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Donnelley - Covering All Bases

April 2001
CHICAGO—When you're one of the biggest print solution providers in the world, there's a certain amount of pressure involved in maintaining the status quo. In essence, companies need to change in order to just remain the same.

R.R. Donnelley & Sons rattles more windows in Chicago than the House of Blues. Its sales for 2000 mirrored 1999's, a lusty $5 billion. At first blush, one could surmise that the company exhibited no growth, but it takes a high degree of activity just to maintain such a dizzying sales pace.

The year 2000 was an active one for R.R. Donnelley, capped off by its being named the top U.S. printer in Fortune magazine's list of "America's Most Admired Companies." Donnelley improved its previous score by more than 16 percent, and placed in the top 20 percent of all companies in the survey.

According to William L. Davis, chairman, president and CEO, Donnelley is committed to revolutionizing communications effectiveness by partnering with customers to build their businesses and brands.

Donnelley spent much of 2000 expanding print-related services to cover its customers' all-around communications needs, according to Mike Allen, executive vice president. On the printing end, Donnelley set a high-water mark in terms of number of impressions in its long-run business—without making significant equipment additions. The book printing segment produced more than 520 million hardcover and softcover books, also a record volume for the company.

Donnelley augmented its print-related services with five acquisitions, as well. One plant was purchased from Communicolor and another, bought from printer/publisher Penton Press in 1999, was integrated. The printer also snapped up a pair of premedia facilities: Omega Studios, of Irving, TX; and Iridio, of Seattle. Lastly, Donnelley enhanced its logistics network with the acquisition of CTC Logistics.

Allen expects to see this same formula for success to be used in 2001. "We're going to continue to invest in manufacturing training—the Six Sigma training that we have in all of our manufacturing operations—because that's paying dividends," he says. "At the same time, we will continue to invest in expanding our print-related services to satisfy the multi-channel needs of customers."

He adds that the acquisition of Iridio and Omega tripled Donnelley's premedia network in the United States. By expanding the network, Donnelley can "get closer to our customers, so we have faster, more reliable and higher quality turnaround time on the front end of the printing process," Allen remarks. "Premedia services, because they're digitally based, also support the development of the new services we have around the Internet, in helping our customers communicate to their customers across the Internet channel."

Among the challenges for 2001, Allen notes, is monitoring customer needs as they evolve. He believes the slowdown of the economy and the increase in postal rates will be at the fore of customer issues presently and in the near future.

"I don't believe our customers are going to significantly change their print needs going forward," Allen says. "Print is always going to be a critical component of our customers' mix because it's so effective as a media choice.

"We believe, if you were to look at the whole print-related market, that the U.S. communications industry could increase by as much as 31 percent by the year 2004, and that will be about a $750 billion market size," he remarks. "So not only does print look like it's got a bright future and strong growth, but the related services we're investing in to support our customers also look strong."


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