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INDUSTRY NEWS
Perry Printing Closes
FLINT, Mich.-After 75 years in business, Perry Printing Company closed its doors April 18. The mailer manufacturer will finish work in progress. Chris Nyland, vice president of account development for Perry, said the company is closing because the conventional mailer market is rapidly deteriorating. Among its product line, Perry manufactured peel-back and insert mailers. "We wanted to be proactive in the closing and shut down while we were still in control," said Nyland. "We're doing the right thing economically in view of the declining demand for our product." Perry Printing had 20 employees remaining. During the past five years, it had gradually reduced its workforce. Last year, the company downsized from two production shifts to one. Perry's management team included Nyland and his three brothers: Jan, president; Greg, executive vice president; and Bruce, vice president of manufacturing. Chris Nyland says they are "keeping their options open and considering retirement and alternate employment." He concluded by saying, "We appreciate everyone's support through our many years in business." Perry will liquidate its equipment and facility.
International Paper Bids for Rival Champion
PURCHASE, N.Y.-International Paper Co. is bidding $6.2 billion in cash and stock to acquire rival paper maker Champion International Corp., Stamford, Conn. IP hopes to unseat a competing offer from Finnish paper company UPM-Kymmene. Champion agreed in February to be bought by UPM, but a subsequent 20 percent slide in the European forestry company's share price caused the value of UPM's all-stock offer to slip from $6.6 billion at the time it was announced to about $5 billion.
IP is offering $43 in cash plus $21 of its own stock for each share of Champion, valuing the company at $64 a share. This is well above Champion's closing value of approximately $51 per share the day before the offer. As part of the deal, International Paper also would assume about $2.3 billion in debt from Champion. Champion released a statement saying it would "consider the proposal and respond as appropriate."
IP's offer could trigger a bidding war in the normally staid paper industry, which has had several consolidations recently. Five days after UPM's merger accord with Champion was announced in February, the Finnish-Swedish forest products company Stora Enso announced a deal to acquire Consolidated Papers Inc. of Wisconsin for approximately $4 billion.
Reynolds to Buy HAC Group
DAYTON, Ohio-The Reynolds and Reynolds Company agreed to buy privately held HAC Group LLC, a provider of Internet services to car makers and retailers. Reynolds will pay $139 million in cash and stock for the company. As part of the deal, Reynolds will nominate HAC chief executive Eustace Mita to a seat on its board of directors.
In April, Reynolds announced plans to sell or spin off its Information Solutions Group (ISG), the company's document services business with revenues of more than $730 million in fiscal 1999. According to David R. Holmes, chairman and CEO of Reynolds, the company plans to sell ISG to focus on the automotive retailing market. "It is Reynolds' intent to be the leader in this [market], helping retailers master the Internet to become a more sophisticated enterprise," said Holmes in a prepared statement. Reynolds had revenues of $1.6 billion in fiscal 1999.
Creative Forms Merges with BRIDGE®
CARY, Ill.-Distributorship Creative Forms Inc. merged with BRIDGE® Information Systems Inc., a distributorship in Arlington Heights, Ill. Wayne Albin, president of Creative Forms, will remain with BRIDGE during the transition as a consultant for account operations and sales. According to Rich Stienstra, president of BRIDGE, the acquisition allows his firm to develop new markets.
ValForms Buys Crown Business Systems
PLEASANTON, Calif.-ValForms Inc., a large distributorship based in central California, acquired Crown Business Systems, a distributorship in Pleasanton, Calif., that markets printed and promotional products. Offices and personnel will be consolidated into one location in Pleasanton. Jim Gregory, president of Crown, joined ValForms' staff, which now includes 10 employees.
MANAGEMENT
Merger, E-Commerce Spur Sales Growth
You can't call Kevin Austin, CDC, afraid of change. In just the past year, his distributorship has merged with two other companies, re-engineered its entire workflow process, retrained its staff and launched an e-commerce division. That's enough to make any distributor dizzy. But the bold moves are paying off. Annual sales for Golden Pacific Systems of Rohnert Park, Calif., reached $5.3 million in 1999, up 69 percent from two years earlier.
Much of that growth took place last year because of the merger, says Austin, president of Golden Pacific and a former member of DMIA's Board of Directors. His distributorship joined with two companies, Innovative Business Products (IBP), a distributorship based in Marin County, Calif., and AdPro, an ad specialty company owned by IBP. Innovative was merged into the Golden Pacific name, and AdPro is now a division.
Why join with those companies? "We had very complementary visions and methods of doing business," Austin says. "And there was very little overlap in our customer base." The venture not only gave Golden Pacific a big boost in sales and a larger customer base, but also a full-service ad specialty house. Since the joint venture, the company has had a tenfold increase in ad specialty sales, Austin says.
This year, though, he expects e-commerce to be the key factor in Golden Pacific's growth. The company already serves seven large clients online; Austin expects to add 5 to 10 more this year. "Our customers absolutely love it," he says. "We've been able to get some accounts that we wouldn't have otherwise as a direct result of [e-commerce]."
For example, one of Golden Pacific's customers orders 3 million business cards a year from 200 locations. Without e-commerce, it wouldn't be cost effective to handle those orders, Austin says. "It's a lot of very small transactions," he says. "It's very difficult in a traditional environment to process that volume of orders at the cost point that's required." E-commerce can cut the cost of a transaction by up to 70 percent, Austin says. "It's pretty dramatic," he says. "It's a lot more efficient way of doing business."
Golden Pacific began its e-commerce project a year ago through its Printsource Online division. It set up a Web site specifically for e-commerce customers. Although anyone can order online, the main growth is from select large customers, says Austin. The division started by choosing one large customer, then grew from there, he says. Convincing end users to participate was the easy part. Getting it all to work behind the scenes was tougher.
"The biggest challenge is the manufacturers were very slow to adjust to the new technology and the changing requirements in their workflow," he says. "Getting the manufacturers up to speed is a big hurdle." Austin says his company provided training for manufacturers so they could use the technology effectively. But training alone isn't enough. You have to have a strong relationship, too, and both sides have to be committed to making it work, he says. "You have to have much more open communication with your manufacturer," Austin says. "The manufacturer is going to know what your sales are. Everything's kind of on the table for everyone to see."
In addition, Golden Pacific had to train its own staff and change its workflow process. "Instead of being paper-based, it's much more digital-based," he says. "The paper flow is different. The way we enter a transaction is different. The entire process is different. You really have to get down to all the nitty-gritty of how things flow through the organization....We're still not through it. We still have a ways to go."
Austin says he's not sure of the total dollars that e-commerce has cost so far. But he suggests planning for several different layers of expenses, including the cost of researching a service provider, signing on with the provider, setting up each new large customer, and training customers and your staff. "It's an ongoing process," he says. "We've done more training in the last year than the previous 15 or 20 years."
Still, the headaches have been worth it, says Austin. "What's really driving it is the end user," he says. "End users are looking for ways to reduce costs. They're trying to do more with fewer people. In the future, companies are going to need to look at some e-commerce solutions to help make themselves more competitive."
Preparing for Area Code Changes
This year, more than 45 new area codes will be introduced. With so many changes, phone numbers in your data files are bound to become obsolete overnight. These obsolete numbers cost your firm time and money. There's a helpful Web site that offers free area code charts and sells area code tracking software: www.areacodeupdate.com.
In addition, you may want to use this Web site for marketing purposes. If you learn about a pending area code change before your competition, you can pitch updated printed products to companies. When area codes change, companies need new stationery, business cards, invoices, checks, order forms, product packaging, labels, brochures and other pieces with their new phone and fax numbers.
POINTS AND CONTROVERSIES
May is for Flowers and Updates
May is the month when flowers are blooming...you know, that April showers thing. May also begins the second half of DMIA's fiscal year. With six months behind us, I thought I would take this opportunity to talk about how the association is progressing.
We are developing the 2001-03 Strategic Plan. Work on the plan began late last year when a Needs Assessment Survey was sent to all members. The results of the survey were tabulated and analyzed. Based on this, a SWOT Analysis (our strengths, weaknesses, opportunities and threats) of DMIA was accomplished. After several planning sessions, we determined that there are four areas that we will concentrate on over the next three years. At the end of this article I have listed the four areas of concentration. I have also asked for your input. But first, let me tell you what has been going on with DMIA during the first six months of fiscal 2000.
Our year began with a total membership of 1,954, of which 1,381 are distributors. The balance is a combination of manufacturers, suppliers and internationals. We grew by 57 members in 1999. Our retention rate was 88.6% in 1999 and 90.1% in 1998. The average retention for trade associations is about 84%. For the year 2000, our retention rate is currently almost 86%. We expect to end the year around 88%. Fifty-two percent of the members we lose each year is because of mergers, acquisitions or bankruptcies.
Since 1991, DMIA membership has declined by 13%, again mostly because of industry consolidation. However, we anticipate continuing to grow the DMIA membership like we did in 1999. DMIA members, including you, represent at least 63.7% of the entire Independent channel's sales volume of $7.6 billion. Almost two-thirds of the Independent chanel's volume is because of DMIA members. We estimate there are approximately 8,000 true distributors in the U.S. We will continue to try to recruit them so DMIA can represent 100% of the channel's volume.
Programs so far for this year have been going well. For example, we just completed the Spring Management Retreat (SMR), formerly the Mid-Year Planning Conference. We had 246 attendees, a record high. More than 40% of the attendees were in the 1-3 dues categories. In March, we held our Solutions 2000 manufacturer educational program with IBFI in Atlanta. There were 193 attendees, another record! The companies that attended Solutions 2000 represented more than 30% of the DMIA manufacturer membership. Last week, the Forms School was held, and its 41 attendees broke another record. And, DMIA is partnering with WBSA (West Coast distributors) and IPIA (distributors in England) to help bring the word of the independent to the entire world.
On June 28, this year's Trade Mart series will end. The 24 shows will attract more than 225 manufacturers (44% of DMIA's manufacturer membership) and more than 3,500 distributor attendees. The Trade Marts are an excellent vehicle for distributor training. The most profitable products distributors can sell are displayed at Trade Marts. This October's Informservices (i2000), another great training opportunity for distributors, is well on its way to sold-out status with more than 370 booths sold so far—30 booths ahead of last year's record-breaking pace. Thousands of distributors will be coming to Chicago for i2000 (October 18-20) to learn all about the products that are available to sell.
FORM Magazine continues to be the industry's leading publication. Last week, FORM won three more awards for writing and design excellence in the 22nd annual competition sponsored by the American Society of Business Press Editors. There were more than 2,000 entries. In each of the last 11 years, FORM has won an award in at least one national competition for excellence in publishing. FORM now has a total of 52 awards, an impressive record for any industry magazine.
Just over a year ago, we launched the DMIA Web site (www.dmia.org). There is a wealth of information included on the site for members to surf. And you have been surfing. Last month there were almost 8,000 visitors to the site accessing more than 25,000 pages of information. If you have not been to the site, please check it out. Also, you may want to participate in our members-only Listserv®, a valuable tool that allows you to post a question and get an answer from industry peers. Currently there are 442 member principals participating on the Listserv. That's 442 principals who can help you with any problem you may have.
DMIA is much like any service organization. We, like an accounting firm, don't produce products. DMIA produces member services that rely heavily on the abilities of staff people. As you have read, DMIA has been successful. We have been successful with fewer staff people and lower overhead. Overhead for 2000 has been cut 14% from the previous year. Staff has been reduced 21% from its high in 1997. We are getting the job done, and we are doing it more efficiently.
One member service that gets more use every year and requires a lot of staff effort is the Source Hotline. Last year, we had more than 43,000 requests for sources. We are on pace to beat this record in 2000. For our first six months, we have had almost 22,000 source requests.
DMIA is doing well. We are setting records. We will do even better in the future...especially if we have your help. As I mentioned, this year we will complete our 3-year Strategic Plan. In 2001 a new 3-year Strategic Plan will begin. The 2001-2003 plan will focus on four initiatives:
1. Developing the most effective and accessible delivery vehicles for member programs and services.
2. Developing the educational products and programs most needed by members.
3. Positioning DMIA as an integral Internet resource for members.
4. Improving the value to the members of DMIA publications and trade shows.
The 2001-03 Strategic Plan is still coming together. If you have any thoughts/ideas on how we can achieve any of the four initiatives I have listed, please call, write or email me (pcolaianni@dmia.org). In fact, if you have any thoughts/ideas on how we can serve you better, let me know. Your DMIA staff is here to serve you.
TECHNOLOGY
Profiles of Four More Dot-coms
The February issue of the IMR included profiles of 17 companies offering printing via the Internet. They were just some of the firms involved in this burgeoning electronic marketplace. Throughout the year, the IMR will update the list, providing thumbnail sketches of Dot-com printing companies. Please let us know about any companies that should be included. This month, we profile four firms: GOprinter, inaQuest.com, printable.com and Transaction.
GOprinter Inc.
Carol Stream, Ill.
(630) 690-2317
Profile: GOprinter is an applications service provider offering business-to-business e-commerce tools for manufacturers, dealers and distributors of printing supplies, equipment and paper products. It specializes in solutions for the graphic arts supply chain. The company's suite, PORTfolio, allows users to create and manage Web catalogs, conduct e-commerce transactions and integrate business systems. PORTfolio consists of four products: PRODUCTfolio, which enables users to convert paper-based and electronic data into secure Web-based formats, then manage the catalog online with any browser; MARKETfolio, which enables users to track order histories, customize interfaces for specific customers, and let those customers find and order products by keyword searching; PARTNERfolio, which enables users to trade data with EDI partners, suppliers and other parties; and CHANNELfolio, which enables users to offer private auctions, discussion threads and news feeds.
GOPrinter, which doesn't buy and resell products or compete with its clients, also offers Web site building and hosting.
Founded: 1999
Management Team: Greg Howell, president and CEO; Dave Rohner, vice president of marketing (previously director of commercial printing for Moore North America and a key player in the launch of Indigo America); Drew Gaffney, director of business development; and Joe Kuryla, lead architect.
Corporate Status: Privately held. GOprinter recently formed an alliance with PagePath Technologies, a Chicago-based firm that sells MyOrderDesk, a system used by graphic arts service providers to manage electronic documents online.
Payment Structure: Customers pay a one-time setup fee and a flat monthly licensing fee. The setup and monthly fee are determined by the number of sku's in the customer's online catalog, the degree of functionality deployed at the site and the integration level of the e-commerce system and the customer's legacy system. GOprinter doesn't enter into exclusive agreements with clients or prohibit them from engaging in other e-commerce relationships.
Customers: Cleveland-based Morway Corp., an international blanket converter, among others.
inaQuest.com
Cleveland
(800) 776-3676
Profile: inaQuest.com customizes and maintains online stores for distributors and manufacturers. The stores are designed to allow online viewing, buying and management of imprinted product such as forms, business cards, letterhead and promotional products, including wearables. There are two options:
The Company Store offers a centralized point for the purchase and management of corporate branded merchandise. Customers, employees and stakeholders may purchase corporate logo merchandise, printed material or forms online.
The Co-Branded Business Center offers print, promotional and business forms products for the SoHo market. The site is co-branded under the name of the distributor. The Business Center is a pre-configured site focused on selling configurable products at fixed prices through a predefined set of vendors. Many looks and styles are available.
Founded: March 1999
Management Team: inaQuest.com's founder and CEO is Greg Muzillo, founder and CEO of ProForma.
Corporate Status: Privately held.
Financial Status: Private funding.
Payment Structure: Annual subscription fee and transaction fees.
Customers: In early May, nearly 30 Company Stores and Business Centers were up and running.
printable.com
San Diego
(858) 676-0300
Profile: printable.com develops and delivers scalable, hosted application services designed to help printers "increase competitive position, strengthen customer relationships, manage digital printing and workflow, and boost buying power." The company's e-business services are accessed through the Printer's DashBoard™, a free Web site that acts as a customizable control panel. It allows printers to manage lead generation, sales, file transfers, media asset management, account management, procurement and other business activities. It includes a home page and pages for About Us, Tips, Equipment, Jobs, Services and News. The e-business components include pages such as Portfolio, Review Activity, Get a Quote and File Transfer.
YourPlaceSM, another printable.com tool, is a customer-care center created by the printer for top customers. It appears on the printer's Web site. Customers can access password-protected sites to check on current jobs, input job specs and RFQs, reorder items from customer catalogs and contact the printer's sales representative.
Founded: April 1997
Management Team: Stuart "Stu" Clifton, chairman, CEO and president, served the same roles at DataWorks Corp. from 1987 until its merger with Platinum Software (renamed Epicor) in 1998. While at DataWorks, he grew the company's sales from approximately $2 million to more than $170 and won Ernst & Young's Entrepreneur of the Year Award. printable.com's board of directors includes Clifton; James A. Caccavo, a partner with Moore Capital Management's private equity group and Tickets.com's executive vice president and president of Internet operations; Theodore J. Roth, president of investment management firm Totem Enterprises LLC; and Roy Thiele-Sardina, a high-tech investor who helped launch Brocade Communications (now a $20 billion company) and who served key management and sales roles at Sun Microsystems.
Corporate Status: Privately held.
Financial Status: In April, printable.com secured $13 million in second-round funding from a number of high-profile investors, including Moore Capital Management; Totem Investment Partners; Louis Rossetto, co-founder of Wired magazine; and Bill Joy and Andreas Bechtolsheim, co-founders of Sun Microsystems.
Payment Structure: Customers pay a monthly fee for access to the software, but not transaction fees. The company charges one-time setup fees for establishing or enabling Web sites for e-business, creating portfolios and establishing customer centers. Fees are also charged when customizing a printable.com site.
Customers: printable.com has more than 150 customers.
Transaction
www.transaction2000.com
Eccles, Manchester, England
+44 (0) 161 787 3050
Profile: Transaction software is a suite of Web-based programs designed to improve the efficiency of stationery and print ordering. It consists of three main components: an online ordering system, a custom print module and an editing suite. The online ordering system allows users to order standard printed pieces administered under a print management system. Users can request that items be manufactured or delivered from existing stock. The custom print module allows users to personalize printed products, such as business cards and letterhead. They view templates of products on screen, enter in variable data and submit orders. Within seconds, a proof is returned to the user's screen, where it can be printed out, amended or approved. Once approved, the order is sent through an approval process and delivered to the printer. The editing suite gives users flexibility when configuring their Transaction systems. Distributors can set up multiple clients on the system with their own sets of databases. Once clients are set up in the system, a series of menus allows additions, amendments and deletions of various elements, including budgets, users, products and prices.
Founded: Transaction was released in 1999 by Broker Forms & Print Ltd. in Eccles, Manchester, England. At presstime, the company's Web site (www.transaction 2000.com) was slated for a new version with a demo and full information.
Management Team: Brian Kellett, managing director, has 30 years of experience in the printing industry, including 17 years as managing director of Broker Forms & Print Ltd. Dave Etherington, project director, has worked in the information technology industry for 10 years. He has focused on Web design projects for the past five years.
Corporate Status: Broker Forms & Print Ltd. is a privately held company, owned by Brian Kellett and Dave Etherington.
Payment Structure: Distributors purchase the software. The pricing structure depends on how many clients the distributor includes on the system: It ranges from $7,500 to $27,000. The only other fees associated with Transaction are support fees.
Customers: Five companies in the United Kingdom and two in the United States.
Reminder: Don't Forget Your Subscription Listings
Have you returned your DMIA Subscription Verification Forms? This is your opportunity to review your company's lists of subscribers for FORM Magazine, the Independent Management Report and the Business Printing Technologies Report. The lists also provide information required by U.S. Postal Service auditors. Make changes, corrections or additions to the listings, sign each page and return the forms to DMIA, 433 E . Monroe Ave., Alexandria, VA 22301. Fax them to (703) 549-4966. Even if you have no changes, please sign and return the forms. If you have questions, call Diane Saunders at (800) 336-4641. |
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