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By Cary Sherburne, Senior WTT Editor
March 23, 2007 -- Leading national provider of integrated direct mail solutions IWCO Direct has had several announcements over the last few months, including becoming a member of the Print Council, purchasing the Valpak production facility in North Carolina, and adding an IBM Infoprint 4100 to its production mix.
WhatTheyThink spoke with IWCO Direct President and CEO Jim Andersen to get an update on the company and its strategic initiatives.
WTT: Can you give us some background on IWCO Direct for our readers who many not be familiar with the company? When was it founded, how many employees, number and location of plants, etc.
JA: IWCO Direct was founded in 1969 as a printing company, and today is positioned and provides an integrated production solution for direct marketing services. That includes data services, printing on paper and plastics, envelope converting, personalization, lettershop services, mailing, logistics and distribution. We have a little over 1,700 employees and facilities in Minnesota, New York, and a purchase agreement to acquire a facility in Elm City, NC that will be operational in May. Sales this year will hit $300 million in revenue, so it is a nice-sized business.
WTT: The Elm City facility is the Valpak production facility acquisition you recently announced, right? How does that fit in with IWCO’s overall strategy?
JA: Right, that is the one in North Carolina. That facility will bring new value to us and our customers through expanded capacity, an attractive geographic location, and a very skillful work force that can support our unique integrated business model.
WTT: Are you looking for other acquisitions?
JA: We are looking for other acquisitions selectively. Our whole footprint is about geographic replication of our unique business model. We will be looking West for an additional acquisition later this year or early in 2008. It is all about optimizing our postal and distribution model to reduce cycle time for customers and improve and enhance response rates.
WTT: What type of production equipment are you primarily using in your plants? You announced last year you were using IBM 4100s. Are those new additions or your standard B&W print device?
JA: In addition to the 4100, we just purchased two new Drent Goebel web presses, and we have also invested significant dollars in our high-speed inserting and finishing departments. From a personalization perspective, we do have both IBM and Océ as prominent footprints in our organization, driving higher resolution for our customers and advancing our ability to get into color.
WTT: What is your color strategy?
JA: Our current platform supports the ability to produce two-color and black & white high resolution LED and inkjet printing, but we expect in the next 12 months to have digital print as complementary color to our platform. We have some R&D underway on that front right now. We are not limiting ourselves to IBM or Océ, but would prefer not to talk about other players just yet because we are in R&D beta. But we are expanding, and we believe four-color can be complementary in high volumes. We are still about three years away from that, but we believe the technology will be there to support the high volume platform that is the cornerstone of our business. We produce 175 million direct mail packages a month, so you have to have speed as the driver, and the technology for four-color just isn’t quite there yet.
WTT: Are you doing any multichannel communications—by that, I mean, combinations of printed and electronic mail with web features such as personalized URLs, etc.
JA: This opportunity has triggered some good thoughts. We are talking to some suppliers. Our immediate focus is our ability to target in-home dates through postal and logistics programs. This is more important right now to our markets than personalized URLs because it supports their mutlichannel operations. We might be producing a promotion for BestBuy, for example, to draw people into their store next Saturday, and it is obviously critical that the mail pieces arrive at exactly the right time to drive maximum traffic. That is how they are using us to support multichannel initiatives today. But we will invest in personalized URL technology which can be used in both the B2B and B2C channels. Customers usually give you drop dates for mailings, but we are focused on in-home dates. It is important for call center balance and predictability to deliver integrity of in-home dates.
WTT: Based on a very thoughtful comment you posted on WhatTheyThink, I gather you supported the effort to pass the Postal Reform bill. Was IWCO part of the coalition, and can you give us any additional perspective on that subject? Ben Cooper indicated that mailers—i.e., your customers—were primarily interested in predictability of postal rates. Do you find that to be the case?
JA: We were very involved in the coalition on Postal Reform. We worked closely with the coalition as well as traditional organizations like the DMA to bring visibility and advocacy to the issue. And we worked with our legislators. This is the first time in 30 years there has been a significant effort to fix an old model, and it has driven predictability in rates and transparency in the rate process, and it ensures the viability of the USPS going forward, especially as it relates to moving the military pension problem back where it belongs. Is it perfect? No, But I would say the industry scored a B or B+. And yes, predictability of postal rates is important to our customers.
WTT: There have been some comments posted on WhatTheyThink and elsewhere about having the Postal Service run more like a business. Do you think this reform legislation helps with that, or is that even important in your opinion?
JA: Generally I would say the biggest challenge to running it like a true business, with revenue goals, cost management and growing it like a business to make sure it is sustainable, is around privatization. That discussion and direction is years away. We believe from our angle that Mr. Potter has done some good things in terms of extracting cost out of the USPS to make it more competitive. But to run it as a for-profit business, there would have to be some level of privatization, which no one wants to tackle just yet.
WTT: What are the key strategic initiatives you have on the table for the company?
JA: We are focused on optimization of our postal and distribution strategy, and that is not going to change. It is the basis of driving improved response time and reduced cycle time for our customers. As part of that, we are replicating our business model, as I have indicated. Now that we have the Southeast baked, the Northeast baked with Fala, and our operation in Minnesota, we are closer to the geographic populations and able to get mail in-home faster. That is the centerpiece and will continue to be.
WTT: You recently joined the Print Council. Can you share your thoughts on that organization and the role it plays in the industry?
JA: We just joined. We have been working with Ben, and we see a key role in being advocates for the power of print. We will continue to work on a number of issues, including strengthening the printing industry work force. There are not enough young people getting into the industry. As well, we will continue to pursue legislative and regulatory policies that support print. I think that the Print Council is complementary in about 98% of its efforts with what the DMA and other associations are engaged with.
WTT: What are your thoughts about the general health of the printing industry and its future as we continue to see increasing competition from alternative forms of business communications?
JA: If you focus on purely direct mail and paper based communication, the outlook is promising, continuing on a path of 5-6% growth over the next five years, which reflects a healthy industry in direct mail. Commercial print is more at risk for lack of growth. We are not a printer, we are an integrated direct mail service provider. But printers need to focus on delivering value to clients, not just ink on paper, with complementary extensions of their business.
WTT: Any other thoughts you would like to share?
JA: I do have some concern about the do-not-mail initiatives. There are nine states that have at least entertained the idea of that. We need to focus on educating those states and their legislators on the importance of paper-based communication. There is no more junk mail, in my opinion. That went out a few years ago with refined databases and more targeted communications. Now we need to focus on the value of mail for business communications.
Prior to launching her consulting practice, Ms. Cary Sherburne was the Vice President of Marketing Communications and Outsourcing Solutions at IKON Office Solutions. In that capacity, she developed and implemented a branding campaign to build brand awareness for IKON in the marketplace as well as enhance employee pride in the organization, and was responsible for all internal and external communications, including trade shows and events, corporate newsletters, and industry and press relations. In the outsourcing role, she set strategic objectives and priorities for IKON's product and services portfolio in its Outsourcing businesses, including development of programs and sales support materials for that environment.
Sherburne was a Director at CAP Ventures, an internationally known firm specializing in market research and strategic consulting for the digital document and print on demand industry, before joining IKON, where she launched and managed the company's Document Outsourcing Consulting Service.
Her tenure in the printing and publishing industry has also included sales and marketing positions at Xerox Corporation, Indigo America and Bitstream. She is a frequent speaker at industry events and a recognized author.
Cary can be reached via email at email@example.com, online at www.sherburneassociates.com and by telephone at 603-430-5463.