Keeping an eye on Quebecor, capacity

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Alex Brown has been advising major magazine publishing companies on what to do with their printing since 1984 when she founded her consultancy, Printmark. MB: What's the most important aspect of the printing world for b-to-b publishers to keep their eyes on this year? Brown: Quebecor World. Whether it survives its current financial troubles or ends up selling some or all of its assets, it is bound to have an effect on the rest of the printing industry. No matter what happens, we're watching closely for any plant closures or equipment reductions there. It's virtually axiomatic as part of a workout like that. The consequence would be how much capacity in the U.S. market disappears when the reorganization is complete. B-to-b printing, however, is one of the safest areas, because one of the main methods of reducing capacity will tend to hurt newsstand publishers that are clustered around one time of the month, which obviously hurts consumer publications more. B-to-b will survive the capacity reduction, but their prices will ultimately—who knows when?—go up. If some capacity leaves, which is likely in the long run, we have to have in our awareness that pricing will at least hit a bumpy patch. The takeaway from that is that if you're in position to renegotiate your contract right now, do so. MB: What are the latest technology improvements from printers? Brown: Technology investment isn't happening very quickly. The margins are low, so the printers are very hesitant to put a lot of money into plants right now. Printers' inclination to invest into R&D and new technology is not going to be a major area because the results aren't great. MB: What's happening on the environmental front in printing? Brown: Soy-based inks are happening more. Printers are trying to get away from petroleum-based inks as oil rises. The pricing on that could get people to move to soy. The advertisers want to see more recycled paper, and that's a paper mill area. I think we've been conquering all the issues related to performance of recycled paper: strength, touchability. But the biggest issue is creating less waste on the newsstand. Interest in recycled paper grows, and grows and grows. There could be a big transition to recycled paper in the next few years. Recycled paper is still waiting for its big gusher moment, but it is steadily building. MB: What's next? Brown: Some publications should probably be making their move to an entirely digital realm. This is a direction that we're clearly headed for when postage, paper and the cost of print are likely to go up as well. If you can get your customers to follow you on to the Web, it seems natural to go there.
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