Pushing the Envelope: Shortages Prompt In-plants to Make Their Own

For Steve Ryan, 2022 was pivotal for his in-plant’s move toward in-house envelope conversion. The general manager of Oregon Corrections Enterprises says that while discussions to do so started two decades ago, the technology at the time, which Ryan refers to as “old-style, non-automated equipment,” required a great deal of space and operator know-how. Since that time, he says, the equipment has become highly automated — a better fit for his prison in-plant’s needs.

It was over the past two years, however, amid paper shortages and supply-chain disruptions, that he says the shop decided to finally “take control of its own destiny.”

The result of that decision, a W+D 410 envelope converter, has been ordered and is currently being built in Germany. Delivery to Ryan’s Salem, Oregon shop, is expected in September and full operation in November. Ryan says the machine will be used primarily to produce 6x9", #9, and #10 envelopes. He notes that it will not produce catalog envelopes (10x13"), which will continue to be sourced from external vendors.

The Oregon Corrections Enterprises in-plant, Ryan says, holds the envelope contract for the state, for which it prints 18 million envelopes annually. With the new system in place, the shop will be able to convert (and print as needed) as many as 50 million envelopes. In so doing, it will be able to serve not just the state, but also cities, counties, municipalities, and school districts. Converting for private enterprise is also a possibility, he says. While the shop’s average envelope print run is around 5,000, it is not uncommon to have them reach half a million.

“It just depends on what’s needed,” he adds.

At Oregon Corrections Enterprises, Steve Ryan (right), general manager, discusses production with one of the shop’s press operators.

With its installation, the new system will address a few different issues faced by Oregon Corrections Enterprises and other mail-focused printing shops.

• First, it will address supply; standard #10 envelopes have been hard to source, he says, partially because fewer envelope manufacturers are producing them.
• It will also address stock. As a result of paper shortages, Ryan says instead of using 24-lb. white wove paper, manufacturers have, in some cases, switched to 60-lb. stock, “which makes it harder for automated machines to process.”
• Finally, there is the cost factor. Using the W+D system, Ryan says the shop will be able to produce 1,000 #10 envelopes for between $10 and $13. With recent cost increases, he says, that same volume from a vendor currently costs between $30 and $35. “We anticipate savings for the state,” he says, “and we’ll have what we need.”

Ryan sees the addition of envelope converting as filling a gap in the in-plant’s broader production. With services including ideation, design, printing, folding cutting, and bindery, “this is the next piece in our progression,” he says.

Reliability and Service

At the State of Kansas Division of Printing, Mailing and Surplus Property, it was the difficulty in maintaining a reliable envelope supply, coupled with the poor quality of some of the supply available, that served as a tipping point, says David Lord, deputy director. These challenges, which were most acute during 2022, led the in-plant to install its W+D 410. He says installation of the new machine went smoothly.

The real challenge, he says, was getting through the state processes needed to pay for it. Funding-wise, he says the investment was a significant reach.

“We are fee based,” he says, “and have to pay for things out of what we do.”

That said, he expects a five- to six-year ROI on a machine that is expected to operate for 20 years.

“We’ll get more than that if we don’t abuse it, so that’s a lot of upside,” he says. And this is an in-plant that takes good care of its equipment; some pieces have been in operation for decades.

Currently, the shop is producing both #10 and #9 envelopes, regular and with windows. Lord says the in-plant has produced several runs of specialty envelopes with larger windows for state agencies that wanted to have more visual content — such as a logo — show through. He says the shop currently possesses “15 or 16 dies,” allowing for variation in size and placement of windows.

While 90% of the envelopes converted at the shop are white, runs have also been done with blue, green, and red stocks. While an average envelope run is around 10,000 pieces, Lord notes, the shop did one job of 1.8 million. The machine, he says, runs at an average of 400 envelopes per minute.

Lord says the shop is still working with envelope vendors for envelopes other than #9 and #10, but fully expects to expand into other sizes, and take full advantage of what the new unit can do, once a dedicated operator has been hired.

Asked about the benefits of bringing envelope converting in-house, Lord says, “We’re going to notice a cost savings, and the quality should be better because we will be controlling it ourselves.” Further he sees a reduction in waste, noting that envelopes held in inventory have a proclivity to develop curl or lose their adhesive abilities.

Like Ryan, Lord sees the adoption of envelope converting as a key step in the shop’s broader quest to provide more reliable services to the agencies it serves.

“It’s a huge piece of the puzzle,” he says. “That’s a part of our goal. A lot of our pieces are printed and mailed from here, and our [state] agencies never have to mess with them.”

Postage and Supply Update

While for some in-plants, the benefits of bringing envelope converting in-house may just make sense economically, the envelope supply challenges of 2022 that drove some in-plants toward conversion may be easing. Andrew Schipke, VP of marketing and strategic sales with W+D North America Inc., whose envelope converting systems can be found in the in-plants just discussed, says increases in postal rates during this year (2023) may serve to soften direct mail activities and thus reduce demand for manufactured envelopes.

“We will see,” he says, “if this has an effect on overall demand.” Further, he says he’s seeing less evidence of “paper hoarding,” as supply stabilizes, to some degree.

Marco Boer, VP at I.T. Strategies (and conference chair for the annual Inkjet Summit), says that while, “nobody in the commercial printing or in-plant space wants to be envelope converters, supply has been pushing it.” That said, he believes those who bring envelope converting in-house have a competitive advantage.

“Having the capability,” he says, “has turned out to be a differentiator.”

In-plants investigating this path, Boer says, need to find answers to key questions: “What is the capital investment? What is the learning curve?”