John Edwards is President & CEO of Edwards Brothers, Inc., Michigan’s largest privately owned book, journal, and catalog manufacturing firm. The company specializes in short, medium, and ultra-short runs for publishers, scholarly societies, industrial firms, and universities. It’s a fourth-generation family business, established in 1893. Edwards Brothers has eight sales offices and employs more than 700 people in three facilities: the Ann Arbor, Michigan, headquarters and two production plants in Lillington, North Carolina. The company also operates two onsite digital print centers as well as six remote digital printing operations for a variety of publishers in both the United States and the United Kingdom. Sales in 2008 were over $80 million. WTT: What are some of the challenges you face today, specifically as it relates to the economy? JE: One challenge is the uncertainty of the economy and how that will impact the buying behavior of our customers. The real question is will they continue to demand product like they have in the past and will readers continue to want the products they’re offering. As disposable income drops, readers may go to the library for books because they can get them for free. That means a drop in retail sales. But library funding for books is dropping, too. Will growing demand for library books put enough pressure on libraries to increase spending? Or will consumers simply change their behavior and move on to other forms of entertainment? One thing we do know, based on an NEA study, is that while the population is growing, the number of readers is not. The key is getting more people to read. Other challenges include rising commodity prices, unpredictable healthcare expenses, and very good competition. The economy is also putting further stress on the available capital that we need to invest in the business to continue to improve our operations. It’s a tight margin business and it’s difficult to maintain margins in today’s environment. WTT: How is Edwards Brothers positioned to handle the trend for smaller quantities? JE: As companies reevaluate their print buying decisions they see opportunity in shorter runs and quick replenishment. That has been our strength for over 115 years. We are now talking to more and more people about how to manage inventory to effectively lower total costs and improve cash flow, and how to move from printing “just in case” inventory to “just in time” inventory. Our web, sheetfed, and digital platform is well suited for printing the right quantity at the right time. WTT: Tell us about your progress on environmental certifications. JE: Edwards Brothers has both FSC and SFI certifications and is in the process of securing SGP certification because we recognize the increasing pressures that our customers are feeling to be more environmentally sound. Our presses don’t care if the paper is recycled or not. Our only concern is will the paper go through the press without adding cost or producing higher waste. Our experience to date is that the papers work just fine. The biggest problem our customers have is that recycled sheets are more expensive. And that makes the economics more difficult to justify, although more and more people are using these stocks. Most of our sheets are SFI certified. The recycled and FSC materials are a smaller part of our list – around 10% -- because they are more expensive, less readily available, and usage is much lower. The bottom line? Green can be green if you do it right. We’ve been doing it for 50 years because it makes financial sense. We’ve gotten better at tracking waste. We’ve enhanced our efforts significantly in the last five years and team members are on board and enthusiastically do what it takes to segment waste and recycle it properly because deeper segmentation of waste yields a higher return. Ultimately we’re still trying to reduce the amount of waste we generate. We recycle or use 97.5% of all raw materials entering the plant, shipping them out as finished products or as 27 different recyclable byproducts. Our goal is to boost that to 99% and we’re almost there. The fact that it pays and makes environmental sense is a win-win for us. I don’t know why any printer wouldn’t want to do it, but it is an investment – the scrap handling system equipment we installed cost $400,000 -- so you have to be smart about it. WTT: Your company has web, sheetfed, and digital capability under one roof in many locations. Tell us about the investments you have made and why these are important. JE: Our goal is to print the right quantity at the right time on the press that offers the greatest efficiencies for us and the customer. We call this concept Life of Title® and it’s our solution for helping customers manage inventory and associated inventorying costs by printing more closely to actual demand. The result is the maximization of a title’s revenues and profits from cradle to grave. In terms of new investments, we’re in the process of installing state-of-the-art computer systems and processes that take best practices from all plants and incorporate them across the board. It will help us meet our goal of being the best value-provider in the industry with improved communication and work flows and hopefully quicker delivery in all bind styles. We’ve also made several investments in new equipment at our two main facilities in the last year or so, including a Timsons wide-body, double-web press; a new high-output Kolbus Case Inline binding line; a six-color cover press; and a new high-speed in-line drill. And we relocated a Timsons single-web press from Ann Arbor to Lillington, NC and installed Kodak Prinergy systems in both locations. In terms of digital capacity, we’ve made several significant investments there as well. We just opened a new digital print center in Jackson, Tennessee and we’ve doubled our Ann Arbor digital capacity by installing new SigmaLine digital equipment from Muller Martini and new Lasermax prepost equipment. Few companies are investing in themselves like we are now. Our goal is to lower costs, communicate more effectively, create more capacity, and become an even more valuable supplier. lifeoftitle2.jpg WTT: How long has Edwards Brothers been in the “digital business” and how many digital operations do you have? JE: We’ve been in the digital business for over 10 years -- it was a natural extension of what we were already doing for publishers. We could see that print runs were getting lower and lower and digital equipment allowed us to meet changing customer demands. We currently run eight digital printing operations, one at each of our plants in Michigan and North Carolina, as well as six digital remote sites throughout the U.S and the UK that are in publishers’ warehouses. These relationships are unique because they compress the supply chain where we are producing virtual or nearly virtual products, allowing our customers to minimize inventory exposure and risk yet meet their customer demand almost immediately. This complements our offset offerings and our other plants as well. In 2008 we produced over 100,000 digital orders and it’s growing all the time. WTT: How recession-proof is your customer base? JE: We serve three basic markets: K-12, higher ed (college), and the trade market. All three segments are feeling the pressure from the economy. The good news for K-12 funding is that it should remain strong -- they’re not going to cut school funding -- and college enrollments will grow in a down economy. So, those two markets are fairly recession-proof. However school districts can always make those books last another year. And the used book market for textbooks as well as the rise of electronic media will have an impact on printed products and could ultimately affect us. In the trade market a down economy will have a major impact since, for the most part, it’s a discretionary spend. If people are worrying about paying their mortgages, they’re not going to go to the bookstore and buy a book. The silver lining for us is that as our customers look to control costs and manage inventory better, our short run offerings are attractive. By printing shorter runs more often they can chase demand as opposed to building “just in case” inventory and hoping that it sells. So instead of printing 50,000 copies they may choose to print 5,000 copies ten times, which is good for Edwards Brothers and for the customer. If a book does take off, our customer can just print more. You can always print more. You can’t print less after the fact – there is no “undo” button in printing that will erase years worth of inventory on hand. WTT: Do you ever worry when you hear pundits say that print is dead? JE: Whenever I meet someone new it takes me about half an hour to explain what I do. I get asked, “Isn’t everything on the Internet now?” I tell people about the four B’s: bedrooms, bathrooms, beaches, and buses. As long as those places exist, people will be reading. So print is still alive and there’s still a lot of opportunity out there. It’s a little scary right now but the good businesses will survive. I don’t think it’s a question of books being displaced totally. Radios and movies still existed after TV’s came out. The key is to get people to read. If we can do that, there will be plenty for all of us to do.