My daughter was reading a book, “The New Geography of Jobs,” by Enrico Moretti in her globalization class in college. She sent me an excerpt which reads as follows:
“Every time a company generates jobs in the innovation sector, it also indirectly creates additional jobs in the non-traded sector in the same city.
To see how this multiplier effect works in practice, let me introduce you to a small-business owner named Tim. Tim is a bookbinder in San Francisco. His clients are mostly local residents and local businesses, so he is clearly part of the non-traded sector. He employs eight workers who bind books and do custom printing. His employees are good with their hands and tend to have low levels of education. If you visit his cavernous, neon-lit shop, the first things you notice are several beautiful old-style cutting and binding machines that dominate the floor. Bookbinding appears to be a very labor-intensive craft. The technology used in Tim’s shop has not changed much in the past thirty years.”
Tim’s company is a hand bindery. Making custom bindings has not changed much in the past 100 years. Perhaps the machines have improved somewhat but all of the work is the same as it always has been, going back to books of The Middle Ages. I would venture to guess that the technology used in Tim’ shop is the very same technology that was used 50 to 75 years ago.
This is quite understandable. But what if we are talking about a trade bindery? Can a trade bindery survive under such a business model? The answer is no. When a printer gets in a sizeable run of books that require a type of binding he does not currently offer, he goes out and buys the equipment. A trade bindery will tend to use what he has, which is often less that up to date equipment.
An owner of trade bindery recently sold his business to one of his customers and his accounts to another bindery. When I had visited his shop in 2000, I saw he was using manual, table top spiral binding equipment. I pointed out to him that the five girls binding the books were chatting and not really getting good production. He already had an automatic paper punching machine so all he needed was the binder. I offered him our Sterling Coilmaster plastic coil binding machine, which could bind up to 700 books per hour and equal or surpass the production. I sent him the video, which he did not look at and followed up with him for a period of five years, trying to convince him to automate. At times he professed that he was cheap and told us that when he was ready, he would call.
After he closed his doors, one of his customers, a publisher, called me explaining that his bindery had gone out of business and needed to bind over 100,000 books per year. He was looking to purchase equipment and was willing to purchase a paper punch an automatic plastic spiral binding machine. This was something the bindery was never willing to do—even though he had much more work. Not only did he bind this particular customer’s books by hand, he bound all of his other customers’ books that way.
When he sold his business, the bindery who bought his accounts was flabbergasted that he was still doing coil by hand. This bindery has up to date paper punching and coil binding equipment which he had purchased from our company.
Is it any wonder why one bindery is thriving and the other is out of business? This is a trend I have been seeing for a decade, and it shows little sign of changing.