The Printers' Evolution
For example, if you have a box of books going from the U.S. to Australia, the freight bill is seven times the print bill, and it takes a long time to get there, a couple of days at least. ... Now we can produce locally, and get it faster and at a lower 'landed cost'—the cost to get it to your customer. With gas prices high, the freight piece is always going to be important, but if we can produce it closer [to the destination], it's a good hedge against increasing gas prices.
We're doing it today in the U.K., and the Asia-Australia piece will be automated in a couple of months.
BB: What other factors are driving changes in how books are made and distributed?
Edwards: I think what is happening in the publishing community is that publishers are figuring out [that] the CFO becomes a vital part of the [book production] discussion in terms of total transaction cost, because if you look at manufacturing in a vacuum or paper in a vacuum or distribution in a vacuum, you may not come up with the right conclusion in terms of how much it really costs.
... One thing that I talk about a lot is that the unit rate [per book] is not the unit rate of the books produced; it's the cost of the books' bill divided by the [number actually] sold. For example, if you have a 10,000-copy transaction for $2 a copy, and you sold 5,000 of the books, your unit rate is $4, not $2. What we try to help our customers recognize is if you printed 5,000 twice, yes, your unit rate would have been higher, but if you didn't have to print that second 5,000, you would have spent less—you would have had more cash.