Wallace?A Commercial SuccessFebruary 1998
Hello, Graphic Industries.
"It was part of the Wallace strategic plan to acquire a fairly sizeable base of commercial printers," reveals Mike Leatherman, senior vice president and head of Wallace's growing commercial printing division. "Once we started evaluating the market, we found that the Graphic Industries facilities included some of the most respected names within the markets where we wanted to be."
The list of Graphic Industries' 20 companies reads like a who's who of commercial printing. Wallace concluded that the operations would not only boost capacity, they would provide proven sheetfed offset expertise. What better to complement Wallace's own distribution and information services?
Wallace proposed to purchase Graphic Industries for $18.50 per share. The deal seemed locked until Mail-Well hinted at an offer of $20 per share. Wallace countered with $21.75. Before the bidding could escalate further, Graphic Industries made a decision.
"We felt that Wallace was the best fit—not only for our people and our companies, but also our customers," says Alvan Herring, formerly a vice president at Graphic Industries, now vice president of Wallace's commercial printing division. "Wallace is making a commitment to handle print management, the whole print distribution side, and do everything from a graphics standpoint for customers."
Although the acquisition presented clear benefits, Graphic Industries employees couldn't help but feel somewhat nervous about being bought. Wallace's management could understand their anxiety. After all, Wallace once faced similar circumstances.
Three years ago, Moore Corp. launched a hostile takeover attempt for Wallace. In the long run, the experience brought more pluses than minuses. For example, Wallace's workers proved their loyalty by rallying around their employer, producing the results necessary for Wallace to remain independent. Staff accepted new technologies and services without question.
"Employees embraced the changes we were implementing for customers a lot faster than they would have in a normal environment," Samson notes.
In the end, Moore's failed takeover energized Wallace, according to Leatherman. Wallace, which had finished 1994 with $400 million in sales, grew to $906 million in 1997. With the addition of Graphic Industries, Wallace should close '98 with $1.5 billion in revenues.
Leatherman points out that the attempted takeover by Moore didn't do any real damage to Wallace. It did, however, teach the company some valuable lessons. "It provided us with a very good perspective on the human side of being acquired," Leatherman offers.
During the acquisition of Graphic Industries, Wallace demonstrated its empathy with a communications program. "They put together a video that answered a lot of questions," Herring notes. "It covered a lot of the ground that people had concerns with—everything from benefits to sales commissions. They sent videos and annual reports to each company. They made people feel welcome and answered questions when asked."
Once Graphic Industries' staff members saw they had nothing to lose, they could appreciate what they had gained. They kept their jobs, their companies kept their names—with "A Wallace Company" tacked on the end. And they helped create a large network of 49 companies capable of providing local services to a national clientele. Best of all, they found themselves part of an organization that boasted more than just size.
"We're not just creating another large printer," Herring emphasizes. "This is a company that provides services from A to Z. It can answer all of the needs of the customer—from printing to inventory management. Nobody in the industry can offer all the services we can offer at the level we can offer them."
And, thanks to the acquisition, Wallace can now offer all of these services to new accounts. Graphic Industries shared few customers with Wallace. So there's minimal overlap.
Wallace's 700 salespeople already have experience with commercial printing, so they shouldn't have too much trouble filling capacity on Graphic's fleet of primarily sheetfed presses. The 300 salespeople from Graphic Industries should keep Wallace pretty busy as well.
"To our pleasant surprise, we're finding that the Graphic salespeople have identified well with the Wallace product lines," Leatherman says. "They're actively selling those product lines."
Some of these new product lines even extend into commercial printing. Specifically, Wallace has designed W.I.N. 3.0, the latest version of its popular software program, with buyers of commercial printing in mind.
W.I.N. 3.0 provides buyers of commercial printing with the same time- and money-saving features that previous versions brought to early W.I.N. adopters. Need to know how many brochures you should print? Pull some data from W.I.N. Look at specific usage patterns for similar products you've printed in the past. See how these products performed—across a region or across the country. Measure data by days, weeks, even years.
"Because of all the data we are tracking about the use of these items, buyers can do a much better job of forecasting the initial quantities," Samson boasts.
W.I.N., while extremely powerful, is just one step in the process. Wallace markets a total print management strategy. Distribution, warehousing, shipping and, whenever necessary, outsourcing complement manufacturing and information services. Wallace treats each customer uniquely, providing as many services as the customer requests.
That means selling more than just forms and commercial printing. And Wallace does. Labels, direct mail and office products round out the organization's offerings.
While commercial printing and forms comprise the biggest chunk of Wallace's business—44 percent and 22 percent, respectively—these two categories do not overshadow the company's other products. On the contrary, Wallace is dedicated to finding new ways of improving all aspects of its business.
For example, the organization recently developed The Daily Mail, a service that offers digital on-demand direct mail. And @W.I.N. Direct, an Internet-based service, provides a quick, easy and convenient way to order from Wallace over the Internet.
@W.I.N. Direct is available to anyone within a customer's company. The customer specifies the number of users, then sets the limitations on what any given individual can order.
With a Web browser, the user logs into @W.I.N. Direct by keying in the customer number and a personal identification number. Once the system recognizes an authorized user, ordering begins. Once the user finishes, Wallace boxes up all the requested supplies, then ships everything out using the courier the client chooses.
More services in new segments may be forthcoming from Wallace, but not until the company feels that it has adequately marketed the commercial division—a division that continues to expand. While the former Graphic Industries plants have bulked Wallace up, the company must fill in gaps around the country in order to become a truly national network. Look for acquisitions on the West Coast.
In the meantime, Wallace will enjoy its 20 new additions. According to Cronin, the Graphic Industries acquisition has more than met his expectations. "What we saw from a distance appears to be a reality up close," he says.