A message from the president of a print association said: "The state of some very good printers is very bad today due to profits deteriorating in recent times. Costs of labour, space, power have risen multifold. Conventional printing cannot survive in recent times." 

The president added, "Usually the small printer can survive as the firm has the least overheads and is satisfied with the revenue earned. While big printers who have innovated and created something different, and who, over the years, had control over spending and were driven by a solid admin process will thrive. Medium-sized printers suffer the most as they struggle to innovate and prosper due to financial irregularities and bad compliances."

The same lament is being heard across the country. How Capex has increased due to automation and digitisation, and ROI has plummeted due to technological changes in the print processes. Many brands and super brands are working hard to reduce their costs. This reduces the size of print and puts pressure on the printer to give similar services for reduced revenue. Topline companies have cut the job orders by half or at times by one-third. This is making it difficult to service it at contractual rates.

All this brings us to Capital and the Role of Capital. All of us start with a certain amount of money. After which, one takes that money and goes to a marketplace to buy a commodity called labour power - and this, along with capital facilitates the means of production. The means of production can be: raw materials, machinery, energy, etc. To produce an item you choose a technology. The circumstances under which this occurs is important as with the technology one combines means of production and labour power. Ideally, all printers - SME and MSME and the MNCs - would like the Flow of Capital to increase at a compound rate. To borrow an example from a sheep breeder, your two sheep become four which become eight and then you end up with 16. Soon it is 32. And finally, 64. Like the breeding of sheep, Capital has to breed faster. Simple market mantra, money has to make more money. The Value of Capital has to accumulate over time.

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The Good Old Days

As most legacy print CEOs who pine for the good old days say, "The good old days were wonderful. Because the system was simple. It was a simple process of buying and selling; and the print firm earned extra money, which is the profit." As the economists say, surplus maketh our world.

Today, the big question is where will that surplus come from?

One answer states, it comes from the labour process, that is, is the worker who creates the extra value to add to the value of items. Thereby creating a new commodity. And so, the new commodity is impregnated with the surplus value, which is realised through this process of selling in the market. The profit from this process or product is the surplus. So, does the origin lie in the labour process? Is this the root of all our problems?

I don't think so. Since the past decade or so, we have a market which survives on IOUs. This means I buy, but I don't pay. Look around at the list of big companies (from real estate to airlines, to liquor factories to energy equipment) that have crash-landed in the past two years. They have bought and then when they have had to pay in the never-never land of tomorrow, tomorrow never came. 

This is how the system works in our country. Good Capital re-invests. Bad Capital takes the money and runs. And this goes on in perpetuity.

Which is why, we have more and more accumulation of IOUs, instead of Good Capital. Some people are saying this debt is beginning to hurt our industry. Simply because if there is an unmanageable increase in debt, you're making the system vulnerable. How so?

We inhabit zigzag times

We are living in zigzag times. And typically, the saga of our capital crisis is a sort of zigzagging where a hot potato is being passed from one stakeholder to another. The hot potato could be the very genuine problem of selling the goods at the right price or workers who don't earn enough money or speculation on raw materials or inadequate energy supplies. In other words, what we are witnessing is a shuttling forth, the back-and-forth of the hot potato amongst ourselves.

That's why as one major corrugation box converter said: we have been playing a game of hot potato. And the interesting (and disturbing) question is who is being hurt by the current crisis? And who is doing okay? And of course, who is performing very well?

To understand that, look out for who is holding the hot potato and who has dropped the hot potato! Above all, look out for those who have leveraged the hot potato for Capital!