Northern Exposure

TRANSCONTINENTAL IS North America’s sixth largest printer and Canada’s fourth largest print media group, with 2006 revenues of C$2.2 billion (U.S.$1.9 billion). Luc Desjardins joined Montreal-based Transcontinental Inc. in 2000 as president and COO, then became president and CEO in 2004. Since then, he’s been a key player in the company’s growth, pursuing a balanced strategy of internal growth and selective acquisitions, focusing on targeted niches with high growth potential.

Desjardins, formerly a top exec with Mail-Well and Supremex (a Canadian printer acquired by Mail-Well in 1995), is one of the keynote speakers scheduled for the upcoming WOA conference in Toronto.

Below, Desjardins discusses Transcontinental’s future plans and overall industry trends with Mark Michelson, editor-in-chief of PRINTING IMPRESSIONS.

PI: How do you see print’s role changing within the communications mix due to the growth of electronic and cross-media forms of communication? As a major publisher/content creator and printer, how is Transcontinental responding to those market dynamics?

DESJARDINS: The major trend sweeping the communications industry is specialization and targeting. Transcontinental is ensuring that its entire product and service offering, both in our print and media activities, evolves in harmony with those shifts.

On the media side, we’ve been developing our multi-channel, brand-centered approach. That means, for example, not only putting our market-leading, French-language business newspaper Les Affaires on the Web with constant updates, but also launching Les Affaires TV, featuring new video interviews daily with prominent business people.

It means leveraging our very strong magazine brands and content in ways that best suit their content and readership. For example, we turned the Canadian TV Guide into a Web-only product with targeted special print editions around important TV events. We’ve extended the extremely popular Canadian Living magazine beyond the Web and into cook books and, in partnership with Yellow Pages, elderly-care directories. These are just a few examples of how we’re maximizing our strong content to reach consumers in more and more ways.

On the print side, we’re helping our customers better target their consumers to increase their ROI and decrease waste, which improves the environment and our bottom line. Improving database management and increasing the services our growing direct marketing segment offers is one approach. Adding sophisticated zoning capabilities in the mail room of our outsourced newspaper printing plants is another.

When we start printing the San Francisco Chronicle in 2009, it will be distributed across some 400 zones, with specific inserts targeted for each. And, in book printing, we’re specializing in shorter and shorter runs with faster turnaround times, as technology and consumer habits drive the market toward niche products.

PI: There has been some significant industry consolidation recently in North America, e.g., RR Donnelley buying Banta, Perry Judd’s and Von Hoffmann; Cenveo acquiring Cadmus. Do you see this industry consolidation trend continuing?

DESJARDINS: Yes, I do. The North American printing industry is still relatively unconsolidated. In 2005, Research and Markets reported that the largest 50 companies held only about 30 percent of the market. Consolidation is a natural maturing process of any industry, and I see it continuing in ours for the foreseeable future.

PI: As a publicly held, international company, do you foresee Transcontinental growing more through acquisitions vs. organic growth?

DESJARDINS: Transcontinental’s “Evolution 2010” business project guides the company’s development. In it, we have set two growth targets—to grow sales organically by 5 percent on average per year; and to grow adjusted earnings per share, excluding the foreign exchange impact, by 10 percent on average per year. So, we plan to grow in both ways, depending on the niche and what opportunities are available.

PI: You recently announced the creation of a new Newspaper Division, based in the San Francisco Bay area, that will focus on U.S. publishers seeking to outsource their printing. Are you targeting the United States as your key market for international expansion?

DESJARDINS: Yes. We’ve had a lot of success with this unique printing model because print technology is changing very rapidly, and publishers are facing prohibitive capital costs to keep up. Instead, they’re turning to us, handing over the physical production of their product to a printing expert, who makes such investments regularly. That way, publishers can concentrate on their strengths—content and product development—while we focus on ours—providing greater deadline flexibility, more color capability and, ultimately, a superior-looking printed product.

And papers like the New York Times and The Globe and Mail have profited from this arrangement with us. The Globe, in fact, was named the top large circulation daily in North America for print quality by the International Newspaper Color Quality Club.

So yes, now that we’ve perfected our model in Canada, we’re turning our attention more to U.S. publishers to expand it further. There are many papers we’ve identified that are the right size to make our model work well for both parties. We’re currently in talks with most of the major U.S. newspaper publishers.

PI: Do you also anticipate growing your existing position and success within the U.S. direct marketing services sector?

DESJARDINS: Yes, and again, in two ways. As always, we’ll look for good acquisitions that fit our stringent criteria—the company must have good management and a compatible culture, be profitable and growing, provide synergies, and be accretive to our earnings in Year 1. Our internal M&A department is constantly looking at opportunities.

But, we’re also looking to expand our products and services in direct marketing organically. We’ll be growing our fulfillment, database and MailGard capabilities in the years ahead.

PI: As a relatively low-margin, high capital-cost industry, what skill sets will be needed to operate a successful graphic arts operation going forward?

DESJARDINS: The main skill set is more of a personal characteristic—flexibility. With our industry changing so rapidly, we need people who can think creatively, react quickly and learn constantly. We ensure we have those people aboard in two ways.

First, a staff of 75 run the plant that prints Montreal’s La Presse. All of them know how to do every job required to get the paper out every morning. What’s more, there are no managers in the conventional sense; the workforce is self-managed. Empowering our people with such responsibility and flexibility gives us more options on how to run the operation.

Second, we have internal, company-wide training programs. The Three Pillars course, which every one of our 14,500 employees go through, teaches them to think like an entrepreneur, contribute their ideas and take responsibility for the processes they’re a part of. And, our “Mission: Leadership” program teaches our 1,500 top managers coaching and listening skills to get the best results from their direct reports, their peers and themselves.

PI: What advice can you give other printing companies on how to survive, and thrive, in the future?

DESJARDINS: Obviously being flexible is not going to diminish in importance. But beyond that, a company is like a person. Every person has to figure out what he or she does best, put a personal twist on it that differentiates them from the rest, and then pursue it as far as possible. It’s how you differentiate yourself that lets you rise above the competition.

The companies that are merely average in our industry are subject to extreme pricing pressure. To rise above that and thrive in the future, a printing company will have to pick one or more specific niches and try to become the expert in them, the go-to company. That’s what we work on every day—and it’s definitely a work in progress. PI