At the beginning of the year Wisconsin-based Quad/Graphics announced it would reduce production and cut about 550 jobs in five states; a few weeks later on January 26 it announced the acquisition of Worldcolor. What a busy month for one of the largest printers in the U.S., run by one of the industry’s youngest CEOs. So who are the Quadraccis who may soon be affecting the lives of so many of us in the industry.
Ready, Fire, Aim is a book about the life of Harry Quadracci. Harry was the co-founder of Quad/Graphics now run by his son Joel, 41. I had the pleasure of seeing Harry during the 1980s and 1990s when I represented Ronalds Printing, and later Quebecor Printing, at the annual Time magazine dinner during paper week in New York City. Harry would be there, bow tie and all. He’d say hello to everyone—customers and all his competitors. He was a positive, bright star in an industry filled with characters, but he always stood out because he made a difference. He has to be smiling now at the success of the family members he trained to manage the next phase of Quad’s history.
Harry had a vision and followed his gut to make it happen. He saw that demand for colour TV would drive demand for colour printing when he started Quad/Graphics in 1971. Harry grew his company by hiring young people out of school and showing them the “Quad way,” rather than through acquisitions. Now Joel is poised to steer one of the largest acquisitions in the print industry. Will he follow Pierre Karl Peladeau, son of Pierre Peladeau, who took Quebecor World down a different path, or will Joel build on his father’s vision?
Quad/Graphics is based in the Midwest and, as unlikely as it may seem, this is a positive factor. I worked in Denver, Colo., for four years and dealt with people from across the country. I found location tended to affect attitude. Mid-westerners know how to listen. They don’t think they know everything and they realize top managers are not emperors. I hope for the sake of the shareholders and employees of the combined entity that Quad’s management introduces a mid-western flavour to the business and that Joel doesn’t use this acquisition as a way to step aside from the business so that others with a different cultural mindset can lead.
In recent years, more high-profile Canadian companies have moved to produce their work in the U.S. and the Quad/Worldcolor transaction will bring a greater emphasis to cross-border selling. We can expect Cenveo, Vertis, R.R. Donnelley and Consolidated Graphics to cherry-pick opportunities in Canada to generate work for their U.S. production facilities and help re-build their sales. It’ll be interesting to watch Joel and his team deal with the competition after the deal is done.
The Worldcolor team in the U.S. should by now have decided which jobs can be produced more cheaply in the U.S. The amount of work leaving Canada could be large, as some will tell you that the worst Quad plant is better and more efficient than the best Canadian Worldcolor plant, at least from a cost base standpoint. It’s not hard to understand: there’s been little investment in new technology in Canada, and the company is suffering from years of poor management, high labour costs, and a confused and frightened employee base.
And, government rules are always the wild cards in situations like these. Here, for example, the “Print in Canada” rule is about to disappear along with the postal subsidy. Publishers will still get their grants but Canadian printers will suffer as the money comes without strings, making it more attractive to move printing south.
In contrast, many Canadian companies haven’t been successful at entering the U.S. market. Transcontinental, for example, has retreated from there three times. Will the Quad move spur Transcontinental to enter the U.S. market again? It’s the only Canadian company left that could take a stab at it but its strategy to date has been to build in Canada to support Canadian customers. And if Transcontinental takes aim at Quad, are we ready for the fallout?
Once the Quad integration is complete and the team focuses on operating and building a stronger business, we’ll all stop watching the machinations and get back to real business, in an industry that’s still under fire from alternative media and new technologies. The last few years have been tough, but I can see that more consolidation is sure to come.
However, whatever happens with this merger I challenge all leaders to answer these three questions: Are you ready for the changes? Are you taking aim with a new vision? Will you fire up those around you to succeed?