The Top 30 Book Manufacturers
It's not likely a big surprise that Quebecor World held fast to its No. 1 spot among the Top Book Manufacturers—ranked by book-manufacturing revenue—in the United States and Canada. With a $36 million lead over R.R. Donnelley, and a $273 million lead over third-ranked Von Hoffmann Corp., Quebecor World isn't likely to lose its position anytime soon.
Both top seeds, however, saw book revenue drop in 2003. In fact, revenue for three of the top five sank by a total of nearly $130 million. Arvato Print USA (a division of Bertelsmann) and Von Hoffmann were the only two in the top five with increases.
The revenue losses aren't all that surprising either, though. 2003 challenged printers from many directions. For one, "The price of paper was down," says Dave Mead, senior VP of sales and marketing for Banta Book Group, and president of the Book Manufacturers' Institute. While low prices are good for publishers, "Paper costs can represent 40 to 50 percent of the unit cost of a book," says Mead. "If paper prices drop 10 percent, printers lose 5 percent on the gross production revenue."
Paper prices factored less for Quebecor World, since its clients largely furnish their own paper. Quebecor World's major challenge, echoed by several other printers, was price erosion, says John Faust, director of marketing.
Mead calls it a case of "overcapacity that drove down prices and lowered revenues."
Printers, therefore, have focused on cutting costs to try to maintain their profit margins—and were not always successful.
In the last month or two, however, printers have seen an escalation in paper prices—good for the goose, but not necessarily the gander. "Paper demand has increased pretty dramatically … and prices are starting to go up," says Mead. But if prices rise too much, he notes, publishers will become increasingly cautious about costs and will cut back on projects.