Cover Story: Top 30 Book Manufacturers
BB: What strategic moves are being encouraged by current market conditions?
Edwards: Capital budgets are being significantly reduced as printers look to control cash, strengthen balance sheets and survive this economic downturn. Like everyone else, we’re looking at all costs to try to stay competitive. However, … if we see equipment that can get a quick return on investment, we’ll do everything we can to buy it. … You have to continue to focus on the future and try not to get into too much of a bunker mentality. …
Right now, automation is key—we’re doing anything we can to lower transaction costs because the cost pressures we feel today aren’t going away under any economic conditions. And we’re focusing our investments on our short-run orientation, because helping publishers run their inventory more tightly and control cash will be important for us forever.
On the “green” front, pioneers like Scholastic have driven a huge increase in the amount of recycled paper used in the book industry.
BB: What’s the next step for ‘greener’ manufacturing?
Edwards: Everybody wants to follow environmentally sound practices and use certified and recycled paper. … But availability isn’t what it needs to be right now, so it costs more. … But supply will improve, and I expect pretty widespread use of these kinds of papers in the long run.
… One of the problems … is that the demand for recycled goods is way down, a reflection of overall economic conditions. But we continue to work on … ways to improve and expand our recycling efforts, including things like recycling waste ink and testing non-heat-set inks on our heat-set presses to lower natural gas- consumption rates. We’re uncertain whether this will work for the kinds of products we produce, but we continue to try. An example of a project that did work out is our recycling of paper dust for use as bedding material at local horse farms. …
BB: Are new investment and infrastructure improvements on hold right now given the economy?
Edwards: We have reduced our capital expenditures in other areas for the next year or two, but that’s because we already invested heavily in 2007 and 2008—the biggest investment years in the company’s history—and have the equipment we need to handle any economic swing.
[However], now is exactly the right time to take a close look at operations to see how you can drive costs out, so we’re continuing to invest in infrastructure and business system improvements. We embarked two years ago on a project to redesign all company systems—it will be complete in 2010. We’ve also accelerated the pace of our lean manufacturing efforts in all plants as part of our infrastructure overhaul, focusing on work in process, throughput and overall improvements in operations. No matter how long it takes for the recovery to happen, anything we do on these fronts will pay off in the long run. …