The supply chain issues facing the book business this holiday season and beyond were years in the making and there are no quick fixes, speakers at the webinar “Publishing Industry Supply Chain Challenges and Opportunities,” presented by PW with support from Westchester Publishing Services on October 6, said.
Matt Baehr, executive director at Book Manufacturers’ Institute (BMI), kicked off the discussion by pointing to the dozens of paper manufacturers and printers that have closed over the last decade as demand for their products—which include much more than books—fell. As book sales jumped last year, paper suppliers and printers scrambled to meet demand, but underlying industry issues were exacerbated by the pandemic, Baehr said. In particular, he noted that labor shortages, which existed before the Covid outbreak, have only gotten worse, explaining that even if U.S. printers wanted to put on a third shift to meet demand, they most likely couldn’t staff it.
The knowledge that there is a paper and printer crunch has also led to something else that has become a characteristic of the pandemic: panic buying. “Since supply has dropped, there’s been a little bit of stocking up, or paper hoarding,” noted Baehr.
The situation is much the same with overseas printers. In addition to well documented delays in getting books from Chinese and Asian printers into the U.S. due to congestion at ports, container costs have risen fourfold over the last year, Baehr said. Chronicle Books president Tyrell Mahoney further noted that printers and other manufacturers in China are now coping with planned power outages.
Kelly Gallagher, v-p of content acquisition at Ingram Content Group, echoed many of Baehr’s concerns. “The rising cost in labor has been pretty dramatic,” Gallagher said. “We’ve seen a 30% increase in employee wages.” Though undeniably good for employees, this makes it a challenge for companies like Ingram to hire enough staff in a business where the profit margins can already be razor thin, Gallagher said.
Both Gallagher and Baehr also pointed to another area in which there is a labor shortage: truck drivers. That is one factor that has made FedEx announce price increases while also setting capacity limits. “Pickups are becoming a bigger and bigger issue,” Gallagher noted.
Among the solutions offered, Baehr and Gallagher pointed to using print-on-demand as an insurance policy to prevent hot-selling titles from going out of stock (Ingram owns Lightning Source, the country’s largest POD publisher). Baehr, citing the steady improvement of POD technology, credited the technique with helping to make surprise bestsellers of social justice titles following the surge in demand for those books after the murder of George Floyd by Minneapolis Police last year.
But while POD can work for some titles, it is not for everyone. Bill Smith, director of trade publishing and sales for the MIT Press, said that POD isn’t yet a possible option for his press. “We are known for design rich books and illustrated books,” Smith said. “These books demand high production standards and for cost purposes we source overseas.”
Given the many issues facing the industry, Smith and Mahoney advised publishers to be more flexible with both their on-sale dates and printing schedules. Smith said MIT Press has upped its first printings in some cases to avoid being caught with no inventory, but Mahoney said that Chronicle has not yet taken that step. “We don’t want to find ourselves overprinting and with overstock problems,” Mahoney said.
Mahoney and Smith both said they have moved some on-sale dates, with Mahoney adding that it is possible that some fall titles may be moved to early 2022, noting that any illustrated book Chronicle is publishing that is not already on the water is not likely to be in stores for the holidays. Chronicle has considered seeking additional printers in places outside of China to combat this issue, among others, but, Mahoney stressed, “it’s not something you do quickly or with a lot of immediate confidence.”
In moving pub dates, the publishers stressed the importance of communicating the changes not only with accounts, distributors, and the media, but internally as well. “It is all about communication,” Mahoney said. She added that she did not envision an increase in e-book sales this holiday as a way for consumers to buy unavailable print books; Smith said that MIT “has seen healthy growth” in e-book sales, ”but it isn’t astronomical.”
Distributors and wholesalers have warned their accounts to stock up on titles early in anticipation of a difficult holiday season, and Gallagher said that many stores have already placed orders. Still, Gallagher said, logistical challenges remain, and it may be necessary at some point to ship stores less than a full allotment to ensure all stores have some stock.
The long-term solution in fixing the supply chain in terms of manufacturing, both Baehr and Gallagher agreed, is automation. “Automation is a priority” for lessening dependence on jobs that have been hard to fill, Gallagher said. Given the lack of capacity, Baehr wasn’t entirely confident that U.S. printers could swoop in to help overcome any shortages. “It’s up to them to decide if they want to pick up any work,” said Baehr. “In terms of expansion, it’s all about automation now.”
At the end of the day, the panelists agreed that the supply chain issues will continue well into 2022, and costs will continue to increase. And though none of these cost increases have affected the consumer yet, the likelihood is inevitable.
“We expect to see some cost increases transferring to the consumer,” said Gallagher. “All of these costs and labor increases are going to have to land somewhere.” But, he noted, hardcovers continue to be a good value, adding: “they may even be undervalued.”