The printing industry is getting smaller. Industry giant R.R. Donnelley & Sons recently purchased both Perry Judd's and Banta. And Cenveo Inc. acquired Cadmus Communications Corp., the fifth-largest printer in the U.S.
The long-term concern for production executives is that consolidation will hurt competitive pricing, but in the short term it appears production departments are benefiting from having more distribution options.
Dedra Smith, president of printing consultant Printmark West, doesn't see a major price shift occurring as a result of the consolidation. She said Donnelley could shut down plants but that it would unlikely affect prices because of overcapacity in the market.
The consolidation could, however, have an effect on services, Smith said. "A few months ago you could have a real eye into the nuances of services at a particular plant," she said. "But now all those plants are under one management, so even though as a customer you might be able to request one plant or another, you will not be able to study the differences between plants in such a minute way."
Plus, Smith added, the big printers have gained the ability to place jobs in whatever plants are convenient for them rather than for the publisher.
Ned Kulka, marketing manager at Publishers Press, said there could be more consolidation in the future. "Publishers saw those corrections in their world and how printers were lagging behind," he said.
"Now it's started to happen and it could continue."
The paper market, after a few years of slowly rising prices, has stabilized, and some publishers have even seen prices fall slightly.
The importation of more paper from Asia has helped drive down prices, but John W. Miller, exec VP-sales and marketing at Cadmus, said this won't always be the case. "When the Asian print markets heat up, more of that paper will be used up in Asia instead of coming to us, and there will be an upward pressure on price," he said. "It's a delicate balancing act."
The interest in recycled paper has gone up in the past year as its quality has improved. "The flecks are pretty much gone," Kulka said.
Also, the price of recycled paper, while higher than that of standard paper, has reached a point where it can at least be considered as an alternative by publishers. "The biggest difference is that it's way more readily available than it was a few years ago, and the price point is now at a place where it's more affordable to do it," said Joanne Harap, president of consultant Production Matters.
Some publications will be willing to pay the higher price for recycled paper, said Smith, who works with Good, a magazine that markets itself as helping to "drive change in the world." For this reason, the publication is a good fit with using recycled paper (and its readers are willing to pay for that as well), she said.
Smith envisions that many other magazines will switch to recycled paper in the next few years. "As long as global warming and our environment are big issues, people will start to demand these kinds of things and publishers will find that it's another way to market themselves," she said. "For some titles, being green will just make sense."
One area in which printer consolidation is benefiting publishers is distribution. The volume of Donnelley's co-mail program should be a plus for former clients of Banta and Perry Judd's. Plus, Donnelley is now following the lead of Publishers Press and allowing tabloids and polywrapped titles to be co-mailed, which will increase the volume—and therefore savings—exponentially for publishers.
"The postal piece of the pie keeps taking a larger chunk," Smith said. "How quickly co-mailed books get out of the printer and to the subscriber has become a deciding factor for a lot of publications.
The U.S. Postal Service has initiated another rate case and is continuing to push incentives to move mail onto pallets. This is part of USPS' plan to automate the mail system as much as possible.
"The emphasis is on shape over weight and making mailers change preparation behavior," said Rick Marcoux, president of magazines at Donnelley. He said the effect on magazine publishers would be a focus on getting out of sacks and using co-mailing and co-palletization.
Marcoux said the rate case offers both upsides and downsides for magazine publishers. "On the upside, there is an increased drop-ship discount," he said. "On the other hand, eliminated are the separate pallet discount, the drop-ship pallet discount and the co-polarization discount. There is also an added charge per container. In net, the USPS is focusing these changes to incentivize periodicals mailers to prepare more mail on pallets than in sacks."
Consolidation has also enabled some printers to offer a wider array of options to publishers. Instead of just printing the publication, larger printers are offering such things as "total events printing." This means printing everything associated with an event or convention, including table cards, magnets, bags, placards and programs. Events, of course, have been a solidly growing revenue stream for publishers in recent years as they've expanded beyond print.
Harap said that Donnelley has grown stronger in this area with the acquisition of smaller presses that can handle such jobs. But Miller said smaller, regional printers have an advantage in this department still, since none of the big printers has enough outlets around the country to accommodate every situation.
Donnelley has been receiving requests from b-to-b publishers for far more than just events marketing printing, Margaux said. The list includes such things as direct marketing and centralizing end-to-end ordering, fulfillment and content customization, ideally through a single collective portal.
In order to address the new types of demands, Donnelley created CustomPoint, an integrated Internet-based tool set that communicates directly with the printer's distributed network of print and fulfillment operations. It basically allows publishers to streamline their ordering processes.