November 02, 2018


Every so often, I get one of those emails from the vendor community ... something about how print is critically important in a digital world. You know there is some sort of coordinated effort, because a popular vendor will say something and then a paper rep says something and then newsletters include the content and then consultants are talking about it and then clients say something to me about it ... see how that works?

So it got me thinking ... if print is in a period of resurgence as the industry says print is, then sales at RR Donnelley and Quad Graphics should be surging and those businesses should be healthy, right? Right?

Fortunately, each company issues quarterly sales updates and produces annual reports - in accordance with their status as publicly traded companies. And we're all able to read those statements and learn what is actually happening - as opposed to the content produced by the industry.
There are interesting comments in the documents. Here's annual sales at Quad:
  • 2013 = $4.7 billion.
  • 2014 = $4.8 billion.
  • 2015 = $4.6 billion.
  • 2016 = $4.3 billion.
  • 2017 = $4.1 billion.
  • 2018 = Trending toward $3.9 billion.
Oh oh.

Look at what Quad says on page 7:
  • "Over the past seven years, the Company has closed 41 manufacturing plants representing nearly 13 million square feet of under-utilized production capacity. This commitment to consolidating work into fewer facilities to maximize capacity is one key way Quad/Graphics maintains platform excellence and remains the industry's high-quality, low-cost producer."
Look at what Quad said about their 2018 outlook:
  • "In 2018, the Company expects net sales to range from a slight decrease to a slight increase as compared to 2017 primarily driven by organic growth in the International segment, partially offset by the anticipated continuing volume declines in the Variable Print segment and price pressures in most parts of the business."
A comment from RR Donnelley:
  • "The print and related services industry, in general, continues to have excess capacity and remains highly competitive and fragmented."
That only happens when supply exceeds demand - they built their infrastructure expecting a certain level of print volume and that level of print volume isn't happening.

Another comment from Quad - 21,000 employees as of today ... but 41 plant closures resulted in the elimination of 11,800 employees. That's a lot of contraction. A lot of that happens because of efficient operations. Some of that happens because print volume is in decline.

An RR Donnelley tidbit:
  • If you invested $100 in RRD stock in 2012 you'd have $94 today.
  • If you invested $100 in the S&P Small Cap 600 in 2012 you'd have $209 today.
Why share all of this information?

You can earn a TON OF PROFIT using a marketing channel that is in decline ... I've got many clients doing just that ... and Quad is generating profit in spite of the structural decline of the industry. Heck, people have been saying TV is dead for more than a decade, and it may well die sometime, but ask Fox News or CNN if they're printing money or not during this election cycle?

Make no mistake ... there isn't a resurgence in print. The industry is in structural decline.

The industry doesn't need to lie to you. If everybody operate with integrity, there'd be plenty of profit to go around, regardless of the long-term prospects of print.

Do what is right for your business. Make profitable decisions. That may include print. That may include other channels.

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