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Graphic Communications
The Physical Side of Growth
By George A. Milite
When we talk about business growth one of the most critical and obvious components often gets overlooked: physical growth. How do companies choose whether to expand an existing facility or build a new one? Do satellite facilities work? What about plant design—how flexible should it be to accommodate future expansion?
While it’s no secret that the printing industry relies heavily on space—for equipment, materials, and storage—the truth is that many companies don’t know the most effective way to go about expanding physical plant. It takes planning, commitment, and the ability to look to the long term—without breaking the corporate budget.
What Do You Need?
The first step any company should take before embarking on an expansion project is to examine the existing plant carefully. “You want to make sure that you understand what your current plant’s shortcomings are before you do anything else,” says Hal Ettinger, a consultant specializing in the printing industry and president of Lawrence, Kansas based RBE Co. “Look around and ask questions. Are you using your current space to its fullest advantage? Do you have equipment that’s outdated or just not being used taking up valuable plant floor space that you desperately need? Can you improve upon the existing plant layout to gain production efficiencies which will extend the life of your existing location? ” The reason for this, he continues, is that “you don’t want to spend lots of time and money building something new and then bringing those same inefficiencies with you.” A new facility may give you three times as much space, but if you don’t use that space to maximum benefit, you won’t be much better off.
Planning for More
When your company has grown 40 percent in the past six years and your staff has gone from 58 to 120 in three years, space is clearly a key consideration. That’s what Printing for Less has found, and it’s why the company is building a new 46,500 square foot plant to replace its 15,000 square foot facility.
“We’ve had to be quite creative in the way we use our space here,” says development director Dan Rice of the Livingston, Montana company’s current plant. “You can imagine how eager we all are to move to a building with more than three times the space.”
Printing for Less, which receives all its orders online through the Internet, has much more potential client reach than more traditional printing companies—which means the company has the potential to keep growing quickly. The question is whether a 46,500 square foot plant will be big enough, and what the company plans to do if and when it becomes too small. “We thought that through very carefully,” says Rice, “and we’ve planned for potential expansion.” The new building, for example, “is designed so that we could add an additional 10,000 square feet without having to reconfigure the rest of the plant.” And if that additional 10,000 square feet turns out not to be enough? “We own the 20 acres of land the new facility sits on,” explains Rice. “That gives us enormous flexibility to build in the future if we need to.”
Suttle-Straus, Inc. in Waunakee, Wisconsin, did just that, adding a 120,000 square foot distribution center to its 90,000 plant to create a 210,000 square foot campus. “When Suttle Press and Straus first merged, we decided to combine our operations into one building,” says president John Berthelsen. “The Straus facility was the older of the two, so we moved everything to Suttle.” Suttle-Straus has been successful with its building expansion program (“we had three construction projects in three years,” says Berthelsen) in part because it developed a thorough planning process. But the philosophy at Suttle-Straus also played a key role. “To say ‘if you build it they will come’ may be somewhat simplistic, but the truth is that if we want to attract new fulfillment customers, we have to be able to show them that we have the capacity and capabilities they need,” Berthelsen explains.
Old Versus New
“People are creatures of habit,” says Hal Ettinger, “and often they don’t like change even when it’s to their benefit.” It may seem odd that when two companies merge, or when a company builds a satellite facility, some employees prefer the older building. “It’s a matter of comfort,” Ettinger continues. “In the short term familiar surroundings trumps an improved working environment.” But that doesn’t mean employees can’t learn to accept newer and more modern surroundings. Interestingly, though, they’re more accepting when they’re part of the planning process. “We got supervisors and team leaders involved in the process, and they got input from their teams,” says Berthelsen. “It made everyone feel more a part of the decision.” Rice agrees: “Even if they’re looking forward to moving to a better facility, people still want to know that their ideas and comments are taken into consideration. We’re fortunate to have a highly motivated work force here, and taking their in input seriously makes them even more motivated. ”
If a company opts for building or leasing a satellite facility, it’s important to make sure that the people element is taken quite seriously. “One reason we decided to build one facility instead of put people in two plants is that there’s always the danger that some staffers will think they got the ‘bad’ building,” says Rice. Companies that expand by acquiring another company need to address this—and they need to know when the acquisition may be more of a hindrance than a help. St. Louis-based Nies/Artcraft has made several successful acquisitions over the past decade; the company has six subsidiaries at three locations. Thomas Hedrick, vice president of finance, advises companies against making acquisitions that are “beyond repair.” Examples are companies whose facilities or equipment are outdated and companies that have a completely different corporate culture. “It’s really a matter of common sense,” Hedrick says.
“Sometimes,” he continues, “companies forget that the folks being acquired are in a sensitive situation.” It’s important to give employees from acquired companies every opportunity to assimilate, particularly if they’re going to be staying at their current location.
Green Considerations
As environmental issues takes an increasingly prominent role in daily life, more companies are looking for ways to create a greener physical plant. This can be costly, but if done right it can actually be a huge cost-saver. Schumann Printing, Inc, has devised a way to recycle hot air produced by heat-set printing and use it to heat the building and produce hot water. “We have a series of sensors throughout the building that regulate the circulation of the hot air,” says vice president Mark Schumann. “When we put the system in more than a decade ago, there was an initial up-front cost to install and connect ductwork throughout the plant,” he explains. “But it’s dramatically cut the amount of heating fuel we use.”
Schumann’s 40,000 square foot plant is in Fall River, Wisconsin, where winters can be severe. But the recycling system provides enough hot air to heat the entire plant—without using any additional fuel—comfortably as long as the temperature remains above 35 degrees. “I don’t care what kind of heating fuel you use—it’s expensive and it’s just getting more expensive,” says Schumann. “This was an investment for us that has really paid off.”
The Bottom Line
While companies take the physical side of growth seriously, it’s easy to overlook key components that can add efficiency and reduce costs. A long-term approach, input from the people who will be using the facilities, and an eye for creative applications will go a long way toward making the expansion a success.
George A. Milite is a Philadelphia-based business management writer.
