R.R. Donnelley--Calling the Shots
“Organic capacity expansion has resulted in capacity exceeding supply; thus, the focus is now on consolidation to leverage scale, synergy and efficiency. I believe that the pace of consolidations will accelerate, at least over the short term.”
PI: In fact, Donnelley has disposed of some non-core businesses in the past couple of years. Why has the company done this, especially when the entire industry seems to be consolidating?
Pyzdrowski: “Donnelley has disposed of non-core businesses we had acquired in the past. You could say we have gone through a ‘de-merger’ stage—consolidating to our core of putting ink on paper.
“Every acquisition opportunity in the industry crosses our desk. We’ve taken a pass on most of them because we just don’t see value in it for our customers and shareholders. Other companies try to make the case that consolidation means more efficiency, improved synergies and heightened productivity. That’s fine for them, but what’s in it for their customers? Printing is a manufacturing business.
“Our work is definable. It can be standardized. It’s repeatable. And, therefore, it can be managed more effectively to deliver significant value for our customers. Instead of buying assets that might, on closer inspection, be redundant, companies should focus on using the capital structure already in place to improve productivity, enhance distribution effectiveness, reduce cycle time and lower materials consumption and costs. Donnelley has chosen to focus on supply chain management to reduce waste and cost, and to provide better products and services to customers at a better total delivered systems cost.”
PI: Obviously, you believe supply chain management is key to reducing customer costs. How has the practice changed over the years?
Pyzdrowski: “Managing the supply chain in the printing industry is critical to help our customers build their revenue streams and reduce their total cost of doing business.