Standard Register Unveils Renewal Plan
DAYTON, OH—Standard Register is embarking on a renewal plan aimed at revitalizing the company, taking advantage of growth opportunities and creating increased shareholder value.
The plan comes at a steep manpower cost—2,400 employees—nearly 30 percent of Standard Register's workforce will be laid off.
The four-step plan, which features restructuring, reorganization, performance improvement and growth initiatives, is designed to generate total shareholder return of 30 percent per year over the next three to four years. The long-term goal is to position the company for sustained earnings growth.
After four quarters of declining earnings, Standard Register named Dennis Rediker CEO in June of 2000, in the hopes that he could revitalize the company.
Standard Register then instigated a review of its products and services, along with the market segments and customers that it serves.
"We found that Standard Register had overinvested in a business model that was not consistent with the rapidly changing nature of the marketplace," Rediker says.
"As a result, the company must undergo significant restructuring to 'disinvest' in those segments of the business that are not providing an adequate return and to invest more heavily in those areas that provide growth opportunities."
The layoffs are part of the restructuring segment of the plan, and includes reducing production capacity by roughly 30 percent. In restructuring the business, Standard Register expects to see revenue reductions of 18 percent to 20 percent ($235 million to $300 million) of low-margin business.
In order to support these actions, the company will take a first quarter 2001 restructuring charge of $109 million. The actions are expected to result in $125 million in annual cost savings.
The company is being reorganized into four strategic business units (SBUs): Document Management, Fulfillment Services, Labels and Label Systems, and SMARTworks.com.
"One of the major benefits of shifting to an SBU model is that we now have the opportunity to attract highly qualified, proven business leaders who will bring fresh perspectives to the company, to serve as presidents of the new strategic business units," Rediker contends.
As part of the company's goal of performance improvement, Standard Register is tapping the Six Sigma business process, which allows companies to improve the bottom line by designing and monitoring everyday business activities in ways that minimize waste and resources, while increasing customer satisfaction.
In terms of growth initiatives, Standard Register notes that two-thirds of its revenue comes from declining market segments. The target of its growth initiatives is to shift that ratio so that, by 2004, more than two-thirds of Standard Register's revenues will come from growth markets.
The business units have identified distribution labels, document consulting, fulfillment services and e-procurement as specific growth initiatives.