Stop the Presses

Employment within the printing and support fields has fallen steadily in Wisconsin since peaking at 39,444 people in 1999.

Many factors have contributed to the falling employment numbers in the commercial printing industry in the state, including continuously evolving technology, global competition, rising commodity prices, the vast availability of desktop publishing, the dot.com crash at the turn of the century and an increasingly competitive domestic business environment.

Several large commercial printers have had high-profile troubles in recent years.

  • Quebecor, one of the largest commercial printers in North America, entered bankruptcy earlier this year. Quebecor closed its Brookfield printing plant in 2006. It had more than 300 local employees at the time.
  • In November 2006, Menasha-based Banta Corp. was acquired by RR Donnelley & Sons Inc. for $1.3 billion after Banta closed five of its plants and eliminated 500 jobs. In January 2007, Donnelley laid off 89 workers from its Waterloo printing facility.
  • In May of 2007, Reiman Media Group of Greendale laid off 81 employees.
  • Welsh Bindery, a New Berlin book binder, filed for receivership in 2007 and closed its doors in December. Much of its machinery was acquired by Letterhead Press Inc., also of New Berlin, which hired several of Welsh’s former employees.
  • In April, Serigraph Inc., a West Bend commercial printer, laid off about 50 employees.
  • In July, Synergy Web Graphics entered receivership and announced it will close its printing facility in Mazomanie and will lay off the 125 workers there. The facility was previously operated by Sunny Industries, which entered receivership in December, 2006. At the time, the company had 400 employees.
  • In July, Quad/Graphics Inc. laid off 100 workers from its 12,000-person workforce. Because most of Quad’s employees are in Wisconsin, most cuts were made in Wisconsin. Many of the positions cut were administrative, but several production positions also were eliminated. The layoffs were needed because of a softening in the company’s publishing, catalog, retail insert and direct mail business, company president Joel Quadracci said.

Technology driven

Changing technology has been one of the largest causes for falling employment numbers within the commercial print industry, said Jim Sandstrom, president of HM Graphics in Milwaukee.

“The new presses are literally two times more productive than a press that is 10 years old,” he said. “The industry is not the one that I joined 30-plus years ago. It’s totally technology driven. We were a letterpress shop in the 60s, and we joined the offset world in the 70s. We bought our first multi-color press in the 80s. That’s when we entered the national arena – unique national direct mail was what we wanted to enter.”

Printers have long complained about the difficulty of finding employees interested in careers in commercial printing, which has helped fuel automation, Sandstrom said.

“Employment growth within the industry is a poor barometer of the industry,” he said. “My competitor (down the street) has half the employees he used to have. It used to be a manual process. I can honestly say that I don’t have anyone doing what they did 30 years ago in pre-press. Technology has replaced it.”

Craig Faust, president and chief executive officer of HGI Company Graphic Arts, agreed. HGI Company has three divisions – Hi-Liter Graphics in

Burlington, and Plus Digital Print and Inland Graphics, both in Menomonee Falls.

“When you see some of the downsizing or ‘right sizing,’ it comes through technological advances,” Faust said. “You see it in all manufacturing. We’re producing the same volumes or higher volumes with the same head count. A lot of us are going into lean (manufacturing), 5S or Six Sigma. It’s all about working smarter, not harder.”

The need to continually invest in new machinery, software and systems can put extra pressures on printing companies, especially if they are struggling, said Rick Mandel, president of Mandel Co., a venerable Milwaukee-based printer of in-store signage, outdoor graphics and related products.

“There is intensive capital investment in printing,” Mandel said. “It creates financial pressure as everyone tries to get lean and mean. If there is a soft market, it’s tough to make capital investments. And banks are careful with printers – we’re not their favorite market segments.”

Consequences of inaction

Commercial printers who do not reinvest in new technology, lean manufacturing principles and other continual improvement processes will pay a price for it.

“If you haven’t been investing all along, using technology to grow your business with fewer labor dollars, you will have a hard time competing,” said Quadracci. “The technology (that the industry) has employed gives faster rates and the ability to control color with less waste. It all costs money, but if you don’t keep up with it, you will lose the game.”

Many of the commercial printers that have experienced difficulties have not reinvested in new technology, said Niall Power, president and CEO of Print Industries of Wisconsin, a commercial printing industry group.

“The Synergy Web Graphics plant in Mazomanie used to print ‘TV Guide,’ and the plant was built to serve that purpose,” he said. “Formats change. This company bought the whole operation pretty cheap, but the format that it prints in is not very popular. They’ve had some trouble making the conversion, trying to convert from one technology (to another).”

Quebecor and several of the companies it acquired did not continually invest in new technology and continual improvement, Quadracci said. Quebecor seemed to think that it would be able to control pricing in the marketplace because of its size and numerous acquisitions, and when it was not able to do so, it could not react quickly enough, he said.

“(Quebecor) tried to reverse its course with a big investment in presses,” Quadracci said. “It’s not just about buying the press. It’s about all of the technology that comes along with it. You have to look at your whole organization, all of your processes. Once your foot is off the gas pedal for 15 to 20 years, it’s awfully hard to catch up.”

Dennis Winters, chief of the office of economic advisors at the Wisconsin Department of Workforce Development, says printers must have the latest technology to survive in the industry today.

“With technology improving … this industry is becoming (more of a) commodity business,” he said. “If you don’t have the latest technology and techniques, and this is usually a high volume business, you can’t compete. Essentially you have to substitute your capital (investments) for labor. You need the best technology possible, and you need the highest productivity possible.”

Foreign, domestic pressures

The commercial print industry began shedding jobs in the early 2000s after the collapse of the tech bubble, Quadracci said.

“The dot.com explosion was one of the biggest producers of print (materials), compared to other sectors,” he said. “There was a huge bubble and it spilled heavily into print. There were a lot of ads, a lot of catalogs. When the bubble crashed, print was artificially high. A lot of ad pages went away.”

Since then, several factors have continued to put pressure on printers. One of the largest has been foreign competition, which has impacted many other manufacturing and industrial sectors.

“From my perspective, the global economy isn’t doing us any favors,” Sandstrom said. “The Asian and Pacific Rim companies are adding print capabilities … we also have foreign paper companies not competing fairly because they’re government-subsidized. That’s not helping our industry. The global economy is not a fair playing field.”

Mike Graf, president of New Berlin-based Letterhead Press Inc., said his firm may lose a $1 million account to China, which would be the second large account the company has lost to China in the last four years.

“That whole Chinese situation isn’t doing us any favors,” he said. “Free trade isn’t fair trade. I’m certain there are a few people lining their pockets by bringing in stuff from overseas, but they’re hurting hundreds of thousands of people in this country.”

The commercial printing industry also has lost jobs in recent years because manufacturing and industrial companies have continued to leave the Milwaukee area, taking packaging and printing jobs with them, said Chandler Young, vice president of sales with Letterhead Press Inc.

“They were supporting all of this capacity that was here,” Young said. “Not too many years ago, this was a custom craft. There has been so much capacity that has come together in recent years, business has gone away and there is now an economic slowdown. Financial institutions have really affected (printers). All those companies have cut back a lot (on their printing jobs). And that’s affected a lot of printers who were doing pretty well.”

The current economic downturn will give commercial printers additional challenges, said Craig Graff, a consultant with Silverman Consulting in Skokie, Ill., a firm that works with commercial printers througout the country.

“The print industry uses a lot of natural gas to heat their buildings or power their air conditioning unit,” Graff said. “And when oil goes up, a lot of the printing products are oil derivatives. And with raw materials, particularly for the more specialized printers who have to get them from certain providers – they may not have a lot of alternatives and may have to eat some costs.”

The commercial printing industry was hit with two significant cost increases in 2007: a 15- to 25-percent postage rate increase for catalogs and direct mail advertising from the U.S. Postal Service; and a 20- to 25-percent increase in the price of paper, Quadracci said.

“Paper costs and shipping costs going up made it a tough climate,” he said.

Certain sectors of the printing industry also show signs of weakness because of reduced demand for their services.

“If I were printing newspapers right now, I would be nervous,” Sandstrom said. “Or if I were printing for products made in the Pacific (I would be nervous).”

The Milwaukee Journal Sentinel eliminated 130 jobs earlier this year after additional layoffs in 2007.

Gannett Central Wisconsin Media Group recently announced it will close its Stevens Point print production facility, eliminating 11 full-time jobs in September.

Gannett, which owns the Wausau Daily Herald, the Daily Stevens Point Journal, the Marshfield News-Herald and the Wisconsin Rapids Daily Tribune, said it will shift the printing, inserting and labeling work from Stevens Point to its Wausau facility, effective Sept. 19.

“In the communication industry, more people are getting their news online, and there is a lot less (demand) for newspapers, a lot of which is the bread and butter for printing companies,” Graff said.

Shrinking workforce
Employment in commercial printing and related support activities in Wisconsin has fallen since 1999.

    1999    39,444
    2000    39,041
    2001    37,563
    2002    34,720
    2003    33,824
    2004    33,208
    2005    33,064
    2006    33,400
    2007    33,137
    2016    33,120 (projected)

Source: The Wisconsin Department of Workforce Development.

Buyer’s market

The Wisconsin commercial printing industry has seen a significant number of acquisitions in recent years, including:

  • Commercial Communications Inc., a Hartland-based printer and document management firm, was purchased earlier this year by TouchPoint Print Solutions Corp., a printing company acquisition platform sponsored by Huron Capital Partners, a Detroit private equity firm.
  • Sussex-based Quad/Graphics Inc. purchased a majority stake in Winkowski, a Poland-based company and a large commercial printer in the European market earlier this year. Quad/Graphics also acquired Craftsman Press West, a Reno, Nev.-based printing company, in 2006.
  • Robert Wendt and Greg Mierow, owners of Brookfield-based Heritage Printing, bought Graphics Factory Inc., a Waukesha-based specialty printer, last May.
  • CoakleyTech LLC, a Milwaukee-based document process outsourcing firm, was purchased by TouchPoint Print Solutions Corp. in July 2007.
  • Banta Corp. of Menasha was acquired by RR Donnelley & Sons Co. in late 2006.
  • Outlook Group Corp., a Neenah-based packaging and direct marketing printer, was acquired by Vista Group Holdings LLC, a holding company, in 2006.

 

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