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Top book printers -- El-Hi, Trade Fuel Optimism

August 2005

State departments of education prepare their adoption schedules far in advance, and tracking the schedules allows manufacturers to know what's in the offing a few years down the road, giving them time to upgrade as they see fit.

"In '03 and '04, those were sort of the trough years of the adoption cycle, [while] '05, '06, '07 look like very strong years in terms of states purchasing textbooks," contends RR Donnelley's Lane. "This is particularly true for California, Texas and Florida—which are big adoption states with large student populations."

To prepare, RR Donnelley approved the expansion of its four-color education platform in 2004, adding two presses and some bindery modifications at its Willard, OH, plant, Donnelley's principal education book facility.

Looking ahead to 2006, the biggest adoptions will be in: California, which will be adopting history and social science books, known jointly as social studies; Florida, which will adopt K-12 subjects; and North Carolina, which has a large reading adoption scheduled, according to Rick Blake, vice president of communications and government relations with Harcourt, a global education company, in Orlando, FL.

"Reading and literature are the largest, followed by math and then science," he notes.

Courier Corp. and Quebecor World also used 2004 as a launching pad for the strong adoption period that lies ahead. Courier added a four-color MAN Roland book press to its Kendallville, IN, plant last year and will install an identical MAN Roland at the facility in late 2005. Quebecor World made capital investments at its Dubuque, IA, facility to increase its volume in the four-color textbook segment.

"We started (installing equipment) several years ago…The investment was really made to ensure that Dubuque was a first-class player in the education market, and the timing couldn't be better," reports Kevin Clarke, president of the book and directory group at Quebecor World.

"Publishers in general are predicting double-digit growth because of an increase in the number of state adoptions this year and in the next several years," says Peter Tobin, executive vice president of the North Chelmsford, MA-based Courier Corp. Tobin adds that the amount of state funding, a critical component of educational publishing, has increased.

Another segment that has made manufacturers optimistic is the trade sector, spurred by the release of the sixth Harry Potter book.

"(Trade) can be influenced by the big books that (are released) every year," Clarke says. "There are 10 or 12 books that seem to have a life of their own and sell millions—some of which you can count on, and some of which are surprises."

Clarke anticipates Quebecor World's trade plants to stay fairly busy this year and, as a result, the company is adding two presses this year and a third in 2006. Overall, Clarke sees 2005 as remaining a strong year, with publishers putting an emphasis on inventory and supply chain control, and quick reprints.

Take Some Time Out

Manufacturers are also doing more with publishers to help take time out of the process. Courier, for one, has begun electronic transactions with its book publishing clients, online proofing and preflighting in response to publishers' need to compress the book manufacturing schedule.

The jury is still out as to what impact the higher paper prices will have on manufacturers' performance this year, but some expect that reality to have repercussions in the long term.

"We haven't seen increases in paper have a tremendous effect on what we're seeing in increased volume," says Clarke. "I'm sure the books that are mid-list might be subjected to reductions or eliminations."

To combat paper price increases, publishers tend to purchase paper in advance, while some of the larger book manufacturers that supply paper to their customers pull rank.

"For the Donnelley-furnished stock, the strategy is to leverage the buying power of being part of an $8 billion company that purchases a lot of paper," says Lane.

Others fear that rising paper prices may push publishers to offshore markets.

"We heard reports that high paper prices could cause publishers to look overseas for manufacturing," reports Charles "Tuck"

Krehbiel Jr., CEO of CJK. "If they have to pay more for paper, they're talking about paying less for manufacturing."

"I had one customer tell me that India has not had dramatic paper price increases," says Rob Krehbiel. "Suddenly it has become a very desirable region to produce books."

Offshore manufacturing is a reality in today's book market and, to put it bluntly, book manufacturers either need to adapt or perish, according to many industry players. Strategies to compete with offshore facilities run the gamut from establishing plants overseas to offering discounts on reprints.

Last year, Donnelley continued to develop its global book-sourcing platform to serve customers looking to produce books in China. Donnelley also offers customers a "rapid reprint scenario" that provides a domestic option for publishers that are unable to work with the lead time of manufacturing a reprint overseas.

CJK has a similar program it offers to key customers, where it will run a reprint of a job that was originally produced overseas. CJK will treat it as a reprint in its plant. And while manufacturers with offshore facilities have put in place safeguards to prevent piracy associated with offshore manufacturing, Quebecor World uses facilities in Latin America (called nearshore) for customers who are wary of producing titles overseas.

"We have a plant in northern Mexico, about two hours from the Texas border," says Clarke, who adds that the turnarounds can be anywhere from two to four weeks, compared to eight to 12 weeks from India or China.

For a manufacturer such as Courier, which does a lot of its work in the education market, the offshore trend, so far, has had little effect on its business. But Tobin recognizes the offshore market needs to be watched closely.

"So much of what we do is in the education marketplace, and the time to market, particularly for reprints, is so critical," he says. "So far, it's impacted us in small areas."

Tobin says while nothing is definite, Courier has talked to potential partners in other countries in an effort to form some offshore alliances.

While challenges remain, manufacturers are upbeat about the remainder of 2005 and beyond, and continue to invest in new equipment and technologies to attract work. And with textbook adoptions on the rise, and a new Harry Potter now in stores, it appears the work will keep coming.

About the Author

Warren Chiara is managing editor of BookTech Magazine, a sister publication to Printing Impressions.


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