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By Kevin Keane, IAPHC CEO Hurricane Aftermath It was this writers honor to speak to dozens of graphic arts professionals gathered earlier this month at meetings in Binghamton, NY, Newburgh, NY and in New York City. We appreciated the chance to share some thoughts with old and new friends. We thank everyone concerned for such gracious hospitality. Regrettably, our talk for the North Jersey Club had to be cancelled because of Hurricane Floyd. We have heard of several IAPHC members whose firms have been afflicted by the flooding and our thoughts and best wishes go out to all of them for a rapid recovery. Two CC's of Crazy It doesn't get any simpler to understand, this wild and woolly graphic arts industry, writhing in the change of the consolidation conga line, watching with worried brow as the control of content moves ever more ineluctably into the hands of clients and away from the printer. Consolidation -- Don't those guys ever get tired? Consolidated Graphics signed letters of intent to acquire Byrum Lithographing of Columbus, Ohio on September 8; and Keys Printing of Greenville, South Carolina on September 10; and Everett Graphics of Oakland, California on September 21; and Maryland Composition.com of Baltimore, Maryland on September 24. When these deals are done the company will have sales of nearly 700 million dollars. Cunningham Graphics International, Inc., of Jersey City, NJ did yet another deal on September 10 when it bought Colorfast Printing in San Francisco. Meanwhile, Master Graphics, Inc., announced on September 9 that it was likely going to be making an initial public offering of the stock of EagleDirect.com a firm it acquired in no small part because of its Internet strategy and savvy. Candidly, the irrationally exuberant market mavens on Wall Street don't seem to know what to make of these firms. All three of the above noted public firms, focused on consolidating the ma and pa printing industry, have seen their stock prices fall this year. And two other well known public printing concerns are equally buffeted by the marketplace. On September 23, R.R. Donnelley & Sons Co said it would be buying back as much as $300 million more of its stock. "Our business generates significant cash, our new repurchase program allows us to take advantage of the current weakness in the stock price, " said William R. Davis, CEO. In other news late last week, Donnelley snagged the contract bid to remain the printer of the Yellow Pages in Britain and said it will invest 35 million pounds to upgrade its plant near York in England. Meanwhile, Bowne & Company, the world's biggest financial printer has decided after 224 years of success in that field to transform itself into an information empowerment company (any format, anytime, in any language, anywhere in the world) and to let the world know of its transition, Bowne has launched its first ever major advertising campaign. One of the ad tag lines caught our fancy -- "Prepare Your Information for the Ways of the World." Bowne too has seen its stock value weaken recently. Our good friend Tim Trachtenberg points out that consolidation is happening in every segment of the industry. Tim is a member of the Portland Club and relates this tale of rapid change -- his employer AEP Flexo was purchased by Southern Graphic Systems ( a division of Reynolds Aluminum) on August 12th; and then Reynolds was purchased on August 20th by Alcoa. Tim's business card printer has been busy! In our view, while the challenges to blend disparate corporate cultures, multiple computer platforms and even differing e-commerce strategies may be a short term drag on these firms, the economies of scale they are mustering makes them a force one can only ignore at great peril. No longer content to not control Content In the last issue of TMN we quoted John Wadie of Imation: "The trend is toward more proofing by content creators, with creative professionals gaining more control over specified images and colors." In Printing Impressions Special Report on Digital Prepress, Pantone offered its view: "The traditional and Internet publishing workflows are destined to merge. There will be content creators and publishers from a variety of areas and each will create content that will be published in one form or another." In early July, the huge Japanese printing firm Toppan Printing Co. Ltd., announced a collaboration with several fairly well known firms including Intel, Sun Microsystems, and IBM to create a new electronic commerce project to be called Bitway that will specialize in distributing content over the Internet. The concept is to generate fee revenue (like a music royalty) of each transaction involving the sale of content to end users. The notion that content control is moving away from the printer is a serious threat and one wonders how many printers are plotting a marketing response. On September 27, we saw one such response when IntraNet Solutions announced that IKON Office Solutions had selected IntraNet's Xpedio Content Server to re-engineer IKON's document and production management solutions into an Internet based solution. Importantly, Impresse Corporations PresseWare, a web based order and production management system is also part of IKON's response. The upshot? "The new system, to be rolled out over the next 30 days, (in 30 IKON production centers) will provide IKON customers with real time order entry and job submission, real time order status, and comprehensive document management functions including automated e-mail notification of document changes, incremental updates, full-text search and conversion to Adobe's PDF." Printers (and their sales people and CSR's) need to think about what this means. A direct customer interface into the printer's computer system to place an order, change an order, track the progress of an order..... "CAP Ventures believes this is the first of many such announcements we will see as service providers race to provide comprehensive solutions to their customer base in order to increase their share of each customer's business," said Cary Sherburne, director of the Document Outsourcing Consulting Service at CAP Ventures. Prepress News Today, September 28, The Wall Street Transcript released a 26 page special report on the Imaging Industry. Gibboney Huske of Credit Suisse Boston said: "Companies that have digital color printing technologies will benefit significantly over the next decade." Jonathan Rosenzweig of Salomon Smith Barney commented in glowing terms about Creo Products: "This company, similar to EFI, is a pure play on the transition to digital, but this time in the graphic arts sector. They have no ties to conventional processes. They are a leader in their market by a factor of three. They have by far the best technology and are years ahead of their competition." WOW! Nice ink. PressRoom News As mentioned in the last TMN, the big Japanese trade show IGAS just wound up. Presstek announced a deal there with Akiyama to create a digital offset press for the book market. It will likely debut after Drupa and is to be based on Akiyama's J-Print offset perfector model. Komori reported a third successive year of greater sales and profits. Not too shabby for an Asian based firm; the continuing success came in part because some 70 percent of the firm's presses are exported. Meanwhile, on September 13, Indigo released a study from CAP Ventures in the latter firm's "Next Generation" newsletter. In the report, Indigo's e-Print Pro+ (the new model aimed at the quick print segment) was compared to the Xerox DocuColor 40 and the Canon CLC 1000. CAP found that the Indigo unit had higher resolution and could print on more substrates, and was competitive on a cost per page basis in higher monthly print volumes (40,000 pages and up). PaperNews On September 8, The Boston Consulting Group released its study "Paper and the Electronic Media." The study predicts many facets of the paper business will change in the next few years. The report expects that a rise in e-mail will result in a one million ton loss of envelopes. And that there will be a continued drop in demand for paper forms, and that those forms that are needed will be printed on Small Office/Home Office (SOHO) printers rather than being preprinted on presses. Parenthetically, we note the cover story in the October 4 issue of Business Week, "Last year, we're told, the volume of e-mail in the U.S. surpassed the volume of hand-delivered mail." Actually, it is the increase in the number of computer printers that gives one paper segment a rosy future. The study says that a rise in print-on demand will mean a doubling of the 1996 levels of consumption for cut size office papers. And the study defines print-on-demand to include printing on the SOHO printers. Morgan Stanley Dean Witter just issued a new research report, titled 'Paper and Packaging,' that sees a pretty good future market for paper mostly because as we noted in the last TMN there is so little additional capacity coming into the market. The best paper segments are coated and container board while newsprint will increase at the slowest pace due to advertising moving to the Internet. According to Kubas Associates in Toronto, in their upcoming report for GAMIS (The Graphic Arts Marketing Information Service) "The Outlook and Trends for Newspapers," between 1989 and 1998 newspapers' value of shipments (in 1992 dollars) fell by approximately 22 percent, while the printing and publishing industry overall posted a gain of 4 percent in the same time frame. The Morgan Stanley report expects that global paper making capacity will grow just 1 per cent over the next five years, down from 3.9 per cent over the past five years. There is only one new mill under construction and that is in Indonesia. Increased European capacity is not expected to come online until the end of 2001. Perhaps taking advantage of this situation, Amcor, Ltd, Australia's largest paper maker announced in Melbourne on September 23, that it would be increasing the price of offset grades by A$60 (Australian dollars) a ton. Morgan Stanley's Charles Spencer said: "We're at the very beginnings of what could potentially be a strong cycle for paper prices."
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