Book manufacturer Thomson-Shore is adapting and rebounding [Detroit Free Press]By Jc Reindl, Detroit Free PressMcClatchy-Tribune Information Services
Dec. 02--Kevin Spall, the president and CEO of Thomson-Shore, says the recession prodded his company ahead a few chapters in the book-manufacturing business.
Revenues dropped more than 20% in 2008, prompting the first layoff notices in the employee-owned firm's 40-year history -- from 260 workers to a low of 179.
Worsening the grim outlook were monumental shifts under way in the publishing world, threatening the company's core product: bound books with black type on white pages, made by conventional lithography. More publishers sought "print-on-demand" services for short-run titles to avoid piles of unsold inventory. And Amazon.com had introduced its first Kindle e-book reader, unleashing grand predictions for the end of physical books.
As Spall and his management team saw it, the firm could adapt to the changing marketplace or face decline. They opted to introduce new digital services while enhancing offerings in their traditional niche of short- and medium-size print runs, typically 1,000 to 1,500 books.
The company, one of a half-dozen book manufacturers still in the Ann Arbor area, undertook $14 million in capital investments that included $10 million in previously-approved state economic development loans.
It installed a digital print center to gain business in the print-on-demand market, where publishers can request print runs as small as a single copy to fulfill an Amazon.com order. It added color capabilities to make fancier titles and children's books. And it began offering conversions from print to e-book format for Kindles, Nooks and the Sony eReader.
Thomson-Shore's decisions appear to be paying off. Spall said the company's annual revenues of about $35.5 million are back to pre-recession levels. The firm's employee count, although still just under 200, is growing.
Yet despite its investments in software and digital imaging equipment, the company says it still makes most of its money through traditional lithography.
Thomson-Shore has added new accounts to its customer base of religious and university presses and a list of publishers, which includes Random House. This fall, it became the preferred U.S. book manufacturer for U.K.-based Bloomsbury Publishing. It is also the favorite book manufacturer of San Francisco-based McSweeney's.
"We expect to see double-digit growth next year," Spall said in an interview last week inside the firm's 180,000-square-foot headquarters and factory in rural Washtenaw County just outside of Dexter. "It's ironic that a lot of that bright expectation is a result of the recession, because we had to reinvent ourselves."
But Thomson-Shore must work harder today for its money than a decade ago. The company once did 400 to 500 jobs a month to get the current revenue numbers, Spall said. Now it does nearly 1,500 jobs a month. "We've really had to change the way we do business," he said.
The company was started in 1972 by Ned Thomson and Harry Shore, who quit jobs at the former Braun & Brumfield (now a part of Sheridan Books). The men ran the business with a profit-sharing program and transitioned to an employee ownership model by the mid-1980s. Thomson retired long ago and sits on the company's board.
"The (employee ownership) culture here is very much supportive of change, as long as they understand why the change is occurring," said Spall, who arrived as CEO in September 2008 from the New York office of print company RR Donnelley.
For a low-tech product -- the book -- Thomson-Shore's factory is a sprawling wonder of computerized mechanization. The lithography process begins with a laser that etches images and words onto an aluminum plate. Giant spools of paper are loaded into a second machine as ink rollers transfer ink onto the plate and a rubber blanket, which in turn transfers the images to the paper as it unspools at 800 feet per minute. The paper is cut into pages, compressed and then bundled by robots.
An array of machines then sews the pages and glues the binding. From start to finish, it takes about 20 hours to manufacture a run of about 1,500 books. The new digital print machines skip the aluminum plates and produce more modest book runs of 1 to 500. Traditional lithography still produces higher-quality books, but digital is catching up fast.
The company prints about 1 million to 1.5 million physical books a month. Its record print run, just under 500,000, was for Volume 1 of Mark Twain's autobiography, an eclectic four-pound tome that rocketed up best-seller lists in 2010.
In a scene last week that could have fit Twain's 19th-Century heyday, six men and women sat at a table on the factory floor stitching author-signed pages into completed books.
"Their attention to detail is off the charts it's so good," said Dave Eggers, a best-selling author and founder of the McSweeney's publishing house. "I've been to a lot of printing plants, and we've never worked with a better printer than Thomson-Shore."
In an interview, Eggers recalled visiting Dexter and meeting the workers who would later create the elaborate details and cover of his latest novel, "A Hologram for the King." Copies of the book are displayed throughout Thomson-Shore's offices.
"We came up with a beautiful book and everyone we show it to can't believe it was printed, A, in the U.S. and, B, at the unit cost that Thomson-Shore was able to do it at."
In 2010, the company bought the Bessenberg Bindery of Ann Arbor, the last remaining commercial hand bookbindery in Michigan. The bindery's repair experts moved in to the Dexter-area headquarters, adding custom-made binding to the parent company's services.
Jon Buller, the bindery's founder, said about 20% of the unit's business is restoring old books; the rest is mostly binding catalogues and booklets for institutions and corporations, including Fiat.
While Bessenberg contributes less than 1% of Thomson-Shore's revenues, it is the company's second fastest-growing business segment with 20% annual growth. "Which is very ironic, because you've got this old technology and old equipment," Spall said.
Its fastest-growing segment is print-on-demand books, although they contribute only 6% of revenues. Traditional lithography, including Bibles and color books, remains the bread and butter with more than 75% of revenues.
Yet as current trends accelerate, Spall anticipates a 50-50 revenue split by 2020 between old-school lithography and the company's print-on-demand and e-book formatting services.
Spall said he believes the e-book revolution will reduce the number of actual books publishers print, but not eliminate them.
"The book is never going to disappear," said Buller, the binding craftsman. "Those people who say it is are merely sensationalists."
Location: Dexter area
What it does: Manufactures books for short- and medium-run titles
Employees: About 200
CEO: Kevin Spall
Contact JC Reindl at: 313-222-6631 or firstname.lastname@example.org, and follow on twitter @JCReindl
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