Nigel Lyon, managing director at Pinstripe Print Group, is a chartered accountant by trade and not your typical printer. This background probably helped him to spot the economic downturn at an early stage and take the necessary action. It's also meant a certain degree of pain, but by controlling costs and cutting expenditure, Pinstripe is still standing, while other businesses continue to fall by the wayside.

"There are many companies that have trundled on," Lyon observes. "Their margins are very thin and they're all fighting for a limited pool of work. This drives prices down and will continue to do so until supply and demand realigns itself. Those with strong balance sheets will survive, but many will not."

Tough times require tough decisions and Lyon's solution has not pleased everyone, but staff and suppliers have come to accept that cutting costs is the only way forward if the business is to survive.

All-round strength
Birmingham-based Pinstripe Print Group was set up by Lyon in 1998 and is a commercial printer with both litho and digital capabilities. It also offers print management services. "To be successful, printers need to adapt to a changing market. Some have done this better than others but some have not done it at all. Hence, we seek to offer complete solutions and not just print," he says.

The strategy of the business was based on partnerships with clients and it has also made it onto several framework agreements, producing print for universities and local government - these have given Pinstripe a more secure source of work. Lyon adds that the firm has a "good spread" of business.

2007 was Pinstripe's most profitable year, but 2008 was very different and the company, like so many others, was "trundling along". Prospects were not good as the economic waters became choppier.

"By mid 2008 I knew I needed to take some action as sales volumes were reducing and margins were under even more pressure," recalls Lyon.

It was the difficulties that were encountered by Northern Rock that made Lyon sit up.

"I made it clear to my management team that we needed to prepare our ship for the stormy waters," he says. "Everyone said that it would not be that bad, but I didn't believe it. August 2008 was incredibly tough, as it was for many others - it was our worst month in the history of the business. I knew then that I needed to act immediately so I started the consultation process.

"We revisited our business plan and conducted a complete review of the business; examining critically all areas and reworked our financial forecasts. This review wasn't restricted to just manning, but labour costs formed the largest part of the cuts we needed to make."

The first decision was the toughest any director will have to face - making redundancies. Lyon explains that there were some people in the business who were not performing and let them go. In total, eight redundancies were made, bringing the workforce down to 27. But the Pinstripe employees were not exempt from the belt tightening - all had to take a 15% pay cut.

"Everyone was shocked," he adds. "We discussed various options. This included a four day week but that would not work as I needed production to continue for five days. After a while people understood that if margins were going down we needed to adjust other areas to maintain profitability."

It was extremely tough on the employees. "I understood a 15% cut would hurt everyone including myself so I offered everyone the opportunity to meet and discuss their individual circumstances on a confidential basis," he adds. "This resulted in compromises in a few cases, but on the understanding that everyone in the company was treated in the same way. This flexibility was important in getting buy-in to cuts that needed to be made."

Getting staff on side has, understandably, not been easy although Lyon adds that one employee remarked that they were grateful for the measures that had been put in place - they may be paid less but at least they still had a job. "The jobs market is extremely tough out there," he says. "One member of staff I had to make redundant went for a driving job and found that he was up against 56 other applicants. There is little help around."

Supplier relations
Suppliers also had to be kept up-to-date and before Lyon's plans had been communicated to staff, they were told what the business was doing to stay afloat. Lyon brought all the firm's key suppliers in and told them about the drastic cuts that were being made.

"We didn't want them to find out through industry gossip which inevitably paints the wrong picture," he says. "They all understood what we were doing and why, and appreciated our professionalism and honesty. Indeed, many wished other companies were taking some similar actions."

The upshot has been that Pinstripe has cut its supplier base, but is committed to working alongside them; the aim was not to beat them up over price, but to maintain competitiveness.

Effectively, Lyon has conducted a root and branch examination of the business to find cost savings. Pinstripe is fully committed to lean manufacturing and a close eye is kept on the maintenance of equipment, while maintaining good levels of communication with customers has been vital. That said there are some who are slow to pay up - Lyons advises that you need to make sure that debtors pay up on time.

"We spend a lot of time on cash collection and debtor control," he adds. "It is a continual process and you cannot afford to take the pressure off. Ultimately, if someone is not paying within terms then you need to take action quickly which may result going down the legal route."

Morale at the company has been "reasonably good", according to Lyon. He admits that in a recession everyone is concerned about their job and having to tighten their financial belts. But the company is keeping staff informed on all efficiency drives and the wage situation continues to be reviewed monthly. That said Lyon doesn't see any green shoots of recovery just yet.

"I can't see anything positive happening at the moment and there is no confidence in the marketplace," he adds. "People are still worried about their jobs. My view is that we are here in this downturn for some considerable time - probably through to the early part of 2011."

Despite the pessimism, Lyon has fought hard to keep Pinstripe trading and so far the strategy has paid off. His training as a accountant will no doubt have come in handy for the amount of number crunching needed to keep the business afloat. But while the medicine for the staff and suppliers has been difficult to swallow, it has meant that Pinstripe is fit and ready to face future challenges.