Top 100 Manufacturers
More Change Hits the Top 100
Changes in company ownership and product mix are having a dramatic effect on the industry
By Bill Drennan, Maggie DeWitt & Danielle Litka
Change has become the norm in the forms industry, as the past year has seen last year's top independent manufacturer by sales close its doors and directs going independent, in addition to the usual spate of mergers and acquisitions.
CST/Star Products ceased operations last Spring. A few weeks later, American Tissue, a paper converting company, purchased CST/Star's assets and opened three of the eight plants as American Forms. With only a few months of operations, American Forms declined to be a part of this year's Top 100. Likewise Latitudes, Moore Corporation's new independent division, which opened for business in May, also did not participate this year.
Notable acquisitions this year included Transcontinental Printing's purchase of some of the as-sets of Newtown/CPC; Print-Xcel's acquisitions of Discount Labels and Braceland; and En-nis' purchase of Northstar Computer Forms.
In fact, there was a lot of activity overall among the Top 100, as 78 percent expanded manufacturing capabilities in existing op-erations, an additional 17 percent purchased or acquired facilities and six percent built new plants. Alternatively, 14 percent consolidated operations.
Overall, the total revenue re-ported by the top 100 Manufacturers was $4.38 billion. While this is significantly higher than last year's $3.16 billion, the addition of Transcontinental Printing's $1.6 billion in sales has skewed the charts. Next year, the addition of Moore's numbers to the mix will further confuse the results.
The chart on the following page illustrates that a wide range of equipment is dispersed among the Top 100. However, equipment purchase plans for the coming year are light, with CTP equipment the most often cited at only six percent.
Software, as shown in the above chart, fares a little better. Of the companies responding, 38 percent now have e-commerce capability and another 18 percent plan to add it in the coming year. For Web site access to production information, 25 percent have it now and 27 percent plan to purchase it. For job proofing over the Internet, 20 percent offer it now and another 20 percent plan to provide it in the coming year.
How did the workforce fare? According to the responses, 10 percent of the manufacturers laid off workers last year and three percent foresee layoffs coming this year. However, 67 percent added production employees, 55 percent added salespeople and 39 percent added administrators.
The total number of employees jumped to 30,431 from a total of 21,662 last year. This is a result both of merger activity and the addition of Transcontinental with its 10,000 employees. The number of locations increased to 384, from 361 last year.
Sales per employee dropped slightly to $143,843 from $145,710 last year, while sales per location increased to $11.4 million from $8.7 million last year.
The $4.38 billion in sales breaks down into $2.07 billion in forms (47.3 percent), $635 million in labels (14.5 percent), $583 million in commercial printing (13.3 percent), $530 million in direct mail (12.1 percent) and $558 million in other products (12.8 percent). Last year, total sales for the combination of labels, commercial printing and direct mail was $971.3 million, or 30.8 percent of all sales. This year, the same combination yielded $1.75 billion, or 40 percent of total sales. The jump is a result of a combination of factors. There are a couple of label companies in this year's Top 100 that were not on last year's list. Also, some primarily form manufacturers have purchased label companies, which changed the product ratios for these companies.
Top 10 Manufacturers
The Top 10 forms manufacturers sold $1.35 billion in forms products. The Top 10 label suppliers sold $433 million in labels. The Top 10 commercial printers in the group sold $550 million and the Top 10 direct mail suppliers sold $512 million. As you can see, the numbers for non-forms products are growing.
The overall Top 10 manufacturers generated $2.78 billion in sales, employing 18,563 people at 188 locations.This represents 63 percent of the Top 100 sales, 61 percent of the employees and 49 percent of total locations. Last year, the Top 10 accounted for $1.32 billion in sales, 7,789 em-ployees and 81 locations.
In terms of productivity, the Top 10 manufacturers generated $149,080 in sales per employee this year, compared to $169,470 in 1999. On a sales per location basis, the Top 10 generated $14.8 million, compared to $16.1 million last year.
Combined, the Top 10 manufacturers are roughly the size of Moore, which had $2.43 billion in sales for its most recent fiscal year. Moore employs 15,812 people, generating $153,681 in sales per employee. Moore turned a $93 million profit for the fiscal year, for just under a four percent return on sales. Ennis, ranked number four among this year's Top 100 manufacturers, showed a net income of nine percent of total sales.
The biggest effect on the independent segment of the industry may be the increased involvement of formerly direct-selling manufacturers. Some, such as Transcontinental and Moore have either acquired or opened distributor divisions. Others were purchased by independent manufacturers or already mixed companies, such as PrintXcel owner Mail-Well's purchase of American Business Products.
Another trend is the common ownership of distributors and manufacturers, such as Champion Industries' Interform and Consolidated Graphic Communications subsidiaries, and the relationship between Data Supplies and DSI Forms.
While responses from manufacturers showed that plans for equipment purchases are light, software investments are up.