Quad/Graphics to Enhance Book Manufacturing Platform Through Investment and Plant Consolidation

Quad/Graphics, Inc.has announced plans to invest in and restructure its book manufacturing platform to create production and distribution efficiencies, and deliver enhanced value to book publishing clients.

The company plans to invest more than $15 million over the next several months to strengthen its book manufacturing platform in Martinsburg, W.Va. This investment is in addition to previously announced capital expenditures to enhance its book-component manufacturing capabilities in Leominster, Mass., as well as recent multimillion-dollar investments in digital press technology at the company’s Fairfield, Pa., and Dubuque, Iowa, book facilities.

As far as platform restructuring, the company will close its Buffalo, N.Y., book facility in the fourth quarter of 2011. The action is part of the company’s ongoing process to integrate operations and remove excess and inefficient capacity following its July 2, 2010, acquisition of Worldcolor.

“Quad/Graphics is strengthening its offering and position as one of North America’s leading book printers,” said Joel Quadracci, Quad/Graphics Chairman, President & CEO. “We recognize that the landscape is changing for book publishers and their interest in shorter runs and print-on-demand services is growing. To that end, we are adjusting our offering to be more responsive and flexible, and improve quality and turnaround times. We want to help book publishers be strong and competitive, especially as consumer preferences continue to evolve.”

Plant Closure

The Buffalo plant, which specializes in mass-market paperbacks, will begin stepping down operations immediately, and production is expected to conclude in the fourth quarter of 2011. Client work will be moved to the company’s Martinsburg, W.Va., and Leominster, Mass., facilities. The Buffalo plant encompasses approximately 830,000 square feet and currently employs approximately 400 people. The company will proactively assist impacted employees in finding new jobs, including those available at other Quad/Graphics locations.

“The plant closure is necessary to remove excess capacity from our platform and strengthen our overall competitive position, and in no way reflects on the performance of employees or the quality of service to clients,” Mr. Quadracci said. “The age and condition of the facility, and its current capacity utilization, make this action necessary.”

Book Platform Investments

Quad/Graphics’ planned investments in its Martinsburg book facility will augment existing services for trade-book publishers while also accommodating and advancing services for mass-market paperback publishers. Among the investments the company will make are upgrading press equipment, and replacing all binders with more productive models. “We are committed to book publishers, and are making the necessary and desired investments to keep pace with a rapidly changing marketplace,” Mr. Quadracci said. “The Martinsburg platform’s infrastructure and equipment improvements will provide tangible value to our clients.”

The company also expects to realize distribution efficiencies by concentrating more work in Martinsburg. The book facility is near Quad/Graphics’ existing Martinsburg magazine and catalog plant, and its Fairfield book plant. By consolidating freight from these and other nearby facilities, the company will be able to provide economic, expedited distribution of product using the East Coast Interstate system. “Timely, efficient, cost-effective delivery is key to our clients’ success, and we are committed to helping them succeed through a strategically placed East Coast distribution center,” Mr. Quadracci explained.

In Leominster, the company will augment its already sizable book component capabilities by installing a new high-speed color press with inline UV coating for producing covers, dust jackets, end papers and inserts; bringing on line new high-speed foil-stamping and embossing systems; and expanding its coating and laminating offerings. These investments are part of a previously announced $13 million investment in the company’s Commercial & Specialty platform. “These capabilities give our clients more options to differentiate their products in a crowded marketplace,” Mr. Quadracci said.

Quad/Graphics’ other recent investments in its book manufacturing platform include the installation of several advanced digital presses, some with fully integrated inline finishing systems, in both its Dubuque, Iowa, and Fairfield, Pa., facilities. “Our digital printing capabilities complement our conventional platform, and give book publishers more product delivery options,” said Brian Freschi, President of Quad/Graphics’ Retail Inserts, Books, Directories and Canada operations. “Our growing digital print-on-demand capabilities allow us to be a full-service provider for publishers throughout a book’s lifecycle. We can do short initial runs on our digital equipment, followed by longer web offset runs. Then, for the ‘tail’ of a book’s lifecycle, we can print mass-market paperback or softcover trade versions as well as reprints through more short digital press runs.”

“We continue to listen to our clients’ needs and are making appropriate investments to help them succeed,” Mr. Freschi added.

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