LSC Communications to Close Two Lancaster, Pennsylvania, Printing Plants, Impacting 656 Workers
The market demand for long-run printed magazines and catalogs continues to shrink, partly due to the growth of more targeted, fewer-page-count catalogs and special-interest publications, coupled with a shift to electronic marketing and internet-based information dissemination. Those ongoing trends were reinforced with the announcement last week by Warrenville, Illinois, headquartered LSC Communications that it intends to close both its Lancaster (Pennsylvania) East and Lancaster West printing plants by March 31, 2023, impacting a total of 656 workers.
“LSC emerged from bankruptcy a few years ago and we’ve been doing everything possible, through the COVID-19 pandemic and beyond, to stabilize our business and plan for growth in the future," LSC Communications CEO Stephanie Mains indicated in a statement. "At the same time, demand for long-run catalog and magazine printing has continued to decline, while paper and ink costs continue to rise. Our customers are reducing their page counts and print runs, and some are converting to other marketing channels, forcing us to closely examine our operations and position ourselves for winning in a new marketplace.
“The consolidation decision was made after having exhausted all other options for the business," she added. "It has zero to do with our team members’ abilities or commitment; they are exceptional workers and people, and we’re doing everything possible to support them during this transition period.
Long-Run Printing Plants Employed 656 Workers
LSC Senior VP Melissa Noebes confirmed to Printing Impressions that 380 workers are employed at the just under one-million-sq.-ft. Lancaster East facility, which houses an approximately 50/50 mix of gravure and web offset printing presses. The Lancaster West plant employs 276 workers within a little over one-million-sq.-ft. offset printing plant.
She said work being produced at the Lancaster facilities will be shifted to fellow LSC long-run printing operations located in Maple Grove, Minnesota, and Warsaw, Indiana. The two Lancaster facilities were originally part of RR Donnelley (RRD) and date back more than 60 years.
"As you might imagine, this is a difficult time for us. We are prioritizing our efforts on our impacted employees with a focus on job placement assistance, career transition support, severance packages, and more," Noebes said. "Right now, we are focused on our employees and helping them through this transition. The consensus among our employees and customers is that many saw this coming; however, it is still a shocker when the inevitable finally happens."
Fortunately, Lancaster, Pennsylvania, is a rapidly growing community. Several area employers have already reached out with job opportunities, and LSC is doing everything it can to facilitate those connections, according to Noebes. "We have also received a half-dozen calls from printing companies across the country looking for skilled labor; especially press and bindery operators."
Following the Lancaster closure, LSC's total headcount will be about 4,250 workers at facilities across the U.S. LSC's MCLC Div. reported $1.06 billion in sales for its most recent fiscal year, placing it at No. 7 on the 2022 Printing Impressions 300 ranking of the largest printers in the U.S. and Canada. Its sister operation, Lakeside Book Co., reported $868 million for its most recent fiscal year sales, making it the ninth largest printing operation on the PI 300 list. Lakeside is the largest book manufacturer in North America, while LSC Communications' MCLC Div. is the second largest catalog and publication printer — ranked only second to Quad for annual sales in both market segments.
"LSC continues to maintain a strong presence in print and remains one of the country's leading providers of co-mail and postal optimization services," Noebes pointed out. "In addition, we are growing our capabilities in digital printing, print and non-print logistics, and marketing execution services. We are evolving along with our customers."
Strange Saga for LSC Communications
Nevertheless, the past several years have been difficult for LSC Communications. It was part of the $11.7 billion RRD spinoff into three separate, publicly-held companies in 2016 — an arguably failed attempt to maximize shareholder value. Quad then attempted to acquire LSC in a $1.4 billion, all-stock transaction in October 2018, which resulted in the U.S. Department of Justice filing an antitrust lawsuit in June 2019 to block the transaction. Quad ultimately decided to call off the merger in July 2019, and was forced to pay LSC a $45 million reverse termination fee as part of their original sale agreement.
That wasn't enough to keep LSC Communications afloat financially, however, and LSC voluntarily filed for Chapter 11 bankruptcy protection in April 2020. In September of that year, LSC entered into an agreement to be acquired by Atlas Holdings, a private equity firm that already maintained several holdings in the printing and packaging industries.
Ironically, Atlas Holdings also tried to acquire RRD — which would have reunited LSC and RRD under the same ownership — in a prolonged and contentious battle with fellow private equity firm Chatham Asset Management. Following a lengthy bidding war, Chatham eventually prevailed, acquiring RRD in February 2022 for $10.85 per share in an all-cash transaction with an enterprise value of $2.3 billion.
In a further twist of fate, Thomas (Tom) J. Quinlan, who was RRD's CEO from 2007 through the initial breakup of RRD into three separate companies in 2016, and who then served as CEO of LSC after the breakup in 2016 to 2020, was eventually named CEO of RRD again in 2022 under Chatham's ownership.