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Catalog Printing--Presses Are Working Overtime

December 1998

Even as they seem to be up to their M-3000s with jobs, catalog printers can't seem to get enough work. They're as busy as ever, yet a hunger for new applications can't be satiated.

Take R.R. Donnelley & Sons, of Chicago, North America's largest commercial printer. Donnelley amassed more than $1.3 billion in catalog printing sales, yet it is developing new market niches with Select Source, which integrates catalog merchandise into specialized Internet sites. Catalogers are matched with subject-specific editorial on high-traffic Web sites.

Top 10 Catalog Printers
Total Sales
1R.R. Donnelley & Sons
Pewaukee, WI
3Quebecor Printing
4World Color Press
Greenwich, CT
5Banta Corp.
Menasha, WI
6Arandell Corp.
Menomonee Falls, WI
7Perry Judd's Inc.
Waterloo, WI
8GTC Transcontinental Group
9Spencer Press
Wells, ME

Donnelley also boasts HouseNet, its own community of interest site. This site focuses on home and garden afficionados, which helps to sell gardening and home improvement products and services.

"We continue to play a role in the Internet; we have a couple of businesses where we help catalogers get into the Internet and we see some segments of our business where it has somewhat more impact than on other segments," stresses Joe Lawler, president of the merchandise media group at R.R. Donnelley & Sons, a group that produces business and consumer catalogs. "More and more customers are establishing a position on the Internet. They are using it as a distribution vehicle, for selling products."

Lawler points to a solid economy and a reasonable level of consumer confidence for a successful 1998 enjoyed by Donnelley. Even with an uncertain global economy that led its customers into a somewhat tough stretch late in the year, Donnelley is seeing an increase in specialty catalogs, something that has buoyed the industry giant.

Wanted: Press Time
On the whole, Asia's economic woes have yet to reach the catalog printer's doorstep. It certainly has not slowed printing activity, according to Susan McIntyre, president of McIntyre Direct, a catalog consulting company in Portland, OR.

She notes that printers are adding additional shifts and investing in increased capacity to keep up with customer demand. It has prompted the catalog customers to be wary of job schedules.

"It seems very difficult (for printers) to find time to print for the customers," McIntyre says. "The catalog companies themselves are having to book catalog printing far in advance. When they wanted to increase quantity, it's been hard for them to arrange for additional press time. I've seen that happening with several customers.

"Paper availability is not a problem, but in terms of keeping presses running, I'm seeing (printers) running all shifts," she adds. "They've been seeing a lot of quantity increases on the part of their customers."

McIntyre, who reports from a print buyer's standpoint, witnessed an economic boon that appeared to have no end in sight during 1998.

Print customers held their collective breath, waiting for global economic pressures to take a toll on the industry. But as the third quarter ended and the fourth began, neither the global economy nor paper shortages or paper increases played a role in the state of catalogers or catalog printers.

According to Harry V. Quadracci, president of Pewaukee, WI-based Quad/Graphics, 1998 has been an unqualified success.

"It's been a great year with double-digit growth, which we expected," Quadracci notes. "Going into the year, we thought that we had adequately planned for growth in catalog work. However, because of new business—increases in print orders from existing clients and new customers—growth unexpectedly doubled."

New catalog business was also heaped upon Perry Judd's of Waterloo, WI. Marketing Director Eric Sullivan notes that his company expanded its capacity to serve catalog customers, installing a Heidelberg Harris M-3000 at its Baraboo, WI, facility. According to Sullivan, page counts were up in 1998, as were the number of new clients and the expansion of previous print relationships.

A variety of issues faced in 1998 will also need to be addressed by catalog print customers in the coming year, adds Sullivan.

"They're seeing paper and postal increases," he remarks. "They're moderate in comparison to past increases, but they're still increases in the overall cost of doing business. From a customer's perspective, it's tough to pass price increases through to customers. I'm not a pessimist, but there's a fair amount of caution in the air. I think we'll see restrained growth (in 1999)."

Less Is Better?
The caution is justified. Increases in postal rates and United Parcel Service rates are scheduled for 1999. Jim Treis, executive vice president of sales and marketing for Arandell Corp., based in Menomonee Falls, WI, already sees an adjustment on the part of catalog customers. He sees fewer high-page-count catalogs and an increase in versions.

"We're seeing a trend away from gravure, back to offset with versioning," Treis remarks. "They're going after more than just a generalized book; it's targeted. The key is that you have to find qualified buyers. If somebody's a golfer, don't send him a tennis catalog. Some of the major catalogers have also developed adult and kids' books, like the Gap and Gap Kids.

"The amount of pages is going down, but they're doing more versions," he adds. "You're not producing the amount of books that would be in a gravure (run). With the

M-3000-style presses, you're able to compete with the gravure process. The M-3000 has grabbed market share away from gravure, since it's a gapless press."

One area Treis feels that needs to be addressed is the digital workflow, which integrates electronic prepress with the pressroom.

"We're taking our data and pre-setting our ink keys," he notes. "We don't have any plate scanners anymore because we're running 98 percent digital right now. We've embraced a true digital workflow in our plating area, which is resulting in faster makereadies."

Consequently, Treis believes customers need to be educated on a filmless environment, to understand the digital workflow as opposed to the film workflow. He is chairing an industry conference in February that will feature top executives from Heidelberg, Wam!Net, SAPPI Fine Paper, Consolidated Papers, among others, along with the Postmaster General. His hope is that these industry heavy hitters can underscore the considerable role of a digital workflow.

"It's critical to get the end-user customer up to speed with the technology that's out there," Treis maintains. "There hasn't been an adequate push to educate end users."

Internet: Friend or Foe?
One technology that has permeated most digitally-driven work cultures is the Internet. A few years ago, according to McIntyre, there was a fear that the World Wide Web was going to be robbing catalogers of their business. Thus far, that hasn't been the case.

In fact, catalog printers have found the Internet to be a valuable ally. Perry Judd's Sullivan notes his company's new on-line service, Judd's Online, which services e-commerce, Web site design and hosting. Judd's Online counts, among others, Martha Stewart Omnimedia, Electronics Boutique and Ulla Popken (a European manufacturer of women's apparel) among its clientele.

"The expansion of services both for print and on-line is an exciting opportunity for us," Sullivan points out.

Donnelley's Lawler also expects to see more Internet applications and solutions in the coming year. He believes growth will continue in overall catalog mailings; growth will be moderate for consumer catalogs with a faster growth rate for business catalogs.

The general economic concern for 1999, according to McIntyre, is that consumers might start lowering their spending, thus decreasing catalog print quantities to a degree.

"There's a lot of companies that have decided to start marketing direct," she says.

"Marketers that weren't using catalogs, like manufacturers with retail stores, are adding a catalog to the marketing mix. Even though traditional catalogers may be cutting back some on their print quantities, it's being made up for by new entrants into the catalog market. Consequently, I don't foresee a decline in print volume for catalog printers in 1999."

The volume may remain steady, McIntyre says, but the jobs may come from different sources, perhaps new to the catalog environment.

"Traditional retailers or manufacturers are being very successful at adding a catalog, so that's an increase in total production for the printers," McIntyre continues. "From the printers' standpoint it's shifting who they're printing for, but not their total print volume."

As long as the presses continue to roll with catalog jobs, the printers, more than likely, won't seem to mind who is placing the order. By the looks of those press schedules, however, finding jobs will not be a problem.

Finding an open time slot is a different matter, and that's the kind of problem every printer wants to experience. Whether that holds true for 1999 remains to be seen, but with new applications being developed, it's apparent some printers are not going to wait around for bad news.


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