Let The Layoffs Begin
Some of the largest commercial printers are closing plants and laying off employees.
by Erik Cagle
After an almost unprecedented stretch of prosperity across the board, the commercial printing industry is starting to feel the pinch of a plodding economy. Several prominent companies have responded with cost reduction measures.
• Montreal-based Quebecor World, the world's largest printer, plans to close plants in Illinois, Kentucky and Nebraska, resulting in the loss of more than 1,000 jobs. The company refused to comment on the situation.
• Cadmus Communications, in Richmond, Va., is cutting 280 positions, 8 percent of its 3,500-employee work force.
• Chicago-based R.R. Donnelley & Sons closed the doors of its St. Petersburg, Fla., and Houston facilities, in addition to the previously reported South Daytona, Fla., plant. A total of 360 jobs were lost, not counting 160 who were let go from the Hudson, Mass., facility at the end of 2000. It also plans to close its Des Moines, Iowa, plant, which employs 775 people.
• Bowne & Co., of New York, disclosed that its cost-reduction plan will eliminate 650 positions. Its Internet consulting business, Immersant, will be shut down.
Early Warning
Quebecor World's Salem, Ill., facility, which employs 880, was slated to lock its doors permanently early this month. Officials at the Illinois Department of Employment Security said the firm advised the agency of its intention to close the plant on June 2, barring any change in circumstances.
Under the federal Worker Adjustment and Retraining Act of 1988 (WARN), employers are required to give a 60-day notice of plant closings and layoffs of 50 or more employees.
"The State of Illinois and local elected officials in the Salem area have initiated talks with Quebecor to determine if there is anything that can be done to keep this 25-year-old facility open," commented Illinois Governor George H. Ryan in a press release. "In the meantime, we are taking steps to see that all state employment services are made available to the plant's workers to ensure that they land on their feet."
More than 150 workers were scheduled to lose their jobs this month when the company's Metroweb plant, in Erlanger, Ky., closes, while roughly 85 positions were slated for slashing when Quebecor World Omaha closed its doors in early May.
Consolidation and Reconfiguring
Cadmus, which had earlier decided to consolidate its technology-related logistics operations, announced it would also enact cost-saving measures. Among them are the consolidation of Cadmus' two Richmond-based commercial and magazine printing operations, and the reconfiguring of equipment to better service those markets.
"The consolidation among publishers has led to some pricing pressures, and we are experiencing higher costs related to several projects that will enhance our content management and other STM journal services," notes Bruce V. Thomas, Cadmus president and CEO. "Still, the fundamentals in these core businesses remain sound and offer us attractive growth potential.
"Our other operating units, however, have not been immune from much lower demand and increased competitive pressures...resulting from the economic slowdown and reduced advertising spending," he adds.
The plant closings and work force reductions at R.R. Donnelley come just as the company announces plans to invest $300 million over the next 24 months to upgrade some plants and replace less efficient equipment with faster, more flexible machinery. Since February 1, the company has bought back 2.2 million shares under a program authorizing the purchase of up to $300 million in shares before January 31, 2002. Still, the firm has had volume shortfalls, prompting the closings and reduced work weeks.
"Even in the current economic environment, we are satisfied with the progress we've made in repositioning R.R. Donnelley," states William L. Davis, chairman, president and CEO. "We have the resources and strong cash flow to manage and execute through this environment."
The latest move by Bowne & Co. is in addition to the $20 million cost-reduction initiatives that it announced in January. The company cited the rapid deterioration of the Internet consulting market and customer delays/cancellations as the motivating factors in shutting down Immersant.
"We must continue to adjust our capacity to meet the reality of current business conditions and further reduce costs," remarks Robert M. Johnson, Bowne chairman and CEO. "The steps...though painful, are necessary to position the company for a return to acceptable levels of profitability."