Open Enrollment | Subscribe to Printing Impressions HERE
Connect
Follow us on
Advertisement
 

A New Player Enters the Consolidation Competition

September 2000
PLYMOUTH, MN—Watt/Peterson, a sheetfed printer based here, will become the latest entrant in the competition to consolidate the graphic arts industry, if the plans set in motion recently proceed as anticipated. Revealing a "long-term strategy of creating a national provider of high-quality graphic arts services ranging from high-quality sheetfed printing to cost-effective web printing, binding and mailing services," the company, and neighboring rival Cimarron Printing, have merged to form a $32 million company under the banner of a new umbrella organization, Printing Partners of America.

"Increasing competition has generated a wave of consolidations within the printing industry, making it more difficult for mid-size operations to compete," notes Dennis Watt, CEO of the newly christened Watt/Peterson-Cimarron, explaining the thinking behind the strategy.

But Watt believes a fatal flaw has emerged in the business plans of many consolidators. "Many of the industry giants have pursued a consolidation strategy based on financial considerations alone: cutting costs, trimming staff and combining equipment and other assets. Not surprisingly, their customer service has suffered. Many of these publicly held printing firms now find that they're losing customers and trading at a discount to the S&P 500."

That won't be the case at Printing Partners of America, Watt says. "Unlike these other consolidations, the goal of our merger is to grow this business under the Printing Partners of America name by serving more customers, doing it better than the competition, and by having more services that meet our customers' needs."

Officials say that the merger will work because there is almost no overlap in the services the two companies provide.

"Watt/Peterson has been a national leader in high-quality sheetfed printing for many years," notes Dave Peterson, sales vice president of Watt/Peterson-Cimarron. "Cimarron has a similarly strong national reputation for web printing: cost-effective printing services for direct marketing campaigns, direct mailing services and spiral binding. Now, customers of both organizations can take advantage of the greatly expanded services."

"This merger gives both organizations the critical mass and service breadth to grow more quickly as we leverage our mutual customer relationships," adds Bruce Schulz, president of Watt/Peterson-Cimarron.

The Minnesota facilities of both Watt/Peterson and Cimarron are located here, in Brainerd and in Marshall; both firms are privately held. The combined entity employs 251. Watt/Peterson was founded in 1963. Cimarron Printing was formed in 1998 through the acquisitions of Gesme Printing in Marshall and Universal Printing in Brainerd and in Shakopee, MN.

"Our salespeople have been walking by business we didn't even know was there," he explains. "Cimarron is really into direct mail, and when our salespeople told customers we could now provide it, suddenly they were asking them to give quotes on it."

As the company looks for new acquisitions, it will follow the same strategy it used in this first one, Watt explains.

"We'll be looking at companies that offer anything we don't have now," he says. "Cimarron has letterset and spiral binding and heatset web; [Watt-Peterson] never had those before. Similarly, we'll be looking for larger heatset web capabilities, perhaps a label printer, a packaging printer. The candidates we'll be most interested in will be the ones that will help us offer new products and services."

Watt adds that companies offering similar capabilities, but which will extend Printing Partners of America's reach into new geographical regions, will also be considered.

The key to success, he says, will be avoiding what he perceives as the pitfalls that some other consolidators, especially those that have gone public, have fallen into.

"They've come to see everything in terms of adding to the bottom line," he observes. "The emphasis is on the stock price. They've lost their focus and forgotten who is paying the bill. The customer demands attention, but that's not the attitude that's flowing from the top."

As it expands, Watt is careful to note, the company will also be carefully keeping up with technology. The firm has just added a new prepress area, for example.

"We have a new Heidelberg direct-to-plate system," Watt notes. "And when we informed [Heidelberg] of this move, they were as helpful as they could be: very accommodating and very supportive."
 

Companies Mentioned:

COMMENTS

Click here to leave a comment...
Comment *
Most Recent Comments: