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Challenges Are Ahead For PAA, Wallace

January 2002
DARIEN, CT—The 2001 campaign continues to be a challenging one for some of commercial printing's biggest names.

Printing Arts America (PAA), based here, has filed for Chapter 11 reorganizational bankruptcy, another blow to the once-flourishing corps of commercial printing industry consolidators.

Joe Ahearn, of Pilgrim Associates, has been brought in by PAA to lead the company during its bankruptcy proceedings. Ahearn replaces departed President/CEO Marion Antonini. Harris DeWese, of Compass Capital Partners, has been engaged to advise PAA on strategic direction.

Formed in 1998, PAA quickly made a name for itself by acquiring 11 companies in the United States and Mexico. The debt accrued in financing the purchase of these companies, along with the sluggish economy throughout 2001, led the company to file.

A president of one of the 11 PAA affiliates, speaking on the condition that he not be identified, said the company is exploring restructuring options and believes most, if not all, of the individual facilities can survive. "They are all very good companies," he says.

The PAA network consists of S&S Graphics, Laurel, MD; Classic Printing, Nashville, TN; AIM Riverside Press, Pompano Beach, FL; Bay State Press, Framingham, MA; Printing Arts Houston; George Lithograph, Brisbane, CA; Oaks Printing, Bethlehem, PA; Printing Arts Chicago; Printing Arts Dallas, Euless, TX; Original Impressions, Miami; and Printing Arts Mexico in Guadalajara, Mexico.

At $207 million in sales, PAA ranked 38th on the Printing Impressions 400 list of leading commercial printers.

Meanwhile, Lisle, IL-based Wallace announced the closing of six manufacturing facilities as part of a restructuring and cost reduction initiative that will cost the company 10 percent of its workforce.

Wallace plans to merge business from its facilities in Charlotte, NC, and Silver Spring, MD, into other existing facilities, and close the two plants. Facilities in Austin, TX, New Orleans and Rochester, NY, will be sold. Sales not tied to the specific locations will be consolidated with other Wallace commercial printing operations.

Additionally, two facilities in Elk Grove Village, IL, a kitting/fulfillment center and a targeted communications manufacturing operation, will be closed. These operations will be consolidated within other plants in that state.

A multiple-use facility in Lodi, CA, will be phased out and closed over the coming months, with its production and distribution operations moved to other existing plants in the state.

"We can no longer accept the under-performance of our commercial print division," states Mike Duffield, president and COO of Wallace. "Commercial print continues to be an important part of our strategy. These moves will strengthen capabilities in our strategic locations and put greater focus on contract business.

"Combined with emphasizing contract business, we intend to get our profits to the levels we know that we can achieve," he adds.

The restructuring is expected to result in annual cost savings of roughly $13 million. Operating leaders have also identified approximately $20 million in cost reduction opportunities in various areas.

Wallace, which employs more than 8,000 workers, ranked seventh on the Printing Impressions 400 with $1.7 billion in annual sales.
 

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