Mr Bill
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What surprised me was a major lab in the U.K's second largest city which is competitive on price, announcing it was closing and it was this that prompted my post
A 2 person lab is far from "major".
The fact that it is 2 man is not relevant to the main thrust of my post. What I think is relevant is what concern we should have in the U.K. about the future of lab processing...
I think the fact that it IS only a two-person operation is very significant here, especially given the statement that they are competitive on price.
Coming from a large lab background I can assure you that a small color lab operates at a significant disadvantage. It takes a great deal of expertise across different disciplines as well as never-ending attention to detail.
The ideal situation is for a lab to use replenishment, which can reduce chemical costs (per roll) by a factor of roughly 10 times, more or less. But you can't do this with a rotary processor. So you ideally gotta have enough volume to get into a roller transport processor. This, in turn, drastically reduces the "labor" to process each roll - just feed it in vs load onto a reel, etc. But... there is a trade-off - the owner now has to do routine maintenance on the machine, as well as have the skills to troubleshoot and repair problems (or pay for it). And perhaps have a backup plan for when the machine is "down." BTW when using replenished systems one has to learn how to test and troubleshoot the chems. This means, at a minimum, a densitometer along with routine control strips (read Kodak Z-131 to learn about this), and preferably some rudimentary chemical testing equipment.
So where does one get this expertise? Ideally the owner already has it before attempting to operate a lab. Or... they have a day job (to pay the bills) while operating the photo lab at night - a sort of "hobby" business while learning the ropes.
I almost forgot... you'll probably be scanning film, so need a decent scanner and the skills to operate it (as well as have the skills to troubleshoot both it and the computer issues). What about taking orders over the internet? Will you be accepting print orders? (Means you need some sort of pro (?) quality printer and know something about ICC profiles and color management.)
There's more... you have to deal with your effluent. You have to order supplies, as needed. Not only chemicals, but film sleeves, twin-checks, mailing supplies, etc. (hopefully with your lab name and logo). You gotta have a way for customers to contact you with questions or complaints, as well as the customer-service skills to deal with same. Not to mention keeping track of customer accounts as well as all of the accounting information for tax purposes.
So, back to the two-person operation... is this something that one or two people could realistically operate, AND make a living at? Or at least bring in enough income to be satisfied with? I could see struggling with this to grow a larger business - perhaps combined with a studio or a custom framing service, or that sort of thing. But as an ongoing thing? I dunno... will the owners ever be able to take vacations, or even weekends off?
So when a two-person photo lab just closes down? This might just reflect more on the difficulty of running it, while being price-competitive with other local businesses, than it is a reflection on the total local processing business.
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