SUSSEX, Wisc. (From news reports) -- With its commercial printing revenue declining 29% this year, Quad/Graphics Inc. "right-sized" its operations with four plant closings and 1,100 job eliminations.
The plant closings did not include Sussex-based Quad'sfour plants in Wisconsin, which are in West Allis, Sussex, Hartford and Lomira.
The company closed printing plants in Taunton, Massachusetts; Charlotte, North Carolina; Portland, Oregon, and Riverside, California. The company previously ran two plants in Riverside and consolidated them into one facility, said spokeswoman Claire Ho.
The closings were in February for Charlotte, Portland and Riverside and in May for Taunton, she said.
The employee headcount reductions took effect since the beginning of 2020, Ho said. As of the end of 2019, Quad/Graphics had 19,600 full-time equivalent employees, according to its 10-K annual report.
"That helps us kind of over the longer-term to right-size our costs to match volumes," Quad's executive vice president and chief financial officer David Honan said of the actions.
Honan made his remarks during a Nov. 4 analyst call on the company's third-quarter financials that showed commercial printing revenue for the nine months ending Sept. 30 at $1.59 billion compared with $2.25 billion in the same period of 2019. Overall revenue including all business segments was $2.09 billion through Sept. 30 compared with $2.85 billion the first nine months of 2019.
The company attributed the lower revenue to the economic impact from the Covid-19 pandemic and ongoing print industry volume and pricing pressures.
Large commercial printers like Quad have "this huge infrastructure of capital base of equipment and plants," said chairman, president and CEO Joel Quadracci.
During the Covid-19 economic shutdown earlier this year, the company furloughed entire plants, Quadracci said. At the height of that period, the company temporarily took $325 million out of its costs on an annualized basis, Honan said.
The cost-cutting measures translated into net income of $1.6 million, or 3 cents per share, in the third quarter after the company posted net losses totaling a combined $57.4 million the previous two quarters.
Quad executives always try to match the company's costs with changes in customer volume and demand, Honan said.
"That approach has been crucial in reducing costs at a higher percentage rate than our net sales decline, he said.
Quad executives have worked on converting a lot of those temporary savings into permanent savings, Honan said.
"At this point, just under 40% of our temporary savings have been converted into permanent," he said. "And what that really represents is permanent cost reduction for us."
Quad is in the midst of implementing a business-transformation strategy it calls "Quad 3.0" that is focused on counteracting ongoing print industry volume declines. The ultimate goal is to completely offset the sales decline through growth of Quad's higher-margin marketing solutions, which drive revenue across all of the company's products and services, Quadracci has said.
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