The Top 30 Book Manufacturers
Speak to just about any book manufacturer these days about his or her business, and you’re likely to hear a laundry list of concerns: an economy teetering on the edge of a recession, paper’s rising costs and tighter supply, the need to respond to publishers’ and environmental groups’ “green” demands, and mounting pressure to improve turn times and to upgrade technology, among others. And yet, for an industry so seemingly wrought with challenges, a look at Book Business’ annual list of North America’s Top 30 Book Manufacturers (on pages 16-17) appears to tell a different story.
Just seven of the 30 printers who appear on this year’s ranking reported a decline in book-manufacturing revenue this past year—down, perhaps surprisingly, from 13 companies with declining book revenue on last year’s list. In fact, a number of companies performed exceedingly better in this past year’s market, including each of the five companies whose presidents are interviewed in the state-of-the-industry report on page 18.
Book Business’ annual list of the Top 30 Book Manufacturers is the industry’s most comprehensive ranking of the leading public and private book printers in the United States and Canada. In addition to financial information from public companies, the ranking includes figures voluntarily provided by privately held firms. Despite Book Business’ repeated attempts, some companies refused to divulge their annual printing sales figures—or would not break down these sales by revenue from book printing—and, therefore, were not included on the list. RR Donnelley does not separate its revenue from book printing from its other businesses, but the company’s acquisitions last year of Perry Judd’s, Von Hoffman and Banta Corp. ensure that this figure is ahead of No. 2-ranked Quebecor World’s.
This year’s list did see a few newcomers, including Taylor Publishing (No. 8), Sheridan Books (14), Bradford & Bigelow (23), and Quad/Graphics and Bookmasters, tied at No. 27.
Over the past year, what were the major trends or shifts in the book-manufacturing market?
John Edwards: We have seen intense pressure on price, more than ever. We have to be better at lowering costs, and that is a primary focus at Edwards Brothers. We will be able to lower costs through better use of technology, equipment, methods and management systems.
Also, [there should be] an increased awareness of the cost of inventory, [as] more publishers are taking a closer look at total cost of manufacturing, and that is a good thing. By looking at the total cost of manufacturing, real opportunity exists to lower costs. With a focus on printing “just-in-time” inventory, not “just-in-case” inventory.
Curwin Friesen: We continue to see a move to shorter runs. This trend is not new, but it is accelerating and changing the way we need to respond to the needs of publishers. Today, we see it in the number and frequency of orders we manage. This trend adds to the complexity of book manufacturing and publishing, as many more projects need to be monitored on a weekly basis.
Another major development is in color management. The tools to achieve this long sought-after goal for printers have matured, and we are now beginning to see the tangible benefits of color management from file creation through proofing and then to the final printed product. This development will be very useful in dealing with faster turns and more projects.
Dave Liess: Print runs have been steadily decreasing, run frequencies have been steadily increasing, [and] turn times have also been tightened.
Charles Nason: The single biggest shift we have seen is the increase in demand and interest from publishers in having a “green option” for production of their books. The initial push for environmentally friendly papers and materials came from the special-interest organizations dealing with the environment. That movement has successfully embedded itself within the publishing industry and now into the manufacturing sector. There is a cost involved in doing this, and we still do not have a handle on how much will be done once the understanding of true costs filters through the system. …
The second major shift we have noticed is the impact of the overall economy on our industry and China. Increased fuel prices are making the “China alternative” less attractive to publishers, as has the modest adjustment in the Chinese currency. Paper and labor prices are also impacting the Chinese pricing structure, so the gap is narrowing. We are aware that there are some publishers “rethinking” the amount of work they are sending to Pacific Rim manufacturers. That would prove to be a significant and positive shift for domestic suppliers.
Bill Upton: The first trend [I see is] digital short-run printing. This has been a hot topic of conversation in the industry for a number of years, but it’s no longer something that is “on the horizon” or just a small niche in the market. POD [print-on-demand] and digital short-run printing are now integral components of the inventory-management strategies of most publishers. …
The second trend [is] the increasing interest we’re seeing from publishers in using paper certified by FSC [Forest Stewardship Council] or SFI [Sustainable Forestry Initiative]. I think this is a very positive trend, both for the environment and for the book industry.
… In the U.S. and Canada, we have, in fact, been renewing the wood that we harvest. But to ensure that this continues, we need to know that the wood we use for our paper comes from sustainably managed forests. FSC and SFI provide that assurance. In the past year, many printers, including Malloy, have obtained chain-of-custody certification from FSC and SFI, which enables us to display the logos of those organizations in the books we print. This lets the public know that the products we’re supplying to them are made from environmentally friendly materials.
How is the price and demand for paper affecting the market?
Edwards: I believe that as paper [costs] go up, print quantities go down (which is not a bad thing for us), but less printing is not a good trend. In the worst case, publishers may look to an electronic version to lower their costs. That is not good for our industry.
Friesen: There is no doubt that we are seeing upward pressure on paper prices. Mill closures and consolidation mean that supply is tighter than it has been in many years in the book-paper space. We are also seeing longer lead times in sourcing paper, which is not helpful in our drive to cut production times.
Liess: To date, it is a cause for concern. Better planning is required due to more limited supply, but higher prices have not yet impacted demand.
Nason: The price and demand for paper doesn’t seem to be having a significant impact at this time. I do believe, however, that the price for FSC and SFI papers may have a neutralizing effect on the current intensity of the publishing community’s desire to “go green.” Only time will tell.
Upton: So far in 2008, our sales have been running slightly ahead of 2007. However, I’m concerned that the increase we’ve seen in paper prices over the last 18 months will begin to affect our sales as the year progresses. … I did hear some good news in early May, when John Maine of RISI [a publisher targeting the forest-products industry] addressed the Spring Management Conference of the Book Manufacturers’ Institute. John predicted that prices for uncoated free sheets (offset papers) would stabilize in the second half of this year, due to a softening of worldwide demand. If things work out as John predicts (and they often do), it would provide some welcome relief to the U.S. book industry.
How is your company feeling effects from the “green” movement?
Edwards: We have been recycling for more than 30 years because it makes economic sense. If done right, “green” can lower costs. We have expanded our recycling in our plants, and have a goal [that] no more than 1 percent of the materials that come into our buildings go to the landfill. Today, it is nearly 3 percent.
Our presses don’t care if paper is a free sheet or recycled paper. They just need to run, without additional stops or paper waste. I think the biggest obstacle today is the price of recycled paper vs. the free sheets. When that price gets closer (or even lower), everyone will want it. Printing local, shorter runs and proximity to warehouse are all becoming important, and can lower total cost and reduce the carbon footprint.
Friesen: … Material purchasing is much more complex given the wide number of environmental initiatives within the industry. Tracking the quickly changing paper classifications and ensuring we have stock on our floor means more communication between printing plants and the mills.
Formal management practices are critical in ensuring that environmental initiatives in the production plant continue to be effective after implementation. These initiatives are also expensive, and we have had to focus on lean practices to help offset some of these costs.
Liess: Our customers vary from those making purchase decisions based on our environmental policy, to those who are concerned with environmental issues, but are not willing to pay more to support them, to those who do not express any interest at all. We have, however, chosen to apply for sustainable forestry certifications, moved all chemicals possible to water-based, eco-friendly alternatives, developed more effective waste-reduction initiatives, and made a greater effort to recycle the waste stream that we do generate. In addition, we offer our customers recycled-paper alternatives, an FSC-
certified workflow, and several paper-based packaging alternatives to plastic.
Nason: … We are seeking certification for FSC, SFI and PEFC [Programme for the Endorsement of Forest Certification] programs, as well as becoming registered in ISO 14001. We do not feel that this is going to add a significant amount of work to handle the necessary documentation and program-related matters. We are doing most, if not all, of these types of things already; it is only a matter of getting the system in place to audit and monitor what we are already doing. … As far as the impact on costs and prices, I believe that this is still a “wild card” issue. There are additional costs associated with materials that carry a certification; that is simply a matter of fact. This will have the impact of increasing the costs and prices for the customer, and it remains to be seen whether they will accept those increases.
Upton: The green initiative in the book industry has focused mainly on paper. As [I mentioned earlier], I see the interest in forestry certification as a very positive development. We clearly want to leave to our children forests that are in better shape than we found them, and we have the ability to do that by applying the FSC and SFI standards.
Publishers also have a heightened interest in using recycled papers and reducing greenhouse gas (GHG) emissions. However, the best way to combine these objectives in the production of books is not always clear. …
The bottom line is that this issue is complex. … Recently, we’ve seen even more significant increases in the cost of recycled paper than in the cost of virgin paper. This is driven by the high demand for recycled fiber. China is buying much of this. Stepping up municipal recycling efforts in this country would help boost supply, thereby bringing down the cost of recycled fiber. It would also directly address the GHG emission problem mentioned above. Paper recycling rates in the U.S. are quite a bit lower than those of many other developed countries. Are there ways the book industry can help stimulate greater municipal recycling?
Both the high cost of fuel and the interest everyone has in lowering GHG emissions are causing publishers to look for ways to reduce freight usage. Malloy is developing greater fulfillment capabilities so that our customers can store some or all of the books we print for them at our facility and then fulfill orders directly from here. This can be particularly beneficial for orders publishers receive through their Web sites, and we have developed a Web service that will make it easy for publishers’ customers to place their orders with us.
How are you incorporating digital short-run and POD into your customer service offerings?
Edwards: We have been in the digital print business since 1997, so it is not new to us. We expect that offering to grow in the years ahead. I look forward to when we just call it “short-run” and not digital. The quality has really improved, so that day is very close where you cannot tell the difference between digital and offset quality.
Friesen: Friesens has launched a major initiative in digital short-run books with the installation of a digital book factory. Just like offset and web have different print strengths and weaknesses, so does digital. Our customer service representatives and sales team must work closely with publishers to choose the right process for the right book project. Managing the life of a title across several different production platforms has its challenges, but also represents a great opportunity for keeping books relevant and profitable for our customers.
Liess: Digital short-run and POD have been a part of our core offerings to our customers for more than five years already. We see them as an extension of our traditional offset businesses and feel we could not be a full-service provider without them.
Nason: We have no direct plans to incorporate digital or POD into a present service profile. We have considered some digital equipment for printing covers and jackets, but to date have not made the decision to go in that direction.
Upton: … We installed an Océ 6160 in the spring of 2007. This machine prints beautiful screens and halftones, and it is very efficient. It has helped us extend the range of run lengths we can efficiently produce down to 25 copies. In doing this, we’ve tried to make it as simple for the publisher as possible by making it part of our overall offering and not a separate service.
To what extent are your customers now willing to forgo folded and gathered sheets [F&Gs] or hard proofs for soft proofs once they have furnished their own PDF files?
Edwards: Many of our customers use soft proofs now. The soft proof eliminates overnight shipping charges and improves the cycle time. The quality of files is much better than in years past, so publishers have confidence in the integrity of the files they send to printers. In fact, a number of our customers do not get any proofs at all.
Friesen: It is surprising to us that more publishers are not embracing this potential opportunity. With the internal improvements in color management and proofing technology, we are confident we can save publishers significant time on the front end of the process—where most of the delays occur. This does mean more training, and new equipment and systems, which we understand takes time. We are setting up some new training tools to assist publishers in making this transition.
Liess: Many of our customers are already forgoing F&Gs and hard proofs when supplying PDF files. We are comfortable with whatever our customers preferences are regarding proofs.
Nason: … F&Gs, for the most part, are gone. Our customers simply do not request them. Hard proofs or contractual proofs are still requested on more than 80 percent of our jobs, but it is starting to move toward soft proofs as a final look or correction. We do have a few customers that provide PDF files and contractual proofs, and do not want to see any additional proofs. In these cases, we do a sampling of Kodaks and a folded blueline for internal review with nothing going to the customer. We would not recommend sending proofed PDF files without hard proofs or soft proof approval. In the near future, we expect to have clients reviewing all aspects of color and copy via soft proofs. …
Upton: F&Gs have always been a fairly rare requirement and are becoming even more rare. Soft proofs are increasing in popularity, but as prepress software has become more mature and PDF files more reliable, publishers are becoming increasingly comfortable forgoing proofs altogether. This is something we strongly encourage. …
[Requiring proofs] increases cycle times for print jobs, which means publishers have to allow a few extra days to have their orders filled … . Malloy produces between 30 and 40 titles per day, and as of this moment, we have 13 titles on hold at the proofing stage, because the publishers are late getting back to us with approvals. Nearly all of these titles are being delayed for editorial or design changes. We’ve worked closely with some publishers to refine the development and prepress workflow for their files to the point where they can confidently send their PDFs to us without requesting proofs. The benefits they have seen from this are eliminating the cost of proofs, faster print schedules and lower inventories.
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