Criticism of the U.S. Postal Service's abundance of supervisors, problems with its retirement process, and possible shifts in its workforce were among the items of greatest interest to Dead Tree Edition readers this year.
The 10 most popular articles this year were all about the Postal Service, led by USPS Has Too Many Supervisors And Too Many Employees, Congressman Says with more than 18,000 page views and 1,140 hours on page. The Oct. 2 article (and its Oct. 16 follow-up, ranked #3 in popularity) became more significant a month later when the election made Rep. Darrell Issa the next chairman of the House committee overseeing the Postal Service.
Interest among postal workers concerning how their jobs might change showed up in high readership for USPS May Split Role of Letter Carrier By Creating "100% Street" Routes (ranked #2), Postal Service Plans to Use More Part-Time Employees (#6), and GAO Suggests Plant Closings, Two-Tiered Wage Structure for USPS (#7).
Concerns about practices that discourage USPS retirements showed up in the #4 ranking for Why Does USPS Make Retiring Difficult When It Has So Many Excess Employees? Tough Question #5 and #5 for How Does the Postal Service Discourage Early Retirement? Let Me Count the Ways.
Rounding out the Top 10 were Potter Quitting the Worst CEO Job in America, FSS Machines Shuffled Again -- But Do They Work?, and perennial favorite The Unofficial Guide to Flats Sequencing, which has been updated several times since its original publication nearly two years ago.
As for non-postal articles, readers spent the most time with NewPage Does The Curley Shuffle (Was it the article or the Three Stooges clip that drew them in?), Is Bankruptcy Inevitable for NewPage?, IRS Brings Son of Black Liquor Back From the Dead; Ruling May Be Worth Billions to U.S. Pulp Makers, and Newspapers Are Greener Than Web News, Says Environmental Expert.
While we're looking back on the year, allow me to walk you through the highlights and low points for Dead Tree Edition:
January: Dead Tree Edition reports that the regulations governing USPS price caps don't seem to anticipate the sort of deflation that occurred in 2010: "What is not clear is how the rate cap for 2011 will be calculated." Nine months later, the Postal Service realizes the regulations are not clear and asks the Postal Regulatory Commission how to calculate the rate cap for 2011.
February: D. Eadward Tree eats crow when newsprint manufacturer White Birch goes Chapter 11.
March: This blog breaks the news that publicly traded U.S. pulp manufacturers chalked up $6.5 billion in black liquor tax credits during 2009. Various media outlets have subsequently used that number without attribution. Are we really supposed to believe that they dug through the SEC filings of 21 companies to verify that the number was correct? Or is there a new rule of reporting that says you can rely on information from an anonymous blog as long as you don't cite it as the source?
April: We celebrate Earth Day by recommending the use of genuine Amazonian rubber condoms and the firing of Smokey the Bear.
May: The Associated Press distributes an article that for the first time quotes Dead Tree Edition as a source, in this case regarding a quarterly loss for Quad/Graphics. Someone wasn't paying attention to the new rules for citing anonymous blogs. (See March.)
June: Mr. Tree is named #43 on RISI's Power List of movers and shakers in the global paper industry. Still in shock, he reveals how he once confused parasitic wasps with parasitic WASPs.
July: Once again, Mr. Tree is found eating crow, this time after the IRS made "Son of Black Liquor" tax credits possible. He's still trying to figure out how the IRS determined that a "fuel meets the EPA registration requirements if the EPA does not require the fuel to be registered."
August: Print Media Centr's Deborah Corn, the Barbara Walters of the printing industry, publishes an extensive interview with Mr. Tree that delves into rumors that he lives in Hawaii.
September: A publisher offers Mr. Tree some actual money to write a series of articles in 2011. Stay tuned.
October: USPS announces that Pat Donahoe, whose double life as Mr. Tree had been exposed only five months earlier, will be the new Postmaster General.
November: Popular publishing analyst BoSacks' email newsletter says "my e-friend D. Eadward Tree has some of his usual excellent observations about our industry and the new magazine apps," referring to the article that introduced a new term -- app-oplexy. BoSacks responds to the resulting inquiries by insisting he doesn't know Mr. Tree's real identity. (Psst, don't tell Bo that his wife writes most of this blog's articles during his infamous poker games.)
December: Mr. Tree is so burned out that he goes nine days without publishing an article, then ends the hiatus with a rehash of what he previously published during the year. Hey, this Postmaster General thing is hard work.
Tuesday, December 28, 2010
Sunday, December 19, 2010
Un-Intelligent Mail: Another Bungled Postal Regulation
Will the U.S. Postal Service ever learn how to create sensible regulations, or will it continue to find new ways of making the same mistake over and over again?
The latest example of the Postal Service’s regulatory two-step came Friday with the announcement of indefinitely delays to "Full-Service eDoc postage corrections" -- that is, denial of Full-Service Intelligent Mail barcode discounts because of alleged errors -- which were supposed to be implemented on Jan. 2. The ostensible reason was “to give mailers more time to use information from a new report to help correct errors in their electronic documentation,” but there’s more to the story than that.
“The USPS needs more time just as much as, if not more so, than the mailers,” wrote Lisa Bowes, who has reported extensively on Intelligent Mail trials and tribulations at Intelisent’s Postal Affairs Blog. “Making mistakes is a part of learning, but the USPS needs to also learn and try not to repeat its’ mistakes. Setting dates without adequate time to test and implement keeps biting everyone over and over again.”
We’ve seen this dance before, and not just with Intelligent Mail: USPS announces when a new regulation will be implemented, mailers point out flaws with the regulation or the implementation timetable, postal officials forge ahead as planned, and then at the last minute someone at postal headquarters avoids disaster by pulling the plug.
A classic case of poorly considered postal regulations came early last year when USPS announced that the specifications for window envelopes would be changed within a few months, making all currently standard formats illegal. (See It's Curtains for the Window Envelope.) If the bureaucrats who crafted the language had spoken to a few mailers first, they would have realized that their plan would have sent billions of inventoried envelopes and forms to the dumpster.
Fortunately in that case, the proposed regs were taken off the table after only a few days. Unfortunately, the Postal Service has apparently done nothing since then to start the process of getting mailers to switch to window envelopes that work better on letter-sorting machines.
Mailers and their vendors have been saying for months that the Postal Service’s information systems were not ready for it to assess noncompliance penalties for Full-Service Intelligent Mail barcodes (aka FUBAR codes). But in this case, all of the brave "Mission Accomplished" talk from Intelligent Mail executives apparently prevented L’Enfant Plaza from realizing the truth until the eleventh hour.
I’m not saying mailers have to approve or even like every postal regulation. But the Postal Service could anticipate and avoid many problems merely by listening to mailers instead of assuming we’re just a bunch of whiners.
Implementation of the Flats Sequencing System shows how dialog with mailers and mail service providers can help the Postal Service avoid disaster. For example, by discussing its plans for FSS facilities with publication printers a few years ago, postal officials learned that some of the buildings didn’t have enough loading docks or highway access.
The FSS plan originally envisioned all flats being addressed on the top of the back cover, which would have ruined magazines’ most valuable advertising space. The final regulations ended up allowing upside-down addresses at the bottom of the front cover, which met the Postal Service’s needs while causing only minor grumbling among publishers.
Mailers and postal officials have worked together in developing mail-preparation standards that are achievable at the printing plant and should help the FSS facilities operate more efficiently. Declining flat-mail volume and balky machines are big enough challenges for the FSS program, but at least it’s not being hampered by uncooperative customers.
Other articles about Intelligent Mail fiascoes include:
The latest example of the Postal Service’s regulatory two-step came Friday with the announcement of indefinitely delays to "Full-Service eDoc postage corrections" -- that is, denial of Full-Service Intelligent Mail barcode discounts because of alleged errors -- which were supposed to be implemented on Jan. 2. The ostensible reason was “to give mailers more time to use information from a new report to help correct errors in their electronic documentation,” but there’s more to the story than that.
“The USPS needs more time just as much as, if not more so, than the mailers,” wrote Lisa Bowes, who has reported extensively on Intelligent Mail trials and tribulations at Intelisent’s Postal Affairs Blog. “Making mistakes is a part of learning, but the USPS needs to also learn and try not to repeat its’ mistakes. Setting dates without adequate time to test and implement keeps biting everyone over and over again.”
We’ve seen this dance before, and not just with Intelligent Mail: USPS announces when a new regulation will be implemented, mailers point out flaws with the regulation or the implementation timetable, postal officials forge ahead as planned, and then at the last minute someone at postal headquarters avoids disaster by pulling the plug.
A classic case of poorly considered postal regulations came early last year when USPS announced that the specifications for window envelopes would be changed within a few months, making all currently standard formats illegal. (See It's Curtains for the Window Envelope.) If the bureaucrats who crafted the language had spoken to a few mailers first, they would have realized that their plan would have sent billions of inventoried envelopes and forms to the dumpster.
Fortunately in that case, the proposed regs were taken off the table after only a few days. Unfortunately, the Postal Service has apparently done nothing since then to start the process of getting mailers to switch to window envelopes that work better on letter-sorting machines.
Mailers and their vendors have been saying for months that the Postal Service’s information systems were not ready for it to assess noncompliance penalties for Full-Service Intelligent Mail barcodes (aka FUBAR codes). But in this case, all of the brave "Mission Accomplished" talk from Intelligent Mail executives apparently prevented L’Enfant Plaza from realizing the truth until the eleventh hour.
I’m not saying mailers have to approve or even like every postal regulation. But the Postal Service could anticipate and avoid many problems merely by listening to mailers instead of assuming we’re just a bunch of whiners.
Implementation of the Flats Sequencing System shows how dialog with mailers and mail service providers can help the Postal Service avoid disaster. For example, by discussing its plans for FSS facilities with publication printers a few years ago, postal officials learned that some of the buildings didn’t have enough loading docks or highway access.
The FSS plan originally envisioned all flats being addressed on the top of the back cover, which would have ruined magazines’ most valuable advertising space. The final regulations ended up allowing upside-down addresses at the bottom of the front cover, which met the Postal Service’s needs while causing only minor grumbling among publishers.
Mailers and postal officials have worked together in developing mail-preparation standards that are achievable at the printing plant and should help the FSS facilities operate more efficiently. Declining flat-mail volume and balky machines are big enough challenges for the FSS program, but at least it’s not being hampered by uncooperative customers.
Other articles about Intelligent Mail fiascoes include:
Wednesday, December 15, 2010
USPS Delay Means Smaller Price Increases for Mailers
If only every Postal Service delay were this beneficial to customers . . .
The maximum 2011 price increase on most types of mail dropped a bit this morning because the U.S. Postal Service did not submit price increases before the Consumer Price Index for November was released.
The price cap on such market-dominant classes as First-Class, Standard, and Periodicals dropped to 1.741%, down from 1.799% if USPS had announced price increases before today. The cap is likely to drop below 1.65% if the Postal Service waits for the December CPI to be released on Jan. 14 before submitting 2011 price increases.
As explained in Postage Rates Could Rise 1.8% As USPS Wins Rate Ruling, the Postal Service didn't know how inflation-based price caps would be calculated for next year until the Postal Regulatory Commission released a complex ruling late Friday.
The maximum 2011 price increase on most types of mail dropped a bit this morning because the U.S. Postal Service did not submit price increases before the Consumer Price Index for November was released.
The price cap on such market-dominant classes as First-Class, Standard, and Periodicals dropped to 1.741%, down from 1.799% if USPS had announced price increases before today. The cap is likely to drop below 1.65% if the Postal Service waits for the December CPI to be released on Jan. 14 before submitting 2011 price increases.
As explained in Postage Rates Could Rise 1.8% As USPS Wins Rate Ruling, the Postal Service didn't know how inflation-based price caps would be calculated for next year until the Postal Regulatory Commission released a complex ruling late Friday.
Sunday, December 12, 2010
Postage Rates Could Rise 1.8% As USPS Wins Rate Ruling
Postal rates for the majority of mail are likely to rise about 1.8% early next year because the Postal Regulatory Commission has sided mostly with the U.S. Postal Service in a dispute over price caps.
Determining exactly what will happen to First-Class, Standard, and Periodicals rates as a result of the PRC’s complex ruling, issued late Friday, is a bit difficult to discern. But one likely scenario is that the Postal Service will announce average increases this week of 1.8% for these “market-dominant” classes, with implementation as early as February.
The Postal Service would have the latitude to raise the price of a First-Class stamp one cent, to 45 cents (a 2.3% increase), by keeping other First-Class increases lower than the cap.
The PRC ruled that the inflation-based price cap for the next round of price increases would be based on comparing the average Consumer Price Index for the most recent 12 months to that of the previous 12 months. The Affordable Mail Alliance objected to that approach in October (See Mailers Alliance Fights 'Nonsensical' Price-Cap Ruling), saying that it would unfairly ignore a deflationary period in 2009.
The method approved by the PRC would currently yield a price cap of 1.799%, but it is likely to edge down a bit this Wednesday (Dec. 15), when the CPI for last month will be released. If the CPI numbers continue their recent trend, the cap would probably be about 1.65% if USPS waits for the December numbers to raise rates.
The mailers alliance’s proposed method would compare the most recent 12 monthly CPI readings to those of calendar year 2008, resulting in a current price cap of 0.96%.
The ruling was not a total loss for mailers, however. The PRC determined that the deflationary period of early 2009 factors into calculation of USPS’s “unused rate authority”. That’s usually where the Postal Service can “bank”, for future increases, the difference between a rate cap and an actual rate increase. But the ruling cleaned out the bank, resulting in unused rate authority of -0.6% to -0.7% for each market-dominant class.
The rate bank’s negative balances introduce a “use-it-or-lose-it” element to the next rate increase: If any class’s average rate increase is less than the cap, the Postal Service will not be able to bank the difference for future rate increases.
The PRC’s ruling has no apparent impact on the Postal Service’s request for “exigent” rate increases, which is still in front of an appeals court.
Related articles:
Determining exactly what will happen to First-Class, Standard, and Periodicals rates as a result of the PRC’s complex ruling, issued late Friday, is a bit difficult to discern. But one likely scenario is that the Postal Service will announce average increases this week of 1.8% for these “market-dominant” classes, with implementation as early as February.
The Postal Service would have the latitude to raise the price of a First-Class stamp one cent, to 45 cents (a 2.3% increase), by keeping other First-Class increases lower than the cap.
The PRC ruled that the inflation-based price cap for the next round of price increases would be based on comparing the average Consumer Price Index for the most recent 12 months to that of the previous 12 months. The Affordable Mail Alliance objected to that approach in October (See Mailers Alliance Fights 'Nonsensical' Price-Cap Ruling), saying that it would unfairly ignore a deflationary period in 2009.
The method approved by the PRC would currently yield a price cap of 1.799%, but it is likely to edge down a bit this Wednesday (Dec. 15), when the CPI for last month will be released. If the CPI numbers continue their recent trend, the cap would probably be about 1.65% if USPS waits for the December numbers to raise rates.
The mailers alliance’s proposed method would compare the most recent 12 monthly CPI readings to those of calendar year 2008, resulting in a current price cap of 0.96%.
The ruling was not a total loss for mailers, however. The PRC determined that the deflationary period of early 2009 factors into calculation of USPS’s “unused rate authority”. That’s usually where the Postal Service can “bank”, for future increases, the difference between a rate cap and an actual rate increase. But the ruling cleaned out the bank, resulting in unused rate authority of -0.6% to -0.7% for each market-dominant class.
The rate bank’s negative balances introduce a “use-it-or-lose-it” element to the next rate increase: If any class’s average rate increase is less than the cap, the Postal Service will not be able to bank the difference for future rate increases.
The PRC’s ruling has no apparent impact on the Postal Service’s request for “exigent” rate increases, which is still in front of an appeals court.
Related articles:
Friday, December 10, 2010
Here's How the Postal Service Can Get Back Its Pension and Benefits Overpayments
Those who are urging Congress to reform the Postal Service's pension and retiree-benefits overpayments would do well to drop the word “give” and instead learn a new one: “invest”.
The suspicion in Congress is that money given to the Postal Service (even if, as in these cases, it's money that rightfully belongs to USPS) would just be poured down a rathole. What Congressman will stick his neck out for something that could be mislabeled a “Postal Service bailout” if he’s afraid of having to explain in a few years why USPS is in trouble again?
Mailers can't really argue with that. We’ve seen how USPS management didn’t really get serious about reducing costs until it was faced with inflation-based priced caps.
But Congress might be able to get behind the idea of investments designed to fix the Postal Service’s financial problems. In other words, much of the pension and benefits money being returned to the Postal Service would be earmarked for solutions rather than just going into general operating funds.
Here are a few of the Postal Service investments that could be attractive to Congress:
Making It Easier To Retire
Downsizing through retirement is a major strategic initiative of the Postal Service, but almost everything USPS and the Office of Personnel Management do to potential retirees discourages them from retiring. OPM is coming to grips with the problems by transferring 40 employees to the division that handles retirements and stopping the practice of shorting new retirees' annuity payments.
Now the Postal Service needs to follow suit by offering retirement counseling (as required by federal regulations) and providing accurate and timely estimates of all pension and annuity benefits. That will require money for new (or transferred) employees and for overhauling information systems.
Incentives To Go Part-Time
The Postal Service also has a sensible goal of relying more on part-timers and temps to handle the peaks and valleys of mail volume, but it hasn't shown much evidence of a plan to reach that goal.
Why not offer bonuses to employees who agree to retire from full-time status and to be hired back as part-timers? That would entice more employees to retire by easing the financial hit they take from leaving the workforce altogether, and it would give the Postal Service an already-trained cadre of folks whose hours can be increased during peak periods. Such a program's popularity with the rank-and-file might ease the postal unions' resistance to workforce flexibility.
Replacing Delivery Vehicles
The Postal Service's delivery fleet is so old that replacing most of the vehicles (many 20-plus years old) would be cheaper than maintaining them, according to the Office of Inspector General. But the Postal Service, which is on track to run out of money in less than a year, keeps delaying the purchase of new vehicles for lack of funds.
A fund to purchase replacement vehicles would ease the Postal Service's operating costs and almost certainly have a favorable return on investment. Many of the new vehicles are likely to be electric, which would appeal to Congressional greens and to those interested in jump-starting the country's electric-vehicle and battery industries. (And maybe some USPS charging stations could be made available to the public.)
New or Revamped Facilities
Delivery vehicles are not the only example of a short-term, cash-flow focus that discourages spending that will pay off over the long run.
The conversion of USPS's Bulk Mail Centers to Network Distribution Centers, which has apparently improved both efficiency and service, shows the potential to reduce costs with capital investments in outmoded facilities. In other cases, the Postal Service could carry out worthwhile facility consolidations if it could expand a building or start from scratch in a new one.
Venture Funds
From selling additional items and services at post offices to using delivery vehicles for reading utility meters, various sources of new revenue for USPS have been proposed. But getting any of those ventures off the ground would require direct spending on equipment, marketing, and perhaps information, as well as the hiring or reassignment of employees.
Sometimes you have to spend money to make money.
Investment in Human Capital
Every discussion with front-line employees about working for the Postal Service seems to touch on the same topics -- abusive supervisors, ineffective managers, too many lazy or incompetent co-workers whose only skill is smooching rear ends, and some employees who are idle most of the time while others are grossly overworked. It sounds like an organization in need of better selection and training of supervisors, as well as the retraining of excess employees to move into slots where they are needed.
This list is by no means complete. I'm sure others will be able to suggest additional Postal Service investments that would have a favorable return on investment.
Related articles:
The suspicion in Congress is that money given to the Postal Service (even if, as in these cases, it's money that rightfully belongs to USPS) would just be poured down a rathole. What Congressman will stick his neck out for something that could be mislabeled a “Postal Service bailout” if he’s afraid of having to explain in a few years why USPS is in trouble again?
Mailers can't really argue with that. We’ve seen how USPS management didn’t really get serious about reducing costs until it was faced with inflation-based priced caps.
But Congress might be able to get behind the idea of investments designed to fix the Postal Service’s financial problems. In other words, much of the pension and benefits money being returned to the Postal Service would be earmarked for solutions rather than just going into general operating funds.
Here are a few of the Postal Service investments that could be attractive to Congress:
Making It Easier To Retire
Downsizing through retirement is a major strategic initiative of the Postal Service, but almost everything USPS and the Office of Personnel Management do to potential retirees discourages them from retiring. OPM is coming to grips with the problems by transferring 40 employees to the division that handles retirements and stopping the practice of shorting new retirees' annuity payments.
Now the Postal Service needs to follow suit by offering retirement counseling (as required by federal regulations) and providing accurate and timely estimates of all pension and annuity benefits. That will require money for new (or transferred) employees and for overhauling information systems.
Incentives To Go Part-Time
The Postal Service also has a sensible goal of relying more on part-timers and temps to handle the peaks and valleys of mail volume, but it hasn't shown much evidence of a plan to reach that goal.
Why not offer bonuses to employees who agree to retire from full-time status and to be hired back as part-timers? That would entice more employees to retire by easing the financial hit they take from leaving the workforce altogether, and it would give the Postal Service an already-trained cadre of folks whose hours can be increased during peak periods. Such a program's popularity with the rank-and-file might ease the postal unions' resistance to workforce flexibility.
Replacing Delivery Vehicles
The Postal Service's delivery fleet is so old that replacing most of the vehicles (many 20-plus years old) would be cheaper than maintaining them, according to the Office of Inspector General. But the Postal Service, which is on track to run out of money in less than a year, keeps delaying the purchase of new vehicles for lack of funds.
A fund to purchase replacement vehicles would ease the Postal Service's operating costs and almost certainly have a favorable return on investment. Many of the new vehicles are likely to be electric, which would appeal to Congressional greens and to those interested in jump-starting the country's electric-vehicle and battery industries. (And maybe some USPS charging stations could be made available to the public.)
New or Revamped Facilities
Delivery vehicles are not the only example of a short-term, cash-flow focus that discourages spending that will pay off over the long run.
The conversion of USPS's Bulk Mail Centers to Network Distribution Centers, which has apparently improved both efficiency and service, shows the potential to reduce costs with capital investments in outmoded facilities. In other cases, the Postal Service could carry out worthwhile facility consolidations if it could expand a building or start from scratch in a new one.
Venture Funds
From selling additional items and services at post offices to using delivery vehicles for reading utility meters, various sources of new revenue for USPS have been proposed. But getting any of those ventures off the ground would require direct spending on equipment, marketing, and perhaps information, as well as the hiring or reassignment of employees.
Sometimes you have to spend money to make money.
Investment in Human Capital
Every discussion with front-line employees about working for the Postal Service seems to touch on the same topics -- abusive supervisors, ineffective managers, too many lazy or incompetent co-workers whose only skill is smooching rear ends, and some employees who are idle most of the time while others are grossly overworked. It sounds like an organization in need of better selection and training of supervisors, as well as the retraining of excess employees to move into slots where they are needed.
This list is by no means complete. I'm sure others will be able to suggest additional Postal Service investments that would have a favorable return on investment.
Related articles:
- Retiree-health benefits overpayments: Postal Relief? How About No More Congressional Thievery
- USPS's pension-fund overpayments: Pensions: Another Government Rip-off of the Postal Service
- Retirement disincentives: Why Does USPS Make Retiring Difficult When It Has So Many Excess Employees?
- Slow payment of retirement claims: For Postal Service Retirements, Slow Going Ahead
- Part-time postal employees: Postal Service Plans to Use More Part-Time Employees
- The promise of electric postal delivery vehicles: The United States Postal Service & Power Company?
- Some possible business ventures for USPS: How About A Drug-Sniffing, Meter-Reading, Photo-Taking, Bug-Spraying Postal Service?
Tuesday, December 7, 2010
Quad/Graphics Claims Success in 'Quadracizing' Worldcolor
Though they have struggled to bring decentralized Worldcolor operations into the fold, Quad/Graphics executives told Wall Street analysts today they are off to "a fast start" in integrating the two companies.
The bad news of the former Worldcolor's structure is that its "previous acquisitions hadn't been integrated," resulting in "no common manufacturing platform or workflow process," "63 vacation policies" and "94 post-retirement healthcare programs," Quad executives said.
The good news is that Worldcolor had "very little corporate culture to change," they added. That's a huge contrast to Quad, where managers talk of "Quadracizing" almost everything and employees joke about drinking the Kool-Aid.
The executives' comments came during "Investor/Analyst Day" presentations in Wisconsin, which included a tour of the huge printing/mailing facility in Sussex, WI. (Quad posted two presentations on its Web site -- CEO/CFO Overview and Magazine-Catalog Business Overview.)
Quad said "things are progressing as we anticipated" and that projected synergy savings -- annualized $225 million within 24 months -- are "on target."
The printing industry, however, still faces "pricing headwinds due to overcapacity." Quad is putting a dent in that capacity by closing six North American printing plants during the second half of this year -- the "equivalent of closing a large printing company."
Along with shutdown of the former Worldcolor headquarters in Montreal, a 40% headcount reduction in the combined accounting operation, and other "right sizing," Quad is on track to shed nearly 3,000 positions since the July merger.
Some employees displaced from closing (mostly ex-Worldcolor) plants are being transferred to other (mostly legacy Quad) plants. And some customers of the closed plants reported frustrating waits at the peak of a tight paper market while trying to find out where their work was being moved and where their paper shipments should go.
Quad acknowledged that its first post-quarter merger was a bit rough financially, with sales down 2.8% versus what Quad and Worldcolor achieved as separate companies in the 3rd Quarter of 2009. Profitability was also down, with adjusted EBITDA slipping from 15.9% to 14.9%. Once all the post-merger synergies are in place, Quad projects that operating margin will rise to 18.8%, versus 12.6% for rival mega-print R.R. Donnelley.
Other recent articles about Quad/Graphics:
The bad news of the former Worldcolor's structure is that its "previous acquisitions hadn't been integrated," resulting in "no common manufacturing platform or workflow process," "63 vacation policies" and "94 post-retirement healthcare programs," Quad executives said.
The good news is that Worldcolor had "very little corporate culture to change," they added. That's a huge contrast to Quad, where managers talk of "Quadracizing" almost everything and employees joke about drinking the Kool-Aid.
The executives' comments came during "Investor/Analyst Day" presentations in Wisconsin, which included a tour of the huge printing/mailing facility in Sussex, WI. (Quad posted two presentations on its Web site -- CEO/CFO Overview and Magazine-Catalog Business Overview.)
Quad said "things are progressing as we anticipated" and that projected synergy savings -- annualized $225 million within 24 months -- are "on target."
The printing industry, however, still faces "pricing headwinds due to overcapacity." Quad is putting a dent in that capacity by closing six North American printing plants during the second half of this year -- the "equivalent of closing a large printing company."
Along with shutdown of the former Worldcolor headquarters in Montreal, a 40% headcount reduction in the combined accounting operation, and other "right sizing," Quad is on track to shed nearly 3,000 positions since the July merger.
Some employees displaced from closing (mostly ex-Worldcolor) plants are being transferred to other (mostly legacy Quad) plants. And some customers of the closed plants reported frustrating waits at the peak of a tight paper market while trying to find out where their work was being moved and where their paper shipments should go.
Quad acknowledged that its first post-quarter merger was a bit rough financially, with sales down 2.8% versus what Quad and Worldcolor achieved as separate companies in the 3rd Quarter of 2009. Profitability was also down, with adjusted EBITDA slipping from 15.9% to 14.9%. Once all the post-merger synergies are in place, Quad projects that operating margin will rise to 18.8%, versus 12.6% for rival mega-print R.R. Donnelley.
Other recent articles about Quad/Graphics:
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