Year In Review : 2011 - Year of the Felony
If no news truly is good news, then perhaps 2011 offered the printing industry a respite from the calamity and tumult of the past three campaigns. Alas, that was not the case, but if we grade the year on a curve, then 2011 gets acceptable marks.
While 2010 was resplendent with major acquisitions—Quad/Graphics added Worldcolor and HGI Inc., RR Donnelley obtained Bowne & Co., and IWCO Direct acquired the U.S. direct mail operations of Transcontinental Inc.—its successor came and went with little fanfare. Asset sales and closures took center stage, and crime continued to play a leading role from a news standpoint. According to our Website tracking statistics, the police blotter proved to be a popular subject.
Among the crimes reported during the year, former Harold M. Pitman Co. CFO John Eichner pleaded guilty to wire fraud and tax evasion stemming from a $2 million embezzlement scheme. In August, he was sentenced to 56 months in prison.
Brian Steele, the former controller for Dataflow Inc., was sentenced to concurrent sentences that could see him spend 12 years in prison after pleading guilty to stealing nearly $1 million from the Binghamton, NY, printer. Steele forged company checks, made fraudulent wire transfers of Dataflow’s funds, set up phony credit card accounts and took petty cash. He reportedly doctored the books to hide the crimes.
Maureen Beers took a plea deal and agreed to repay $40,000 to
Roemer Printing after being charged with two counts of misdemeanor theft. Beers, the former office manager and bookkeeper of the Middleton, WI-based firm, was accused of giving herself unauthorized pay raises of about $123,000.
The experience cost the printer one of its facilities, which was closed, and $176,000 counting the overpayment, cost of an audit and resulting IRS fines stemming from unpaid payroll taxes.
Canada had a difficult time trying to figure out how to handle alleged Ponzi schemer Tzvi Erez, the owner of print brokerage E Graphix who was accused of defrauding 70 investors of $27 million. At first, the Ontario Crown Attorney’s Office withdrew the charges in part because the court “lacked the resources to go after Erez.” But a new set of charges were filed in October, claiming Erez stole $9 million from investors through phony printing contracts. He was due back in court this month.
In one of the more odder developments of the year, publisher Condé Nast fell victim to a phishing scam of sorts. Its accounts payable department, acting on what it believed to be a request from Sussex, WI-based Quad/Graphics to send work payments to another bank account (“Quad Graph”), wired $8 million between Nov. 17 and Dec. 30, 2010. The con job was discovered when the real Quad/Graphics reached out to Condé Nast regarding outstanding payments. The money was recovered.
Vertis Inc. completed a refinancing plan through a prepackaged Chapter 11 bankruptcy filing. The recapitalization was expected to strengthen the Baltimore-based firm’s capital structure by reducing its total debt by about 60 percent.
Quad/Graphics announced it was closing a direct mail facility in Fredericksburg, VA, eliminating 300 employees, while shedding another 400 employees from its Mt. Morris, IL, plant, which was subsequently closed. A smaller downsize, at its Depew, NY, location, led to 95 layoffs. Quad/Graphics later divulged that it was halting production at its Richmond, VA, and Stillwater, OK, plants, impacting 365 positions.
Cenveo Inc., of Stamford, CT, made a pair of moves, buying the Envelope Products Group from MeadWestvaco, and Impaxx, owner of Gilbreth Packaging Solutions in Croydon, PA. Meanwhile, Walsworth Publishing, Marceline, MO, struck a deal to acquire IPC Print Services of St. Joseph, MI. The yearbook specialist also invested $3 million in new printing equipment.
Houston-based Consolidated Graphics (CGX) got into the act by swinging a deal for The Jackson Group, with two facilities in Indianapolis. CGX then named Patsy Koepke to the position of president of the Midwestern firm.
Classic Graphics, of Charlotte, NC, pulled off a deal, acquiring Belk Printing Technologies. The deal reportedly created the largest printing company in the Carolinas.
RR Donnelley of Chicago decided to close its plant in Greeley, CO, resulting in 177 lost jobs. The plant specialized in printed directories.
Book manufacturer Courier Corp., North Chelmsford, MA, opted to close its Stoughton, MA, facility. The firm cited technology shifts and competitive pressures behind the closure of the one-color paperback book specialist.
Quad/Graphics plunked down $15 million to augment its book manufacturing platform in Martinsburg, WV. The printer also beefed up its plants in Leominster, MA; Fairfield, PA; and Dubuque, IA.
The summer heated up with one of the industry’s biggest deals in 2011. In an actual trade of facilities, Quad/Graphics acquired Transcontinental’s Mexican operations. In return, Montreal-based Transcontinental reaped Quad’s Canadian operations (except for the Vancouver, BC, facility). Quad also received a portion of Transcon’s Canadian book printing operation.
The summer saw a flurry of activity: Philadelphia printers Smith-Edwards-Dunlap and Graphic Arts Inc. merged, as did New York’s Peeq Media and
Toppan America (creating Toppax). CGX also added RT Associates of Chicago.
Padgett Printing, a force in the Dallas commercial market for more than 100 years, decided to close its doors. It was a victim of a liquidity crisis.
The Printing Impressions/RIT Printing Industry Hall of Fame welcomed four new inductees: Ken Kaufman of Corporate Press in Lanham, MD; Mike Panaggio of DME in Daytona Beach, FL; David Pitts of Classic Graphics and Joel Quadracci of Quad/Graphics.
Command Web Offset,
Secaucus, NJ, announced it was closing its doors in November, leaving 105 employees without work. Continued inroads made by electronic books and digital publishing competition were the chief reasons behind the closure of the 40-year-old book printer.
RR Donnelley made a deal for Genesis Packaging & Design of Lemont, IL, while Las Vegas-based Creel Printing acquired Digital Lizard.
The parent company of NewPage Corp. filed for Chapter 11 reorganizational bankruptcy. The move was done to facilitate an orderly debt restructuring.
Finally, Philadelphia-based The Phoenix Group opened a new Midwest facility, fortified by the assets purchase of All Out Print Communications. Former All Out executives James and J.B. Capuano joined the newly christened Phoenix-Veterans Print.
The news might not have been predominantly positive in 2011, but there was certainly enough spice to keep the reader’s attention. With the industry continuing to evolve, in ways both good and bad, we can probably expect to see more of the same in 2012. PI
