Quad HQ in Sussex, WI

So not only is Quad Graphics, because of anti-trust concerns, not going to take over LSC, the book part of R. R. Donnelley, they are now quitting the book business altogether, as Book Business Insight reports. Facing depressing overall results, they want to sell their book manufacturing business which generates about $200 million a year. This consists of the old World Color assets (previously Quebecor) and involves three large plants:

  • The Versailles, Ky., plant employs approximately 700 employees. The 1 million-sq.-ft. facility specializes in educational textbooks and trade books.
  • Quad’s 370,000-sq.-ft. Fairfield, Pa., facility employs approximately 300 people and specializes in trade books.
  • Its Martinsburg, W. Va. (Baker Road) plant produces trade and mass-market books. The 380,000-sq.ft. facility employs roughly 350 workers. Quad operates two manufacturing facilities in Martinsburg. The company’s other facility (located on Caperton Boulevard) primarily prints magazines, catalogs, and retail advertising inserts, and is not impacted by the decision to sell its book business.

This is a large chunk of book manufacturing capacity, and while one can assume any buyer will want to make efficiencies, we can perhaps hope that there will not be mass layoffs or capacity reduction.

The book manufacturing business is going through changes. I do think the fears of a few years back that ebooks were killing off the printed book have dissipated, but we are living through an effort to right-size the industry. While much book work continues to move towards longer and longer runs, most books are actually being printed in ever smaller runs. Bestsellers are printing more and more; regular books fewer and fewer. In crude terms the shorter runs favor digital printing, while the longer runs of bestsellers still support the use of large web offset presses. Book manufacturing, in contrast with book publishing, is a capital intensive business. Investment is always needed in new equipment: you are perpetually tempted to keep on using your already amortized machinery, twisting and turning to avoid new capital outlays by operating equipment at less than optimal levels. But ultimately the bullet has to be bitten. So you have to make the call: more digital or bigger offset. With machinery costing so much, mistakes are expensive. Be it noted that the random imposition of tariffs here and there doesn’t help in planning.

I think we should resist the temptation to over-interpret the news of this and other changes in the book manufacturing business. Sure plants have closed, but every case is bound to be different: there are all sorts of ways to go out of business. I don’t think these changes signal the beginning of the end of the book manufacturing business. There is no doubt a good deal of turmoil, and the ways book manufacturers used to know they could make money are no longer exactly applicable to modern market conditions. Adjustment is what’s going on, not armageddon.

To end on a more positive note, recall that Worzalla recently announced a $12.5 million expansion and is looking to hire 50 people. Book Business Magazine reported the news last month.