DS Graphics : Helping Clients Do MoreMarch 2010 By Erik Cagle
SOME CUSTOMERS view the products manufactured by commercial printers as commodities. And that's just fine with DS Graphics. The Lowell, MA-based firm isn't hell-bent on changing the print buying world's attitude toward print, and is more than secure in its own quality and turnaround time capabilities.
At face value, DS Graphics' forte is printing, mailing and fulfillment. But, after factoring in a multitude of other ancillary offerings, only a little more than one half of its overall business is printing. The company takes a multichannel-services approach based on the fundamental principle of being the best in every aspect of the total value proposition.
"We are not a conventional services provider involved in print communications," contends Jack McGrath, vice president of sales and marketing for DS Graphics. "We have the expertise to go far upstream in strategic discussions with clients. With our knowledge base in both strategic resources and manufacturing, we tend to find better ways for customers to run their businesses. It transcends transactional business and consultative discussions. We try to engender an enterprise-type relationship with our clientele, where there's a lot of feedback between the organizations."
Upping the Ante
DS Graphics has certainly laid the foundation for enabling in-house success, including taking an aggressive position with both capital expenditures and acquisitions that have improved virtually every facet of its operation, particularly sheetfed offset and digital printing. On the latter count, the company raised its game to dizzying heights with the 2009 acquisition of a fellow New England printer, the much-respected LVI Print Optimization.
This came after DS Graphics had already taken delivery of a new 10-color Heidelberg Speedmaster XL 105 sheetfed perfector press in order to satisfy the growing need for printed products that are produced cheaper, faster and more efficiently. Apparently, President and CEO Jeff Pallis never received the memo about a crippling recession.
"We're committed to the industry, and printing is still generating 50 percent to 60 percent of our revenues," he says. "We're finding that the more efficient we can become as a company, the better it is for both our clients and for our profitability. The efficiencies and quality controls built into the Speedmaster XL 105 are making us more efficient. That's why we've been aggressively upgrading every aspect of our company."
DS Graphics has constantly evolved since its 1974 founding by Jim Pallis as a commercial shop. The company thrived by doing work in the computer hardware space in the 1980s and, in the following decade, refocused on inventory management and fulfillment. At the dawn of the new millennium, it became clear that digital printing and mailing services would enable DS Graphics to continue its growth.
Today, the New England firm boasts nearly 200 employees with roughly 180,000 square feet of manufacturing space. Its client verticals include publishing, software, advertising, medical, higher education and non-profit spaces. Revenues check in north of the $30 million plateau, and given DS Graphics' penchant for successfully following market trends, the odds of further growth are strong.
Jeff and Jay Pallis—Jeff's brother and company CFO—have acquired several businesses that have bona fide track records in market sectors that complement and build upon DS Graphics' game plan. In 2006, they acquired print-and-mail specialist Fidelity Communications, which boasted variable data expertise and a large mailing footprint. A couple of other smaller transactions followed and, along the way, DS Graphics developed its own formula for evaluating possible acquisitions.
Doing Whatever it Takes
Still, there wasn't anything in that master plan covering high-speed due diligence. Last summer, when Jeff read in the trade press that the former LaVigne Inc. would be going up for auction, DS Graphics' brain trust had little time to get acquainted with the particulars of the $6 million business. It needed to submit a deposit in order to just get into the Chapter 265 bankruptcy bidding process, and would have to qualify with a strong balance sheet and be able to close on the deal within 24 hours. Piece of cake.
"Our management team proceeded to breeze through, oh, 400 pages over the weekend," Jeff Pallis recalls with a chuckle. "We did some due diligence quickly and saw there was some real value there. LVI was an organization we were already somewhat familiar with—both (LVI executive) Chris Wells and myself served on the board of PINE (Printing Industries of New England).
"Internally, we have a large digital printing footprint, running two Xerox iGen print engines and three black-and-white devices. Over the last year, we had been seeing increasing customer demand for high-quality digital work, so we were starting the leg work of purchasing an HP (Indigo) type of print engine. LVI already had that workflow in place, so we did the measurements and checked to make sure their culture would mesh," he notes. "We found LVI to be a can-do organization. Their employees didn't lead to the company's downfall, it was other external pressures."
Wells, himself a celebrated figure in digital printing circles, remains as a member of the executive management team, in charge of the print optimization offerings. All LVI employees were offered jobs with DS Graphics; about 60 percent accepted, most of the rest did not want to commute to Lowell as opposed to LVI's former home in Worcester, MA.
So Far, So Good
The acquisition has been well received on all ends, from the merged cultures to client feedback, according to Jay Pallis. "The like cultures made the integration process go relatively smooth," he says. "Both organizations were very customer centric, and now the combined entity has been able to expand services to the entire client base while maintaining this customer-focused centricity.
"We have already been receiving praise from buyers for the attention to detail that the combined resources are able to provide day in and day out. These traits are hard to find in today's economy, where many companies are cutting back."
DS Graphics was far less rushed, but no less enthusiastic, about obtaining the Speedmaster XL 105. The sheetfed perfecting press was installed in October of 2008 and is already well loved, producing one million double-sided impressions per week. According to Jeff Pallis, the company wanted to upgrade its mid-1990s model, six-color press with a more automated and efficient printing solution. He had seen a market shift from six- or eight-color sheetfed work to four-over-four and five-over-five jobs.
"The Prinect Inpress control system allows us to makeready the XL 105 much faster than our competitors can, and there's also less makeready waste generated," he says. "There aren't a lot of XL perfectors in the market yet, but there's a clear advantage in what Heidelberg has engineered into the perfecting unit. What it really means is that we can run the press at full speed."
Also pleasing, notes Jay Pallis, is that the XL can handle a rich diversity of substrates, from 24-pt. board for packaging jobs to 60-lb. gloss coated stock for four-over-four commodity book work. All in all, DS Graphics reaps the benefits of producing more sheets, in less time, with less human capital.
Land of Milk and Honey
It has been a fertile period for equipment acquisitions by the company. With the purchase of LVI from bankruptcy court, DS Graphics further augmented its digital commitment by obtaining an HP Indigo 7000 color press, which is capable of both variable data and static print work. Meanwhile, in the back end of the shop, a highly automated Kolbus KM600 perfect binder was added.
Speaking of additions, the company's foray into offering promotional products has provided a lift to its clients' marketing campaigns. It's even been a boost for the printer itself, which sent out a "goody bag" filled with environmentally friendly promotions in a self-promotion campaign touting its green initiatives. McGrath points out that although a promotional product can stand on its own, it frequently serves as a booster to the execution of more complex marketing strategies.
"The addition of promotional products was really just a natural extension of our existing fundamental core service," he explains. "It's not just an add-on. We offer a more strategic approach to what would add value to our client base."
Further validation of its quest to add value can be seen in DS Graphics' certification as a G7 Master Printer last year. The certification, issued by IDEAlliance, validates that the shop uses the most modern technology, techniques, proofing and press controls, and standards required to produce a close visual match from proof to print.
DS Graphics is in an entirely different place than it was 18 months ago, though its aim to "Be the Best & Provide the Best" is clearer than ever, and shall remain so regardless of what direction the future needs of clients will take the company.
"The world is changing as fast as our industry is," Jeff Pallis remarks. "Resources are being shuffled around within the client side of our business on a regular basis. As companies right size and figure out where their economies of scale are, there seems to be a defined focus of most organizations to evaluate their spends at every level.
"DS Graphics has the advantage of being able to go in and review those potential economies of scale, add our efficiencies and generally provide a higher level of service at a more economic value in today's market. Right now, that is very attractive to our client base." PI