Tuesday, January 22, 2008
Quebecor World didn't keep with times, experts say
BY Roberto Rocha, Canwest News Service
MONTREAL - For Gaetano DiTrapani, co-president of printer Phipps Dickson and a 30-year printing veteran, the headaches began with the Internet and the environmental movement.
As more people chose the screen over the printed sheet, he said, it also became trendy to reduce paper use. Less demand for paper led to printer overcapacity.
"And the more capacity you have, the more competition you have," DiTrapani said.
And that's when the printing industry went from a fairly predictable business to one requiring constant rethinking and adjustment of operations.
Ask around the printing landscape and the answer is pretty uniform: Quebecor World just wasn't quick enough on its feet to see the changes creeping and respond appropriately.
"They haven't had the focus that, say, Transcontinental Inc. has had," said Sandy Donald, publisher of Graphic Monthly, "Transcontinental built itself up in very specific areas. Quebecor World took over everything in sight.
"They spread themselves too thin."
If there is a mantra in the printing business today, it's "find a niche and be the best at it," an axiom that can be applied to any highly mature industry. Volumes are shrinking along with margins. Many printing customers are expanding through mergers and want to simplify their supplier base, often demanding multiple services from a single printer. This forces printers to provide complete solutions for highly specialized needs.
This was the strategy for Transcontinental, Canada's second largest printer, which is always happy to show off its upward-bound top line.
"You need to offer services today," said Benoit Huard, the printer's chief financial officer. "Clients want one supplier that will service all their needs."
No one can blame Quebecor World for not trying. For the past few years, the company has sold off numerous plants to focus on magazine, catalogue and directory printing. Their sin was being a late mover and a poor allocator of managing talent, Donald said.
While the rest of the industry was busy upgrading presses to modern, versatile digital equipment, Quebecor World became an afterthought as parent company Quebecor Inc. focused on its acquisition of cable maverick Videotron.
"They started replacing their equipment later than their competitors," Donald said. "And Videotron took key management from Quebecor World, which hurt them quite a bit."
Much of the printer's pains came from Europe, where its operations were the weakest. An attempt to sell off that continent's operations to RSDB NV fell apart late last year, denying the company some much-needed capital.
Donald said Quebecor World was partly blind to the market differences between the Old World and New World printing markets.
"The really should have gotten out of Europe two, four years ago," he said. "They didn't think like Europeans do. They sent sent North American people to run European operations. But it's a different world, different culture."