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Budget season poses big challenges

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Budget season has arrived, and, as always, production is one area where publishers will be looking to hold down costs. Unfortunately, two of the biggest costs are particularly hard to control.

"Paper and postage are always crazy," said Patricia Wisser, production director of Edgell Communications. Paper prices have already risen several time this year, largely as a result of mill consolidations, and another round of hikes is expected in January.

"Paper is always the big wild card," said Glenn Filippone, director of manufacturing at ALM. "You work that instability into your calculations, but you never fully know what will happen with it."

Filippone said he always goes back to study potential downgrades or sheet changes so he is prepared if prices go over budget. "That could just be a short-term solution, but with paper, you always need to be ready for something changing," he said.

Rob Brai, director of production at Northstar Travel Media, said, "Everyone should be talking to their [paper] merchant, printer and/or paper mill right now to get a sense of what will happen later next year."

Brai pointed out that companies that use a lot of paper try to secure deals that have certain caps quarter-to-quarter, but he said he senses that the paper industry is trying to move away from that. "The key is really how much you purchase," he said. "Obviously, the more you purchase, the more you can negotiate controlling costs with your paper vendor."

Speaking of b-to-b magazines generally, Brai said: "Anything that is marginal will be looked at very, very carefully as opposed to prior years. Things will be intense just because of the pressures on cost."

As for the postal challenge, publishers now need to budget for a full year of the rate hikes that took effect on July 15.

ALM isn't large enough to take advantage of co-mailing, but it co-palletizes as much as possible and strives to keep its lists clean in order to avoid distribution problems, Filippone said. "Our goal is to get the best discounts we can get going in and just be smart about every single thing we do."

Part of that effort, he said, is to continually talk with ALM's vendors to find out about the latest technology that's available. "The more information we have on what is out there, the more able we are to leverage those things for our products," he said.

Edgell started using co-palletization and co-mailing this year but won't write either one of those discounts into its budget, Wisser said.

"I'm not putting those numbers in my budget," she said. "If it happens, it happens; but I'd rather have a little wiggle room. We sort of load right off the price lists and hope we can get some of those savings throughout the year."

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