Year in Review -- QW Grabs the Headlines

IF THIS magazine chose to hand out an award for the biggest newsmaker of the year, the 2008 honor would go to Quebecor World (QW), hands down. One might contend that the attention, while merited, is not the type of exposure a company would want: Financing issues, trying to sell an unprofitable venture and muddling through with bankruptcy in two countries. But Quebecor World is a printer for our economic times, the No. 2 in North America at a time when market leaders (Circuit City, AIG, Lehman Bros.) have come crashing down.

And, as the year progressed, the Montreal-based printer proved it was laying the foundation to become a shining example of responsible restructuring as opposed to mismanagement and avarice. But let’s not get ahead of ourselves. We’re here to present you with the greatest hits...and misses...of 2008.

In January, we reported on the failed sale of Quebecor World’s European business, as shareholders of Netherlands-based RSDB voted down the proposed C$341 million deal. Days later, Wes Lucas, president and CEO of Quebecor World, resigned his position. He is replaced by Jacques Mallette, as the company files for Chapter 11 credit protection in the United States and Companies’ Creditors Arrangement Act (CCAA) in Canada.

Cost-cutting initiatives were fairly popular during 2008. AbitibiBowater of Montreal shut down four mills for good and lopped off around 2,600 jobs in order to save $375 million by 2009. Meanwhile, in an effort to achieve $265 million in synergies, the NewPage-Stora Enso merger leads to mill closures and consolidations, along with about 600 lost jobs.

Wisconsin residents were up in arms when, for the second time in a little more than a year, their social security numbers were exposed in a mass government mailing. As a result, the printer, Electronic Data Systems (EDS), of Plano, TX, offered the impacted people a year’s worth of credit monitoring.

Good news and bad news made its way from the U.S. Postal Service. On the plus side, the USPS rate increase fell in the 2.9 percent range, below the rate of inflation. But, perhaps, in an omen of things to come, the USPS reported that mail volume was down 3 percent for the first quarter of fiscal year 2008.

In late January, tragedy struck at Digital Pre-Press International in San Francisco where a pregnant employee, Margarita Mojica, was trapped and killed by a diecutter. She had been preparing the machine, which was off, for a new job.

Visant Corp., Armonk, NY, stoked the M&A fires when it paid $219 million to acquire Phoenix Color of Hagerstown, MD, in an all-cash deal. Not to be outdone, Houston-based Consolidated Graphics went back to the acquisition well and obtained PBM Graphics of Durham, NC, which had been ranked 51st in the PI 400 rankings for 2007 with $121.7 million in annual sales.

Speaking of deal makers, Chicago-based RR Donnelley plunked down $122 million for Pro Line Printing of Irving, TX. Donnelley also reached terms with McGraw-Hill Education on a seven-year, $800 million contract.

Meanwhile, over at Cenveo Inc., Chairman and CEO Bob Burton vowed to stick with the Stamford, CT-based company for the long haul. Burton stated his desire to achieve goals of $3 billion in sales, $300 million in EBITDA and a stock price of $30 per share.

In late March, President Bush stopped in at ColorCraft of Virginia (Sterling, VA) to tout his economic stimulus package. Bush was given a tour of the plant by ColorCraft CEO Jim Mayes, who would gain more distinction of his own before the year was out.

Diversified Global Graphics Group (DG3) of Jersey City, NJ, was acquired by Dr. Michael Cunningham, DG3’s CEO, and the printer’s executive team, in tandem with private equity firm Arsenal Capital Partners. Cunningham founded the company in 1989.

Quebecor World closed its Magog, Quebec, magazine and catalog facility, resulting in the loss of about 300 jobs. On the other hand, it received final approval for debtor-in-possession (DIP) financing and signed a laundry list of contracts, including deals with Wenner Media and McGraw-Hill.

Past Printing Impressions/RIT Printing Industry Hall of Fame inductee Roy Grossman stepped down from the top executive perch at Sandy Alexander (Clifton, NJ) at the end of May, as did fellow exec Chip Stine. Before the year is out, the duo would announce that they have formed MSP LLC, as a vehicle for making investments in printing-related companies with revenues in excess of $5 million.

Baltimore-based Vertis Communications and American Color Graphics, Brentwood, TN, ended a year-long drama with their much-anticipated merger and restructuring through a prepackaged Chapter 11 plan.

Seeking $50 million in cost reductions, Bowne & Co. of New York implemented a 15 percent workforce reduction that would translate into 650 lost jobs. Those layoffs would reportedly provide $21 million in savings; the balance would come from other initiatives, including the integration and transition of acquired businesses.

Quebecor World consolidated its divisions into a three-tiered infrastructure, with Kevin Clarke (Publishing Services), Brian Freschi (Marketing Services) and Brad Nathan (Logistics and Premedia) acting as group presidents. Around the same time, the company also finally sold its European operations to Hombergh/DePundert Group for roughly US$206.5 million.

Quad/Graphics of Sussex, WI, unveiled plans for a $25 million investment in its direct mail services division, QuadDirect. The investment included digital and offset presses, high-speed envelope inserters and commingling machinery, among other upgrades. Shortly after, the firm announced it was letting 100 employees—mostly in administrative positions—go, due to the soft economy.

Only 16 months after it was rescued from receivership, Synergy Web Graphics (formerly Sunny Industries) of Mazomanie, WI, had to close its doors again, leaving 125 unemployed. Court papers showed the company owed millions of dollars to creditors.

Even with a faltering economy, transactions kept flowing through the summer and fall. Minneapolis-based Bolger Vision Beyond Print bought the assets of crosstown rival Diversified Graphics, while book manufacturer Bang Printing of Brainerd, MN, snapped up Valencia, CA-based Delta Printing Solutions. Transcontinental Inc. of Montreal, meanwhile, acquired Rastar Inc., in Salt Lake City.

Still, the news of consolidation and staff reduction was extremely prevalent. Deluxe Corp., St. Paul, MN, needed to close down three facilities, leaving 570 employees jobless.

And, due to reduced mail volume, IWCO Direct of Chanhassen, MN, closed its Elm City, NC, facility, leaving 380 workers unemployed. The direct marketing specialist transferred those operations to three other IWCO plants and planned to hire 250 people.

In October, four new members were inducted into the 2008 Printing Impressions/RIT Printing Industry Hall of Fame: Jim Mayes, ColorCraft of Virginia; Jim Andersen, IWCO Direct; Ralph Johnson, Lake County Press, Waukegan, IL; and Michael Keene, The John Roberts Co., Minneapolis.

In legal matters, Graphic Press founder John Zamora reached a settlement with his former Los Angeles-based company and its investors, with Zamora getting $9.2 million. Zamora had sued for slander, breach of contract and wrongful termination, among other things.

Charges were brought against a pair of men by the Pennsylvania attorney general in a bid fixing scheme. Print shop owner Daniel Snyder was accused of giving more than $30,000 and other gifts to Kyle Becker, when Becker was employed by the Pennsylvania Higher Education Assistance Agency, in exchange for printing work.

Finally, Transcontinental Direct USA, the U.S. direct mail subsidiary of Transcontinental Inc., consolidated production from its Warminster, PA, facility to its plant in Hamburg, PA. The plant closure eliminated 460 positions, though some workers were offered the opportunity to work in Hamburg.

While we cannot sugarcoat a difficult year, the onset of a new presidential administration led by Barack Obama and Quebecor World’s pending emergence from bankruptcy protection give cause for optimism in 2009. We’d hate to think the economy could grow any worse. Stay tuned. PI