Quad/Graphics Becomes Largest Printer in Central Europe

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WARSAW, Poland - Quad/Graphics has become the largest printer in Central Europe only months after entering a joint venture with a major Polish printer. It is the US company's third foreign undertaking.

In 1996 Quad/Graphics bought a "substantial interest" in the Argentine printer Anselmo L. Morvillo S.A. which has become one of the largest web-offset printers in Argentina.

Last year, the Wisconsin-based company acquired "an interest" in Plural Editora e Grafica, the commercial printing arm of the Sao Paulo-based Folha group.

"This new venture is the third step of our multi-step investment plan to build a global communications and print network," Quad/Graphics president and founder Harry Quadracci said.

He had been looking for a Polish partner for some time, acknowledging that finding the right one is not always easy. "You don't marry every girl you date and we've been dating in Poland for some time," he said earlier this year, "but it hasn't happened yet."

Now it has with a deal linking the US printing giant - it has annual sales of $1.2 billion - with the printing arm of Proszynksi I S-ka, a printer/publisher with plants in Warsaw and Pila, a town only 150 miles from Berlin.

"We look for a business partner who will run the business and has the most to gain from it. We bring technology, education, international know-how and financial strength."

The approach has worked well in South America, Quadracci said at last month's DMA conference in San Francisco, "and is already working for us in Poland. We started with a workforce of 600 and expect to be well over a thousand soon."

The location so close to Berlin opens the lucrative German market and Quadracci is looking beyond Germany to France and Switzerland. "We're in Central Europe between East and West and expect to serve both markets."

Distances in Europe, he noted, are different in scale than in the US with Zurich no further from Warsaw than Chicago is from New York.

"Pila puts us next to the second largest DM market in the world," Tim Ohnmacht, Quad/Graphics international manager, added. "We can print in Poland and ship to Germany and Sweden."

Transportation costs, he said, are more than made up for by the far lower manufacturing costs. "We print, bind and address shipments and work closely with a local distributor."

An arrangement with the Deutsche Post AG has the Germans come in and put printed product directly into the German mail stream, cutting time and red tape.

The Americans are in the process of installing two eight-unit web offset presses which will substantially boost the capacity of the Polish company's eight presses, all relatively late models.

"The new plant probably has the largest perfect binding capacity of any such facility in Europe. The equipment is very modern and in no way does it resemble Eastern Bloc type technology."

But Quadracci also has an eye cocked eastward. He thinks Russia is a potentially great market despite the current economic meltdown, "so what you want to do is invest in a facility that can serve the Russian market without being in Russia."

He expects to edge into direct mail as the Polish economy develops further. "You start with publications, then you do flyers for supermarkets and then free-standing inserts. That's where the growth is now. Direct mail catalogs come later."

Two of the partners in the Polish company started in business as underground publishers and went legit when the communist government fell. They added a printing arm in 1991 and are one of Poland's biggest magazine publishers.

They handle printing of many foreign titles including Elle, Playboy, BusinessWeek and Computerworld and publish a clutch of monthly magazines including the Polish edition of Scientific American.

Audiences for such magazines tend to be middle class and Quadracci is convinced that only a middle class can afford four color printing. "If you don't have one they can't afford it," he said.

China, he noted, "is a well read society but it has no middle class so it is all one color - newsprint. Poland has had a jump start in creating a middle class so there is high demand for four color printing."

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