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Largest Book Manufacturers -- Best Sellers List

September 2004
By Noelle Skodzinski

It's not likely a big surprise that Quebecor World held fast to its No. 1 spot among the Top Book Manufacturers—ranked by book manufacturing revenues—in the United States and Canada. With a $36 million lead over RR Donnelley, and a $273 million lead over third-ranked Von Hoffmann Corp., Quebecor World isn't likely to lose its position anytime soon.

Both top seeds, however, saw book sales drop in 2003. In fact, revenues for three of the top five sank by a total of nearly $130 million. Arvato Print USA (a division of Bertelsmann) and Von Hoffmann were the only two in the top five with increases. (See accompanying chart.)

The revenue losses aren't all that surprising either, though. 2003 challenged printers from many directions. For one, "the price of paper was down," says Dave Mead, senior vice president of sales and marketing for Banta Book Group, and president of the Book Manufacturers' Institute. While low prices are good for publishers, "paper costs can represent 40 to 50 percent of the unit cost of a book," says Mead. "If paper prices drop 10 percent, printers lose 5 percent on the gross production revenue."

Paper prices factored less for Quebecor World, since its clients largely furnish their own paper. Quebecor World's major challenge, echoed by several other printers, was price erosion, according to John Faust, director of marketing.

Mead calls it a case of "overcapacity that drove down prices and lowered revenues."

Printers, therefore, have focused on cutting costs to try to maintain their profit margins—and were not always successful.

In recent months, however, printers have seen a sharp escalation in paper prices—good for the goose, but not necessarily the gander. "Paper demand has increased pretty dramatically… and prices are starting to go up," says Mead. But if prices rise too much, he notes, publishers will become increasingly cautious about costs and will cut back on projects.

Robert Mathews, president and CEO of Von Hoffmann, says of Von Hoffmann's rise in book revenues, "We are winning in the marketplace because we are focusing and investing in customer solutions." Von Hoffmann, like some others, is focusing those customer solutions on helping publishers save money, time and effort.

Partnership Driven

RR Donnelley is focusing on customer solutions, as well. "Our client base wants to streamline," reveals Ed Lane, president of RR Donnelley's book publishing service business. "They want fewer, more strategic partners."

These demands set the scene for RR Donnelley's merger with Moore Wallace, which closed in February of this year.


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