Quad to Close Three Printing Plants in Early 2021, Citing Decline in Retail Market, COVID-19 Impact

Citing volume declines in an already challenging retail environment and exacerbated by the COVID-19 pandemic, Sussex, Wis.-based Quad closed out a tumultuous 2020 by announcing it will permanently cease print manufacturing operations at three production facilities in early 2021, impacting approximately 650 workers. Work currently performed in these commercial printing plants will be consolidated into other existing Quad locations.

• Its Fernley, Nev., plant will close in late January. The 480,000-sq.-ft. facility specializes in retail advertising inserts and employs approximately 75 people. It was acquired in 2010 as part of Quad's approximately $1.3 billion acquisition of Worldcolor, which coincided with Quad becoming a publicly held company listed on the New York Stock Exchange (NYSE).
• Quad's Oklahoma City plant will be shuttered in early March. Employing approximately 400 workers, the plant produces magazines, catalogs, and retail advertising inserts. Quad designed and built the Oklahoma City operation in 2003, and more than quadrupled it in size over the years after it first opened. Among those various expansions was 385,000 sq. ft. of manufacturing space to accommodate the startup of gravure operations in the fall of 2004. At 1.2 million sq. ft., Quad touted the plant in 2013 as being its largest print production facility west of the Mississippi River.
• The Nashville, Tenn., facility will permanently close by mid-April. The 107,000-sq.-ft. plant specializes in retail advertising inserts and employs approximately 175 people. It was also acquired as part of Quad's 2010 acquisition of Worldcolor.

According to Quad officials, the mega-printer is offering affected employees the opportunity to relocate to another Quad facility elsewhere in the U.S. where client work is being consolidated. Employees who are unable to relocate will be offered a comprehensive separation package that includes severance pay, continuation of health care benefits, and career transition assistance through a career counseling company.

"This decision in no way reflects the quality and performance of employees in these plants, all of whom have performed well and worked hard to make the plants succeed. Quad continues to optimize its print manufacturing operations to align capacity with decreased industry volumes," a media statement issued from Quad indicated. "Nevertheless, print remains an important and integral part of Quad’s integrated marketing platform that is focused on uncomplicating marketing and delivering more for brands and marketers through reducing the complexity of working with multiple agencies and vendor partners, improving process efficiencies, and enhancing marketing spend effectiveness."

Worldwide, Quad operates 50 printing plants and employs approximately 17,000 employees. The majority of its operations are in the U.S., where it employs approximately 13,000 people and operates 41 printing plants (including the three closing plants) and 60+ production-oriented client on-sites.

Financial results for nine months ended Sept. 30, 2020, included net sales of $2.1 billion for 2020, a 27% decline from 2019, which was blamed primarily due to the economic impact from COVID-19, and ongoing printing industry volume and pricing pressures. However, net cash provided by operating activities was $107 million for the nine-month period, an increase of $103 million from 2019, primarily due to higher cash earnings and improvements in working capital. Free cash flow was $57 million for the period, an increase of $91 million from 2019, primarily due to a $48 million decrease in capital expenditures, $40 million of income tax refunds received during the third quarter of 2020 due to the CARES Tax Act, and improvements in working capital.

On Oct. 31, 2020, Quad also sold its two remaining book manufacturing facilities, located in Fairfield, Pa., and Martinsburg, W.Va., to Berryville Graphics, a division of Bertelsmann Printing Group USA, a provider of hard cover, mass-market, trade and digest books, components and specialty finishing. Quad used the proceeds from the sale to pay down debt.