The Top 25 Magazine Printers
Magazine printers look to weather a ‘perfect storm’ of challenging market conditions.
April 2008 By Matt SteinmetzIn its annual review of the magazine printing market, Publishing Executive sought the insights and opinions of executives from several printers who appear in this year’s Top 25 Magazine Printers list. Each of the executives interviewed here offered varying levels of concern about current market conditions, while at the same time reaffirming their optimistic outlooks for the long-term prognosis of magazine printers. Publishing Executive also sought commentary from columnist Steve Frye, an expert print buyer, on many of the same issues.
This year’s Top 25 Magazine Printers list (click on the thumbnails below to see the full list)—the industry’s most comprehensive ranking of leading magazine printers in the United States and Canada—bears a good deal of similarity to our 2007 rankings. Despite the magazine printing market being dogged by more uncertainty and confronted with more challenges than at any point in recent memory, just two printers on the list reported declines in magazine printing revenue last year.
Volker Petersen, President and CEO, Brown Printing Co.
What are some of the changes or trends you’ve seen in the magazine printing market over the past year?
Petersen: I think … there are three major issues. The first is that, overall, we have seen some volume decreases, and we definitely have some overcapacity in the marketplace that has continued to erode the pricing. Some of the pricing erosion that we have seen … has then also really led to some instability in the marketplace and problems for some of our colleagues.
Paper is the second trend. The overcapacity there has been greatly reduced over the last year. Last summer, about a million tons of production was taken out of the system … which … caused significant tightening of the supply—so much so that even some projects had to be canceled because paper couldn’t be purchased. And that’s now causing the paper’s pricing to increase significantly, so much so and so quickly that a lot of publishers and catalog companies have a really hard time adapting to the new business environment. I’m afraid that these paper-price increases are [happening] too fast, and are not allowing the industry to really accommodate and adjust to these prices.
The third major issue in the marketplace is coming from the distribution side. Price increases from the post office and also the overall cost drivers like fuel surcharges ... are causing … stress on our end-customer who purchases print and distribution services. That’s really put a lot of stress [on] the industry, and it has all been compounded by the overall softening in the marketplace, so that there’s quite some concern in the industry overall.
Having said all of that, we are still bullish about our future, our industry, so much so that we decided last spring to again add additional capacity into our company—about 9-percent companywide—to continue on our growth path. We want to continue to grow our business, and we feel that there are good opportunities to grow and expand by continuing to do what we have done all along: focusing on our customers to make sure that we offer the right services; focusing on our employees to make sure that we have the right skill sets to actually service our customers; and continuing to reinvest in our manufacturing platforms so that our employees have the right tools to service our customers.
How is Brown’s implementation of co-mailing going?
Petersen: It’s going really well. We started up the co-mailing over a year ago in January 2007, and we have continuously grown our co-mail pool. I am looking forward to when we can add the next piece of equipment to further extend our co-mail services.
In terms of the distribution side of our business, it is getting significantly more attention than it ever has. … With the right co-mail program, [publishers] can achieve significant cost reductions that can offset some of the increases that [they] are seeing on the distribution side or on the paper side.
What can Brown do to try to improve the balance of supply and demand?
Petersen: … In the end, what works the best is to provide the correct services for our customers. If I have the right services to add value to the business of my customers, the customers will ask for those services. …
We have grown our business, on average, by about 2 [percent] to 3 percent per year. So we are accustomed to growth, and we want to continue along that path.
Doron Grosman, President, Quebecor World’s U.S. Magazine Division
What are some of the changes or trends you’ve seen in the magazine printing market over the past year?
Grosman: There’s no question that this has been a year that will be known as the “perfect storm,” with simultaneous challenges created by rising postal rates, escalating paper costs and supply concerns, and market resistance to both circulation and advertising growth. The “green” trend is also starting to have a measurable impact, whether it is the scaling back of newsstand draws or advertisers beginning to evaluate magazines based on their environmental practices.
How has the rising cost of paper affected the way Quebecor World (QW) is partnering with its customers?
Grosman: The issue isn’t simply the rising cost of paper; it’s a multi-determined situation of rising cost, shrinking supply, opening foreign markets, private-equity management philosophy and the demand for sustainable and recycled papers. QW is attacking the challenges on all fronts. On the environmental front, in January, we became the first printer in North America to achieve full chain-of-custody certification [from the Forest Stewardship Council, Sustainable Forestry Initiative and the Program for the Endorsement of Forest Certification] across our entire platform, and we are now a sponsor of the Environmental Paper Network’s Recycled Fiber Roundtable. We are sourcing paper for an increasing number of customers. We’re committing resources [to] and training [on] best practices where paper is concerned, whether it’s expertise in running lower basis weights or gaining manufacturing efficiencies.
Has consolidation in the market (both among printers and publishers) affected pricing?
Grosman: Pricing has been an area of concern for some time. However, we have won—and continue to win—business where we are not the lowest-priced vendor. Value-added services are increasingly important, as is customer service. … While the cost structure is driving lower prices in the short run, in the long run it is innovation across the entire value chain that will restore the industry to health. We’re certainly in it for the long run, and the work we’ve done to strengthen our balance sheet will enable us to be an even more formidable player.
Do you have an expectation of shifting significant revenue to premedia or prepress? If so, how much can this make up for lost business on the printing side, and why do you consider yourself positioned to attract this money?
Grosman: As one of the industry’s first providers of digital production methods, technological solutions continue to be a primary focus at QW. As with our paper expertise, we surround the issue from all fronts. We have a full and growing menu that includes workflow solutions, advertising and editorial portals, digital asset management, process control, revenue-generating solutions and more. But our most important asset isn’t the technology—it’s the strategic thinking we provide on how to deploy it. There’s no such thing as one-size-fits-all when you’re applying digital solutions. Working closely with your customers to customize the project to their needs is critical.
This is such a difficult time for the printing industry as a whole. What is QW trying to do to improve the balance of supply and demand?
Grosman: Critical to the future health of the industry is the realignment of magazines as premium products. In order to achieve this, the end user has to be willing to pay more for the innovations and investments that the publishers and their suppliers put into that product. At the moment, we have a premium product, but it is priced and marketed as a commodity. We believe in the publishing industry, and we’re committed to leading the shift to this new business model. QW employees donate considerable time to leading the industry as chairs and serving on the steering committees of key industry initiatives. We continue to fund research and share that knowledge. As the new format of the industry emerges, we’ll be there to support it.
Charles Shelley, Vice President of Sales and Marketing, Lane Press
What are some of the changes or trends you’ve seen in the magazine printing market over the past year?
Shelley: We have seen dramatic acceleration in downward price pressure as a result of paper and postage increases during the past year. Before jumping into draconian product modifications (e.g., trim size, page count, etc.), it’s understandable that publishers would first try to squeeze more costs out of the production process by hitting up their printers.
How have USPS price increases affected the way Lane Press is partnering with its customers?
Shelley: While the world still calls us a printer, we’ve rapidly become logistics experts. We have to know the fastest and least costly means of getting 20 advanced copies across town or moving 400,000 copies to the interior of Africa.
How has the rising cost of paper affected the way Lane Press is partnering with its customers?
Shelley: We’ve been hit with a double whammy—price increases and a revitalized “green” movement. Both of these have us spending much more time and resources on paper management for our customers. Like distribution, the complexities of paper management have increased exponentially.
How is consolidation in the market (both among printers and publishers) affecting pricing?
Shelley: Printer consolidation has limited the options for publishers, making the few remaining high-quality independent printers, like Lane Press, a very desirable alternative to the mega-printers. Publisher consolidation has reduced the number of available customers and increased the size of each account, amplifying the level of competition among printers.
What can Lane Press do to try to improve the balance of supply and demand?
Shelley: Lane Press cannot affect either supply or demand in any material way. Our solution to market challenges has always been the same: Stay our course of the past 104 years. Remain dedicated to the short-/medium-run publication market. Adopt appropriate technologies and innovations. Strive for efficiencies that allow us to be price competitive. Focus on the customer. Continuously improve quality and service. Stick to the knitting.
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