It ain’t pretty out there for Orange County’s printing and graphics companies.
The industry is already being squeezed by a spike in paper prices and fuel and high costs associated with buying faster digital printers and other equipment.
And it just got uglier.
Earlier this month, printers were hit with another increase in postage, which many say they will pass on to their clients.
Those printers that can’t compete are considering all options, including selling to bigger companies.
“The industry is continuing to consolidate, probably more so now than ever,” said Jared Greene, regional manager at the printer formerly known as Moore Wallace Inc. in Irvine.
Several acquisitions have played out in OC during the past few years.
In 2004, Costa Mesa-based Consolidated Reprographics bought Corona’s Action Blueprint, which provides architectural printing services in the Inland Empire.
That same year Chicago-based R.R. Donnelley & Sons Co., which handles print
and other services, bought Moore Wallace and changed its name to R.R. Donnelley Co. The company continues to grow through acquisitions, Greene said.
He declined to say whether R.R. Donnelley is scouting prospects in this area.
Last year, Stamford, Conn.-based print company Cenveo Corp. picked up Costa Mesa-based ColorGraphics Inc.
David Madison, director of sales and
marketing, said the move let ColorGraphics gain more buying power for bulk paper and expand its services, adding digital, envelope and
publication style printing.
Customers these days have a “multitude
of options” when it comes to advertising,
Madison said.
“Advertising budgets are split between print, Internet and other electronic methods,” he said.
That has put pressure on ColorGraphics to continually look at ways to “bring more value to our customers” and bring in business, he added.
It’s not easy. With hikes in paper prices and postage, some customers are cutting back on how much they print, or going with lower grade, less expensive paper to get more bang for their buck.
Others are pressuring printers to cut prices.
“Postage increases tend to have more of an effect” on business, Greene said. “You can’t shop around on postage. But you can shop around on printers and beat them up” on prices.
With print runs getting smaller, “there is
just too much equipment in the marketplace to
sustain all of the printers for an extended period
of time,” ColorGraphics’ Madison said. “Something will have to change.”
Printers continue to look for options.
About 30 independent printers have contacted Northville, Mich.-based Allegra Network LLC to see about selling their business to one of its franchisees, said Tina Virga, director of marketing and franchise development for Allegra, which runs graphic communications shops, including 15 in OC under the names Allegra Print & Imaging and American Speedy
Printing Center.
So far Dimension Printing in Garden Grove and JPM Print & Silk Screen Huntington Beach have sold to Allegra, Virga said.
Expensive Technology
For many printers, it’s tough to keep up with the times.
One reason: Technology is changing fast and it’s expensive to invest in new equipment.
It costs about $300,000 to $500,000 to up-grade to full-color equipment alone, Virga said.
“Competition from office superstores and the Internet continues to pose a greater threat on the accounts base of independent printers as well,” he said.
Printers that want to survive and prosper in this tough economy have to watch things closely, said David Melin, president of Meridian Graphics in Tustin.
His company is being ” a little bit more selective” about what jobs it takes, making sure their clients have good credit and will be around to pay the bills, he said.
The printer has seen its paper costs rise about 10% in the past few years and its fuel costs jump 100%.
“We have outside sales people and delivery vehicles that are constantly driving,” Melin said.
Plus, trucks delivering paper to Meridian Graphics are now charging fuel surcharges, he said.
“With business being slower and costs going up you can’t afford any bad debt or to reprint jobs,” Melin said.
Meridian has also encouraged its employees to work harder by selling them shares of the company that belonged to now retired co-owner Steve Ard, Melin said.
“We thought it would be a good opportunity to give employees more of a say of what
happens to the company,” Melin said.
Meridian is already “a little more profitable,” Melin said, but he doesn’t expect to see the “full effects” until the economy turns around.
“The overall economy is slow,” Melin said. “People aren’t spending as much on advertising as they were in the past.”
Printers are also working hard to give customers more options, particularly when it comes to another hot topic: going green.
“We offer a full line of recycled papers, soy-based inks and recycle our waste paper and ink,” said Doug LeMieux, president of Orange-based We Do Graphics Inc.
The company is also “constantly analyzing the environment in which we do business” and questioning the companies that it buys paper, software and other products from.
They “seem to think that printers have the capability to pass on any and all price increases to their customers,” LeMieux said. “Nothing can be further from the truth. We are constantly challenging our vendors.”
The result: “We can get better pricing and stay competitive to better serve our customers,” LeMieux said.
“We have seen the economic cycle go up and down quite a few times,” LeMieux said. “You just have to run a tight ship and you will make it through tough times.”
