RRD, Quad, SCI, Total Printing Systems Forecast Book Manufacturing Market
Perhaps one of the biggest stories to emerge in 2015 from the book market perspective was the June acquisition of Courier Corp. by RR Donnelley (RRD) for a total consideration of $261 million. Along with the employees, equipment and infrastructure, RRD obtained a huge chunk of the goodwill and respect that the former North Chelmsford, Massachusetts-based firm had garnered during its storied existence.
Courier Corp. realized just south of $275 million in sales, according to its 2014 PI 400 reporting period, making it the leading book producer (though to be fair, RRD doesn’t break down segment sales and would have been the top performer). Its biggest impact is on the educational front, as the firms boasted considerable share.
The 2015 campaign brought a changing yet stable environment in the educational and trade publishing spaces—the two largest book spaces Chicago-based RR Donnelley serves. According to Dave McCree, president of the company’s Book and Directory Group, the impact of e-books has leveled off from its high growth period of 2010-2013 and the focus now is on customers managing their product’s total life cycle and focusing on improved inventory management.
Inkjet Enables On-Demand Deliveries
“Through increased utilization of inkjet printing technology, publishers are able to more efficiently respond to fluctuations in demand and thereby reduce product obsolescence,” McCree says.
The book manufacturer is concentrating on helping customers evaluate demand trends while positioning itself to produce smaller print orders on digital equipment or very large print orders on offset presses. McCree points out that managing the front and back end of a title’s life cycle may help with its economics, but the continued ability to manage larger offset print runs remains a critical part of the total solution.
On the educational front, McCree sees an ongoing shift as book publishers spend more resources focused on electronic media and new learning methodologies integrated with printed materials. “Volumes are still driven by adoption calendars and school enrollment, but we are also seeing growth in custom books and consumable products,” he notes. “As with our trade business, RR Donnelley is working to ensure we have the available digital technology, custom publishing tools and offset assets to meet the diverse needs of our customers. An additional trend we see taking place in the education market is that some publishers are also looking for more assistance from their vendors in managing their end-to-end supply chain.”
Annexing the Courier Corp. empire was a huge undertaking unto itself, but RR Donnelley also managed to build and strengthen its warehousing and distribution model during 2015. By linking its warehousing and fulfillment platform with its digital platform, RR Donnelley can assist publishers to better manage the full life cycle of their products.
“The ability to approach book product from a total life management standpoint will be critical to future cost management,” McCree relates. “Offset and digital capacity was our starting point, but we are now also building more holistic models that link warehouse management, workflow systems and logistics services that enable publishers to decrease operating costs and reduce inventories.”
RR Donnelley spent much of the second half of 2015 focusing on the integration of Courier Corp. and, as it concentrates on a successful 2016, the firm will focus on providing the services and capabilities needed to help its clients succeed while continuously investing in its platform to better serve both small and large publishers.
As run counts continue to decrease, the volume of orders and re-orders continues to surge, and the number of titles continues to escalate, notes Rick Lindemann, vice president of Total Printing Systems (TPS) in Newton, Illinois. The religious, self-publishing and home school markets fared well during 2015, while education in general did not fare as well, he adds.
TPS has expanded its perfect binding capabilities to include a longer run system that enables it to be more competitive at runs into the 3,500 to 10,000 copy range and to be more efficient when producing shorter ganged runs. Other revenue-building initiatives undertaken by TPS include the creation of a new website—backed by Digital Palace of Mt. Prospect, Illinois, and new marketing manager Meg Souza. One of the site’s more robust tools is the ability to price books even while incorporating a wide array of specifications.
“It’s really a more extensive pricing tool than anything else available in the market,” Lindemann contends. “Our goal was to allow customers to play with their specifications in order to get the best possible price for their given product.”
Keeping Old Titles Alive
What will be some of the driving forces influencing 2016’s prospects? Lindemann notes that more publishers are discovering they can realize revenue from older or retired titles through the use of print-on-demand and short runs. That, along with the continued influx and ease of self-publishing, has triggered the flood of titles.
“Last year, when we installed our Screen Truepress Jet520 EX mono web press, we were able to unlock needed capacity on our four-color Screen Truepress Jet520 inkjet web,” Lindemann notes. “Along with the addition of our new bindery equipment, we have been working to expand business with our current customers.
“Later in the year, we plan to open an online bookstore for our customers as well. This will primarily cater to the smaller and self-publishers.”
It was a mixed bag year in the adult trade and higher education spaces, which represent a lion’s share of the book work performed by Strategic Content Imaging (SCI) of Secaucus, New Jersey. The adult trade programs experienced some growth but the demand in the higher education market fell, due primarily to vendor consolidations with a key customer. Even so, SCI’s overall book volume continues to increase year over year.
SCI boasts a pair of solutions for its book publisher customers—automated replenishment and on-demand/custom publishing—that support both spaces. The former replenishes inventory on a title-by-title basis via preprogrammed interaction between inventory, ordering and receipt interfaces. The custom publishing is particularly well received on the education front, where professors call for specialized (often self-authored) texts as opposed to mainstream books that previously serviced hundreds of thousands of students.
“Custom publishing continues to grow,” says Dale Williams, executive vice president for SCI. “We’re still seeing growth in the electronic versions of books, but thankfully this has leveled off for the time being. Some programs we’ve seen come out involve rapid reproduction and distribution; essentially, (professors) sending out new coursework on a week-to-week basis. I’d call it custom supplementation.”
While Williams notes the company does not divulge specific information about its capital expenditure program, he did reveal that SCI’s 2016 plans likely include investments in automated workflow solutions, along with binding and finishing tools. And though a press addition isn’t on the company’s radar, Williams says SCI could make an investment on that end should the right opportunity present itself. Attending drupa is high on SCI’s list for 2016.
“We look to support our customers not only by streamlining our processes to keep prices down, but to also use technology to help them streamline their own processes,” Williams remarks. “That way, we can cut out steps through custom software or printing/finishing technology to take them from concept to final product.”
One of the most striking trends to emerge from 2015 was that e-book sales declined more than 10 percent in the first half of the year, notes Eric Steinbach, president of publishing solutions at Quad/Graphics in Sussex, Wisconsin. He says some booksellers even indicated a reverse migration to print as e-book prices went higher. What’s more, Steinbach notes that studies have shown students learn better with printed textbooks than they do when using e-readers.
From a market perspective, 2015 saw upticks in K-12 demand specifically and four-color printing in general, he says. One-color hardcover trade rebounded consistent with the market segment trend. Overall, the number of orders and transactions skyrocketed, backed by its rapidly evolving digital/short-run production.
In 2015, Quad/Graphics embarked on a three-year strategy to transform its book platform, keyed by major investments in high-speed HP inkjet color web presses. The company also introduced new front-end workflow solutions for accepting orders and putting them into production quickly and seamlessly; and enhanced all back-end systems for book finishing, distribution and fulfillment.
“Our goal was to offer breakthrough technology and solutions that allow our book customers the fullest range of options to produce and distribute their books—including producing and delivering books on-demand—bringing zero inventory and just-in-time delivery closer to reality,” Steinbach says.
Giving Publishers More Tools
“This strategic investment is working. We are giving publishers increased customization and versioning capabilities; faster time-to-market; reduced waste, inventories and obsolescence; and lower fixed costs. We expect the migration to digital print production of books to continue and are investing accordingly.”
Heading into 2016, Steinbach believes the variables most likely to impact the book manufacturing market include the overall health of the economy, the tax environment and attitudes toward educational spending. Bestsellers will tell the trade side’s fortunes, and a presidential election year will undoubtedly stoke the literature fires.
From an operational standpoint, Quad/Graphics plans to focus its energies on the key blocking and tackling aspects of print production: controlling costs, increasing productivity and achieving greater performance through innovation. Steinbach sees the digital printing platform continuing to grow while developing front-end and back-end systems around it.
“We are pleased where we are but even more excited by what we see coming very soon that will make digital printing for books even more compelling—greater speeds and throughput, better quality, many more paper options and new ways to take advantage of the variable print capabilities,” he concludes. PI