On the future of the printing industry: World Color sees continued consolidation, an increased focus on value-added services and $4 billion in revenues by 2000

In 1991, World Color needed a strategic plan for moving into the future. When Bob Burton joined the company as chairman and CEO, he understood the importance of establishing strategic objectives that would take World Color into the 21st century successfully. One of the first things Burton did was to build his team. He hired the best managers in the industry. He realized that we as a company needed to improve productivity and operating efficiencies and expand the services we offered to customers. The needs of our customers changed, so we had to change with them. The mix of our revenue streams five years ago was 72 percent consumer magazines, 14 percent directories, 10 percent commercial and 4 percent catalogs for total revenues of $630 million.

Over the past five years World Color has taken significant steps to become the leading provider of print and digital information for its customers, by growing through acquisition and investment to provide them with a full range of products and services. With that in mind, since 1993, we have acquired 13 complementary, strategically driven acquisitions.

Today's revenue mix

If you look at our mix today, you can see some terrific differences in our revenue streams - an improved, diversified revenue base. Today we are 29 percent consumer magazines, which does not reflect a loss in marketshare, but the growth of other business segments around this core business. We've gotten into the catalog market, which is up to 29 percent. Commercial is up to 28 percent and direct mad is at 6 percent. Regarding our future strategy, we are the number-two player in the magazine market, with $552 million in sales and more than 1.5 billion magazines printed annually, representing more than 500 titles. Our consumer magazine customers are the creme de la creme of the publishing industry. We intend to maintain these healthy relationships and grow this facet of the business for a very long time.

Consolidation trends

In response to the market demands, we had to do one thing: grow larger and diversify our service offerings to improve our customers' competitive advantage. This is why you have seen so much consolidation. Our customers want and need a broader array of services from a single source at competitive prices. Our size allows us to respond to this customer need by providing the capital structure to invest in technology, the volume necessary for more effective distribution and the ability to purchase quality materials at competitive prices. Our customers depend on our ability to utilize our volume and sophisticated logistics to deliver predictably and cost-effectively. Now, with our strong presence in several markets, we have the mass and size to provide the most efficient, reliable and cost-effective distribution available in the industry.

World Color has been at the forefront of computer-to-plate (CTP) since mid-1994 and has embarked on this digital path for several reasons: to pursue process improvements, to increase productivity with faster makereadies due to precise registration and to reduce usage of consumables - which is environmentally positive.

Although a very expensive investment, CTP is essential. Our investment in CTP has paralleled conventional technologies, so we are able to handle whatever type of material our customers send us. We must be able to take it to any medium they choose and improve the quality of the final product.

Looking ahead

The future. We need to continue to focus on providing value-added services and helping our customers move into the digital arena. We must be large enough so that, if customers have a direct-mail need or a perfect-binding need, whether they want to repurpose their data to go to the Internet or CD-ROM, World Color will be able to be the single resource - their one-stop shop - to handle all of these different ventures.

We have to continue to partner with our customers. Just as our vendors rely on us for consistent, long-term, reliable orders, we are dependent upon our customers. It all has to work together.

We anticipate continued consolidation and growth throughout the industry. You'll see a commitment by customers of significant volume to a single source. There will be an increased use of networks and digital technology, as well as increased distribution of customers' content through new media. But the printed word is not going away. There may not be only two printers in five years' time, but the consolidation trend will certainly reduce the count from what it is now.

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