WEB OFFSET REPORT -- Looking to Offset Losses
Majerczak: The only way to fight competition and industry capacity is to create niche markets that allow you to move away from strong competitive environments and capacity issues. To do this, web offset printers must continue to pursue strategic initiatives such as digital printing, distribution, mailing, personalization and new product developments that steer us away from commodity-type products.
PI: Do you expect market pressure to spur another round of consolidations in an attempt to build/maintain market share? Or, will printers look inward and focus on "realigning" their existing operations to match demand?
Majerczak: I think you are going to see both done in a very active manner. Companies are going to continue to try to buy market share and solidify their own efforts. Other printers are going to be faced with having to realign their existing operations to match the demand in the market. This will entail a downsizing of capacity, more targeted purchasing of equipment and, in the long run, may bring us into different markets, such as data management.
Keene: We are not looking so much at acquisitions as we are toward building value-added services. Mailing and fulfillment, CD replication and other opportunities of that nature. I think you will see more companies buying those types of businesses rather than another printing company. The value-added is in moving up and down the supply chain for our customers.
Quadracci: While consolidation is likely to continue, history has taught us that this is not always the best strategy. I can think of a number of companies over the years that have focused on industry "rollups" or acquisitions. It is difficult to name one that has been successful with this approach in the long term.
It is certainly true that there are many economies to be gained by merging companies together, but there are also many drawbacks. Money is spent on the acquisition of plants and not on new equipment, technology and innovation. The result typically is a collection of plants with aging equipment, incompatible business systems and disparate cultures. Most of the successes in our industry have come from companies that have focused on their market niche and grown their businesses internally.