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Donnelley Closing Plant, Perhaps Two

May 2001
CHICAGO—R.R. Donnelley & Sons is taking steps in its traditional long-run printing business, which serves magazine, catalog and retail customers, to create what it says is a more cost-effective, integrated and flexible printing "platform of the future" for its customers. As part of this process, the company will invest $300 million over the next two years to improve the efficiency of its long-run printing network and close its South Daytona, FL, plant, which prints magazines, catalogs and advertising inserts, by the end of the second quarter. The facility, which employs 198 people, opened in 1991.

Donnelley also informed union representatives that it is considering closing its Des Moines, IA, printing facility. Spurred by a widespread softening in the economy, Donnelley lowered its earnings per share expectations for 2001 to a range of $1.95 to $2.10 before one-time items and restructuring charges.

"After careful review of our business and market trends, we determined that our South Daytona plant lacks the scale necessary to support the current and future needs of our customers," says Michael B. Allen, executive vice president. "By consolidating our production and equipment in more geographically strategic plants, and replacing less efficient assets, we'll be in a better position to partner with our customers to refine their targeting, eliminate waste, leverage our logistics business, reduce total delivered cost, and build their businesses and brands.

"Taking actions that affect the lives of our employees is an extremely difficult decision," Allen adds. "We are committed to assisting them during the transition."

Donnelley will try to help employees find other jobs, whether inside or outside the company. It will also offer separation pay, extended medical benefits and skills training to eligible employees.

Related to the actions to improve the print platform efficiency, the company informed union representatives that it is considering closing its Des Moines, IA, facility. The plant, which employs approximately 800 people, was acquired in 1990. It produces a variety of magazines under long-term contracts, as well as catalogs and newspaper advertising inserts. A final decision regarding the Des Moines facility was to be made in late April.

Over the next 24 months, Donnelley plans to invest up to $300 million to improve the efficiency of the long-run printing and binding operations serving its magazine, catalog and retail customers.

The company will make investments to upgrade plants with fewer, yet wider and faster, presses to offer customers more flexibility and improved distribution efficiencies with virtually no change to the company's capacity.
 

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