LSC Communications to Close Kendallville, Ind., Book Printing Plant, Impacting 307 Workers

LSC Communications filed a WARN notice with the Indiana Department of Workforce Development on Sept. 1 announcing its intention to begin shuttering its Kendallville book manufacturing facility located on Marion Drive effective Oct. 1, impacting all 307 employees who work there. The Chicago-based printer's operation on Lester Drive in the same roughly-10,000-resident town in northeast Indiana will remain open.

"At this time, the company anticipates that all employees will be permanently separated from employment with the company by December 23, 2020," wrote Rebecca Robertson, VP of human resources, in the WARN notice. "In connection with the plant closure, no employees will have bumping rights to displace other employees working for the company," she added. "We appreciate any support or assistance you or your office can provide to help employees affected by the plant closing in finding new positions."

Ironically, an Aug. 27 article in The New York Times lamented how major book publishers have been scrambling to find print providers with enough open capacity to fulfill the uptick in printed book demand due to temporary shutdowns at major book printers caused by COVID-19, a backlog of blockbuster title launches, and increased consumer demand for educational books and components as part of pandemic-induced home-schooling efforts. As it seeks to divest its book printing operations, Quad also sold the assets of its 1-million-sq.-ft. Versailles, Ky., softcover and hardcover book manufacturing plant to the CJK Group last July.

The closure of the former Kendallville Courier predominately trade and educational book, and bible manufacturing operation — which at one time employed more than 700 workers in its heyday — marks another sad milestone in the decline of LSC Communications. The one-time publication, catalog and book printing and distribution powerhouse filed for Chapter 11 protection on April 13, 2020, after defaulting on nearly $1 billion of debt covenants. In conjunction with that bankruptcy filing, LSC reported it received commitments for $100 million in debtor-in-possession financing from some of its revolving lenders to remain operational and to attempt to restructure.

LSC Chairman and CEO Thomas Quinlan

"Since the termination of our [$1.4 billion, all-stock] merger with Quad/Graphics last year, and given the fundamental changes in the industry, the LSC board and management team have taken proactive and aggressive steps to improve our overall cost structure and streamline our manufacturing platform, while continuing to pursue new business opportunities,”  Thomas J. Quinlan III, LSC Communications’ chairman, president and CEO, said in a release when announcing LSC's Chapter 11 filing in April.

“During that time, we have closed, or are in the process of closing, eight facilities, won new contracts, and delivered on our commitments to our clients and vendors," Quinlan added. "At the same time, we continued to evaluate the best path to creating a more sustainable capital structure for LSC with the support of our senior lenders through the Waiver and Forbearance Agreement."

In January 2020, LSC announced plans to close its magazine and catalog manufacturing facilities in Strasburg, Va.; Glasgow, Ky.; and Mattoon, Ill. The closing of those three printing plants was expected to be completed by July. Then, in April, it "temporarily" closed its Baraboo, Wis., facility, impacting 393 workers. And, about two months ago, LSC quietly shuttered its Senatobia, Miss., 16-page, single-web web offset publication printing operation.

The ultimate fate of LSC Communications still remains murky, but appears that it may be coming to a head with a possible auction within the next 30 days or so. Given Quad's earlier failed acquisition attempt of LSC due to an antitrust lawsuit by the U.S. Department of Commerce to block the transaction, an acquisition by another large printing entity seems unlikely. More likely, current debtors or private equity will take over the distressed company in some manner. But how much of LSC Communications as a whole will remain intact — versus additional one-off plant closures and/or larger portions of the company being sold off — is anyone's guess at this point.