Not that long ago book manufacturers and paper suppliers looked at digital print production as a wholly unwelcome alternative to the honored publishing tradition of putting real ink on real paper.
Today everyone acknowledges—in more than a few cases, grudgingly—that digital’s strengths and progress make sense on a range of publishing fronts. These extend from fast-moving, impossible-to-predict market segments all the way to the control of skyrocketing warehousing expenses.
Among printing companies, that acknowledgment is escalating to action, as use of quick-start Timsons and Indigo web printers gives way to multimillion-dollar, high-end investments, mainly in versatile quick-start, high-capacity T300 and T350 inkjet webs from Hewlett-Packard.
As a result, the established print-and-warehouse model is quickly yielding to short-run, print-and-ship, not just to minimize inventory expenses but to deal with unpredictable title popularity.
In addition, say manufacturing marketing managers, not every book has to have a library binding. Information moves so fast that textbook content will soon be updated anyway and a new edition published, as quickly as within a month.
In interviews with printers and paper manufacturers, including corporate giants as well as family-owned businesses, they describe unique production approaches, changes in book manufacturers’ thinking, the required scale of capital investments, a continuing commitment to sustainability, and how they are all reacting to current changes in the marketplace while readying for the next ones. All are also dealing simultaneously with an anemic economy and rapid changes in readers’ preferences and habits.
More to Digital
Digital production is a hot spot in publishing today, so hot that it’s burning holes in order processing, production, and inventory management systems of book manufacturers, challenging them and their publisher clients alike.
“When our basic business went very quickly from producing thousands of copies of a given title to, say, a total run of just 72 books to be shipped quickly to a dozen different locations, everything changed,” reports Mike Collinge, president and CEO of Webcom, a book manufacturer based in Toronto that also produces directories and catalogues.
“Suddenly,” he adds, “we have thousands more orders, but maybe just dozens or hundreds of books for each. Right now, we’re working with literally hundreds of programmers on new systems to process orders and manage inventories that reach from the publishers to our plant and warehouse and on through the supply chain.”
Collinge explains: “Just 13 months ago, we launched a $12 million production upgrade called BookFWD [book forward] that includes a full-color T300 inkjet web press for text pages—started up in January—and an Indigo 7000 book-cover system, both from Hewlett-Packard. We also added an inline Magnum FlexBook unit, plus two perfect binders and a saddle stitcher.”
The upgrade has had its intended effect. “BookFWD enabled us to win a multiyear strategic alliance with the North America education business of Pearson to produce short-run books for schools and higher-education programs.”
Says Dan Lee, Pearson’s North American executive v-p of content management, “The assurance of quality books with a regular stream of short print runs using this emerging technology is the right direction for our business.”
Rapid Expansion
In little more than a year, Quad/Graphics Inc., in Sussex, Wis., became the nation’s second-largest book manufacturer, first by acquiring Worldcolor in mid-2010, then by buying the U.S. one-color book operations of Transcontinental Inc. this summer, which added a few hundred new book accounts. The acquisitions bolster Quad’s specialty in trade books and educational books, and open the doors to additional publishing segments. “We were able to quickly ramp up our digital equipment platform, systems, and software by the end of last year,” says Sean Twomey, regional v-p of market development for Quad’s U.S. and Canadian retail book and directory businesses. “But,” he adds, “the real expansion—fivefold, to be exact—was in digital and print-on-demand capacity. This included new systems from all the major suppliers, delivered and put into service in a very short period of time. This segment is evolving, especially with its entry point to e-books and print-on-demand applications.”
In Worldcolor, Quad/Graphics acquired a major book manufacturer that had the capacity to annually produce one billion books, about 30,000 publishers’ orders. “But not long ago,” Twomey says, “a single publisher of ours added thousands of orders, accounting for several million books—all attributable to targeted short-run ordering, with quick-turnaround requirements, of course.”
It’s clear that the output method is no longer meaningful to publishers: the output choice depends solely on turnaround time and quantity specified, plus—increasingly—convenient conversion to e-book format. Says Twomey, “The standard working format today is simply a PDF, or an EPDF if the job is going to an iPad, Kindle, or other device.”
Quad’s focus is on supporting publishers through the life of a book. Digital offers production at the beginning and end of the product life cycle, while offset remains the core long-run process.
Most meaningful to publishers today is what the buyer or consumer wants. Reaching that goal, while keeping e-options at the ready, keeps book publishers, and printers, busy today, says Twomey.
He quotes the AAP-BISG BookStats estimate that 2.57 billion book units (total images, all processes) were sold in the U.S. last year, most printed by offset. It’s easy to imagine, Twomey says, a gradual but steady changeover in print from efficiency to versatility, from ink to inkjet imaging, not only for books but for products in many categories.
A New Future
Thomson-Shore Inc., in Dexter, Mich., could well serve as the model of how an established, midsize, employee-owned company—mainly producing perfect- and case-bound full-color and black-ink books in small to medium runs—can find its new future.
“We’ve been steadily adopting digital prepress technology and now also produce coffee-table books and lightweight paper Bible products,” says Kevin Spall, president and CEO. “I joined the company three years ago with a 15-year background in book manufacturing at R.R. Donnelley and Lightning Source.” Spall adds, “We quickly moved the company into CTP, then learned everything we could about data integration, MIS infrastructure, and XML workflows. But we knew we wanted to stay print-centric, even as the e-book trend began to be discussed, then picked up steam.”
Today, Spall says, Thomson-Shore’s Publishing Services Department, just a few months old, is helping its clientele of small and midsize independent publishers to expand from print books into the e-space, as many Thomson-Shore clients have neither staff nor resources to work with the necessary technical aspects. Regan L. Borton, a three-year employee recently named business development manager of Publishing Services, says, “Our publishers were looking for help in everything from formatting e-books to understanding how Amazon works and how to fulfill e-book orders.” She notes, “They’re grateful when we explain the technical stuff and assure them that the workflow is basically the same.”
Adds Spall, “Faced with the dramatic changes being brought by e-books, some manufacturers are choosing to serve solely as middlemen and simply outsource formatting of e-books, frequently to offshore companies. But we chose to keep print–to–e-book conversion in-house, both to minimize finger-pointing and to add value to our services.”
How far along is the e-book conversion? “For the midsize and larger publishers, I’d say e-books represent 30% to 35% right now,” says Spall, “but the conversion rates are still in the single digits for the smaller publishers.” Spall is waiting for that well-discussed “tipping point.” He says, “We saw it in CTP and PDF—just 20% one year, then widespread acceptance the very next year.”
As for digital printing, so far Thomson-Shore uses only toner presses printing cut-sheet stock. “This is solely for quality reasons,” Spall adds, “but we’re in regular contact with ink-jet system suppliers so when their output reaches the high-quality levels of ink, we’ll consider investment in this value for customers.”
Expanding Digital
This summer, King Printing Co. Inc., of Lowell, Mass., ordered a field upgrade to its HP T300 color inkjet web press, conducted by Hewlett-Packard, the press’s manufacturer, which sped up by 50% the output of the press, now designated an HP T350 model. “The upgrade gives us higher throughput to simultaneously raise the break-even point between analogue and digital printing, and to lower the page costs in color printing,” says Adi Chinai, managing director of King Printing.
It is the first such upgrade that HP has made in North America to one of its HP T300 presses in the book field.
King Printing has long specialized in short runs—in pursuit of cost-effective, low-inventory supply chain management, along with lower per-page costs—to respond to demand for digitally printed color books.
The company, one of the first book printers to adopt high-speed continuous-feed color inkjet printing, is known as a progressive provider of short-run hard- and softcover books, and now operates a variety of digital and analogue book production lines. King Printing has stayed at the forefront of high-volume digital book printing since it installed its first inkjet book manufacturing line in 2007.
With HP T350’s versatile Scalable Print Technology, a thermal inkjet imaging system, King Printing achieves high-quality results on standard, uncoated paper stock, as well as on inkjet coated papers designed for high-volume production.
Change Continues
“I think the book manufacturing industry has seen more changes in the past three years than in the previous 50,” states John Edwards, president and CEO of Edwards Brothers, Ann Arbor, Mich. “We’ve never seen such tremendous pressures and fundamental changes to our industry affecting all fronts: costs, margins, turnaround, content, formats, simply everything.”
He adds, “As a book producer, we’re like a ‘mutual fund’ in that we live or die solely on books and technical journals, from trade, k–12, university presses, and higher education, to self-publishing and professional. So every day now we’re dealing with huge pressures on costs, run lengths—companywide, our average is just 2,200 copies—job turnaround, and inventory levels, plus we’re providing a range of print runs to our customers in any format they want and need, down to a quantity of one.”
Busy as it is, Edwards Brothers continues to respond specifically to publishers’ needs, he notes. The company just opened its 10th location, in Southern California, to provide digital print-on-demand services to customers in the area. “Most of our locations are in publisher warehouses—we put in our first site 12 years ago, at Rowman and Littlefield in Blue Ridge Summit, Pa.—which allows our customers to reduce inventory and even go to print-on-demand for slow-selling titles,” Edwards explains.
He confirms that digital book production continues to cannibalize offset today as publishers push down their manufacturing expenses and inventory levels. However, he points out, the number of titles Edwards Brothers produces every year goes up.
“Given inventory costs and shipping expenses, in many cases it’s better to print slow-moving titles one title–to–order than to print to a carton in a warehouse,” he says. “At the same time, we produce many titles on offset presses, which is why we operate seven quick-start Timsons web presses and multiple sheetfed presses as well as produce titles at our many print-on-demand satellite sites. Also, to lower transaction costs, we offer customers One-Touch Reprint, our Web ordering service.”
Edwards concludes, “I tell people 2009 was a horrible year, coming off a good year in 2008. In a bit of a surprise, 2010 was a little better, and 2011 is in between.”
R.R. Donnelley took note of the rising inventory costs facing publishers to strike a deal with HarperCollins in the spring under which Donnelley, HC’s longtime printer, will also fulfill and ship orders for new books for all of HC’s U.S. divisions. The first objective in the transition is to move HC’s new-release titles from its Williamsport, Pa., warehouse to Donnelley’s Harrisonburg, Va., plant in November. The Williamsport warehouse will be closed in January. According to Harper, the move is right on schedule. “Testing is currently underway, and everything is going very well so far,” says Larry Nevins, executive v-p of operations and technology for HC. “Donnelley has been a great partner through the entire process. This is a very strategic move for both companies and we have our best people engaged on the IT and distribution processes.”
Difficult Year
“This has not been a good time for book manufacturers, really, our third difficult year,” reports Bill Upton, president of Malloy Inc., Ann Arbor, Mich. “Book companies are struggling with everything, from lowered order rates to delayed production schedules.”
For Malloy, the biggest factor affecting textbook production this summer was the delay by the Texas legislature until late June/early July to adopt its biannual budget. This dramatically compressed the time for the entire supply chain to respond to textbook orders from Texas. Those orders represented the largest sales opportunity for elementary/high school publishers in 2011.
“For the textbook market, which represents literally hundreds of millions of dollars for the industry, we’re normally in production from May through July,” he says, “but we had to shift production to late July through August. It shows how states’ budget battles these days are having a direct effect on suppliers like us.”
More than at any time in the recent past, he says, manufacturers must accept that the market is changing and that they have to adapt or suffer. “Orders and counts are off,” Upton acknowledges, “but we’re well situated to produce short runs using our Timsons web presses, down to just 500 copies, while still being able to handle longer runs as well.”
In Malloy’s digital printing area, he adds, volumes are up, with more titles but shorter runs, and more use of the Malloy Web site. Upton says Malloy continues to encourage customers to specify printing of FSC and SFI logos in their titles. In the same vein, despite a tough economy, Malloy supports the Book Industry Environmental Council in continuing to pursue zero-landfill goals for the books it produces. “Understandably, not everyone in the supply chain has control of book disposal,” Upton says. “For example, a bookstore may be leasing space, and its landlord may control how waste is disposed of.”
Among book printers, the vast majority of discarded material is recycled. “Malloy has been a zero-landfill company since September 2009,” Upton reports.
He expresses concern about three big events that affected manufacturers over the past year: the Borders bankruptcy, textbook cuts in state budgets, and the encroachment of e-books. “The bankruptcy effects are still not clear and e-book effects are sure to continue,” he says, “but I’m one of those who think state budgets will loosen up again. How we figure out the balance in this kind of mixed environment will be tricky.”
What’s ahead for book printers? Continued tough sledding for the next two or three years, in Upton’s view. “Some of the larger companies that operate multiple facilities have closed plants,” he says. “So far, we haven’t seen many companies fall out of the market completely. But further consolidation is likely.”
When will the field be “right-sized”? Replies Upton without a moment’s reflection, “I think we were ‘right-sized’ a few years ago. What the market has been forcing us to do since 2008 is ‘wrong-sizing.’ ” He pauses, then adds, “Did I say that?”
Clean Substrate
Signature Offset, in Boulder, Colo., now printing in seven locations in Arizona, Colorado, New Mexico, and Mississippi, produces university class-schedule books and an abundance of newsprint circulars, English- and Spanish-language shoppers, and school publications.
“We’ve been sustainably operating and environmentally managed for many years,” says its president and CEO, Lloyd Streit. “We’ve long known that a 50-pound offset book paper is still typically made in a high-waste, coal-fired plant, so we looked around for something better.”
Signature Offset found it in an uncoated freesheet paper, made by AbitibiBowater in its mill in Alma, Quebec, which uses a mechanical pulping process that intentionally retains the lignin, or “glue,” binding the wood fibers, unlike the kraft pulping process used for making uncoated freesheet paper, in which the lignin is removed. The result: at the equivalent basis weight, the AbiBow process requires just half the wood fiber while achieving better bulk and opacity than comparable uncoated freesheet book grades.
“Better yet,” adds Streit, “we soon learned that AbiBow’s new Ecopaque line allows production of more sheets for equivalent weight—or the same number of sheets for less weight—compared to the traditional kraft pulp process. Either way is a clear advantage in both economic and environmental terms.”
Advantages range from lower greenhouse gases and lower environmental impact throughout the life cycle to users’ print and postal savings, not to mention helping keep print viable.
AbiBow’s Ecopaque line is available in inkjet, laser, and offset grades, in weights from 40-lb. to 55-lb. Opacity extends from 91 to 95, and caliper from 3.45 to 5.0.
A Digital Courier
Courier Corp., in North Chelmsford, Mass., the third-largest book manufacturer in the U.S., with more than $250 million in sales, has heartily embraced digital book production in serving its three very different book markets: education, religion, and specialty trade.
It now operates three T350 color inkjet web presses from Hewlett-Packard to streamline offset-quality production of one- and four-color books. In addition to its digital facility in North Chelmsford, Courier continues to operate more than 25 sheetfed and web offset presses at four production sites in the U.S. But as Courier ramped up its digital manufacturing, in the past two years it needed to close two smaller offset plants that specialized in single-color short-run books.
Rajeev Balakrishna, v-p and general counsel of Courier, says the popularity of e-books has been greatest in the trade market, especially in the fiction category, where most books are one-color. The convenience of e-readers, along with selection price points that often are lower than the print version of the same title, has led to rapid growth of e-books in this market. Courier’s focus is “specialty trade,” which covers topics as diverse as gardening, cooking, health and fitness, business and finance, art and photography, sewing, and home improvement. As books in these categories have been slower to migrate to e-versions, Courier’s digital inkjet production is proving very helpful for publishers, including four-color books that are equivalent in quality to offset.
Unlike the trade market, Courier’s religious segment continues to grow despite the slow economy and has not seen any impact from e-books. Many of Courier’s religious products are exported to Africa and South America.
Courier is also a large producer of textbooks for students of all ages. Says Balakrishna, “This has been a growth business for us through ups and downs in the general economy. Recently, demand for college textbooks has been strong, but el-hi is undergoing a real contraction right now simply because of funding levels, as we all know from the budget negotiations going on all over the country.”
Early this year, Courier signed a multiyear agreement with Pearson Education. “Our inkjet capability and the continuing expansion of our four-color offset textbook plant in Kendallville, Ind., both factored into this agreement for North America. Included are textbooks and components, from elementary grades to higher education, in both two- and four-color. Our inkjet operation ran around the clock this summer manufacturing college textbooks, many custom editions for a particular campus or even for a specific professor.”
E-textbook usage is being watched closely on college campuses this fall. Like trade books, e-textbooks are generally priced lower than a new printed textbook, but are close to used or rental textbook prices.
The big e-book players selling e-readers and content gained tremendous publicity this fall by touting the convenience and lower price points of e-textbooks. Still, many students who have read e-textbooks report that they prefer paper books.
This is not surprising to Balakrishna, who says, “Serious-minded students using books can jot notes, scribble key words, and highlight passages, which they can come back to later and find quite easily. This interaction with the text is critical for learning and retention.”
He adds, “Printed books force students to focus on one task: reading the book. But students using e-textbooks almost always have other applications open, too, and it’s awfully difficult for them to keep from continuously checking Facebook and e-mail or playing games or surfing the Internet while they’re supposed to be studying.”
The key issue, in his opinion, is the educational effectiveness of e-textbooks. The new technology’s “cool factor” excites students initially, but he says there’s evidence that it introduces distraction that may impede the learning process.
This area will need careful study at all grade levels, says Balakrishna. He suggests that years of test data at the elementary and high school level can be used in a few years to measure the impact of e-textbooks.
Meantime, he believes college textbook sales will remain strong, driven in part by the rapid growth of custom textbooks and inkjet print technology. “Inkjet imaging enables us to produce custom educational materials for our customers that are priced competitively for students, and are more effective learning tools.”
AbitibiBowater to Become Resolute Forest Products
Effective November 7, AbitibiBowater is changing its name to Resolute Forest Products. The Montreal-based forest products giant said the change “reflects the fundamental characteristics of the company we are today, including our determination, strength, and resolve to be a profitable, sustainable organization.” The switch comes 11 months after the company emerged from Chapter 11. “With our competitive cost structure, diversified revenue base, and strong balance sheet, we are well-positioned for the long term,” says Richard Garneau, president and CEO.
The identity change follows an initiative, launched in April 2011, in which employees were invited to suggest a new name. An internal selection committee and the executive team chose Resolute Forest Products from among approximately 1,400 employee submissions.
