Print Solutions Magazine, January 2003 -- Cover Story Page 1

"Our industry used to have a killer product--continuous forms," says Steve Visio, president of Executive Data Control Inc., a 36-year-old distributorship in Springfield, Mo. "It was an exact-repeating product that worked like an annuity." During the 1970s and 1980s, traditional business forms experienced almost two decades of uninterrupted growth in the value of shipments. Between 1970 and 1988, product sales grew at a compound annual growth rate of 10.5 percent, according to DMIA. "We will never have that kind of product again," Visio says.

According to Formtrac 2002, DMIA's comprehensive study of the document management industry, the total retail value of conventional forms declined approximately 7.5 percent from 2000 to 2002. During the same period, the total retail value of other products, including direct mail, commercial printing, quick printing, labels, tags, tickets, finishing services and promotional products, rose approximately 4.2 percent. (See bar graph on page 42.) This year, these products will overtake conventional forms in total retail value, according to Formtrac.

"The industry is changing every day," says Keith Walters, CEO and chairman of manufacturer Ennis Business Forms Inc., DeSoto, Texas. "That's why we're positioning ourselves to be prepared for the future."

During the past few years, distributors and manufacturers have succeeded by diversifying. Distributors have introduced new products and services, embraced technology and investigated new partnerships. "Distributors will continue adding to their product mixes and will offer a slew of items, not just one thing," Visio says. Less able to turn on a dime, manufacturers have expanded their offerings and broadened their reach by acquiring, merging or partnering with other firms. In 2002, Ennis Business Forms acquired Columbus, Kan.-based traditional business forms manufacturer Calibrated Forms Company Inc.; Centrum Equities, a privately held investment group based in Chicago, acquired Crabar Business Systems and Witt Printing Co.; traditional business forms manufacturers CFC Print Solutions, Peachtree City, Ga., and Datagraphic Inc., Roswell, Ga., merged to form Printegra; and Alpharetta, Ga.-based manufacturer Wise Business Forms Inc. acquired the Greenville, S.C., facility of CFC Print Solutions and EPX Group, a manufacturer based in Portland, Maine.

"During the past 10 years, distributors and manufacturers have begun offering a great many new products that were never a part of our industry before," says Peter L. Colaianni, CAE, executive vice president of DMIA. "There's nothing wrong with offering new products. End users dictate what our industry brings to the marketplace. But our industry made its mark by selling expertise, not products. Distributors' and manufacturers' core competencies are solving problems, not selling products. This core competency has real value in the marketplace."

Print Solutions talks to five foward-thinking document pros with their eyes on the future. They share details about how their firms have diversified during the past few years, how their companies will achieve continued success and how the industry as a whole will evolve.

Insightful Move: Evolving into a marketing firm/advertising agency and a third-party procurement system provider

Company: Executive Data Control Inc.

Principal: Steve Visio, president

Founded: 1967

Location: Springfield, Mo.

Employees: 16

In 1995, computer forms accounted for 73 percent of sales at distributorship Executive Data Control Inc., Springfield, Mo. Six years later, that number had fallen to 23 percent.

"We've lost $1.5 million in that product since 1995, but we've made about $1 million by diversifying our product mix," says Steve Visio, the distributorship's president. Today, Executive Data Control offers commercial printing, promotional products, labels, graphic design services, warehousing, copy services,
e-commerce services and statement processing. "We're selling stuff that we never would've imaged we'd be selling," Visio says. "My sales pitch now is 'Give me everything. I want all of your printed business products, from business cards to 4-color printing and everything in between.'"

As a result of its changing product mix, Executive Data Control is evolving into a marketing firm and advertising agency, Visio says. "Instead of just printing the brochure, we're helping customers come up with the creative and all of the things that traditional ad agencies would do," he says. Recently, Executive Data Control landed a $7,900 job for a company that provides packing materials for the automotive industry. Printing accounted for only $2,000 of the fee. Creative work associated with redesigning the company's corporate image (hiring freelance artists, scheduling photoshoots, designing images) accounted for the rest.

Another client, an electricity wholesaler that sells to 52 rural electric co-ops, relies on Executive Data Control for its graphics needs. It purchased $40,000 in art from the distributorship in 2001. After providing the client with graphic services, 'We may get the print job or we may not," Visio says. "In a lot of ways we're acting as an ad agency for them." Visio expects this evolution to continue.

During the next five years, Visio also envisions Executive Data Control becoming a third-party procurement system provider for its clients. Just as many firms have outsourced human resources services to third-party firms, companies could outsource routine purchasing tasks to Executive Data Control, Visio says. Companies could log on to the distributorship's web site to order printed products, packaging materials, janitorial products, fixtures, display shelves, racks and more. Recently, Executive Data Control's largest retail client began requiring its vendors to provide e-commerce services. "Now they have 12 different vendors with 12 different web sites, and 12 different user IDs and passwords," Visio says. He plans to propose that Executive Data Control's web site serve as a procurement portal, allowing the client to access the distributorship's web site to order items from all 12 vendors.

Executive Data Control also has begun evaluating the benefits of establishing non-traditional partnerships such as one with Kinko's Inc. The Dallas-based document solutions and business services provider recently contacted the distributorship after repeatedly failing to land jobs with a retailer for approximately 10 years. The retailer has been an Executive Data Control client since 1974. "Kinko's has some unique value propositions and we have some unique value propositions," Visio says. "Together, we could serve customers better." Ideally, such a partnership would allow customers to log on to Executive Data Control's web site to place orders for items such as signs and banners. The orders would flow seamlessly into Kinko's back-end system, then would be routed to Kinko's facilities near end users' locations to be printed and delivered within 48 hours. "That would beat what I'm doing now by about three days," Visio says.

The internet will drive the document industry during the next five years, Visio says. "I've landed customers in the last two years that wouldn't even talk to me before," he says. "Now I'm getting all of their business because I'm setting up e-procurement systems."

Insightful Move: Growing through acquisitions, among other strategies

Company: Ennis Business Forms Inc.

Principal: Keith Walters, CEO and chairman

Founded: 1909

Location: DeSoto, Texas

Employees: Approximately 2,200

Ennis Business Forms Inc. had three tangible assets when it opened in 1909: founder Garner Dunkerley Sr., a hand-fed press used to print cotton bail tags for the cotton industry in north-central Texas, and a kitchen table that served as Dunkerley's executive desk. More than 90 years later, the DeSoto, Texas-based manufacturer has come a long way from its founding days and was recognized recently by Forbes magazine as one of America's "200 Best Small Companies."

Ennis has 30 production facilities located in 12 states and produces 34 product lines, including traditional business forms, financial and security documents, tags, labels, presentation folders, commercial printing, promotional products, screenprinted products and point-of-purchase display advertising. Ennis' sales are at a current run rate of more than $240 million.

What's the key to Ennis' success? Several factors, including cost control, new products and product diversification. Another significant factor is its recent acquisitions. In 1997, traditional business forms accounted for approximately 80 percent of the manufacturer's sales. "We've changed our approach from a manufacturing-driven company to a customer- or market-driven company," says

Keith Walters, Ennis' CEO and chairman. "Today, we look to our customers and the marketplace to determine what we should manufacture, how quickly we should manufacture it, how we should deliver it, and where our pricing should fall." By 2001, traditional business forms accounted for less than half of Ennis' sales.

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