Printing industry survivors must eat their own

Article Found in Crain’s Chicago

By Lynne Marek August 25, 2014

Ed Rossini says his company, Palmer Printing Inc., is the last printer on Printers Row.

Decades ago, it was just one of many printing houses lining Dearborn and Clark streets in the city’s South Loop. They were part of a thriving industry that gave Chicago a reputation as the printing capital of the country and provided tens of thousands of skilled laborers with well-paying jobs.

That picture changed drastically over the past decade, with the Great Recession accelerating a decline driven by the rise of electronic communication and digital printing efficiency. The result has been a massive shuttering and consolidation that cast out half of the state’s printing workforce.

“We were in free-fall mode,” Mr. Rossini, Palmer’s president, says regarding the industry’s decline. “2008 was just a bloodletting for printers.”

Illinois printing industry jobs dropped 45 percent to 29,113 in 2013 from 52,575 in 2001. That was the second-biggest decline among significant private-sector business categories during that period, behind department stores, according to the federal Bureau of Labor Statistics. (Some industries with a small presence in the state had larger percentage declines.)

In the latest local example of consolidation, Sussex, Wisconsin-based Quad/Graphics Inc. announced in June that it would cut 550 Woodstock employees as part of a plant closure. It had acquired the facility in May through the $100 million purchase of Brown Printing Co.

At its peak in 2000, the U.S. industry had $165 billion in annual revenue and employed about 1.1 million workers, according to Ron Davis, a chief economist in Charlottesville, Virginia, at the Printing Industries of America. Today, income has declined about 5 percent and headcount 20 percent, but those figures mask the drop-off because they include a host of new related marketing, analytical and distribution services that the printing companies adopted. Meanwhile, average profit margins remain about 3 percent of sales, Mr. Davis says.

Chicago maintains its position as capital of the printing industry, thanks to the presence of industry behemoth R.R. Donnelley & Sons Co., which bought rivals to boost orders even as it cut plants and workers. This year, it paid $660 million for the ninth-largest player, Houston-based Consolidated Graphics Inc.

Still, Donnelley’s $32.4 million in net earnings for the first half of the year, on revenue of $5.6 billion, was lower than the $91.8 million earned in the first half of 2013, on revenue of $5.1 billion. Donnelley CEO Thomas Quinlan declines to comment through a spokesperson.

SLIM MARGINS, BIG EXPENSES

“It remains unclear whether growth in these (related) businesses will offset the secular declines plaguing the traditional printing business,” Standard & Poor’s Ratings Services analyst Peter Bourdon of New York says in a May report on Donnelley

Mr. Rossini, too, kept alive the 77-year-old Palmer business that his father purchased in the 1970s by buying up rivals. In 2011, he bought South Side shop Diemand Printing Co., which itself had purchased six companies in the two decades prior to that sale. Still, Palmer today has just 42 employees.

“If you ask all the printers, any growth that they have is from somebody else going out of business,” Mr. Rossini says. “It’s been a very difficult industry to make money in because the margins are slim and the expense of this equipment is so high.”

Jeffrey Diemand, who sold Diemand to Palmer, says he retooled with new technology for years to keep his business efficient amid the shrinking demand, but eventually he just didn’t feel comfortable investing in a declining industry with intense pricing pressure.

Jim Munoz removes ink during a press run at Palmer Printing Inc. Illinois printing jobs dropped 45 percent from 2001 to 2013. Photo: Stephen J. Serio

The second-to-last printer on Printers Row was Rider Dickerson Inc., which moved to Bellwood in 2007, benefiting from one of the industry’s few remaining assets. With South Loop property values up on rising residential demand, Rider Dickerson sold its building on Clark Street at peak prices just before the real estate market collapsed.

Still, some printers such as Wheeling-based SG360 Segerdahl Co. say they’re growing, partly by offering complementary marketing, data research and brand consulting services. The company boosted annual revenue to $240 million, from $60 million a decade ago, CEO Rick Joutras says. It prints items such as health care information packets that companies send to employees and the ubiquitous coupons sent by department stores to shoppers.

“There’s been somewhat of a resurgence,” Mr. Joutras says. “Companies recognize it takes more than just an email to get someone to go to their website and buy something.”

Mr. Rossini was thrilled to have Chicago’s well-known online music review site Pitchfork come to it last year with an order to print 10,000 copies of a new quarterly magazine. Still, he’s realistic about the industry’s prospects. He says he’s just as likely to sell the last printing company on Printers Row as keep acquiring others.

1 thought on “Printing industry survivors must eat their own

  1. Every printer is feeling the burnt. Printing Industry has gone a over all change in terms of catering the needs of the commercial establishments and industries printing needs. Due to the influx of personal printers like B/W and Colour inkjet printers, laser printers made the individual, personal and commercial printing requirements is made available in house or nearby small printing establishments. Small and medium printing establishments have to shut down the shutters. This is my personal opinion.

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