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By Kevin Keane, IAPHC CEO A Personal Word Because this writer's relationship with so many TMN readers is both personal and professional, I hope you will forgive an aside. Many of you know that my son Nolan Keane, age 18, was killed in a construction accident on October 6th in Camarillo, California. According to the October 7th Los Angeles Times: "At about 11:45 AM, Keane was carrying a large piece of insulation on the roof when a blast of wind blew him off balance ..... Keane fell through the skylight, head first, onto a concrete floor in a warehouse...." It is utter irony that Nolan's older brother Kevin was injured in a virtually identical forty-two foot fall through another skylight on the same roof two weeks previously. Of course, it is also a blessing that Nolan was killed instantly and did not suffer. I would like to express my sincere gratitude for the truly overwhelming outpouring of concern received from so many of you. Thank you. It means so very much. Special thanks to my co-workers Lesley Addy, Mike Scott and Kathy Sherwood for pitching in during this difficult time. Industry News Global Crossings In mid-October, the Arts and Entertainment ( A&E) cable channel announced its ten most influential people of the millennium just ending. Gutenberg was number one. "Our competition is not local, but global." Pierre-Karl Peladeau, President and CEO, Quebecor, Inc. on 21 October 1999 (parent firm of Quebecor Printing, the world's largest printer) Graph Expo -- Klosed Kimono The Executive Officers of the IAPHC met in Chicago on October 15th and enjoyed a very productive meeting, we also attended the opening day of Graph Expo. Not surprisingly, we made it exactly ten feet in the door before running into past Cleveland Club president Armand Salvini, and saw many other members throughout the day. It remains a real joy to walk our industry's trade shows not because of the technology, but because of the fabulous people we meet along the way. If because of Nolan, we were a bit out of focus in our chatting with any of you, please accept our apologies. As one might have surmised, with Drupa 2000 scarcely more than half a year away, there wasn't a lot of truly revolutionary stuff on display. Many vendors are keeping things under wraps until the big show in Dusseldorf next May. For example, the giant Heidelberg Booth of several years ago was a bit downsized this year. And the wonderful purple sneakers from WAM!NET's splashy booth of two years ago were sadly missing. Still there were a few notable things. 1) The smell. Seriously! One of the trade show attendees we walked with hadn't been to a show in nearly ten years. The absence of ink fumes was noticeable to her nose. This suggests not merely better environmental controls but also that the big iron presses are being joined by many other digital technologies. 2) The waste. If you think about the amount of sample work that goes straight to the recycling bin at the end of each show day, perhaps you will join us in saluting Hank Brandtjen, president of Brandtjen & Kluge. Hank approached the Chicago school system about producing something they could use. After being footballed around the bureaucracy he finally found someone who understood that Hank was offering to produce presentation folders free of charge. Hank's company is a two time sponsor of the International Gallery of Superb Printing, and we thank Brandtjen & Kluge for that continuing support as well as reminding us that there are many organizations who can benefit from Hank's lead. 3) The cross platform pollenization. One thing that has really changed about trade shows in the past ten years is the presence of XYZ Company's product or service not just in XYZ Company's booth, but being used in a dozen more vendors booths also. The clear driver of this phenomenon is that every vendor wants to prove it's mettle as the ultimate provider of digital workflow solutions, and very few vendors can claim to have all the answers. This patchwork quilt of solutions seems a bit confusing by times, but it we suspect a coat of many vendors will be the garb of necessity for the first part of the millennium. 4) The convergence. Once upon a time, commercial printers looked down upon quick printers. As the Heidelberg introduction of the Digimaster 9110 copier/printer product developed by Eastman Kodak affirms, there is no longer much distinction. Quick printers have become more like commercial printers in their range of output; and commercial printers have become more like quick printers in terms of client required speed of output. 5) The visionary. It was our honor to spend some time with Robert Hu, Vice President, Product Strategy for Collabria. We have written about Collabria in previous issues of TMN. The fact that Mr. Hu is a former commercial printer and the fact that his firm announced a marketing alliance with PrimeSource Corporation as Graph Expo began, made our visit even more enjoyable and thought provoking. In the rapidly expanding digital world of the graphic arts, there are numerous firms offering to help designers and printers and clients move massively complex digital files across the ether. WAM!NET and VIO have been around awhile and Consolidated Graphics announced at Graph Expo that it had selected Noosh Inc as its marketing alliance partner to implement the Noosh.com Internet based print management service at the ever growing network of Consolidated Graphics (CG) plants. Both CG and Noosh will market the Noosh service to CG's 12,000 commercial printing customers. We asked Mr. Hu to compare what Collabria is offering to some of the other possible solutions. He noted that some vendors provide the pipe to send digital files across the ether. The problem with being a pipeline however, is that one begins to focus on thru-put in the pipeline. Ram the files thru the pipe faster and faster, much like any commodity vendor, quantity over quality. His vision is to help printers (remember he is a printer) to add value to each transaction before it hits the pipeline, and even while the job is in the pipeline, so as to make the relationship between a printer and a client one that is valuable to both sides and for more reasons than digital expertise. We were much impressed by Mr. Hu and he sent us an article he has penned that fits our mindset. We briefly quote: ".... 78 percent of the files submitted to printers still contain errors (15 years after Desktop Publishing arrived). Why? Because the fifth largest industry in the United States was willing to be led instead of taking proactive steps to embrace and define the technology. Printers have invested countless hours of employee and customer training time, spent thousands of dollars on prepress hardware and software, and absorbed countless software anomalies. Imagine if only 22 percent of the output of a new printing press was acceptable; or if 78 percent of the sheets in a pallet of paper produced unacceptable results. Printers would go ballistic. But we let this happen with DTP. And the scenario could well be repeated with e-commerce." Collabria, for those of you unfamiliar, provides print manufacturers and resellers with e-business solutions including print, supply chain and procurement management applications via an Internet based service model. Keep an ear tuned to Mr. Hu. He's one of us. An acutely smart fellow too. And finally as if to confirm that Graph Expo was fun, but the really cool stuff is still under wraps, consider this -- on November 2, 1999 Xerox announced that it would have its own 50,000 square foot exhibit hall at Drupa 2000. According to the company's news release, the stand alone exhibit will underscore Xerox's commitment to define the future of the graphic arts. Hiccups on the Consolidation ChooChoo Just in case you needed proof that Wall Street doesn't understand the printing business (or if they do, then we must not!) consider these facts: On October 21 Mail-Well, Inc. announced its 14th straight quarter of record sales and earnings. It had net income of $17.5 million on sales of $493 million (do the math - that's a decent number in this business.) The company says all four of its segments are growing -- commercial printing, envelopes, labels, printing for distributors. But the bull market has been ignoring Mail-Well, as it stock price has been tethered in the $14 range most of the year. On October 27, Consolidated Graphics announced operating income of $21 million on sales of $153 million in the second quarter - both substantial increases. Again, do the math -- that's a VERY healthy ratio, no matter how you define operating income. So the market says thank you by knocking the stuffing out of the stock price. At one point last week it was down below $17.00. Go figure! On November 1, Cunningham Graphics International, Inc., announced that it had placed 44th on the Forbes Magazine list of the Top 200 Best Small Companies. Cunningham too has had a great track record of increasing sales and increasing earnings. But its stock price has slumped to around $11. Suppose you owned a commercial printing business and were fortunate enough to sell to a consolidator. For tax reasons you may not want to take your sale price in cash and the consolidator would likely prefer to pay you with stock anyway. When the stock was high flying you felt good; when the stock swoons inexplicably however... Just more proof that increased sales and income and general business growth are not enough to excite the market mavens. Maybe we just need more sex appeal. Meanwhile Master Graphics announced on October 26th that its subsidiary EagleDirect.com Inc would seek to generate as much as $35 million through an initial public offering. EagleDirect is based in Denver. Industry Blurbs: Some Tidbits You May Have Missed The Digital Printing Council released a White Paper called Direct Mail Responses Based on Color, Personalization, Database and Other Factors. Written by long time industry expert Frank Romano, with David Broudy, the report suggests that personalized direct mail can increase response rates by up to 500 per cent. The Digital Press industry will be cheered by the report. For our part, we were much impressed to receive a personalized Club Bulletin from the Albuquerque Club. This technology is still in its infancy, but it will grow rapidly. Speaking of digital, Bowne & Co announced on October 21, the opening of a state of the art 130,000 square foot digital print and fulfillment center located in Carlstadt, New Jersey. Earlier in this issue of TMN we mentioned Heidleberg's unveiling of the Digimaster 9110 at Graph Expo. This week at Xplor '99 being held in Los Angeles, Danka is displaying this same machine under the Kodak DigiSource 9110 Network Imaging System label. The use of the term Network Imaging System is significant. We again wonder just how many printers are paying attention to what is going on at Xplor '99. And still being digital, on October 28th, Xeikon, N.V. reported record sales and earnings. The same day Xeikon said it has signed an agreement with Xerox under which the two firms will collaborate to develop a new generation of digital color presses. We had reported in TMN earlier this year the rumours that Polaroid Corporation was likely to exit the graphic arts. On October 8th Polaroid and Andlinger & Company, Inc. said they would be forming a new joint venture called PGI Graphic Imaging, LLC. Polaroid will take a $40 million charge in the third quarter of 1999 made up of asset adjustments and severance payments related to the graphics business. Varn International and Heidelberg announced in October a worldwide deal that will result in a range of specially developed Varn Products that will be Heidelberg branded pressroom chemicals. Heidelberg continues to round out its portfolio of being a single source supplier of everything from soup to nuts. The Rochester Democrat and Chronicle reported in its November 2 digital edition that Xerox received patent approval last week for a process to apply scents to paper. According to Bloomberg, potential uses include applying odors to a photograph of trash to sell deodorizers or aromas to a newspaper ad for food. Meanwhile on October 12 Lucent Technologies and E Ink Corporation announced a joint development agreement to move electronic books and newspapers which might look like flexible plastic sheets closer to fruition. Electronic paper is still in the laboratory, but it is quite likely to find some commercial applications. We keep seeing reports suggesting that young people spend very little time reading magazines or newspapers. And in North America, folks who are plugged into the Internet spend roughly twice as much time on-line as they do reading magazines and newspapers. On October 22 Bowater, Inc., the big newsprint seller said that newsprint process have dropped 20 percent. Meanwhile Carter Holt (owned in part by International Paper) reported from Auckland, New Zealand on November 2nd, a 66 percent profit increase, and Asia Pulp and Paper said on November 1, from Singapore, that its sales are surging. Possible conclusions -- newspapers are impacted negatively by the on-line world; while the on-line frequent flyers use more and more office papers to print out who knows what? And hopefully you didn't miss the item just prior to Graph Expo that said Xerox and Bertelsmann AG, the worlds largest publisher, have agreed to find a way to market books printed on demand and ordered over the Internet. Our thanks to members like John Berthelsen, John Kohnke, Dan Millsip, Tony Sarubbi and many more for submitting items for this issue of TMN.
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