Executives at some commercial print shops are saying they need struggling companies to close in order for the sector to improve its health.
Richmond’s 3S Printers Inc. obtained creditor protection in January although that was suspended in May, prompting rumours of the 20-year-old company’s immediate demise.
“We’re not closed,” 3S president Dave Sandhu stressed to Business in Vancouver June 22.
He is in discussions with several potential investors whom he did not want to name until he finalizes details. Print jobs continue as normal and no staff members have been laid off.
“I can’t disclose anything yet. Discussions are going on. There are a lot of options going on at the moment,” Sandhu said.
Bankruptcy trustee and insolvency consultants Boale, Wood and Co.’s website contains documents that show 3S owes more than $13.8 million to dozens of creditors, including:
- CIT Financial Ltd. ($3.67 million);
- Sukdev Singh Sandhu ($3.14 million); and
- KBA Canada Inc. ($2.82 million).
“Those who overleveraged just before the recession are feeling the pain now,” said Nikos Kallas, who is president of the 34-year-old Metropolitan Fine Printers Inc.
“The problem with the industry is that demand has definitely contracted. Having said that, there are opportunities such as packaging. People still need interesting techniques and finishings to catch consumer attention,” he said.
Kallas and fellow printing-sector executives such as Teldon Media Group CEO Michael McAdam believe the sector would be healthier if a few companies went belly-up.
“We’re waiting for other players in the market to give up and say ‘uncle’ so that we can all stay in business,” McAdam said.
“There are too many printers [in Metro Vancouver]. For certain, that’s true from a demand point of view. There’s obviously less and less demand.”
McAdam’s strategy to survive has been to grow his 250-employee firm’s publishing and marketing divisions while shrinking its printing operations.
He sold a small sheet-fed printing press last year, and one of his two remaining presses is idle much of the time. Job cuts in his printing division have largely been counterbalanced with hires in his publishing and marketing divisions.
Teldon’s revenue from printing has dropped from about 55% of $88 million in overall sales in 2007 to 48% of about $85 million in overall sales in 2010. McAdam aims to shrink printing’s share of overall revenue to 40% in the next few years.
Teldon publishes the 200,000-copy Alive and, with a partner, launched an Australian edition of that monthly nutrition magazine in 2008.
That spurred publishing revenue to increase from 15% of overall sales in 2007 to 20% last year. McAdam wants to grow that division to 25% of total revenue in the near future.
Teldon’s remaining revenue comes from producing marketing materials such as calendars and direct mail for small-business owners wanting to raise their profiles.
“If I was just a printer, man, I’m not sure how we’d be doing,” McAdam said. “It would be a much tougher time. Printing is a penny-pinching business. It’s capital intensive and there’s too much supply in the market.”
Niche businesses that cater to the sector, such as Pacific Bindery Services, however, have been doing OK.
General manager Kris Bovay said her venture, which folds, cuts, stitches and binds printed documents, had its best year in 2007.
It then suffered two years of sales declines before work related to the 2010 Olympics helped last year’s bottom line. The recent Vancouver Canucks playoff run also provided a bit of a bump.
The binding company’s 2011 sales, however, are set to be far short of matching its record 2007 year, which was partly spurred by demand from customers who had work printed at the Quebecor World plant on Marine Drive.
When that plant closed, many of those print jobs went to Teldon while others left the city and went to Quebecor’s now-closed Edmonton plant and then to its Toronto facility.
When products are printed in Toronto, they are unlikely to be bound in Vancouver, Bovay explained.
“Some might argue that there’s too many printers in Vancouver but there’s certainly a sense of community among the group that’s here,” Bovay said. “
Nobody wants to see anyone go under. We’d all like to be thriving and healthy and competing the way we have for years.”
It was in that spirit that Bovay agreed earlier this year to continue to provide binding services for 3S even though her company is an unsecured creditor owed $10,456.
“We did require that [Sandhu] make what we considered adequate provision to pay. We don’t have any new debt with him and we did do some work,” Bovay said.