Top 30 Book Manufacturers
For the second consecutive year, Visant Corp. nailed down the top spot in Book Business’ Top 30 Book Manufacturers List (p. 41)—ranked by 2005 book manufacturing revenue—in what was certainly an up-and-down year for many book printers. The book manufacturing landscape continues to change, with paper prices on the rise while availability declines. Publishers are being more vigilant than ever in controlling their costs, while Asia’s impact on the market increases each year. In its annual look at the state of the industry, Book Business sought insights from executives at four of the companies on the list—four companies, it is worth noting, that posted gains in their book manufacturing revenues for 2005.
Over the last year, can you identify any major changes in the book manufacturing market as well as one or two major challenges facing your company? How is your company responding?
John Edwards: We are seeing intense price pressure in the marketplace, a tight paper market and rising health care costs. And there is some concern with too much capacity and the seasonal nature of the business. The peaks and valleys are much bigger than they used to be. … It seems to me that we are almost getting to be like the toy business where everything seems to happen toward the end of the year … business is up and down a lot more, so we have a lot more variation of volume coming in, [that is] much harder to predict. For example, our sheetfed presses will be buried, our web presses will be empty, and two weeks later it will be the opposite. So, today we are required to create a more flexible workforce to react to where the volume is, which is not a bad thing.
Bill Long: Over the past year, there have not been any significant changes in the book manufacturing marketplace. We continue to see intense price competition, and run lengths continue to decline as publishers look to control their inventories. This has forced Maple-Vail to look to our employees and suppliers for fresh ideas on ways to reduce costs or improve efficiencies. We are implementing internal processes to support the reduction of make-ready times throughout our operation and are making a number of investments to address capacity blockages and reduce staffing levels.
Marc Reisch: The most significant change we have seen in our book markets has been the increase in customization—ranging from the significant increase in state-specific textbooks to highly personalized school yearbooks. We are responding to these changes by taking advantage of the entire Visant book platform, which is helping significantly as shorter run lengths are making the seasonal production peaks even more severe. We are also investing in the right technology including wide web, large-format sheetfed and digital presses along with more efficient and flexible bindery assets.
Peter Tobin: The biggest change has been that there has not been enough four-color capacity in the book manufacturing market. Last year was a really challenging year, because it was such a big growth year in education publishing, both el-high and higher-ed, which is largely a four-color game.
The next three years project to be the same growth scenario in the market. So for Courier, we added another high-output, four-color Man Roland Lithoman press in December 2005, that came online just five months ago. That is a match to one we brought online in April 2004, so that is a lot of four-color capacity that we have added in the last couple years. Because of continuing demand, we ordered a third, identical Man Roland Lithoman, which will be online this December. So the big demand is for four-color capacity, and we’re ready ….
The other thing that continues to become more important each year is publishers needing to manage cost and keep their inventories down, working with deadlines and tight staffing. We and some other manufacturers, as well as publishers, have collaborated on adopting XBITS (XML Book Industry Transaction Standards), which are saving time and resources by implementing online transactions like invoicing, purchase orders and managing paper inventories.
How has the price and demand for paper affected the market?
Edwards: Paper prices are going up, especially the commodities and the free sheets. And the demand is getting tighter, although we have been able to get what we need for now. I think what ultimately happens is that as paper [prices go] up, people buy less. So what I worry about is that as paper [prices go] up, as mills shut down and the capacity gets tight, the publisher that buys 5,000 units is going to buy 3,500—which ultimately means there is less demand for what we do. For Edwards Brothers, shorter is better, since we are a short-run player. Overall, it is a bad thing for our industry.
Long: The increased paper prices have put additional pressure on our customers to find additional ways to reduce their costs. This primarily includes the cheapening of materials used to construct the books. The availability of paper has been very tight, and this has put pressure on our Paper Supply Program as publishers have turned to Maple-Vail to supply paper when they are unable to locate paper directly for upcoming projects. The reduction in domestic paper capacity is creating supply problems throughout the marketplace.
Reisch: Our market has primarily been impacted by the increase in price and tighter supply of uncoated free sheet web. This has been driven by the significant reduction in mill capacity, which has also resulted in shortages at certain times this year. All of these factors have caused customers in certain instances to delay, cancel or reduce order counts for specific jobs or alter the paper stock for those jobs.
Tobin: Availability has gotten tight, and turn-times have gotten longer. There has been capacity taken out. … [This] has given us the opportunity to expand some of our paper programs and provide more paper for some of the publishers who have provided their own in the past. And, actually, there have been a lot of instances where publishers have been looking for alternate papers, both to save money and improve availability. They typically spec one particular type of paper, and they have been asking us to help them find various alternatives. It allows us to be more of a partner and provide them with more options.
One unfortunate outcome, which isn’t good for anyone, is instances where publishers opt to reduce print runs or not reprint, because of cost considerations.
What is your reaction to Bowker’s recent report that the production of new book titles in the U.S. dropped by 18,000 in 2005 and that the United States is now second to Great Britain in book production?
Edwards: I don’t know how Bowker can count all new titles. I think that more titles are being produced than they can count. If someone is consulting/speaking on financial planning … he can produce his own book, give it out at his seminar and sell a couple thousand a year. That’s not showing up on anyone’s radar. We see all this niche publishing these days, I think there are more titles than ever. A guy can do 50 copies of a book now if he wants. It’s very hard to track. … If it doesn’t have an ISBN number, it is not showing up anywhere. [Bowker’s report] doesn’t scare me because the traditional method of publishing has changed. Anyone can publish a book now if they want.
Long: It has been clear in the last year that the U.S. markets have been fairly weak. We have tried to offset this by expanding our presence with European publishers that have the United States as a market for their product. The combination of our manufacturing and distribution capabilities allows us to provide both time-to-market and cost advantages for European publishers.
Tobin: We need to look at the full story: The article reported that new titles dropped by 18,000 in 2005, but it also reported that in 2004 the number of new titles increased by 19,000. 2004 was the biggest new-title output in history, and 2005 was the second biggest. A big part of the 2004 increase, we believe, was including a lot of the self publishers and small niche publishers that are starting to track …
But the one trend that is important to be mindful of is publishers being more cautions about what titles they print in the first place and what titles they reprint. They feel they can take fewer chances with marginal titles, which is understandable.
What influence has Asia had on book manufacturers in North America?
Edwards: For what we do in one- and two-color work, [Asia] hasn’t affected us yet. “Yet” is the operative word. We hear about a lot of pressure on the four-color printers, and ultimately if that happens, more capacity will be available in the U.S., and that makes our world even more competitive. I think the answer to Asia is short-run and quick turnaround, just-in-time inventory.
Long: To date, the most dramatic effect has been in the four-color markets where Maple-Vail is not a player. We have seen some impact in the one-color market for projects that are not time-sensitive. The biggest area of impact has been the migration of one-color medical textbooks with four-color inserts that have become complete four-color projects that are manufactured in Asia.
Tobin: Asia certainly has had an effect over the last four or five years in the juvenile market, and it has moved into general trade—like long-run cookbooks and things like that. There is growing manufacturing of educational titles over there, but on a smaller scale, of course, because of the turn times required. But [the Asian market] is an increasing component of the manufacturing landscape, and we are planning for it. BB