Saturday, August 7, 2010

In Closing 5 Locations, Quad/Graphics Sticks With Its 'Mega-Plant' Strategy

Quad/Graphics’ announcement of five plant closings this week provided reminders that its success has relied mostly on innovation and huge printing plants -- but not on acquisitions.

Quad bought one of the five plants, in Reno, NV, barely four years ago, fulfilling the company’s years-long dream to have a West Coast presence. It tried to "Quadracize" Reno by replacing most of the equipment with newer presses and binding lines moved from other Quad plants, but then seemed to struggle selling business into Reno.

With the Quad purchase, the plant lost a major source of business – doing bindery and offset-press work for the Reno rotogravure plant owned by Quad’s rival, R.R. Donnelley. Reno is too far from Quad’s co-mail operation in Wisconsin to produce catalogs and monthly magazines efficiently and too small to develop its own co-mail pool.

Although the plant is close to California, customers with time-sensitive products were nervous about serving that huge market from Reno because of frequent highway closings in the infamous Donner Pass. Quad can now serve that business from the former Worldcolor plant in Merced, CA, and has also picked up Worldcolor’s rotogravure plant in Fernley, Nevada, leaving no place for the little Reno operation.

Hurt by a Quad invention
The announced shutdown of the Corinth, Mississippi plant, however, results partly from Quad’s success as an innovator. For years, that plant seemed impervious to the ups and downs of the printing business because its key customer was National Geographic; no other rotogravure operation was configured to meet the magazine’s exacting demands.

Then Quad developed its patented triple-former folders, which gives a roto press the flexibility of an offset press, such as the ability to produce gatefolds and signatures with small page counts. The printing of National Geographic moved in 2002 to Quad’s Martinsburg, West Virginia plant, where the presses were specially designed to produce the magazine.

The Thursday announcement included the shutdown of two plants -- in Clarksville (not Covington, as I originally wrote -- thanks, "Anonymous"), Tennessee and Lebanon, Ohio -- that, like Corinth, Quad acquired last month in its merger with Worldcolor. Quad also announced it would accelerate the closing of the Dyersburg, Tennessee plant that Worldcolor had already started.

One publishing executive noted that his company had become accustomed to the closure of printing plants in Tennessee. Work that it did in the now-closed Covington plant was shifted to Dyersburg last year and then a few months ago to Clarksville.

Another publishing executive noted that the operations being closed do not fit the Quad profile of an ideal printing plant.

“Quad/Graphics likes plants that are a minimum of one million square feet and can be expanded,” he said. Until the Worldcolor deal, Quad had built those mega-plants from scratch in stages, usually with heavy helpings of Quad-invented technology.

The five closed plants, the executive noted, average barely half a million square feet “and are either not expandable, are in overlapping geographic areas or in regions that don’t support the current business level.”

Other recent articles on the Quad/Wordcolor deal include:


Anonymous said...

The Thursday announcement included the shutdown of two plants -- in Covington, Tennessee and Lebanon, Ohio

Eadward did you mean to say Clarksville instead of Covington?

Anonymous said...

Quad's rival in Reno is (was) R.R. Donnelley, not R.R. Donnelly.

D. Eadward Tree said...

Thanks for the copy editing, folks.