PBM Graphics — True to Their Heritage

Ask yourself a simple question. Where will you be when opportunity knocks?

Take Terry Pegram, for example. Rather than wait for an opportunity to show up at his doorstep, Pegram made his own chances by being a risk taker—despite having a low-key demeanor more fit for the Southern gentleman that he is.

Who is Terry Pegram, you ask? He is the founder, chairman and CEO of PBM Graphics, based in Research Triangle Park, NC. In terms of stature and industry recognition, the company is as much a mystery as the peculiarly named city in which it resides. His vision was of a company that could provide the quality and service necessary to retain the printing work that had migrated to other regions.

Yet it was a willingness to take chances and Pegram’s mantra to “be all things to a few people” that propelled this seemingly small-town general commercial printer into a national phenomenon with sales eclipsing $110 million annually. The company so defied relative obscurity to conquer an explosive niche that now, in the words of Dave Richey, PBM’s sales and marketing vice president, a lot of customers fly over a large host of well-known printers in order to reach this picturesque North Carolina town and its wildly successful printer.

In 1991, eight years after its inception, PBM entered the sports and entertainment card market and thrived despite a downturn in that business. It initially performed non-sports card production for SkyBox, which led to more work for some of the more venerable names in the card realm.

“Because of the recognition we got in the industry for being a long-term supplier for several card manufacturers, we moved into collectible card games,” Pegram notes.

It started out innocently enough when Seattle-based Wizards of the Coast tabbed the printer in 1998 for a product called Xena Warriors. Wizards then asked PBM if it had enough capacity to produce a new set of game cards it was introducing to the market.

The game was called Pokémon, short for pocket monster. Almost immediately, the cards grew into a national obsession for children.

“We had no clue just how big Pokémon would become. It was an overnight success that went from an initial run of a few hundred thousand sheets to a three-year phenomenon of printing them day in and day out,” recalls Rick Jones, vice president of national accounts. “We grew our entire card production niche through that.”

The collectible card game craze—including Wizards’ Magic the Gathering (which, at 12 years old, is the leading collectible game card on the market)—was so explosive that it prompted PBM to acquire its longtime finishing and packaging supplier, Wrap-It Corp., located in Howard, SD.

PBM Graphics emerged from humble beginnings. Pegram and his wife, Joanne, set up shop in 1983 in the Research Triangle Park area of central North Carolina, which was fast developing as a leading research and development location for Fortune 100 companies. Hoping to garner some of the printing being placed by the newcomers, the business became a family affair with brothers Garry and Larry, sister Claudia and longtime friend Peter Krusa.

Along with a little help from their friends, some mature equipment and a 4,000-square-foot building, they were able to parlay that early speculation into one of the region’s strongest privately held printing companies.

More Than Just Cards

Rather than let the cards fall where they may, so to speak, PBM Graphics remains in constant evolution mode, much like the ever-evolving Pokémon characters that have passed through their presses. The company recently began transitioning its two Durham, NC, operations into a state-of-the-art, 300,000-square-foot facility on the edge of Research Triangle Park. John Langdon, corporate facilities and maintenance manager, says that the move (slated for completion by June) will bring a lion’s share of the operations into a completely refurbished facility that formerly housed an IBM manufacturing facility.

The move will complement redundant operations in Greensboro, NC, under the direction of Glenn Thore, vice president and general manager of Triad/Metro. Steve Wright, vice president of the card division, directs the Howard, SD, efforts.

According to Pete Pearce, PBM president and COO, the move was designed to foster future growth and realign the company’s workflow to gain utmost efficiencies. Secondly, the company will benefit logistically in terms of improved communications and reduced redundant overhead obligations. Yet PBM has no plans to lessen its work force of 825 employees, bucking a common practice with typical plant consolidations.

“As printing companies grow over time, their workflows are seldom what one would desire if they were designing them from scratch,” Pearce says. “This new building will give us the opportunity to maximize efficiencies. We’ve engineered it based on how a printing company should be organized—good material flow and logical sequencing of production operations.”

“When I think of PBM, I think of the talent pool we have relative to the printing industry statewide, or even in this part of the country,” notes Larry Pegram, vice president of administration. “We feel like we have some of the best talent around, and we don’t typically lose people to our competitors.”

PBM Graphics is hardly a one-card trick pony. The commercial operation also produces, among a laundry list of products, annual reports, booklets, brochures, corporate identity materials, desk and wall calendars, directories, direct mail, labels, magazines, manuals, point-of-sale materials, postcards, presentation folders, as well as product and packaging inserts. This includes both traditional offset production and digital print-on-demand output (including variable data).

The company also furnishes fulfillment, kitting, warehousing and distribution for the manufacturing, retail and wholesale trade, services, public administration, transportation and agricultural sectors, among others.

“One of our strengths in the marketplace is our ability to produce turnkey projects for our customers,” says Richey. “We have tremendous capacity to handle their projects, as well as the ability to produce packaging, point-of-sale and folding cartons, along with complete finishing, shipping and mailing services.”

Jones feels that the commercial printing market is growing at a slower pace than PBM’s desire to grow, thus the greatest challenge is in garnering a larger market share.

“Distribution for most printed materials for our customers—at least 70 percent—is done east of the Mississippi,” Jones says. “Therefore, distribution costs are dramatically different. Not just in ancillary products, but what we do in commercial printing.”

One way PBM was able to augment its market share was by extending its reach into other geographic markets. Richey notes that the company has been able to grow markets outside of its boundaries by setting up satellite offices. Hoboken, NJ, was the first regional office, followed by expansion into Atlanta, Indianapolis and Philadelphia.

“(These expansions) enable PBM to capture business from corporations in other regions that wouldn’t normally think of using a Carolina printer,” Richey says.

In the prepress department, overseen by Wayne Bailey, corporate prepress manager, PBM Graphics boasts a Creo Prinergy CTP workflow, two Creo Trendsetter platesetters and a host of digital proofing options such as an HP 5500, Creo Trendsetter Spectrum and Fuji color proofing systems.

On the digital printing side, PBM continues to add gear to meet customer requirements for short run, quick-turnaround projects that may include variable data.

On the iron side, a fleet of 16 sheetfed offset presses in the 40˝ format includes 11 six-color Komori Lithrones, eight of which have aqueous coaters and UV capabilities. A pair of Goss M-110s comprise PBM’s half-web arsenal, which is poised to enter the full-web printing realm with the startup next month of a six-unit, 16-page Komori 38S press equipped with QTI closed-loop color and register controls. It is the first installation of a Komori 38S full-web press in the United States.

“What impressed me the most about the new Komori web model is its innovative design and the electronic learning software programs, which will definitely enhance the ease of operation, as well as enable PBM to provide customers with unequalled quality of product and service,” says Ralph Black, PBM corporate web press manager.

Jerry Gill, vice president and general manager of Research Triangle Park, points out that the printer has had ample opportunities to quote on jobs considered to be traditionally full-web work. And while PBM has remained competitive with its half-webs, full-web capabilities will enable it to sell deeper into existing accounts, as well as garner new clients.

The organization’s true curiosity is its 10-color Komori Super Perfector with double coater, the only model of its kind issued by the manufacturer. PBM has acted as a testing site, notes Wendell Robinson, sheetfed press manager.

“The requirement for one of our larger customers is to perfect with an exact back-to-front fit, from one side of the sheet to the other,” Robinson remarks. “We were looking for a machine that would perfect while guaranteeing that both sides of the sheet were dot-on-dot registration 100 percent of the time. Since the Super Perfector does not flip the sheet in the production process, the sheet keeps a constant gripper all the way through the press. It’s also a benefit to be able to coat both sides at the same time and have the same look on the coatings.”

In the finishing realm, PBM operates an assortment of Muller Martini stitchers and perfect binders, Bobst diecutters and folder/gluers, and primarily Itoh and Heidelberg Polar cutters. PBM also has enjoyed a profitable experience in its relationship with MBO America, starting with the acquisition of two T65s obtained in 1987. The printer has amassed 14 Perfection folders, including one with the Navigator control system. One Palamides automatic bander was also delivered by MBO in January with three more on order to complement an existing model.

According to Gill, its partnership with MBO has enabled the printer to address its need to improve finishing efficiencies, add automation to the mix, eliminate tedious hand work, and reduce the number of workers manning the delivery ends of stitching and folding lines.

“The Navigator-equipped Perfection folders have truly proven to be everything MBO said they could be,” Gill says. “Makereadies can be done with just a few sheets and, on automatic setups, the speeds and production are unbelievable. Our operators are asking for more of them already. The excitement that’s been generated in that department over these new folders, and this new Navigator folder in particular, has had such a positive impact.”

Changes at the Back End

Tim James, corporate finishing manager, has been directing the new acquisitions for the finishing department, which include a six-bin, 60-station Standard Horizon VAC-100 collator and a 20-pocket Kolbus Ratio perfect binder equipped with PUR. An additional high-speed stitching line has also been targeted as an area of need for 2006.

Garry Pegram, general counsel and CFO, estimates that the company dedicated $35 million toward its building and capital expenditure program in 2005 and 2006.

According to Pearce, the primary objectives for this year will be centered around getting settled into its new facility while minimizing the impact on customers and employees. “Getting the full-web up and running in 2006 will be a challenge, but an exciting one,” he says. “I’m confident we can do that smoothly. We’ll continue to refine our capabilities in UV printing, and we have made commitments to enlarge and enhance our direct mail offerings with people and equipment.”

As with all successful printing companies, regardless of the ballyhoo it receives, PBM Graphics’ ability to address customer needs is the common thread. Its “can-do” attitude and staying true to its heritage trickle down from its founder and permeate all aspects of the organization.

“We try to focus on accounts where we can build a good relationship and fulfill all of their needs,” Terry Pegram says.

The company uses a team-based approach toward addressing client needs, headed by a team leader for each group. According to Richey, that enables customers to experience the intimacy of a small company with the capabilities and expertise of a much larger organization.

“We’ve had customers say that ‘we came to PBM with a demanding expectation, and they just came through for us,’ “ Richey notes. “As Terry Pegram says, ‘the difficult we do immediately; the impossible takes a little longer.’ “