Only time will tell what all of this industry shrinkage will mean for b-to-b publishing companies. The No. 1 concern of production executives is what will happen to prices. They fear that fewer competitors will mean less competitive pricing.
"The outlook for publishers holding the line or saving money on manufacturing costs is very bleak," said Ron Brockman, production director for Vance Publishing's food division. He noted that Banta's pricing was always in the running when Vance's contracts with Donnelley were up for renewal.
"These acquisitions give R.R. Donnelley much less incentive to sharpen their pencils," Brockman said. "We are going to need to cast a much wider net to find competitive pricing from other printers that will keep the giant in line."
Julie Davis, art director-production manager at Billian Publishing, is mostly concerned about smaller publications being able to get noticed by printers in general. "I'm not really sure what the consolidation will mean other than a more fierce competition with the few larger players left," she said. "For my own publications, being so small, it will mean more research into other medium shops still open that won't consider my business small beans."
Davis recommends that larger publications be more aggressive in negotiations and look for extra discounts even if they know they won't be met halfway.
Keith Hammerbeck, director of manufacturing services at Advanstar Communications and chairman of American Business Media's Production/Manufacturing Technology Committee, said the consolidation could prove to be a good thing for the industry. "This is a unique supply/demand situation where declining print volume could reduce the possibility of increasing pricing due to reductions in supply," he said.
Tom Fogarty, VP-production at Ascend Media, is concerned that the mergers will result in reduced capacity. "I would think that nothing in the short term is going to happen," he said. "Printing executives are going to watch from the sidelines as merged and consolidated companies find their redundancies and remove them from their organizations for better efficiency. This could mean reduced capacity for the newly merged companies."
Fogarty suggested that publishers that are customers of these printers look to renegotiate to leverage the newly combined volume. "I would also look to see what added value the new and larger organizations can offer," he said.
Technology improvement is one area that publishers should worry about with their printers, said Alex Beam, president of printing consultant Printmark Corp.
"The creation of services and products that benefit publishers was a major selling point for printers, and now the motivation has been reduced for the printer to constantly upgrade with the publisher in mind," Beam said. Instead, she expects there will be more upgrades focused on printing productivity and yield per hour in order to increase printers' capacity.
"This isn't necessarily bad for publishers, but the technology that publishers have taken for granted that their printers are going to uncork for them from time to time probably won't happen as consistently or directly," she said.
Beam sees the postal front as a potential area of significant change due to the consolidation.
Donnelley, for example, now has more to run through its co-mailing program and can get deeper discounts from the Postal Service with that extra volume.
"One thing we can expect is that Donnelley will start selling its co-mailing and freight purchasing to other printers. There's no reason for them not to," Beam said.
This could benefit smaller publishers since the price of distribution at the larger printers will be lower than at the rest of the printing pack. "That other tier of printers will need to lower their manufacturing prices. If they can't compete on postal, they have to compete on manufacturing and paper consumption," Beam said.