Open Enrollment | Subscribe to Printing Impressions HERE
Follow us on

EDITOR'S notebook

December 2003
Printing Impressions 400: Sign of the Times

WOW! I can't believe that this issue marks the 20th year that our editorial staff has been compiling the annual Printing Impressions 400 ranking of the leading printers in the United States and Canada. Along with the PI 400, we present next year's outlook for several key print market segments—another traditional feature of the December issue. Many of you may recall that the list used to include 500 companies, before all of the industry consolidation in the mid- and late-'90s compelled us to lower the number of printers surveyed.

Speaking of consolidation, undoubtedly the biggest industry headline in 2003 came late in the year with the announcement of the blockbuster merger between RR Donnelley and Moore Wallace (the #2 and #3 ranked companies on our list). Note, however, that we kept these two companies separate on this year's ranking because the deal is not expected to be finalized until the first quarter of 2004.

Once completed, this corporate coupling—which will take on the RR Donnelley name—will create North America's largest printer (surpassing Quebecor World) with more than $8 billion in annual revenues and about 50,000 employees worldwide. According to company officials, the new and improved RR Donnelley will generate cost savings of at least $100 million on an annualized basis in the first 12 to 24 months after the closing. The elimination of duplicative administrative and infrastructure costs, asset rationalization and a reduction in expenses are how they intend to achieve it.

Translating the corporate speak, what that really means is head count reductions, plant closures where necessary and razor-thin margins for suppliers doing business with the new behemoth.

I'm not saying the merger was a bad business move, mind you. Given the need to replace retiring Donnelley CEO Bill Davis, Moore Wallace's Mark Angelson can take over without missing a beat. Shareholders for both organizations should win out, as well, and both companies largely compete in different arenas.

But is bigger better, especially from the human and community standpoints? How does a plant closure or major layoff in a small town impact a rural community? Yes, I know: Printers, like all for-profit ventures, are in business to make money, not to guarantee long-term employment or keep an unprofitable production facility open. But, then again, when looked at from a strictly financial standpoint, does the debt load taken on by the new entity become like an albatross hanging around one's neck? For example, did Quebecor Printing—whose stock price is currently in the doldrums—really achieve all of the benefits and economies of scale that were anticipated after its merger in 1999 with World Color?

Even so, assuming that the U.S. economy rebounds next year, I believe the consolidation craze that has been dormant during the prolonged recession will pick up again. But the multiples that buyers will be willing to pay will be lower than they were during the 1990s. Also look for more payouts being a combination of cash and stock. This new playing field will result because there are, and will remain, far more sellers than buyers. Still, look for industry consolidators such as Consolidated Graphics, Mail-Well and others to close more M&A deals in the coming year. When well orchestrated, one plus one can equal three; but it can also spell disaster when differing cultures are not considered, loyal employees are not nurtured and customer relationships get lost in the shuffle.

Let's all toast to a better 2004 for our industry. From the Printing Impressions family, happy holidays and best wishes for good times ahead.

Mark T. Michelson


Click here to leave a comment...
Comment *
Most Recent Comments: