The State of the Printing Industry

ON DONNELLEY’S CHALLENGES …“RR Donnelley’s (RRD) biggest challenge right now is converting contracts from the customers they acquired from [the acquisitions of] Banta, Perry Judd’s and Von Hoffman. As those new customers’ contracts expire, RRD is not ‘renewing’ them, but converting them to RRD customers on RRD contracts. For the next two years, they’ll have hundreds of customers to convert. This is very difficult, because many of those customers didn’t choose RRD and now have to be resold.”ON QUEBECOR’S CHALLENGES …“Quebecor World’s biggest challenge right now, besides their reorganization, is the general perception of who they are in the industry. They’re going to have to change that perception. … Since its inception … Quebecor had a corporate philosophy that every plant was self-sustaining—that it had to prove its own value or worth, or was subject to being closed. They did not have the corporate mentality that Donnelley or Quad or any of their competitors had, which was, ‘We don’t care what plant you’re in, as long as you’re with our company.’ Quebecor has different plants with different specialties. … As plants specialized and customer specs warranted it, and it became obvious [that it made sense] to place different products within different plants, Quebecor had a very hard time doing that. … Customers would be held hostage by the plant manager, and this was difficult for a lot of customers over the years. …That was, I thought, Quebecor’s biggest flaw over the years—because they have the resources, they have the knowledge, they have the expertise. They have everything in place to be a great company. What they didn’t have was good management. The thing I like about Doron Grosman [is that] he came from outside our industry. … He’s fresh, and he’s open to new ideas. He’s willing to break conventional wisdom and, to be honest, a lot of our conventional wisdom in the magazine market just doesn’t work anymore. … I like the changes I’m seeing at Quebecor.”ON OVERCAPACITY IN THE MARKET …“There is an overcapacity of long-run equipment, but not an overcapacity of short-run equipment. The reason is that there just aren’t as many long-run magazines anymore. For the last 20 years, we’ve been buying these mega-presses that are three stories tall and [as] long as a train. And the efficiency of these machines is amazing to produce long runs. … The newer presses are great, but what’s happening is we have a whole slew of old Harris M1000 hardware. Every magazine printer out there has a [lot] of them. And most of them have not been retro-fitted with all the new press controls. Because of that, there is going to be a huge amount of dinosaur equipment that they can sell maybe to the global market, but in the United States, in my opinion, they have a shrinking customer base to run on those anymore. I think what’s going to happen is—and this is a scary thing—[that] the printers are going to learn a lesson from the paper mills, and they’re going to create demand. The paper mills had way too much supply and no demand. So they shut down plants and, all of a sudden, within a 60-day period, we went from a surplus to a shortage. All of a sudden, paper became a premium.” ON THE FUTURE OF THE MARKET …“… I hate to say it, but I think we are going to have an extreme downsizing of the long-run magazine printing market. I think that the printing market is going to stay healthy in the current niche of magazines. I don’t think magazines are going to go away …. But they’re going to be different than what we’ve had in the last 20 years. I think we need to change our philosophy of what a magazine is. We are no longer a cheap means of dispensing information, and that’s what we were until the Internet came along. Now, we are an inefficient and expensive means of distributing information. … We need to reinvent ourselves as a luxury item that people want and are willing to pay for. And until we change our own image of who we are, we’re going to find out that our vendors are going to change it for us. Because, right now, postage is a premium. Paper is a premium. Soon printing will be a premium. How long can we buy at a premium and sell at a discount? We can’t.”

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The State of the Printing Industry

Publishing Executive Staff

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Publishing Executive Staff