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Changing of the Guard Reflects World Change --Michelson

January 2003
The best thing about 2002 is that it's over. A stagnant economy, massive worker layoffs, corporate accounting scandals, fear over chemical and biological warfare—enough to make a newborn want to crawl back into the womb. No one's rushing to pop the bubbly; the toast is "Here's to a better 2003," not "Happy days are here again." And, like the world around us, the printing industry is suffering through depressed sales and earnings, plant closings and staff reductions, cutbacks in capital expenditure plans, as well as personnel changes in the board rooms at North America's largest companies.

As 2002 drew to a close, executive changes came at some of the largest printing conglomerates. Following the sudden departure of Marc Reisch just months earlier, long-time Quebecor World President and CEO Charles Cavell announced his plans to retire by April of this year. Both were involved in the integration of Quebecor Printing with World Color, in what was billed as the largest merger in the history of the graphic arts industry. Moore Corp. Chairman, President and CEO Robert Burton, of World Color fame, stepped down without any fanfare after two years on the job, resolving that the company turnaround he had embarked on had been accomplished.

Likewise, just after extolling a blueprint for R.R. Donnelley's future in a national business publication, Ron Daly resigned as president of Donnelley Print Solutions in order to become CEO of Océ-USA. And, due to the accidental drowning last July of Harry V. Quadracci, a visionary who, arguably, was the greatest printer of our era, Tom Quadracci (see our exclusive interview in this issue)—his capable brother—took over the reins to continue the Quadracci family stewardship at Quad/Graphics.

Aside from the Quadracci tragedy, these management changes, and undoubtedly many others not mentioned above, may signify a proverbial changing of the guard. Once-industry darlings are no longer recognized for their business acumen. Old-timers, many with ink in their veins, are replaced by MBAs and financial types who operate based on what they learned in business school and on Wall Street, not through conventional wisdom and gut feelings gleaned from decades of industry experience. Reading balance sheets replaces the ability to read the minds of customers. Considering whether or not to exercise stock options replaces considering the future of a loyal work force. Finding shortcuts to generate immediate savings replaces following the road map plotted as a result of long-term, strategic planning.

All of a sudden, it seems, there is a new world order as the result of a prolonged depressed market. The biggest entities, admired for their massive equipment asset base, numerous production facilities and economies of scale, experience the same pain and suffering as the local printer in Anytown, USA. Quebecor's world becomes smaller, Moore is less, Mail-Well looks for checks in the mail, Wallace seeks solace and Donnelley's in the doldrums.

Those companies hatched through acquisitions prove that bigger is not necessarily better when it comes to trying to integrate, and then manage, the coupling of formerly separate printing establishments—especially during tough economic times when the resultant debt load from the transaction feels like a tourniquet squeezed around one's neck. And for those attempting to navigate their businesses through internal growth, the rough seas ahead seem just as murky.

Some would argue that the current difficult and uncertain times are unprecedented. But, to look to the future, it helps to look to the past. Turbulent stock markets eventually stabilize and, in turn, reward patient shareholders. Warmongers eventually are quieted by voices calling for peace. Civil unrest eventually leads to civil rights. Great customer service eventually prevails over just being the lowest bidder. And, yes, print buyers with slashed budgets eventually will start purchasing products and related services again.

Mark T. Michelson

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