Not the Best of Times For Industry Behemoths — Michelson
ROBERT BURTON, chairman and CEO of Cenveo Inc., is very decisive in his quest to uncover $100 million in cost savings at the publicly held printing conglomerate (ranked #5 on the 2005 PRINTING IMPRESSIONs 400 listing of largest U.S. and Canadian printers) he took over last fall in a forceful, and sometimes contentious, takeover. Citing the need for a major overhaul, he immediately fired the existing board and senior managers, and brought in his own team from his former World Color and Moore Corp. days. Numerous plant closures, cutbacks and rounds of staff reductions have since followed company-wide. Appeasing analysts and stakeholders, Cenveo’s once-floundering stock has become a darling on Wall Street since he assumed control, catapulting share prices more than 300 percent.
Many may view Burton as a ruthless and uncaring turnaround specialist in shuttering several Cenveo facilities and letting go a reported 1,900 employees. In an exclusive interview for this issue’s cover story, though, Burton validly points out that Cenveo was in dire straits when he took control. Going under, he says, would have resulted in far more Cenveo workers losing their jobs. While not comforting to those individuals who became unemployed after Burton’s arrival, the company is now a more stable workplace for the much larger headcount of remaining workers. Challenges, obviously, going forward will be to improve morale and the sense of job security throughout the Cenveo platform.
Quebecor World (ranked #2 on PI 400) is also downsizing. It revealed last month that it is reorganizing its U.S. book and magazine business, resulting in the loss of more than 700 jobs. The move comes on the heels of several initiatives to turn the company around and boost its sagging stock price. Shutting down in this round of cutbacks are its venerable book manufacturing plant in Kingsport, TN, as well as a magazine printing operation in Brookfield, WI. Earlier, Quebecor World also divested several “non-core” facilities as part of two separate management buyouts.
Appearing #1 on our esteemed Top 400 ranking as North America’s largest printer, RR Donnelley has also struggled to increase revenues and be profitable. In response, it’s morphing beyond print and related services into business process outsourcing (BPO). In late March it signed an agreement to acquire New York-based OfficeTiger for $250 million, a move that follows its purchase last June of Astron, a UK-based BPO supplier. They expand Donnelley’s document-based outsourcing capabilities into transactional services like financial analysis/reporting, credit analysis, claims processing and more.
An even bigger surprise was the April 12th announcement by Consolidated Graphics (#18) that it is exploring strategic alternatives, including a potential sale or other change of control transaction. Easily considered our industry’s most successful consolidator, this will most likely mark the end of CGX Chairman Joe Davis’ remarkable run to acquire and mesh a coast-to-coast network of commercial printing companies now spanning 26 states.
Marking the landscape of today’s battlefield, publicly held printing establishment are under intense pressure from shareholders and analysts to wage war on costs and boost short-term financial results. One result: collateral damage to human and fixed assets.
P.S. Speaking of profitability, PRINTING IMPRESSIONS has partnered with Grant Thornton, an accounting, tax and business advisory services firm, to study industry profitability, performance and best practices. Go to www.2006PrintingProfitabilitySurvey.com to participate. Responses will remain confidential and all survey respondents will receive an executive summary of the findings as well as a customized profitability report.
Mark T. Michelson
