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Don’t Stop the Presses

Download the 2010 OC’s LARGEST PRINTERS LIST (pdf)

Orange County’s largest printers saw another year of consolidation as a tough economy and lower spending by clients dropped their revenue more than 11%.

Two printers closed local plants to trim costs, others forged partnerships and a few sold out to other printers or private equity firms.

The top 30 printers operating here saw revenue drop 11.3% to $573.5 million for the 12 months through March, according to this week’s Business Journal list.

“Last year was a freefall in terms of business, and we were all playing defense,” said Bruce Carson, president of No. 5 Irvine-based Dot Printer Inc., which saw revenue drop 12.5% to $21 million.

In comparison, printers’ revenue dropped 4% to $655 million on 2009’s list, which measured mostly 2008 sales.

Things are looking better this year, according to Carson and others.

“The industry has stabilized in contrast to a year ago,” he said.

Most sales figures on the list are for the 12 months through March with a handful for calendar year 2009.

Thirteen companies reported lower revenue, five saw increases and 12 were Business Journal estimates, which were made in line with decreases reported at other companies.

The five printers that saw increases in revenue posted gains for varying reasons.

No. 18 Tustin-based Foster Printing Co. boosted business by adding a wide-format printer. No. 25 Santa Ana-based C4 Litho LLC became a printer-for-hire doing work for other printers.

To stay current in commercial printing, companies often have to make investments in technology. Two years ago when printers were riding high on growth, several companies bought printers to expand into new lines of business including wide-format and digital printing.

“Printers leveraged up on equipment anticipating growth and in some fashion the bottom fell out from under their large equipment,” said Jeff Carlson, chief executive of No. 3 Irvine-based MyPrint Corp. and eTools LLC. “There are printers out there looking for options to keep their equipment busy and producing work.”

For most of the printers on the list, there wasn’t enough demand to sustain business.

“There is a lot of excess capacity out

there which I don’t know in my lifetime

will ever get absorbed by current demand,” Carson said.

Many companies are looking to trim costs, while others are throwing in the towel altogether.

“There is going to continue to be more consolidation in the printing industry,” said Jared Greene, regional manager at the Irvine office of No. 2 Chicago-based R.R. Donnelly & Sons Co. “The industry can’t support half of what’s out there currently.”

R.R. Donnelly was one of two printers here to close plants this year and move the work elsewhere. That trend likely will continue, according to market watchers.

The printer shut its plant in La Palma at the start of the year in an effort trim costs and shifted operations to plants in Illinois, San Diego and Las Vegas. The plant let go its last 40 workers in January.

“The business was really poor for us in that shop and then we got hit by the economy,” Greene said.

R.R. Donnelly’s revenue is estimated down 30% at $35 million based on the downturn and closure. The printer was big in the magazine and catalog industry, working with clients that include the Disneyland Resort.

The printer plans to keep a sales office in Irvine. Its OC workers were estimated down 63% to 40 workers here.

No. 7 Costa Mesa-based Creel Printing of California was another to close a plant and cut back on workers. The company was acquired last year by Las Vegas-based Creel Printing LLC, which shut down its printing plant in Costa Mesa in September.

Creel transferred local production and equipment to Las Vegas to centralize manufacturing.

“Moving production to Las Vegas will reduce our cost structure and give customers access to expertise across our organization,” said Alan Creel, president of Creel Printing of Las Vegas.

Like R.R. Donnelly, Creel plans to keep a sales office in Irvine. Its OC workers were estimated down 75% to 15 workers.

Companies that weren’t big enough to shed equipment or plants were targets for acquisitions.

Anaheim-based 5 Day Business Forms Manufacturing Inc., a maker of business forms used by printers, acquired last year’s No. 15 Santa Ana-based Universal Forms Levels and Systems Inc.

Printers have looked to similar acquisitions and partnerships to keep presses running.

MyPrint Corp. & eTools saw a Los Angeles-based private equity firm, Triton Pacific Capital Partners LLC, take a majority interest in the company. Terms were undisclosed.

“We were a firm that went out proactively and partnered with a private equity group,” Carlson said. “We keep our ears to the ground for other opportunities to merge with other print businesses, as there are still some players out there willing to consider those types of options.”

MyPrint’s revenue was estimated flat at $25 million.

Triton Pacific cited MyPrint’s eTools software as one of the top reasons for its investment. The online software lets customers order, customize and track print-on-demand marketing materials, stationery and more.

“The functionality of MyPrint’s eTools offering is unique among other companies within the commercial printing, promotional products and fulfillment industries,” said Fred Thiel, managing partner at Triton Pacific and former chief executive of Irvine-based networking device maker Lantronix Inc.

MyPrint, like others, moved into the digital side of the print business and has seen a rise in print-on-demand business.

“We’ve seen more companies interested in using our technology to track costs and keep a firm eye on marketing budgets,” Carlson said.

The downturn pushed many advertisers to cut back on their printing budgets and forced some publications to stop printing altogether.

Smaller Projects

With marketing in the early stages of recovery, printers are seeing some demand come back—but for smaller projects.

“Technology keeps changing where the demand for print will be,” Carlson said. “Larger marketing projects are becoming smaller, regional projects as companies localize their impact and effectiveness.”

Printers are finding their customers are hesitant to commit to longer print runs, sticking to limited, smaller press runs instead.

“Marketing has become much more localized in some of our industry segments which don’t require the mass printing that the broad national campaigns once required,” Carlson said. “We see companies spending more to print on-demand and see more localized campaigns going forward.”

Some printers said they are starting to see the promise of an upswing in business after years of cuts to print budgets.

“We have seen in the last two months the number of opportunities increasing with quantities higher than they had previously been,” R.R. Donnelly’s Greene said. “Everyone is still doing printing, but the total revenue for printers is going to be down as the projects have become smaller.”

Many executives have seen 2010 as a slow climb back to recovery, although no one anticipates the return of past print levels.

“Direct mail isn’t going anywhere anytime soon,” Greene said. “Its magazine, catalogs and phonebooks which have been severely hit and I don’t see coming back to past print levels.”

Many advertisers that severely cut back on print ads and began to shift their focus to the Internet to save on print costs have started to return with more modest print budgets.

“We’re seeing the shift toward integrated marketing with a heavy component of print still as part of the mix,” Carlson said. “At the same time new media and new marketing approaches are kicking in, whereas in the past print would have been the lion’s share.”

Ultimately, many printers see the consolidation in the market as a good thing for the industry as a whole.

“There is going to be some weeding out of companies that aren’t strong enough and that’s going to help the industry in general,” said David Melin, president of No. 15 Tustin-based Meridian Graphics. “I think in the future there will be fewer and fewer companies that are focused on ink and paper.”

Meridian, which does a lot of printing for action sports and automotive companies, saw $10.5 million in 2009 revenue, down 32.3% from a year earlier.

Most print shops have cut workers in response to the downturn. That was reflected in the overall employment counts. The group’s OC workers are down 13.7% from a year ago to 1,855.

No. 1 Los Alamitos-based Trend Offset Printing Services Inc., which again dominated the list, saw OC workers stay flat with an estimated 500 workers.

The company’s revenue was estimated down slightly to $250 million.

Download the 2010 OC’s LARGEST PRINTERS LIST (pdf)

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