BtoB Media Business - November 2010 - (Page 20)

Production PRODUCTION Stopping the presses Despite printer consolidation, production execs remain in the driver’s seat—for now BY MARK J. MILLER B -to-b media production executives don’t like the word “consolidation,” but they’ll probably hear it a lot in the coming months while the printing industry adjusts to reduced demand as the Internet continues its conquest of print. Quad/Graphics, which acquired World Color Press in July, is shutting down several facilities and consolidating operations. In October, the Sussex, Wis.-based printer announced plans to close its plant in St. Jean-surRichelieu, Quebec, which employs about 270 people. The move is part of a plan to invest $23 million in the printer’s infrastructure in Canada in the next year, according to the company. In August, Quad/Graphics said it planned to close five other plants by the end of the year: Clarksville and Dyersburg, Tenn.; Corinth, Miss.; Lebanon, Ohio; and Reno, Nev. “No plant is closing because of employee performance or client service issues, but rather because we are moving work to locations with the most efficient platforms for serving our clients’ needs,” Joel Quadracci, the company’s chairman and president-CEO, said in a statement. Even with these and other closings in the printing sector, there remains too much capacity in the marketplace, said Drew McReynolds, director of global research-media and communications at RBC Capital Markets. “Further industry consolidation will continue,” McReynolds said. “There continues to be excess capacity across the industry, The world of digital media delivered directly to your inbox every Thursday. Each edition of Media Business’ Digital Directions features news and analysis, case studies and interviews with thought leaders, as well as new product information. You’ll enjoy reading Digital Directions as it covers everything you need to know about the diverse and fast-changing world of digital media. Published every Thursday. Subscribe today at: www.btobonline.com/digitaldirections Advertising opportunities are available. To advertise, contact David Bernstein at Dbernstein@crain.com or 212-210-0782. with utilization rates still hovering in the low 60%. With the erosion in demand, the industry simply cannot shut down capacity fast enough to boost utilization rates.” Most b-to-b media production executives don’t see consolidation as an immediate threat. Mike Morgan, VP-publishing operations at Farm Journal Media, said that these changes should yield new options for services and technology. “Because of these new opportunities, I think it keeps all competitive printing companies on their toes—which can oftentimes translate into competitive pricing/savings to the publisher,” he said. Keith Hammerbeck, corporate director of media operations at Advanstar Communications, said, “The most important thing is for publishers to keep their options open and be willing to seriously consider moving printers.” Hammerbeck recommended that publishers use a bidding process, doing “whatever they can to make it as easy as possible for each printer in the bid process to win the business, and not just make it easy for the incumbent to retain the business.” Morgan suggested that publishers attempt to renegotiate their current printing contracts. “New consolidated printer powerhouses have the tools to attract new customers,” he said. “Existing printers want to hold on to their customer base. The publisher is in the driver’s seat.” And while Tom Fogarty, director of production at Vance Publishing, wouldn’t go so far as to say go ahead and renegotiate, he did say publishers should be ready to listen to all offers. “I’m getting more phone calls from printers than I have in a long time—folks that are looking for work,” said Fogarty, who has about three years left on his current printing deal. Dedra Smith, president of consulting firm Printmark West, said that printing prices are unlikely to go up much if at all, but the removal of capacity could put an end to the price freefall printing has experienced the last two years. “I would not be surprised if this culling of excess capacity continues in successive intervals over the next decade,” she said. Some executives think the closures could eventually lead to a rise in pricing. Roger Burg, VP-operations at Canon Communications, warned that less competition in the printing marketplace could eventually drive up prices. “I do believe that will be true over the long haul,” he said. 20 | Media Business | November 2010 | mediabusinessonline.com http://www.btobonline.com/digitaldirections http://www.btobonline.com/ http://www.mediabusinessonline.com

Table of Contents for the Digital Edition of BtoB Media Business - November 2010

BtoB Media Business - November 2010
Contents
Flurry of M&A Activity Likely in Fourth Quarter
Who’s Who in Business Publishing
Sales & Marketing
Events
Audience Development
What to Expect from Printer Consolidation
Production
People
Benchmarks
ABM President-CEO Pettit Outlines his Strategy

BtoB Media Business - November 2010