Five years ago, Webcom Inc., one of Canada’s preeminent book manufacturers for three decades, began building a true evolutionary printing platform around HP’s new T300 Inkjet Web Press. Webcom’s paradigm shift, a fundamental change in the basic concept of book printing, now represents an investment of $30 million and a 2.1-billion pages-per-year digital inkjet manufacturing capacity the Toronto company.
In October 2015, Webcom continued to illustrate its intent on shaking up the book-publishing world by installing a new HP Indigo 10000 press. PrintAction spoke with Mike Collinge to learn more about the direction of a Canada-first platform.
What key advantages does the Indigo 10000’s 29-inch format size provide?
Mike Collinge: It allows us to do larger-format products that you cannot do on smaller systems, whether it is a [traditional] Indigo, NexPress or iGen, basically they all are suited to 11 x 17-type products and, in books, that limits you with spines on books and jackets and oversize book products. It also allows us to double our throughput, so we are able to respond much quicker in peak periods, which publishing has. Third, it allows us to cut a lot of the processing and labour expenses in half because we are producing at least twice as much as we could before every hour.
How does the 10000 fit with Webcom’s existing HP Inkjet Web Presses?
MC: With digital inkjet and an HP Indigo 10000, we are able to offer our customers cost-efficient, offset-quality, short book runs of tens, hundreds or a few thousand books at North American – if not globally – competitive rates… all very, very efficiently.
How does this platform best help clients?
MC: The unique solutions we offer help a publisher pull their capital investment out of keeping inventories and redeploy that [capital] so it is not stagnant in a warehouse… It also helps them customize books for small markets… or, with a backlist title on the end of its lifecycle, our technology allows a publisher to keep products alive.
What growth is available for web inkjet?
MC: Inkjet still has a really positive outlook for the next five years. The industry studies say over 20 percent CAGR in digital inkjet and one of the top two drivers of that growth rate is targeted to be books. So it is a high growth part of the book manufacturing business. It is not all necessarily new business for a manufacturer or publisher… but it is definitely a fast-paced, high-growth segment for the publishing industry.
How difficult is it realize enough margin for large digital-printing investments?
MC: It is not just about printing a physical book and shipping it to the door. We are addressing supply-chain and inventory-management needs and customer integration. We have a lot of investment in systems, people and process… rationalizing and automating our customers’ order entry processes is part of our solution.
Has Webcom moved from unit-cost print?
MC: It is a total cost of ownership model that we take to our publishers and they need to look at more than just a print and bind… we are not quote-and-produce vendors for them. We are business partners.
How does Webcom leverage inkjet colour?
MC: Inkjet technology is so flexible that you can put colour on two pages in a 400-page book and not have to make sure that it is on a certain form or signature… When a publisher is looking at how to differentiate their product in a very competitive marketplace, whether an educational publisher or trade, colour is an underutilized capability because the print community has made it expensive and awkward. Inkjet really addresses that for short run products.
What is the outlook for printed books?
MC:[At November’s BMI conference] Markus Dohle, CEO of Penguin Random House, said, “Our basic strategic assumption is that print will always be important, always – not in 50 years or 100 years – always.” So the Amazon forecast of the demise of the printed book was, and I still believe is, premature and inaccurate. Digital headlines do not match the reality of the publishing world or what their consumers are choosing for preferred book format.
I am happy that our publishers are still successful and sustaining their businesses, but I think Webcom’s solutions are much better valued if there is urgency on them not to patronize old publishing models.
How does Webcom provide sustainability?
MC: Depending on the product, somewhere between 25 and 50 percent of books printed in the past have gone to obsolescence or recycling. Our technology makes it reasonable for a publisher to print only what they need, only what they have back ordered, without significant premiums… We are buying world-class technologies that have sustainability underpinning them.
How do you qualify the risk of being first with new technologies?
MC: We have a very succinct vision of what we can deliver for book publishers in North America. We have fantastic ownership and a strong financial position to be able to make these investments. I would call them investments, as opposed to risks. Whether it is in technology, process or people, these investments are the building blocks to help us deliver us on that vision for our book-publishing customers.
- Serge Loubier, President of Marquis (photo by Anny Lecault). Serge Loubier, President of Marquis (photo by Anny Lecault).
- Marquis' Kolbus KM 600 in Montmagny. Marquis' Kolbus KM 600 in Montmagny.
- Marquis' Timson ZMR in Louiseville. Marquis' Timson ZMR in Louiseville.
Marquis Book Printing over the past three years has more than doubled its annual revenue through consolidation, beginning in mid-2012 when the company, headquartered in Montmagny, Quebec, acquired two manufacturing plants from TC Transcontinental. The purchase of Transcontinental Gagné in Louiseville and Transcontinental Métrolitho in Sherbrooke added just over $35 million to Marquis’ revenue base, which was around $20 million before the purchase. The company’s employee count went from approximately 125 to 350 people.
Just over a year later, in late-2014, Marquis’ management team reaffirmed its confidence in the book-printing sector by acquiring certain assets of Imprimeur Lebonfon, a former Quebecor plant in northern Quebec, which included bringing over members of Lebonfon’s sales team who were generating about $10 million in business. Today, Marquis Book Printing is generating more than $60 million in annual revenue as one of Canada’s largest independent printing operations.
As Canada’s biggest monochrome printer, running six massive, highly automated Timson web presses in Louiseville, Marquis is also beginning to shift into more colour work to move with the book market. In October, the company’s future outlook for book manufacturing also materialized in an exclusive partnership with SoBooks of France to create a transatlantic technology bridge for on-demand book publishing. The most unique strategy currently being employed by Marquis, however, revolves around a yearlong project to build its own UV-enabled web-offset press, scheduled to start-up this December.
Maurice Marquis founded Marquis Imprimeur in 1937 and quickly began to focus on book-printing capacity after acquiring some rights from European publishers, because books were no longer being shipped overseas during World War II. He even built what was called the Bibliobus, travelling from town to town to sell books printed by Marquis. The company never lost sight of its core competency to manufacture books, a position that was embraced in 2006 through a management buyout by Serge Loubier, who now serves as President of Marquis, Pierre Fréchette, Vice President of Sales, and Marc Delisle, who remains involved as an advisor.
“Five years after the management buyout, we were where we said we were going to be,” says Loubier. “ Then we went all in with the [TC Transcontinental] deal. We pushed all of the chips into the middle.” At the time, Transcontinental, which was moving toward a marketing-services platform, was Marquis’ largest competitor in monochrome and two-colour book printing, which remains as the heart of its operation with newer investments like Canada’s first Variquick PC 15 press and an Oce’ Varioprint 6250. The Marquis platform has also been enhanced with a 10-colour Heidelberg (adding to four- and two-col0ur litho presses), a Xerox Versant and iGen150.
Over the past several years, Loubier has focused on annual capital expenditures of around $2.5 million to purposely build the platform and to support the more than $15 million invested in Marquis’ market consolidation strategy. Initially, Loubier explains the plan – as presented to the banks – was to shutdown the Louiseville plant acquired from TC, now called Marquis Gagné, and move assets to Montmagny to realize savings, but minds were quickly changed after spending time in the facility.
“The employees were like the gold out of the transaction that we made – a really good crew over there,” says Loubier, noting the plant is led by a relatively young workforce that was surprisingly bilingual, being based in a francophone region of Quebec. “The heart couldn’t live with the idea of closing [Louiseville] and we had also miscalculated the space needed to produce big runs of books… we didn’t have enough floor space, in my mind, in Montmagny.”
With a potential relocation to Montmagny, Loubier was concerned the skilled Timson operators and well-trained salespeople and CSRs from Louiseville might not join Marquis. This was the case when the Sherbrooke plant purchased from Transcontinental was closed, which also showed Marquis was ultimately going to do what was necessary to succeed in its consolidation plan. He worked with Louiseville’s union to settle on a 15 percent cut and a five-year contract, saving about $1 million per year in costs, and targeted opening up more business in the United States to support the plant.
At the time, Marquis was generating about $400,000 in business from the U.S. and the management team set an ambitious growth target to reach $4 million. “In the first year, we managed to bring in $5 million from the U.S.,” recalls Loubier, noting this was at a time when the Canadian dollar was at par with the U.S. greenback. “It has been three years since the deal and we are going to finish this year over $15 million [generated out of the U.S.].”
Loubier is now comfortable in stating that the consolidation plan has worked out well. In explaining its success, he points to the stability provided by the Montmagny plant and its unique Marquis Laurentien division based in Quebec City. Purchased about a year prior to the Transcontinental deal, Laurentien was the province’s largest producer of school agendas and number two (behind Marquis) in yearbooks. With the TC Metrolitho deal, Laurentien became number one in both categories.
The Laurentien division has about 40 employees focusing on the typesetting and graphic design of books, particularly in the educational sector, including working with more than 1,000 schools. Marquis is now growing its work with schools in other Canadian provinces and again focusing on expansion in the United States.
Largely based on the dollar advantage for Canadian exporters, and a stabilized book-printing market, following a few years of uncertainly around the potential impact of electronic publishing, Marquis is now shifting toward more organic growth for its printing platform. “For the next three to five years, our plan is to double that capital investment,” says Loubier, hinting this will likely point toward putting more sheetfed power into the platform, integrated finishing, and also new inkjet web press technology currently being investigated.
“We need [inkjet] technology that will accommodate monochrome with a click charge that we can then switch to a colour click charge,” says Loubier, noting Marquis’ unique need to maintain high-volume monochrome production as it looks to the future with colour. “I also want to be able to choose my paper, to change it, and I want to print like offset… I thought [press makers] would never achieve it, but they are starting to show me things.”
Loubier also remains intent on running what Marquis knows best – “a big press is hard to beat” – and the company’s vital litho systems are highly automated. “My average run at Marquis has to be 3,800 to 4,000, so my big concern is not the speed of the press when it is running. It is how long it is stopped for,” he says, describing a recent run of 1,500 books with 144 6 x 9-inch pages that took just under 15 minutes to print. “We have Timsons in Louiseville with zero makeready. We do not stop to change the plates.”
In the more immediate future, however, Loubier is eager to start up the web press invented by Marquis. The eight-month project has been led by Alain Roberge, former owner and Director of Lebonfon, because of his engineering background and years of experience in web-offset production. An outside firm provided schematics for the 16-page press as Marquis planned out its interior, including the integration of a brand new closed-loop colour control system. In November, the company was adding folders and preparing to take the press apart for moving and reinstalling in Louiseville.
“We wanted a press that would do four-colour without heatset. The ink will be dried by UV lamps, so there will be no emanation and no gas involved in the process. It is going to be the greenest colour web in Canada,” says Loubier. “I like machines, so building my own press was always a dream.”
In early 2015, Prime Data of Aurora, Ont., became the third company in North America to install a Delphax Technologies Elan 500 press, built in nearby Mississauga using a sheetfed inkjet architecture with Memjet Waterfall print heads and a transparent Mylar substrate transport system. Supplying data-driven marketing services for more than 15 years, Prime Data’s initial goal with the Delphax system was to reduce inefficiencies associated with printing offset shells for post variable imaging.
Prime Data’s Elan 500 installation is unique because it is producing variable colour marketing materials, whereas the other two Elan systems are primarily printing monochrome collection notices (California) and government forms (Quebec). With its world-first printing position, Prime Data has been transforming itself to operate more like a tech startup to mirror a growing shift toward marketing automation.
“We have a mantra around here, everything is always in beta… to have a tech startup mentality and keep that in the place to make everyone feel comfortable with change,” says Steve Falk, owner and President of Prime Data.
Over the past couple of years, Falk has instituted several initiatives to embrace print, which currently accounts for approximately 30 percent of his company’s revenues. These strategies range from investing tens of thousands of dollars in security measures to new CSR tools and from cross-media consulting to variable full colour printing with sheefed inkjet.
The Memjet print heads employed by the Elan have 70,400 jets that fire up to 700-million drops of ink per second, hitting resolutions of up to 1,600 dpi, on a range of coated and uncoated substrates with weights from 60 to 350 gsm and format sizes from 8 x 8 to 18 x 25.2 inches. This translates into printing up to 500 A4 images per minute.
“The biggest thing [the Elan] did was simplify the process of doing batch-run direct mail, so we did not have to worry about offset shells… being able to roll it into one process where you go straight to colour imaging at an affordable price,” says Falk. Prime Data continues to leverage both colour and monochrome Konica Minolta systems for shorter-run applications. Falk explains, however, today’s highest-end toner presses produce upwards of 150 colour sheets per minute in simplex mode and are not fast enough for Prime Data’s larger variable runs. It would require multiple million-dollar toner machines to eliminate offset shells.
“There is only one sheetfed inkjet printer right now and it is the Canadian-made Delphax Elan,” says Falk, noting roll-fed inkjet options from companies like Canon Océ and Ricoh do not fit with his current client base. “For our marketplace, [with a need] to change stocks and sizes several times a day, for the run sizes, sheetfed inkjet is perfect.” Falk explains the Elan produces full variable colour at around the same price as printing offset shells for variable imaging; while also reducing workflow issues by a factor of days. “This business is also big on testing,” he says, which is cost prohibitive when printing offset shells to reach segmentations of 1,000 households.
The ability for Prime Data to leverage data expertise through responsive print helps mitigate the risk of being the world’s first Elan user for variable colour DM. “You should not be looking only at print quality, which is what people once cared about, but you should be focusing on the quality of the print message and how it is responding to [consumers],” Falk says. “The quality of responsiveness to the person you are talking with is what gets you better sales.”
Prime Data has developed proprietary tables and subroutines for cleaning up client data, sweeping vast fields to find potential VDP campaign disasters. “Data can be a nightmare and it can be a relationship killer if you do it wrong.” Falk estimates Prime Data might spend as much as four times the effort relative to competitors when working with customer information – and charges accordingly.
The data-sensitive marketplace led Falk to make large investments in securing Prime Data’s processes over the past two years. This involves measures like building and testing firewall security, entrance swipe cards, non-disclosure agreements, destroying computer and printer hard drives, and chain-of-custody procedures for overprint and setup sheets. The growth in marketing automation also relies on securing data transfers with tech-savvy clientele.
“What you want to do if you are a [printer] is think about how you can interact with how your clients are saving their data,” says Falk, “so communications back and forth, grabbing data at certain milestones in its lifetime.” This environment also pushed Prime Data to establish a CSR-driven customer tracking system to respond to issues immediately, which also helps to drive the company’s always-in-beta mentality. Employees are always improving their internal systems.
Falk feels the new emphasis on online data collection has hurt print, as agencies try to hold on to as much marketing budget as possible, running email and social media campaigns. “Even though this sector has been active for over a decade online, and tried all kinds of things, they can only close 10 percent of their deals online.” He is seeing more interplay of print and online marketing automation.
“For the first time, I had a couple of people come to us and say, ‘We are missing part of the puzzle and it looks like you guys can help us. You can talk our language, take our digital world and add a print piece to it,’” says Falk, stressing the fit of the Elan press. “We are going to grow with this new piece of equipment. We would like to see two of these in here. With the trajectory we are on right now, we will probably make that happen pretty fast.”
Alain Paquette, together with a silent partner, purchased Artcraft Label three years ago and set out to modernize the Burlington operation, leveraging its experienced team and position as a producer of high-quality pressure-sensitive labels. Founded in 1977, Paquette took over the operation from John and Edna Robinson, who grew Artcraft from a sticker business to an award-winning prime-label manufacturer.
Stepping away from his established career with technology suppliers, Paquette saw huge potential in Artcraft’s strong market position to institute significant operational changes to drive out costs. With his own background in lean manufacturing, investments were made to improve all aspects of the business, from the shop floor to the entire IT system.
Paquette focused heavily in establishing Artcraft’s prepress department, through Esko’s HD Flexo system, including a CDI imager and powerful new imaging software. The move adds more control over Artcraft’s high-quality printing platform housed within a 20,000-square-foot facility. The plant is meticulous in its cleanliness and order and primed for the future, which is likely to include contracting out prepress work, which currently accounts for a very small percentage of Artcraft’s revenue.
What potential did you see in Artcraft?
AP: I realized the market was changing so we came up with a plan to really optimize it… everything top to bottom… all of the software, computers, everything was all redone. We reinvented the whole ERP system. All of our stock is barcoded, for example.
How much cost have you driven out of Artcraft?
AP: We have managed to drop our operating costs substantially by optimizing. Of course, we now have a little less staff... and as a result, we crossed trained a lot of staff to be interchangeable.
How was Artcraft’s print work when you bought it?
AP: The knowledge, the quality, everything was already in top shape. There was really not much work to do there. Those improvements come with time.
What has surprised you most getting into this market?
AP: I saw quality from a manufacturing eye, not from a printer’s eye... there is a lot more that goes into this. [It] was a big eye opener.
Are prime label clients overly demanding?
AP: We search for the ones who are the most particular. It is not just for the margins, but you protect your space a lot better… where not many others can follow.
What is the shape of Canadian flexo?
AP: The funnel comes down very, very fast and we are all sitting at that same size. I call them the single-owner type. There is going to have to be some consolidation at some point, if you want to get efficiencies up. We are at the point where we are starting to eye the market to see who can we work with to create growth.
What are your plans in terms of M&A?
AP: We are looking to acquire… We have set up Artcraft so you can take our installation, especially with what we have done in prepress, and easily double or triple it without that much strain.
How did you revamp prepress?
AP: We installed Esko Flexo HD. We are noticing with recent demands and SKUs that you really have to push the quality. We do not have offset presses, but you have to get yourself there and basically we are now.
Do you plan on offering prepress services?
AP: We actually do plates for a few other label printers, primarily out of province. With the locals, there is always [a] trust issue, but we are not out to take business.
What applications are you focused on?
AP: We are a good player in specialized high-quality segments. Our focus is local and regional – a 200-kilometer radius.
Beyond prepress, where else have you invested in technology?
AP: In finishing – our flexo can run silk-screen inline, which not many can do in the area. We are present in health and beauty where there are a lot of the requirements to have more than one screen… We found with HD Flexo that we are eliminating some screens now.
Are you planning to invest in digital print?
AP: We have small digital capabilities right now. We call them our helpers. For us, we just really haven’t seen the value. I know there is payback, but the volumes needed to sustain a million-dollar investment is no walk in the park. There are still a lot of limitations in digital technology.
What future goals do you have for Artcraft?
AP: We want to see growth as a good mid-level shop and we are going to get there. It does take time and we are probalby looking at anywhere between a 5- and 10-year window, but right now the architecture is done. We have a team in place that can transfer knowledge and we will start growing from there.
The full Q&A article with Jay Mandarino can be found in PrintAction January 2015
It is hard to argue against stating Jay Mandarino, President and Founder of the C.J. Group of Companies, is the most-visible personality in Canada’s printing industry. By being so engaged in the community, particularly in the hypercompetitive environment of Toronto, he is as much a sounding board for insight as a lightning rod for criticism.
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