capacity to produce 2,500-3,000 posters per day. I think the total industry demand for static posters is under 1 million posters per year, so we are within that capacity given we are a 24/7 operation.
We are moving rapidly in that same direction on flex, and we should have some exciting announcements by the end of this year in terms of our automation efforts that will dramatically increase our capacity and velocity (shortened turn times).
As a direct answer to your question, we are currently on standard turn times with good capacity and material availability, thanks to the tremendous efforts of our operations and supply chain teams. I don’t know how well they are sleeping, but they are keeping us stocked ahead of demand with materials and we are actually adding customers during these difficult times.
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