Quad/Graphics: The Next Generation - An Interview with Joel Quadracci

By Cary Sherburne, Senior WTT Editor

January 13, 2005 -- In Part One of this two-part interview with Quad/Graphics’ Joel Quadracci, Mr. Quadracci spoke about Quad/Graphics’ investment and operational philosophies, and his view of the role of digital printing technologies, including inkjet. In Part Two, Mr. Quadracci shares his views on the importance of database technologies to today’s printer, the importance of multichannel communications strategies, printing in China and the importance of being environmentally conscientious.

WTT: Can you give us an example of how you are using database technologies to add value for your customers?

JQ: We do a lot of customized magazine mass mailings that are inkjet personalized. In the automotive segment, for example, we have built Web sites that allow the dealership to select from a range of offers, and we will merge a mailing list with the data from a large number of dealers who have each decided on individual offers, and then get it ready for efficient mailing. We also work with clients on helping them link legacy and various other databases to maximize the use of customer data.

We will continue to use more data in our operation—every binder or inserter we have has the ability to plug in high definition inkjet, and we can do 128 lines in 16 positions on every piece of equipment we have. For us, the future looks a lot like the past—we will continue to use really good people to push technology. Technology doesn't really matter unless your people know how to use it. And it has to contribute to a better cost model and make your customers successful.

WTT: What are you doing with respect to multichannel communications; that is, providing alternative channels and file formats when customers would prefer not to print certain things?

JQ: We are the third largest prepress company in the world and experts at moving big files around and figuring out workflows. At the end of the day, the output device, whether it is the Internet, a digital printer, or a Sunday 3000, is merely that—an output device We can help customers design Web sites, but the important thing is to get data ready for whatever output might be required. There is still a lot of opportunity for ink on paper. More people are doing direct mail than ever before. People who do catalogs are doing other direct mail. For example, they may print a catalog containing a large number of products, and combine that with a direct mail campaign featuring one product, perhaps their most profitable product. You will start seeing greater use of direct mail as long as it can be targeted, aggressive and cost effective.

WTT: How do you see your client base implementing multichannel communications?

JQ: The largest players in our stable of clients use three different channels of communication with customers and prospects: online, retail stores and catalogs. When a catalog drops, not only does the volume of Web traffic go up, but store traffic also goes up. The most profitable customers are those that hit all three venues. It has never been about one medium replacing the other. Harry always said that we are printers at the end of day. He always kept us focused on print. People believed that TV would replace radio, but radio is still strong and you now have satellite radio that is addressing a growing market. People want different things for different reasons at different times. But at the end of the day, we are printers and we continue to focus on adding more value to the medium of print.

WTT: As a privately held company, how do you contrast yourself with your publicly held compatriots?

JQ: We think generationally; we are on the opposite extreme of the public markets, which are forced to think quarterly. Our core philosophy is to remain a private company, and to continue to maintain a high level of investment in our platform to keep it young and to exploit technology.

WTT: What are your thoughts about the international front, especially China ?

JQ: We have dabbled internationally, including Argentina , Brazil and Poland . We will keep an eye on international markets, but will still maintain a high degree of focus on the domestic market.

China is obviously an opportunity for every industry, but is a timing issue. You have to go into a market like that with eyes wide open. Ink on paper in the way we think of it is still relatively young over there. We compete primarily in four-color, high-quality high-volume print; a lot of the high volume printing in China is still black & white newspapers. But as the advertising marketplace expands and more foreign companies come in, demand will change dramatically.

Also, China has the chance to leapfrog. We saw that in the Eastern Bloc countries, where the presses were old, but their prepress was better than ours; they went straight to the new technologies.

We are a high-labor-cost country, and that is a challenge. Our goal at Quad is to grow without adding the same ratio of people. We are not slimming down—we are always about growth. But people who were material handlers are now operating a computer at Quad, and the people quality has gone up. China still has a cheap labor component.

WTT: By drupa 2008, what do you expect to be different?

JQ: For the last three drupas, we have seen improvements in laser engraving in gravure. Every time you go, that is more intriguing, but it is not there yet. But it is important because what you are seeing is gravure and offset competing against each other. With gravure, we have seen makeready times go down since we have been going to direct to cylinder, and the speed at which we can engrave today is 50% faster than five-year-old, traditional engraving. Laser could bring it down even further. The reason you go offset versus gravure is volume and economics. The main component is the cost to set up the press. We are starting to see the viability of lower counts in gravure, and on the offset side, the ability to produce extremely long runs as efficiently as gravure with the wider format presses. The overlap is getting bigger. Gravure is a much simpler process. What does that mean for the future? We will find out at drupa!

WTT: Joel, thanks again for taking so much time with us, and best wishes as you take Quad/Graphics into the next generation. Is there anything else you would like to add before we close?

JQ: One thing we should cover that I believe is really important to the industry is the environment. At Quad, have been environmentally focused since day one, not only because my father believed in it, but also because it is simply good business. We are recycling everything, including aluminum cans at lunch. All of our plants have nature preserves around them. We strive to work with the cleanest possible mail lists to prevent mail from ending up in the landfill without productive use. The ovens in our offset presses burn off any solvent being evaporated during the drying process.

We believe that businesses—especially the printing business which will be coming under increasing environmental scrutiny—must take a holistic approach to protecting the environment. And there are so many ways: list hygiene, short cutoff presses, small color bars (ours are 1/16th of an inch), and, of course, recycled content in paper and recycling waste.

Processless plates is another area that we are following, because of the lessened environmental impact. If they can deliver the right cost dynamics and support the quality and run lengths we get from current plates, it will be a good thing.

If something is environmentally friendlier but costs more, it can be hard to justify. Business and the environment must work together or it is not sustainable on a long-term basis. If something is better for the process, has an impact that will help our platform and help clients, and is more environmentally friendly, that is the way we want to go.

This Interview was conducted by Cary Sherburne. She can be reached via email at cary@sherburneassociates.com, online at www.sherburneassociates.com and by telephone at 603-430-5463.