Dan Nitz, president and CEO of Brown Printing, talks about industry consolidation, his projections for e-commerce—and Brown's formidable offset printing intentions for its Midwest territory.
BY MARIE RANOIA ALONSO
The power of print. Dan Nitz, president and CEO of Brown Printing, believes this power will stay in place for some time, even though print will be enhanced and, yes, compromised at times, by the rise of e-commerce and Internet traffic. While conventional in some views, Nitz is also a visionary. He understands the nature of commercial printing—and its logical, likely evolution.
Recently, Printing Impressions spoke with Nitz at his Waseca, MN, office. Sharing his thoughts on Brown Printing's current status and industry projections for 2000, Nitz reveals big growth plans for Brown Printing. He voices his views on industry consolidation—and why some companies are acquired—as well as his thoughts on the necessity of digital prepress and Brown's philosophy for putting ink on paper.
Brown Printing, Nitz reports, has become the leading trade, business and consumer special interest magazine printer in the country. This is exactly what Nitz and team set out to do when Brown management divested three divisions in 1997 and concentrated key resources toward serving special interest titles.
PI: With January 2000 now in plain view, what kind of year was 1999 for Brown Printing?
Nitz: Overall, 1999 has been a good year for Brown Printing. We are well on our way to fully assimilating our latest acquisition, Graftek Press, which was made two years ago. Since that time, we have invested more than $60 million in the Woodstock, IL, facility, located just outside of Chicago. And we expect to continue investing there until our long-range goal has been met—to have the finest, state-of-the art, offset publication plant in the Midwest.
With the addition of Graftek, Brown Printing has become the leading trade, business and consumer special interest magazine printer in the country. This is exactly what we set out to do when we divested three divisions in 1997 and decided to concentrate all of our resources and energy toward serving these two market segments. We have also grown our catalog printing operations, our third major product niche. Selected acquisitions of printing companies serving our primary niches remain on our near-term agenda.
PI: What about the customer side? How was 1999 for Brown?
Nitz: We were successful in adding several new multi-title customers to our base, while at the same time renewing contracts with several long-time customers. We saw pages from our customer base being relatively stable with the exception of pages from the computer technology sector, which fell between 10 percent and 20 percent. Although print orders remained stable, the lack of pages—particularly in the computer market—pushed printing volume for various titles down significantly. In total, circulation for special interest titles has shown mixed results this year.
The good news is that the number of new consumer titles launched the past several years continues to set records. Also, business publication advertising budgets remain at the same level as 1991, despite the growth of the Internet and electronic media.
PI: This was a record year for major news in industry consolidation, with significant activity linked to names such as World Color and Quebecor. What are Brown's views on this industry trend?
Nitz: Without doubt, 1999 was yet another year of significant consolidation activity in the industry. Was it too much? Time will tell, but I don't think so. In the end, fewer printers that can and will stay technologically up-to-date and financially sound will better serve the publishing community. Don't forget that the industry is still one of the most fragmented in the nation and that a great deal of consolidation can take place before anybody has to worry about lack of competition.
Our industry has been plagued by chronic overcapacity for at least the last decade, if not longer. Bringing capacity in line with demand is never a bad thing and, as this happens, the market should bring to the remaining printers a fairer price. With a better price, printers can improve their margins to the point where they ensure their reinvestment in the new technologies, which, in turn, allows them to serve their customers even better.
The reality: Most printers being acquired today were acquired for a reason. Many times the reason has been their inability to meet reinvestment requirements to sustain themselves technologically and/or meet shareholder expectations. Like many other industries, only the fittest will survive over the long haul.
PI: Speaking of technological survival, what effects of electronic media on the printing industry are of most interest to Brown?
Nitz: Everyone can agree that we are just seeing the tip of the iceberg when we think about the Internet and its impact on the printing industry. The expansion of the Internet, and the e-commerce that it will enable, will be the biggest business story for at least the first 10 to 15 years of the new millennium, if not longer. The Internet will impact the life of virtually everyone on the planet within that time span.
In the printing business, we cannot expect that it will be "business as usual" ever again. Although, I don't think print will disappear, I do expect the size of the industry to shrink.
More consolidation will be a natural outcome of this phenomenon. When all is said and done, our industry can still find itself healthy and thriving if it adapts and incorporates the use of the 'Net in its everyday business.
At Brown, the first use of the Internet has been to move content data to and from our publishers. In addition, we already are using the Internet to electronically link to our customers for everything from production instructions to paper reporting to distribution analysis.
Whether we will sell new work directly on the 'Net remains to be seen. Ours is a business built on relationships and trust between printer and publisher; this is still very important. Personal contact with customers is still a trademark of the way Brown Printing does business, and I expect that not to change.
PI: What's the status of Brown from a digital investment standpoint?
Nitz: Converting operations to 100 percent digital is still a work-in-process for Brown Printing, and I suspect for most other printers, as well. We have already invested in the latest computer-to-plate technology and are prepared to take our customers to a totally digital workflow just as fast as they choose to go.
We provide a complete range of consulting services to our customers to help them get there. The other side of the digital revolution is occurring in the printing plant itself. As printers seek to be competitive by continually lowering their unit costs, the use of the computer to drive the manufacturing process presents us with tremendous opportunities. Automating the process is the key to long-term success on the manufacturing front, especially as labor resources across the country become ever more difficult to attract and retain.
The integration of the computer in controlling the process, as well as in running increasingly sophisticated management control systems, is a major priority at Brown Printing.