Internet, New Technologies Force Commercial Printshops to Readapt.

Knight Ridder/Tribune Business News

Jun. 19 -- Only 2 years ago Moon-Lith Press saw its sales grow 45 percent, almost entirely from customers finding their way to the Mountain View shop through word of mouth.

Those were the good times, said Moon-Lith's owner, Ravi Bhade, who founded the commercial printing shop 16 years ago.

That has all changed because of the Internet and the technological advances in desktop publishing. Web sites, laser jet printers and color copiers have allowed everyone to become their own "printer." The result: Bhade's business is now seeing as much as a 25 percent dip.

Last year, annual revenues dropped 17 percent to $1.25 million from $1.5 million in 1997.

"Everybody can now print things right at their desk or put it on the Internet," Ravi said. "It's kind of neat for them but not for us."

And Bhade's story is being replicated throughout Silicon Valley, as small family-owned print shops struggle to survive in the new world of the Internet. Many of these printing business flourished with the proliferation of technology companies in the area. But the very technology that its customers have created now threatens to undermine them.

The shift to the Internet has challenged even the most sophisticated corporations to keep up, but for many small businesses with limited time and resources, the change has proved overwhelming. Some local printers are limping along while others are giving up entirely. Those that succeed are embracing the new technology and broadening the definition of their occupation.

Not all print shop owners, though, understand the source of their problems. "Some of the printers are oblivious to it," said David White, a 23-year industry veteran who sells paper to commercial printers in the area for Nationwide Paper Co. "They think business is down because of too much competition. They don't realize it's the technology that's hurting them."

Northern California is home to 1,300 commercial printers stretching from San Luis Obispo to the Oregon border -- with eighty-five percent of the shops operating in the Bay area, according to the trade association Printing Industries of Northern California.

Unlike the chain photocopying companies, these printers are often established small businesses run by families. They churn out everything from annual reports to manuals and business cards.

Because of the quick and pervasive adaptation of the Internet and new technology in the Silicon Valley, area printers feel the pinch more here than the rest of the nation. E-mail and faxes have replaced letters; Web sites have supplanted promotional brochures and fliers; even annual reports find their way online.

"If there was a trend to replace printing with the Web, it would happen no doubt here first than any other place in the country," said Dan Nelson, executive director of the Printing Industries of Northern California. "People here are hell-bent on technology and are quicker to use it."

Half of Ravi Bhade's business, for example, used to comprise producing thick manuals and glossy brochures for local companies. That's down to 20 percent now, which Bhade attributes to the Web. Companies that would order printed manuals to go with product shipments now place the information on CD-ROM. To make up for the lost business, Moon-Lith now prints packaging materials and smaller leaflets that accompany shrink-wrapped software.

Bhade compares the change in her business as eating 100 little snacks rather than eating four large meals. "We go after the smaller things now," said Bhade. "But lots of it."

Many staples for commercial printers are fading away. Long computer data forms are out, as well as forms which use carbon paper to make extra copies. But perhaps the biggest tumble is in stationery printing, shops owners say. Businesses now zip emails back and forth in a matter of seconds rather than using the postal service, derided by many as "snail mail."

One of the core businesses for R.D. Smith & Co., a 13-year-old printing shop in Milpitas, was stationery. As little as a year ago, it would print stationery in batches of as much as 100,000 roughly every six months for customers such as Verilink Corp. and Flextronics International Ltd. In January, it printed 75,000 sheets of letterhead for one local technology company. But the demand for the printed stationery slowed so much that today, 60 percent of the order remains unused.

To survive the change, R.D. Smith has begun to steer toward a niche market rather than providing the usual milieu of services. It now specializes in business cards, fussy work that established printers reluctantly offer only as a courtesy service to customers. What's more, the company increasingly relies on trade orders where larger companies farm out business cards to it -- at discounted prices. It's been forced to lay off two workers within the last year. "We're going after markets we steered away from in better times," said owner Kathy Waldrop.

Other printers haven't been able to find alternative niches and are giving up. Bob Douglas, who now runs a one-man shop at Ink-Well in San Jose, said he's preparing to shut down the presses and shutter his doors in a couple of years. In business for more than 24 years, Douglas said he's seen business nosedive dramatically since 1996.

"I don't have the ambition, the spark to try to renew the business, especially the way the industry's been going," said Douglas, 52. "Printing has always been a very difficult business. But it's gotten harder with higher rent, expensive equipment that you need to update all the time and the learning curve."

In recent months, before many can quit, they've been forced out of the industry. Auction fliers, the equivalent of obituary notices for print shops, come around a lot more often, many printers and industry observers have noticed. Just within the last three months, as many as seven Bay area shops have closed -- most on the Peninsula, said Printing Industries' Nelson.

Successful printers, though, are learning to take advantage of the Internet and other technologies. In some cases, they're redefining what it means to be a printer. Some are now conducting business over the Internet and even offering web designing and hosting services to customers.

"Customers aren't looking for printers who do just ink on paper printing," said Ron Davis of the Printing Industries of America, the national trade group in Alexandria, Virginia. "They're looking for someone to help them through the maze of possibilities. Successful printers are going to have to be communications specialists, skilled with ink on paper but also in technology."

Babylon Printing in Milpitas, for one, attributes its growth to the Internet and technology. A family-owned and operated business founded 20 years ago, the company specializes in manual printing for companies such as Sun Microsystems Inc., Hewlett-Packard Co. and Seagate Technology, Inc.

Five years ago when the Web was only beginning to germinate, Michael Zaia, a mechanical engineer and Babylon's vice-president, installed a T-1 cable line as well as a server on the premises. The company processes orders online, receives the transcripts for the orders on its servers and allows customers to proof online as well. Consequently, 40 percent of Babylon's $8 million to $10 million business comes from as far as Japan, Israel and Sweden.

"If you can't keep up with technology, you might as well close your doors," said Zaia, whose father founded the business. "It'll eat you up alive."

A few others have positioned the Internet, the so-called threat to their advantage. Take the case of iPrint.com, which operates solely on the Web. Customers order and design business cards, wedding invitations and personalized mouse pads through the company's Web site. The Redwood City company, started in 1997 by Royal P. Farros, doesn't actually print any of the products. Instead, it contracts with a dozen or so companies to do the printing. Because most of the front-end work, such as typesetting and designing, is automated, cost is cut by as much as 50 percent.

Farros says traditional printers need to think more creatively about technology.

"The majority of the printing industry is very unsophisticated," said Farros. "Printers really know hardware. But they don't know software or the Internet."

Bhade of Moon-Lith Press, for one, is determined to see the march of technology as an opportunity. She put up a company Web site last year and customers will soon be able to send orders using servers on the Internet. The company is advertising for the first time in ads other than just the yellow pages. And for the first time in Moon-Lith's 16-year history, it'll have a salesperson peddling its services: Bhade, herself.

"You have to do something. You can't just fight it, " said Bhade. "We have to change with the times."

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