Consolidated Graphics: The Dukes of Digital
Commercial printing is alive and well. Sure, it doesn't look exactly the way it did 10 to 15 years ago, and technology has stretched its definition like Silly Putty. But, perhaps the industry has gotten too wrapped up in definitions; after all, some companies have taken great pains to hide their printing roots with nebulous monikers that are meant to conjure up the visage of a single-source solution provider. And printing just happens to be part of that solution.
Printing is still part of the solution at Consolidated Graphics (CGX), the $1.2 billion commercial kingpin based in Houston. But people are an even bigger part.
Joe Davis, president and CEO of the 10th largest printing enterprise in North America (based on the 2009 Printing Impressions 400 rankings), likes to surround himself with energetic, enthusiastic and intelligent folks. It bothers Davis that he doesn't know every employee, of which there are about 5,500 at CGX. But, he knows the quality of people in his employ thanks to the due diligence performed by his M&A staff over the years—previously Chris Colville, and now Jim Cohen.
Saying that people are the most important asset at a printing company reeks of trite indulgence. But not for a firm that invests in a Leadership Development Program, an initiative that seeks out the brightest and hardest-working young men and women from American campuses nationwide to mold them into future CGX executives.
And if the "people first" mantra was merely lip service, then the company's second annual emerge technologies conference—which attracted upward of 750 customers and was complemented with displays provided by 30 industry suppliers (including HP, Kodak and Adobe)—was unnecessary.
But it is at the intersection of people and technology that you will find the kingdom of Consolidated Graphics, and emerge was just one way in which the company is building on its empire.
"Technology is an important part of our business, and we wanted our customers to get exposed, first hand, to what digital technologies are doing for a certain number of our clients," Davis explains. "The comments we received from customers was overwhelmingly positive. I can't believe the number of e-mails and blogs that we read afterwards. People loved it."
Aaron Grohs, executive vice president of sales and marketing at CGX, is still wading through hundreds of pages of positive feedback he's received. "One recurring theme I hear is that marketers and procurement people are starting to think more creatively about what they can do," Grohs says. "It's kind of a perfect storm, because we have all of this technology, digital equipment and the recession all hitting the industry at the same time. And, it seems that no one else is trying to take the lead and show people what can really be done. Our event was fresh, innovative and educational."
Recruitment Efforts
Likewise, the Leadership Development Program has grown by leaps and bounds, from recruiting a handful of college graduates in the Texas area to hundreds of recruits now coming aboard to learn about printing the CGX way. According to Michael Barton, executive vice president and chief administrative officer, "If anything, our expectations have increased because we realize that, as CGX grows, we'll need a large pool of talented people ready to assume the leadership roles that will become available.
"Going forward, the program will grow in size and importance because leadership in every professional role is critical. Someday, it would not surprise me if every CGX plant president position is held by a graduate of this program."
CGX is a company that shares best practices and technological platforms. Its sales force is constantly raising the bar in terms of cross-selling opportunities, with more than $100 million per year in such sales. Being able to sell the full capabilities of CGX—like its legendary stout balance sheet—is a given for its sales force.
While sheetfed and web offset printing are both on the CGX customer menu, it's safe to note that today's special is digital printing. Davis points out that the 220 machines which grace the CGX network make it the largest fleet of digital presses in the United States. The company isn't beholden to one manufacturer, either, as it embraces HP, Kodak, Xerox and Konica Minolta models.
CGX has plunked down upwards of $50 million for digital equipment over the last five years, and another $25 million in software the past 12 years to develop the technology. And, that doesn't include the 100 hires—programmers, developers, customer service and helpdesk folks—brought aboard to raise CGX's game to a higher level.
Rumors of the conventional printing phaseout may be premature. The beauty of personalized printed material is that it often features an offset printing component.
Case in point is an automotive brochure program reached with Ford Motor Co. CGX's Cincinnati facility, The Hennegan Co., signed a deal with the venerable auto giant to produce custom vehicle brochures for more than 3,300 Ford dealers nationwide. The integrated marketing solution entails offset and on-demand digital printing, personalization and fulfillment. The more integrated the challenge, it seems, the more likely CGX is to win the contract.
Don't cry for offset...last year Wetzel Bros., of Cudahy, WI, installed a 73˝, six-color manroland UV sheetfed press. "We continue to invest in offset printing where we have the demand for it," Davis notes.
Personal Touch
Not that all digital printing at CGX is confined to direct marketing campaigns. Personalization is huge, with products ranging from photo books, calendars, postcards, cookbooks, insurance books and financial services products getting attention. Wide-format digital printing—signage, billboards, bus/van wraps—is also drawing interest from clients and, hence, targeted capex investments from CGX.
Jon Biro, executive vice president, chief financial and accounting officer, notes that investments over the past two years have enabled the company to nurture what he calls the "world's largest digital platform." CGX has digital super centers in St. Louis; Minneapolis; Memphis, TN; and Medford, OR. Internationally, CGX has a digital center in Prague, the Czech Republic, as well as one in Yokohama, Japan.
"We have developed a technology backbone that our customers appreciate because we have (equipment) redundancy, handle their data securely and offer 24/7 uptime to support their business," Biro states. "Additionally, we have made investments in custom software applications such as our Web-to-print storefront that enable us to offer added value by creating solutions for our customers. We also have made investments to ensure that the facilities and equipment we utilize to serve clients are in top-notch condition."
Cross-media communication is a key for the future of CGX's marketing initiatives, though keep in mind that the cradle-to-grave campaign is the key to increasing the customer's response rate, and at the heart of what they're trying to accomplish.
"Many printers can provide clients with a PURL and a basic personalized campaign," Grohs adds. "But you need to offer the whole ball of wax, and that's where we're seeing the most opportunities."
Grohs is particularly proud of the company's online storefront technology, which was developed internally 12 years ago and has since been modified. "Our online storefront provides immediate benefits, allowing customers to manage their inventories better, giving them reporting, as well as the ability for all stakeholders to order, customize and distribute product," he says. "It reduces obsolescence and inventories."
CGX prides itself on home-spun innovations. Its most recent example is a flex mailer, a cost-effective, automated way to send certain items, such as samples and promotional products, through the mail. It was introduced to clients and CGX's 650-member sales force during the emerge conference in April.
Of course, the company is perhaps most noted for its exploits in the transactional arena. Cohen, CGX's executive vice president of mergers and acquisitions, notes that several companies have expressed an interest in joining his organization, and a good many of these candidates find themselves in some level of financial distress. This has enabled CGX to become skilled in the art of creative deal structuring, which can entail negotiating terms with banks and creditors. Its most recent deal was the asset acquisition of The Hickory Printing Group in Hickory, NC, in May, which will add about 3 percent to CGX's revenues.
"Our acquisition strategy isn't directly tied to geography or acquiring new capabilities," Cohen notes. "We look for the best companies, with the best leadership and the best customers, no matter where they happen to be. We generally don't look at acquisitions as a way to bolster our technological offerings. But, if a company has a product offering that we find desirable, of course it is a factor in our evaluation of that opportunity."
Forward Thinking
Joe Davis loves the prospects that the future holds. He has no plans to retire, and is proud of the fact that his Leadership Development Program is churning out executive-level professionals year in and year out. CGX's M&A platform is as robust as any, buoyed by ready access to capital and ready to stretch into a 27th state, though geography is not a requisite. Most importantly, CGX has a committed and educated sales force able to sell across different platforms and to bring innovative ideas into the fold.
For a major printing conglomerate, it boasts many of the traits shown by companies a mere fraction of CGX's size. But don't let that fool you.
"It doesn't matter how big we get," Davis remarks. "The day we start thinking like a big company is the day we're going to die. We've got to stay nimble, stay flexible. We can't get caught up in big company bureaucracy. If we do that, we're going to lose what makes us so special."PI
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