PI 400 -- Books - Judging a BookDecember 2001
self-reported total and market segment breakdowns.
According to Edward Lane, president of Book Publishing Services for R.R. Donnelley & Sons, higher book unit inventories in the trade and college segments at the end of 2000 created a slow first half of the year for book printers, primarily impacting reprint orders. In addition, not as many blockbuster titles materialized this year—no Tom Clancy yarns or a new Harry Potter book to keep the presses rolling. The overall effect, Lane points out, is a market that is flat to slightly down in comparison to 2000.
"The industry is relatively flat right now across most major segments," he says. "Based on industry news, trade non-fiction titles, spiritual and religious topics, and bibles are experiencing some growth as a result of the September 11 tragedy. Even so, sales of computer books and books for direct mail are both down."
Robert Uhlenhop, president and CEO of Von Hoffmann Press, agrees that certain segments of the book printing industry have taken harder hits this year. And there may be more fallout in the near future.
"The economy has had a larger impact on our commercial markets than the education markets at the present time, although I anticipate that it will have hurt the education division in 2002," Uhlenhop contends. "The impact of the economy on the funding priorities of state and local governments is uncertain."
A History Lesson
Still, some book printers see things a little differently. Jerry Allee, president of book services for Quebecor World North America, sees 2001 as a transitional year from the record production levels set in 2000 to a market more in tune with historical growth trends. As with most periods of transition, the time getting back to "normal" can be marked with some difficulties.
"The course of this year has been directed by excess inventories carried over from 2000, as well as the economic downturn accentuated by the exogenous shocks resulting from the events of September 11," Allee explains. "This has been especially true in the consumer and religious markets where initial quantities and reprint orders have been significantly reduced."
Plain and simple, the book printing segment has not lived up to its expectations for this year, says David Mead, vice president of sales and marketing for the Banta Book Group. Mead points to a few reasons for this market falling short of strong pre-2001 predictions.
"There have been significant mergers and acquisitions of major publishers during the year," Mead recounts. "High expectations from educational publishers for 2001 expressed in late 2000 did not materialize from a manufacturing perspective. Unit growth declined and educational publishers burned off inventory manufactured in 2000."
Another curveball thrown into the book printing segment, caused by the terrorist attacks and the war on terrorism, is education publishers rushing to include this dark segment of our history into their newest text books, states Peter Tobin, executive vice president of Courier Corp.
"There have been delays in publishing schedules in the social sciences," he says. "We will need to accommodate quick turnarounds and have components in line to fulfill our clients needs."
One positive message book printers report is that they have not seen a large part of their market swallowed up by electronic media or the Internet, as many print nay-sayers have predicted.
"E-books have not had an impact in any segment, including college, where most expected a migration away from printed books," states Lane, of R.R. Donnelley.
Meanwhile, the Internet has been a net positive for the book industry, notes Quebecor's Allee. Online book selling allows the publishing industry to increase unit sales. It also provides lower marketing and distribution costs, and allows titles to economically sell in lower quantities and remain in print longer, he says.
"We, like many of our customers, are currently expanding and investing in our use of the Internet to incrementally grow our markets," Allee reveals. "We see potential in many developing capabilities such as the ability to view chapters online prior to release of the book and in online bibliographies."
Von Hoffmann's Uhlenhop adds that the Internet and e-books have had a significant affect in certain segments of the book market, but that this technology has appeared to be more complementary than competitive. He anticipates this trend will continue for a number of years due to the economics of the new applications.
"Online shopping has been great for our industry," adds Tobin of Courier. He notes that it has been especially beneficial for small- to mid-sized publishers, which can keep lesser-known titles in print longer.
To offset the difficulties facing the book market, printers are continuing to invest in new equipment and technology to provide better service to their customers. R.R. Donnelley, for example, has just completed the implementation of a new prepress solution that uses the Portable Document Format (PDF) as the standard file format for digital prepress processes across its entire book manufacturing platform.
"Our decision to switch to a PDF file format was triggered by our customers' desire for a more predictable and portable solution," Lane observes. "Other services that simplify workflow include a Web portal where customers use the Internet to track job status, and recombinant publishing, which allows for the customization of college texts and output in either print or electronic media."
Meanwhile, Quebecor's major investments have targeted prepress technology, sheetfed press capacity and bindery automation, Allee notes. Computer-to-plate output capacity and improved workflow software are being added or updated at all of its facilities.
"We are totally revamping our sheetfed press platform by replacing dated assets with state-of-the-art perfecting presses," he says "We have invested heavily in major bindery assets including sewing, casemaking and casing-in equipment. All equipment has been upgraded with current productivity and efficiency features and will significantly reduce conversion costs while increasing capacity."
These mega-printers are not alone in moving forward with new equipment and software purchases. By looking at the investments companies are willing to make in new book printing technology, it is obvious that a brighter future is predicted for the book segment.
"The adult trade and mass market paperback, juvenile, religious trade and bible segments are expected to recover in the second half of 2002," Allee predicts.
"While we believe growth in these segments will be positive, the extent of recovery will be contingent upon the economy. Educational markets will continue expanding for both elementary/high school and college textbooks. Demand for ancillary educational products is expected to recover, as well."
Mead, of Banta, adds that he is pleased the government is taking strong steps to revitalize the economy. Mead is also optimistic that publishers will continue to move in directions that will be advantageous to printers. Historically, he notes, consolidations on the publishing side have worked to the printers' advantage.
"There will be additional consolidation of publishers and their printers, leading to a reduction in the vendor base and better balancing of industry capacity versus demand," Mead declares.
But beyond the financial expectations and production predictions, Courier's Tobin feels the future of book printing can be wrapped up fairly simply—people are always going to buy and read books.
"People are getting back to the basics, and books provide comfort, entertainment and education," Tobin concludes. "I think people will find their way back to the book stores this holiday season."