The OEMs discuss the adjustments they’ve made, dealer concerns, and what’s next for them and the office imaging industry.
Above left to right: Jim Coriddi, Mike Marusic, Mason Olds, Oscar Sanchez, Rick Taylor, Larry White
It is impossible to minimize the impact of the worldwide coronavirus pandemic. By any measure, it has been catastrophic—untold lives lost, staggering unemployment, economies in tatters, and the future of many businesses in doubt.
In our corner of the world—the office imaging industry—things are equally chaotic. However, we continue to experience glimmers of hope and optimism as we speak with individuals across the many different imaging industry segments.
Starting in April and into early May, we reached out to key executives at the Big Six OEMs to find out how this crisis has impacted their companies, how dealers can adapt to current and future COVID-19-related challenges, and their visions of the future for their companies and our industry.
Participants included Jim Coriddi, vice president, dealer division, Ricoh U.S.A.; Mike Marusic, president and CEO, Sharp Imaging and Information Company of America; Mason Olds, senior vice president and general manager, Canon U.S.A.; Oscar Sanchez, president and CEO, Kyocera Document Solutions America; Rick Taylor, president and CEO, Konica Minolta Business Solutions U.S.A; and Larry White, COO, Toshiba America Business Solutions. The following excerpts from those conversations have been edited for length and clarity.
Tough Decisions
“Across every industry, businesses have been impacted and forced into some difficult decisions, and that applies to us at Kyocera too. Our ability to do business has been restricted substantially and, of course, that has an impact. As a result, we took cost-cutting measures across the board to reduce all possible costs as much as possible. As a last resort, we also had to make some staffing decisions in order to establish firm foundations for the future of our organization. That included furloughing 30% of our workforce and a temporary average salary reduction of 15% across all our teams. We did all we could to avoid these measures, but they do help to assure us of a stronger future. These measures are all temporary and we hope to incorporate our full team on their usual conditions as soon as possible.” Sanchez
“Dealers are small business. Small businesses have to make adjustments quickly due to the size and structure of the business. One of the ways we can help them is to keep these people we’ve cultivated in the last 10 years that are really experienced in technology, workflow, production print, label printing, and telephony. We want to keep those assets onboard during what I hope will be a reasonable amount of time where their utilization may be less or may be more. As of the date of this interview, we haven’t had any layoffs or furloughs related to the pandemic. We have made the decision to keep people onboard, as an investment, to serve dealers and our internal customers. Even our service technicians and our engineering resources, who may be on hourly rates, we have kept them at their full hourly wages to be ready to come out of this. I hope when you publish, we’re on the way out. There will be lots of opportunity. For us to be fully functional and be ready to go is important to me.” Taylor
“We have had to make the tough decisions, and a lot of sleepless nights have gone into making those decisions. We’ve had to make some pay reductions, and we’ve had to furlough some employees. We’re doing the best we can with what we have as far as workloads. It’s difficult. It’s difficult for managers that have to make those decisions, but it’s nowhere near difficult as the employees that are affected. That’s what causes me to not sleep well at night these days.” White
The Impact of a Virtual Workforce
“We got lucky in the sense that we launched some products like the Windows Collaboration Display and Synappx, and trained people on them all winter. From the standpoint of getting the work done, it hasn’t been too bad because in many departments, they were doing everything on Microsoft Teams already. The bigger challenge is the social aspect, it’s people being cooped up at home and not seeing their coworkers.
“It does weigh on you. We tell employees to take care of your personal life. Normally, you go to your office and during the ride home is the time to stop working. There are always challenges at home, but it’s different now—it’s COVID 24/7. Everything happening in your personal life and your business life is around the virus. You need to find some enjoyment. We’re posting reminders of that on our social media. We’re saying, there’s more to life than work, and you have to find time to relax a little bit.” Marusic
“The pandemic has highlighted the need for employees, companies, and their employees to have a flexible work style. That means not just at home, but anytime, anywhere. For several years, our ad line has been, work is not where you are, but work is what you get done. That has really been crystallized in everyone’s mind in a tragic situation.” Taylor
“We were pretty smart about two weeks before we shut down. We started preparing people to work virtually. We use Microsoft Teams and it’s working well. Not everybody was used to working with Microsoft Teams, but everybody got proficient quickly. We are still are getting deals, but the total volume is down dramatically.” White
Impact on New Product Introductions and R&D
“Based on our current and incoming inventory levels of parts and supplies, we do not anticipate significant disruptions to the supply chain. Many of our suppliers have resumed operations and are achieving near their expected levels of output. We are continuing to work with our manufacturing division and suppliers to minimize any potential delays for new products in the coming months.” Coriddi
“Fortunately, there has been no impact. Everything is still on track. We have a lot of products coming out. That’s the hard part, keeping a schedule with everyone remote. There are no positives in this, but what you do see is that it really highlighted to the factories what we’re doing with Synappx and some of the other things are critical.” Marusic
“As a leader in R&D, Canon has taken many steps in alignment with our corporate philosophy of “kyosei” (Canon’s corporate philosophy of ‘all people, regardless of race, religion or culture, harmoniously living and working together in the future) to support our customers and channel partners during the current pandemic. Specifically, Canon Medical Systems Corporation was selected to work with Nagasaki University to start development of a rapid genetic testing system for the novel coronavirus. As businesses begin to reopen across the country, we need to be ready to re-open our workspaces as well. With much insight and careful consideration of employee safety, we already are preparing a return-to-work program, which looks at density management—how to limit the number of people in the office at any given time and reduce capacities in conference rooms and all common areas. We plan to train our employees prior to their return.” Olds
“At Kyocera, our schedules have remained on track. The determination of our teams across the globe means that we’ve been able to collaborate not only across our organization, but also with our colleagues in Japan to ensure that everything continues as expected.” Sanchez
“We had secured inventory prior to this outbreak and have no significant stock outages such as parts or toner. We’ve been able to give our dealers a consistent supply of product and will be able to do that for the foreseeable future. In terms of product development, a lot of that is being done in Japan and globally, Europe, etc., and that has kept on pace. We may have delays in our final testing, but we’re pretty much on track to launch product with some small delays but not related to the pandemic.” Taylor
“As far as product introductions, we only had one product (Toshiba’s first A4 device) that we pushed the introduction out two months to an August timeframe because of COVID-19.” White
Beyond Print
“We’re already hearing from our dealers about interest in software and services that help extend the power of print. Additionally, we’re hearing more requests for non-print centric technologies such as our Interactive Flat Panel Displays to help businesses collaborate more efficiently. We expect this interest to continue to increase. One hot area right now is centered on digitizing paper-based information. Doing so helps make it easier for employees to access, process, and securely share essential documents from the safety of their own homes, keeping business running smoothly, and customers satisfied. We offer tools such as Ricoh Smart Integration, content services via DocuWare, and others to help achieve these goals.” Coriddi
“This crisis has forced companies of all shapes and sizes to rapidly turn their attention to digital transformation processes, which were moving more slowly or hadn’t even been considered. Now the value of remote working has become evident for us all, we expect that more and more companies will turn toward software like content services and IT solutions, which would mean that this situation has rapidly accelerated the digital transformation of organizations. As an example, a KDA group company like Databank is having very significant revenue growth during this crisis, due to their experience in process on BPO and document management, where demand has increased due to the new way of working. McKinsey says that 79% of those who started the digital transformation journey are still in the early stages, and all of those organizations will need guidance and solutions to help them to adapt and make the investments required to adapt to the new normal.” Sanchez
“We capture essential print wherever it is, but our business doesn’t depend on that. Print volume is declining, but information is exploding. We want to enable people to access their information and intellectual property in any form they want to consume it—electronically, printed, whatever. It’s a combination of managing print, managing the creation of documents or print and files, collaborating on these, storing and taking unstructured data to make it accessible on everybody’s PC with structure so that people can find it, consume it, and do whatever they want with it. I’ve told the joke 1,000 times that when I saw the front of the iPhone for the first time and it had a trashcan on it instead of a print button, I knew we’d better change our business model.” Taylor
Meeting Dealer Needs
“We believe being flexible is key. During these times especially, we know our dealers’ needs vary based on geographic location, dealership characteristics, etc. Understanding that and addressing it appropriately requires flexibility.
“Our No. 1 priority has always been, and remains today, collaborating with our dealers to help them be successful. We have been conducting formal webcasts, as well as informal “coffee talks” with our dealers to ensure we are addressing current trends and future plans impacted by the COVID-19 ‘new normal.’ Most important is the additional resources we have been providing to support our dealers to remain productive during this time. For example, we launched our “Business Continuity Playbook” for dealers, and we’ve been supporting it with a training curriculum and virtual meetings conducted on a regular basis. The subject matter is actually an expansion and acceleration of the comprehensive programs we launched at our ConvergX meeting last November to drive ‘customer value’ with software solutions, cloud infrastructure, and resources like DocuWare content management. This also includes deployment of portfolio offerings, marketing content, email templates, social media tools, and messaging for dealers to use that is relevant to the current needs of their customers.” Coriddi
“You’d be surprised to learn that dealers always have needs and they’re not shy to ask. We haven’t had any situations where we’ve had to say no at this time. We’re trying to do everything we can to help the dealers. Probably the biggest thing is credit. Cash is king right now. In the first couple of days, we extended credit terms for all our dealers. That’s probably their number one challenge, cashflow. It’s a challenge for everybody. We’ve been doing a lot of trainings for our dealers. We had over 250 dealers and just over 1,700 dealer reps participate. We get a lot of repeats. A rep is coming to three or four more webinars and trainings. We just adjusted our annual program. What we thought dealers were able to do when we began the program in January is probably not achievable now. There’s so much uncertainty for the dealers. We want to provide predictability and clarity and help the dealer. We made dramatic changes to our annual program as quick as we could so that dealers can at least plan. They need information. Not knowing what the manufacturer is doing is not the best strategy.” Marusic
“To continue meeting the needs of our authorized dealers, our Customer Solutions Center is equipped to support customers and dealers through tools which help specialists virtually reach out and see what the field technician is working on through their mobile device. These services are playing a key role in assisting our service partners to maximize efficiencies. We remain in regular contact with our authorized dealers and offer a number of webinars for both customers and dealers on a variety of topics. We have transitioned some of our instructor-led classes to virtual training engagements to help support our dealers’ upcoming business opportunities.” Olds
“We conducted a survey with all of our dealers so that we could first, get a grip on understanding exactly how this situation is affecting them, and, how we can help. We’ve looked to support them in whichever way we can and have sought to establish regular contact with them. We know that many of them are going through difficult times right now and we’re here to provide support and give them the tools they need to come back stronger than ever. What is clear for us in this situation is that we must have a long-term perspective and what we cannot do is to think short term. Dealers’ priorities have changed, and their focus is now to preserve cash, reduce inventory, pursue any sales opportunities, even if it is small, and to minimize expenses. We need to help them in those efforts, putting aside our own priorities.” Sanchez
“We’re working with our dealers to try to stay as engaged as we possibly can. We’ve been doing a lot training for [dealer] sales reps and live webinars. We hosted a webinar for dealer principals on managing your business through COVID-19, helping dealers manage getting federal loans, what they need to do to be able to get those loans, the catches to those loans, and things of that nature. Last week, we had a couple of seminars for end-users on document solutions. About 455 people attended the seminars. There’s a thirst for knowledge on remote document management and document security more so than it’s ever been. We’re just trying to help dealers manage through this unique time we’re going through anyway we can.” White
Dealer Concerns
“Of course, our dealers have concerns, but we have also had discussions about the main opportunities we need to focus on coming out of this situation. Concerns include everything from cash preservation for dealers and customers, to the impact of increased work-from-home/WFH behavior on print volume, to the new challenge of generating net new pipeline if businesses make face-to-face interactions more difficult.
“Ricoh has also been working with our dealer partners to help them navigate through the impact of the current business landscape across different areas of their organizations via tools such as webcasts. One webcast topic was ‘Leadership in a Time of Crisis,’ where we brought in a keynote expert and included a forum for a dealer exchange around best practices. On another webcast we provided a ‘state of the union’ type update, including a third-party perspective, along with direction on the federal CARES program. It’s all about providing resources to help our dealers navigate this uncertain and unsettling time. The most interesting exchange has been the ‘coffee talk’ Zoom meetings we have conducted. Our dealers have been very open with their perspectives, sharing best practices and ideas for required actions to expand the business in the new normal.” Coriddi
“Our authorized dealers require two-way communication, and Canon U.S.A. continues to remain in ongoing communication to help meet their needs. In our conversations with our dealers, they have expressed concerns around cash flow, and how they’ve had to shift their business in order to stay afloat and efficient. Continuing to help our dealers provide service to their customers and expand their business with that feedback in mind, we have also shifted our focus to provide our dealers with more diversified offerings.” Olds
“Kyocera recently conducted a survey, and in that survey, four out of every five dealers told us that their business had been negatively impacted by COVID-19, so it’s crucial that we are open to engage in conversation with them to help find a new way to work. Many told us that deals were on hold and service staff were unable to operate, so we’ve been looking to provide them with as many training materials as possible to capitalize on this downtime, so that they will be able to return to regular service visits in a more efficient way than ever before. Equally, in terms of sales, it’s more challenging to establish contact, so we’ve been providing leads wherever possible and helping to work on strategic planning alongside our dealers. We have also reduced sales targets, facilitating the achievement of rebates, and, as much as we could, we have helped them with payment terms.” Sanchez
Advice for Dealers
“The dealers who have diversified their product lines will prosper. I’m seeing that already. A lot of the dealers are saying things like, thank goodness I invested in an IT business four, five years ago because that helped sustain us in March and April. If you are able to solve your customers’ problems in this crisis, you will be valued. Our Dynabook (laptop) business rocketed up as dealers jumped on that. These were products they weren’t selling. Our run rate went up 60-fold quickly. We have an IT business too. That’s important for all of us, not just Sharp. Sharp will prosper. Dealers will prosper. It’s important that dealers see this and see that there’s an opportunity here to sell other products and support their customers.” Marusic
“We’ve had a 10-year journey of encouraging dealers to diversify and become IT service providers and telephony providers. Some have been quick to adapt and established their own businesses, and some have been slower. Frankly speaking, most of our dealers have adapted quickly because they invested. We have been able to support them with IT services and enterprise content, telephony, and technology. It validates that our crazy ideas, starting from 10 years ago, have been correct. Our business has certainly dropped in the last four weeks and will be significantly down for some time, but the technology side of our business has jumped—the interest in telephony and the Google Suite. We’ve been a Google house for more than 10 years, and that Google Suite capability that gives you video conferencing and chat capability and the ability to monitor a telephony program. With the activity of salespeople, all those things can be used now. Our dealer channel has realigned and has implemented a lot of things that will be essential as we come out of this. We are totally prepared to sell and support that.” Taylor
The Long-Term Effect on the Dealer Channel
“Obviously, we’re in the midst of the biggest work-at-home test run ever. The longer you work from home, the more comfortable people will be working in this environment. So many office activities just happened because they happen. I print because that’s what I always did. People may not print as much after they work at home for a little while. They’re going to learn different ways of communicating. Work habits will change when we return to the office and that will impact print. It also is going to change how we support customers. Print is the core product for everybody. You’ve heard me during the last two years. I always put up a slide with the printed page that says we are not in the page business. We are in the information sharing business. The sooner Sharp and dealers get on that and understand that you are not selling pages, you are selling information. Start selling those other products that share information. Dealers will be fine. You can never underestimate that power of the entrepreneur. I see how quickly dealers move. A lot are adjusting their business models. It will change print. There is zero doubt in my mind. But as far as the industry and our greater business in the printing community, it remains to be seen how well we adapt.” Marusic
“Although a difficult time, this could be a turning point in our industry. Prior to COVID-19, the printing industry was a mature market. Now, as businesses continue to shift their focuses, we anticipate seeing great innovation come out of this, which can help those in the industry become creative in their efforts to be successful over the long term. Cloud-based services and technology can help support this new work style as they offer flexibility implementation, support and usage. Implementing cloud content and email management solutions such as some Canon offers, like Therefore Online, Box or mxHero, can help businesses streamline processes and maintain productivity across teams in multiple locations. Plus, many offer built-in security features such as Box’s detailed activity reports that track the content being accessed by users.” Olds
“Long term, I expect that this will serve to further speed up the journey toward digital transformation. Paper has always been the lifeblood of organizations and still is, but now we’re seeing more companies switching to digital to work across locations, with remote working especially. That will lead to greater demand for content management tools required to do so effectively. We believe that we will probably see a return to distributed printing as well, instead of centralized printing, to avoid the common use of the same device by many people. That means that A4 devices will expand rapidly in the workspace.” Sanchez
“The great thing about the independent dealer is that they can adapt quickly. Strategically, we made the right decision to diversify around print—not to abandon print—especially in technology and invest in enabling the remote worker. That is going to create a lot of opportunity for us and dealers who want to take that journey with us. We have a strong dealer base. I hope some of them, because of us and maybe us because of them, take advantage of what’s available. If you can be optimistic coming out of this and I am optimistic because I’ve seen the increase in businesses that we are already in. I’ve seen print stabilize and in fact grow in areas of very high-value print that are going to be there after this.” Taylor
“Some dealers are going to see a lot of opportunity in the marketplace. You’re going to see a lot more dealers acquiring other dealers over the next 12 months at least.” White
The Long-Term Effects of the Crisis on the OEMs
“We were lined up for it. This is what I’m saying on our calls to our teams. We provide all the products where people look for information. That’s our core advantage. We have MFPs, laptops, conference room displays, desktop displays. We have this joint venture that we just announced with NEC where we acquired most of the NEC display business. Once that is completed, we will have more products in the collaboration space. I feel good because while some other companies were kind of diversifying away from the office, we were investing in the office. That’s going to help us get through this because we have all the products that people will be looking for. Honestly, no one else could say that in our space.” Marusic
“In times of crisis, what is important is how companies are able to navigate through these difficult times and come out on the other side stronger. The office of the future is now, and through a combination of our history of innovation and high-quality solutions, Canon has been able to creatively develop ways to service our customers and channel partners while working from the virtual office. For example, as mentioned, our Customer Solutions Center has made great advancements through its virtual presence assets, which are designed specifically to help our technicians serve and support our customers and channel partners in the field. Aligning with our commitment to innovation, we look forward to welcoming new opportunities as we continue on our path toward transformation and growth. We plan to do this through a combination of versatile, high-quality solutions and the 100% U.S.-based support Canon U.S.A. provides to its customers and channel partners.” Olds
“At Kyocera, our journey to widen our product portfolio and diversify into IT solutions and software is already well underway. This crisis will serve to reinforce our reasons behind that move, focusing more heavily upon the technology that businesses are after as they manage their digital transformation processes. The measures that we have taken have helped us to ensure that financially we are ready to overcome these challenges, and our focus on providing high-quality products and excellent service with a human touch remains the same, as always. Our goal to put knowledge to work continues to apply, now more so than ever. I am really proud of how our people at Kyocera Document Solutions America have reacted to this crisis, and how they have been supporting the company. We have made a big effort to communicate closely with all our people, and our employees have appreciated the openness and transparency. I feel that we are more united than ever, and once this is over, our organization will be stronger than before.” Sanchez
“One thing that frustrated me about the timing of the coronavirus is that we were on a roll. Going back five quarters, we had three of the largest quarters in market-share gains in the history of our company. So that kind of put a damper on that. Our expectation is that once we get through this and come to some sort of normal normalcy, we’re ready to ramp up. We’re doing a lot of programs, seminars, and webinars remotely on virtually prospecting. We trained a lot of dealer reps and we’ve trained a lot of our direct sales reps on virtually telemarketing in this environment. We have to stay engaged and what we’re doing today is going to have a direct impact on what our business looks like tomorrow. People may not be buying a lot today, but they’re going to start buying because they have to at some point. And we want to be there.” White
What’s Next?
“While it’s difficult to anticipate specifics, it’s clear that the COVID-19 pandemic will have long-term impacts across all industries. With that said, I continue to be impressed and inspired by our dealers’ determination and perseverance. Time and time again, I see them rise to new challenges. They’re currently tackling today’s unprecedented business climate with that same positive attitude and can-do spirit. I believe we’ll come out of this unique time stronger together.” Coriddi
“Everyone knows as we come back from the virus, there’s going to be a shift in the work and how people work. Companies are already talking about staggered returns with maybe some people working one week and another group working another week. Certainly, in the initial return that will be the case. The longer this goes on, the more things will change. When you look at it the Windows Collaboration Display and Synappx, they’re dead on. You can have somebody working in the office, somebody working from home, and they’re sharing the same information and the devices integrate. That’s reinforced to dealers the importance of investing in them, because if there’s a downturn on print, then it’s nice to have that side up and running.” Marusic
“As we come out of this, we will be there to capitalize on opportunities that are a different work style. We’re just not going back to the way it was prior to this crisis. It’s going to change, but in some ways it always changes. This was an extension and maybe an acceleration of the direction we were going anyway. Have we made hard decisions? Yeah, but the hard decisions were to make an investment in keeping employees on board to be able to come out of it when we see what the business going to be like going forward. I wish I could predict that exactly, but I can’t. Whatever it is though, we’ll be ready.” Taylor
“When this thing does die down, and it will die down, how do you reopen your business? When we start to reopen, how are we going to do it, and what are the parameters that we need to put in place to work safely and effectively when we do start coming back to the office? And the number of people that can’t come back in? Once we get through that, we’ll start sharing best practices with our dealers.” White
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