Top 30 Book Manufacturers

Krehbiel: During 2006, paper costs remained fairly flat. In my opinion, paper prices would have dropped during the year except that several mills removed unprofitable capacity from the marketplace. So the book market missed some of the cost benefits of reduced demand (and lower prices), because the mills systematically reduced total paper availability.

Hegwood: Rising paper costs have definitely had an effect on larger print companies who continue to focus on long print runs. For companies like [us], who focus on print-on-demand (POD) and inventory reduction, paper is a smaller percentage of our operating cost, so rising paper costs have had less of an effect and, in fact, are fueling the move from long-run, web applications to short-run, POD applications.

What kind of effect has the continued consolidation of printers—namely RR Donnelley’s moves over the past six months—had on the market?

Clarke: Demand is significantly different than it has been in the past, so consolidation is necessary. And … out of the consolidation we’ve seen great opportunity to grow our share with a variety of publishers and to do business with new publishers as alternatives are sought. So for us … it has been a good thing. I think it is necessary for the market, and that there will be continued consolidation. … I think there’s more to come, and we’ll see the same if not more aggressive consolidation on the publishing side, so hold on.

Gregoire: There is a lot of capacity in the market. … I don’t think the fact that Donnelley has acquired [Perry Judd’s, Banta and Von Hoffman] will remove that much capacity from the market. I think some of the large publishers will probably be wary of having too many of their eggs in one basket, so I believe there will be some movement, which is good for some of the printers. But, no, I don’t think the publishers will suffer [from consolidation] too much, because there was already quite a bit of capacity available out there.