BtoB Media Business - February 2007 - (Page 24)
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02-12-07 A 24 B2DB 2/2/2007 12:21 PM Page 1 Production PRODUCTION ostly
consolidation? Production executives fear wave of mergers among major
printers could drive prices up BY MARK J. MILLER PRESSING ISSUES T he
printing industry is undergoing rapid consolidation. In just the past few
months, R.R. Donnelley & Sons, the largest printer in North America, made
deals to acquire Banta Corp. and Perry Judd’s. Meanwhile, Cenveo Inc.
agreed to buy Cadmus Communications. Only time will tell what all of this
industry shrinkage will mean for b-to-b publishing companies. The No. 1
concern of production executives is what will happen to prices. They fear
that fewer competitors will mean less competitive pricing. “The outlook
for publishers holding the line or saving money on manufacturing costs is
very bleak,” said Ron Brockman, production director for Vance
Publishing’s food division. He noted that Banta’s pricing was always
in the running when Vance’s contracts with Donnelley were up for
renewal. “These acquisitions give R.R. Donnelley much less incentive to
sharpen their pencils,” Brockman said. “We are going to need to cast a
much wider net to find competitive pricing from other printers that will
keep the giant in line.” Julie Davis, art director-production manager at
Billian Publishing, is mostly concerned about smaller publications being
able to get noticed by printers in general. “I’m not really sure what
the consolidation will mean other than a more fierce competition with the
few larger players left,” she said. “For my own publications, being so
small, it will mean more research into other medium shops still open that
won’t consider my business small beans.” Davis recommends that larger
publications be more aggressive in negotiations and look for extra
discounts even if they know they won’t be met halfway. Keith Hammerbeck,
director of manufacturing services at Advanstar Communications and chairman
of American Business Media’s Production/Manufacturing Technology
Committee, said the consolidation could prove to be a good thing for the
industry. “This is a unique supply/demand situation where declining
print volume could reduce the possibility of increasing pricing due to
reductions in C supply,” he said. Tom Fogarty, VP-production at Ascend
Media, is concerned that the mergers will result in reduced capacity. “I
would think that nothing in the short term is going to happen,” he said.
“Printing executives are going to watch from the sidelines as merged and
consolidated companies find their redundancies and remove them from their
organizations for better efficiency. This could mean reduced capacity for
the newly merged companies.” Fogarty suggested that publishers that are
customers of these printers look to renegotiate to leverage the newly
combined volume. “I would also look to see what added value the new and
larger organizations can offer,” he said. Technology improvement is one
area that publishers should worry about with their printers, said Alex
Beam, president of printing consultant Printmark Corp. “The creation of
services and products that benefit publishers was a major selling point
for printers, and now the motivation has been reduced for the printer to
constantly upgrade with the publisher in mind,” Beam said. Instead, she
expects there will be more upgrades focused on printing productivity and
yield per hour in order to increase printers’ capacity. “This isn’t
necessarily bad for publishers, but the technology that publishers have
taken for granted that their printers are going to uncork for them from
time to time probably won’t happen as consistently or directly,” she
said. Beam sees the postal front as a potential area of significant change
due to the consolidation. Donnelley, for example, now has more to run
through its co-mailing program and can get deeper discounts from the
Postal Service with that extra volume. “One thing we can expect is that
Donnelley will start selling its co-mailing and freight purchasing to
other printers. There’s no reason for them not to,” Beam said. This
could benefit smaller publishers since the price of distribution at the
larger printers will be lower than at the rest of the printing pack.
“That other tier of printers will need to lower their manufacturing
prices. If they can’t compete on postal, they have to compete on
manufacturing and paper consumption,” Beam said. onnie Otto is senior
VP-production at The Magazine Group. She has been with the Washington,
D.C.-based custom publishing company for 19 years. MB: What are some of
the changes you’ve seen over the years? Otto: There were about 10
employees when I started. Now we’ve got more than 80 for BIO 65
publications. CONNIE We turn out about OTTO, senior VP19,000 pages
production, every year, not inThe Magazine cluding one-offs, Group annual
reports and that sort of thing. MB: What’s your biggest issue right now?
Otto: Since we’re a client-centric organization, it’s making sure we
have the technology to service all of their needs so that they’re not
feeling like little fish in a big pond. … We don’t have demand for it
right now, but we’re making sure we have the technology in place so that
our clients can have realtime access to their editorial. So instead of
files going back via FTP or having a Web-based site, we want to set it up
so that if they want to make editorial corrections to the file, they have
direct access. We’re pretty close to making that a reality. MB: How
close to actual printing would you allow clients into the files? Otto: We
would have to set up some best practices and procedures, so there’s an
ultimate cutoff. That way we can ensure that the files have a quality and
integrity that lives up to our standards. We’ve seen companies lose
control of this kind of thing. We also see this as a vehicle for
repackaging content for the Web, blogs, etc. So it’s really important to
keep the files’ —Mark J. Miller integrity intact. Providing real time
editorial access C 24 | Media Business | February 2007 |
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Table of Contents for the Digital Edition of BtoB Media Business - February 2007
Contents
Online Has Become a Mainstream Revenue Source
Publishers Invest in Preparing for a Surge in Video Demand
Analysts See Another Big Year Ahead
Sales & Mktg
Events
Production
Circulation
People
Benchmarks
Endnote
BtoB Media Business - February 2007
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