TOUGH YEAR
Printers Post 1% Decline in Sales Amid Economic Malaise; Some See Hopeful Signs
By JENNIFER BELLANTONIO
The biggest commercial printers in Orange County faced another tough year in 2002, as budget-conscious clients continued to watch purse strings.
According to this week’s Business Journal list, the top 30 printers saw total OC sales edge down 1% to $513.8 million. Most reporting periods were for the 12 months ended March 31.
The period marked another down year for the printers. Last year’s crop reported a 3% decline in sales for 2001.
Orange County employment was off 3% to 2,681 workers, keeping pace with last year’s employment decline.
“The business climate was and still is tough,” said Donald Secrest, chief executive of No. 3 Santa Ana-based Webtrend Inc.
In all, 12 companies saw sales increases. Ten printers saw decreases and four saw no change. The Business Journal made four estimates for companies that didn’t report sales. Without those estimates, sales fell 2% for the remaining 26 companies.
Many printers rely on the advertising and marketing industry for work. But the sector has been cutting back.
“In these challenging economic times, our clients are looking for every possible way to reduce expenses,” said Doug Grant, president of No. 14 Foothill Ranch-based Westamerica Graphics Corp. “We are seeing a smaller ‘advertising pie,’ and that smaller pie is divided up among more options like the Internet and multimedia solutions than in the past.”
Quantities are being scrutinized.
“Anybody who is spending money on print is trying to make sure it’s reaching the right target market,” said Todd Nelson, president of No. 1 Los Alamitos-based Trend Offset Printing Services Inc.
The result: There’s been a shakeout.
Some printers have thrown in the towel, while others have merged or been bought, said Tom Morrison, owner of No. 23 Anaheim-based Morrison & Burke Inc.
This week’s list saw a few examples.
No. 2 Lisle, Ill.-based Wallace Computer Services Inc. in La Palma was bought by Canada’s Moore Corp. The company now is known as Moore Wallace Inc.
No. 12 Brea-based Dual Graphics Inc. picked up clients and workers from Buena Park-based Graphic Ways Inc. and Brea-based Southern California Lithographics after both shops closed.
“There’s been a consolidation in the printing industry for the last several years, and this is just another view of the economy,” said Paul Carney, sales manager at Dual Graphics.
But there is a bright spot.
On a national level, first-quarter sales this year were up 2%, versus a year ago, according to Ron Davis, chief economist for Printing Industries of America.
This is a good start after two consecutive years of declines. Industry analysts predict a stronger rebound in 2004.
The trend is playing out locally.
“Our sales are ahead of forecasts for this year and ahead of last year’s pace, as well,” said Westamerica’s Grant. “We think the overall print market bottomed out in 2002, and we are beginning to see signs of recovery this year.”
Trend Offset again led the pack at No. 1 with $103.9 million in OC sales, a 9% decrease from last year.
Nelson said the company posted an increase in company-wide sales after shifting some of its OC workload to other plants in Texas and Florida.
“A number of our customers are taking advantage of our facilities in other regions,” he said.
Trend is bound to see some increases in OC activity this year. It recently expanded its Los Alamitos facilities by 50,000 square feet, bringing its total to about 400,000 square feet.
The printer also recently ordered two Heidelberg press lines worth about $12 million that will be arriving in the next few months. Trend also spent $1 million on Mueller saddlestiching equipment.
No. 3 Santa Ana-based Webtrend Inc. held its position with 12-month sales of $45 million, a 1% increase from last year.
The company trimmed its OC staff 16% to 150 workers but added nine salespeople for a total of 23.
Webtrend’s Secrest said the company cut workers in several areas, including accounting and management.
“Even though further streamlining of Webtrend has taken place, the pressure on margins and generating a strong backlog of business is still very difficult,” Secrest said. “Luckily for us we have a unique mix of business: commercial sheet-fed and Web printing coupled with a huge presence in the full-service direct mail market.”
Secrest said the company has seen an increase in its direct mail projects.
“When it comes to responses, the predictability of direct mail is tough to beat,” he added.
No. 4 Creel Printing Company of California Inc. in Costa Mesa posted a 2% sales gain to $24 million.
Tom Steele of Creel’s sales department said the company hired two salespersons to help bring in more volume.
“I’m up 30% right now over last year,” Steele said. “It’s getting a little better. People are loosening up their wallets a little bit.”
No. 5 The Dot Printer Inc. in Irvine fell a spot with an 11% drop in sales to $23.7 million through December. Its OC workforce fell 4% to 151.
In all, eight printers saw single-digit increases, including No. 8 Fisher Printing Inc. in Orange, which reported an 8% increase to $17.3 million. The shop recently bought a new Heidelberg V30 press.
No.12 Dual Graphics saw revenue inch up 1% to $13.7 million.
Four printers saw double-digit sales increases. No. 6 Creative Press Inc. in Anaheim jumped 16% to $21.6 million, No. 13 Mybar Printing Inc. in Irvine posted an 11% jump to $11.9 million, No. 20 Meridian Graphics Inc. in Irvine saw a 32% jump to $9.5 million and No. 26 D.M. Steele Co. in Fullerton said sales were up 14% to $6.5 million.
Mybar Chief Executive Kent Barkouras said the company grew business with existing clients, including Santa Ana-based Ingram Micro Inc., Apple Computer Inc. and IHOP Corp.
In the past year it spent about $5 million on new computer-to-plate equipment and printing presses. Barkouras said that helped the company to boost its workload and cut workers. Mybar trimmed its staff 10% to 54.
Barkouras said he expects business to grow this year, primarily because the shop acquired Anaheim-based Eagle Source Graphics in March.
Meanwhile, 10 printers posted revenue declines, including No. 18 Inland Litho Inc. in Anaheim, which fell 11% to $10 million (it also trimmed OC staff by 11% or eight workers) and No. 30 Rancho Santa Margarita-based StyleCraft Graphic Communications, which saw a 21% drop to $3.4 million.
StyleCraft Chief Executive John Barnhart said his clients, mostly marketing companies, weren’t spending as much on campaigns, his bread and butter.
But he’s optimistic for this year.
“I really think 2003 is going to be better than 2002,” Barnhart said. “We’re primed and ready for it.”
Two newcomers to the list were No. 15 Universal Forms, Labels and Systems Inc., which said its sales were up 6% to $10.5 million, and D.M. Steele. Both came to the attention of the Business Journal after last year’s list was published.
