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Quad/Graphics : Solving the Integration Puzzle

May 2011
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The additional Worldcolor holdings, plus investments and the redistribution of retail insert printing assets to the Lomira, WI, facility—one of the brightest gems in the Quad chain—solidifies the company's reach into the Midwest and provides more geographic coverage. Four web offset presses, including a pair of new 24-page models with gapless blanket technology and digital inking, highlight a $20 million investment initiative announced last November. The result: quick-turn production and delivery of highly versioned, smaller page-count advertising formats inserted into newspapers.

"The advent of the Internet and all of the multi-channel devices that allow shoppers to conduct business online began as a threat, but it's actually made print more important, especially on the retail insert side, in supporting stores," Freschi points out.

"Earlier in my career, I worked for a creative agency, and a newspaper insert is still the most cost- effective way for an in-store manager to deliver a message to surrounding consumers. I feel bullish that the newspaper insert will remain a key driver in terms of advertising price points for all stores.

"Testing has shown that quite a few people buy the Sunday paper or mid-week edition not to read the news anymore, but rather to look at the inserts and see what stores are running which specials. We've expanded into the offset side due to demand for more versioning, more specificity in terms of retailers targeting certain segments of consumers."

On the book side, Quad/Graphics now competes in the trade, educational, reference, children's and religious segments, among others, along with specialty products ranging from maps and diaries to calendars and coupon books.

The company produced just south of one billion books in 2010 through its North American and Latin American platforms. Digital printing capabilities have enabled Quad to become more competitive with the rise of smaller publishers, and clients seeking short, on-demand runs to avoid excess warehousing of product.

Coffee table books, which for a time had been cannibalized by Asian sourcing due to its pricing friendliness but long lead times, have come back to the fold with the availability of Quad's Latin American platform that offers the same cost-effective production, but with shorter turn times.

On the telephone directory front, Freschi notes that while the overall market capacity is declining, driven by the demise of the once-federally-mandated white pages (among other changes), the directory business itself is still good for the company and generates sizable cash flow. Freschi adds that the yellow pages business remains an inexpensive advertising vehicle, with more and more publishers using multi-channel offerings such as Website and micro-site incentives to give local advertisers even more bang for their buck.

"We also have some interesting products coming online that will allow a directory publisher to look at that multi-channel service in a holistic way and bring that product out," Freschi says.

Naturally, the Quebecor World connection also gives Quad a definitive advantage in its foray into the Canadian market. It ranks behind only Transcontinental in Canadian sales. The competitors have a presence in each of the provinces and compete with a variety of regional printers for nationally distributed retail pieces.

"As our U.S. customers look to build a Canadian presence, we understand what they need and how they can reach their target audiences," Freschi notes. "Several of our core customers are also buying companies in Canada, and that bodes well for us in the future."

Magazines and Catalogs

For a company that had sparse, if any, experience in integrating facilities with severe overlaps, give Quad/Graphics a ton of credit for knowing what needed to be done—and in what time frame—to ensure that the magazine and catalog platform was recast to be more effective and efficient than before.

According to 27-year Quad veteran Dave Blais, president of the magazine and catalog division, the company wasted no time in implementing its game plan and restructuring sales the day after closing.

During all of the controlled chaos—closures, repositioning of assets, etc.—one of the prime objectives was to ensure that the changes remained seamless to clients. More than 400 individual titles were being moved around plants, "and we didn't drop any of these spinning plates in the air," points out Blais. Incredibly, after much of the reshuffling had died down last December, the company could boast of a customer retention rate of 97 percent.

"We had a game plan in place, literally on a customer-by-customer basis, to ensure that we weren't setting ourselves up to fumble or create any service issues," he adds. "When all was said and done, it was a complete team effort. It started with a couple of people moving pins around on a map, and culminated with a huge flurry of activity and change management."

Blais remains optimistic about the future of magazines and catalogs. Magazine advertising pages have experienced something of a recovery, and circulation figures have remained relatively stable. As for catalogs, he says the entrenchment that took place during the recession has given way to more aggressive prospecting by catalogers.

As Quad/Graphics moves forward post-integration, Blais feels it is important to help guide customers' cross-channel initiatives and address their content repurposing needs. "We need to be a partner so our customers can be accessible to the consumer, in any way that the consumer might want," he says. "Our opportunity is to continue to drive value across that whole chain—how we manage files, how we push content to a traditional printing press, a digital printing device, an iPad app or a mobile phone—and drive that process all the way to the consumer." PI

—Erik Cagle


 

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