by Jen Clark, The Binding Edge
After 17 years as a management consultant for several leading global professional services firms, Andrew Hoffman was ready for something new. He researched his options, put together a group of investors and bought a bindery, even though he had no experience with the printing, binding or finishing industries. However, Hoffman brought a keen awareness of what it takes for any business to be successful – a systematic approach with a focus on the big picture.
“When I was looking to buy a company, I looked at all sorts of industries,” said Hoffman, who has been president and CEO of Phillips Graphic Finishing, LLC for about a year. “I looked at anything that came across my desk. I really knew nothing about the printing industry or the binding industry, and when this came to my attention I said, ‘Who would buy a bookbinding company in this day and age?’ But when I looked at the information and started to investigate the industry and the binding side of it, I realized it was a good business decision.”
Phillips Graphic Finishing is a full-service postpress finishing and trade bindery located in Manheim, PA. It provides services in three main groupings: binding, finishing and diecutting. “As with many trade binderies, the assortment of services offered by Phillips is commonly bundled together by customers and provides a competitive advantage to Phillips for complex jobs that utilize more than one process,” Hoffman said. “Many customers choose Phillips for its broad array of services, in addition to its excellent reputation with printers throughout the region to consistently produce high-quality work within tight deadlines. We are known as the go-to bindery for complex jobs.”
He said unlike some competitors, Phillips has the right mix of experience and machinery to accomplish complex tasks. “I think people know that if it’s a difficult job, we’ll get it done and get it done right,” he said. “If someone wants to saddlestitch, foil stamp and perfect bind, then fold and glue, we can do all of those things, whereas some other binderies have to farm it out to finish various aspects.”
But the competition is stiff, he noted. Phillips serves the Philadelphia, PA, Lancaster, PA and Baltimore, MD, areas. Full-service binderies in Baltimore and Philadelphia, in addition to smaller binderies with limited finishing capabilities, vie for business from the same pool of clients as Phillips. “Other competition comes from the printers with in-house bindery capabilities,” Hoffman said. “Sometimes we’ll take jobs from an in-house bindery that is either overwhelmed or has an equipment failure. Our competitors sometimes are our customers, too, which is an odd reality in some industries, but is the norm for us.”
In 1957, Si Phillips opened S. G. Phillips, Printer, a diecutting and printing business, in Mount Joy, PA. The business was incorporated as Phillips Die Cutting, Inc. in 1979. A year later, Phillips retired and sold the business to Eric Liddell, who had joined the company in 1974. Liddell moved the company to its current location in Manheim, PA, in 1986. Upon his retirement in 1993, Liddell sold the company to Doug Shelly, who had been with the company since 1984. Shelly changed its name to Phillips Graphic Finishing to better reflect the variety of services it offered.
As the company grew, it added more machinery and more capabilities. One thing that stood out, according to Hoffman’s research, is that as the company grew, management would talk to the customers to find out what services would benefit them. “They’d go out and buy those pieces of machinery or upgrade machinery based on what the clients were asking for,” he said. In 2008, a major expansion was undertaken to accommodate the growing business. It included a 3,000 sq. ft. office addition and a 23,500 sq. ft. production addition, for a total production space of 55,300 sq. ft.
In 2013, Shelly sold the company to a group of investors led by Hoffman. “I organized the group (of investors), and my family has the majority interest,” Hoffman noted. “Here, a lot of people just call me the owner, but I’m not the only owner.” He is, however, the only one with an active role in running the company. Three other members of the investment group make up a board of advisers, though.
In the last year, Phillips Graphic Finishing has seen an uptick in business, but Hoffman doesn’t think that had anything to do with him. “We’ve been very, very busy,” he said. “Toward the end of last year, some of the employees were coming up to me asking, ‘Andy, did you bring all of this new business with you?’ I had no contacts within the printing industry, so it was just luck.”
He’s learned, though, that there is an ebb and flow to the amount of work that comes in. “I think we are even less busy now than we were at this time last year. January and February were good. March was lighter than last year. We still are projected to have a good year and to grow, but we haven’t made any specific changes to aid in that growth – other than new machinery. We haven’t done any sales promotions or anything like that,” he explained.
An attractive investment
In his research, Hoffman found Phillips Graphic Finishing was well established and had a solid base of clients. “It had a small amount of customers, but the end-users of the clients were Fortune 500 companies. The feeling is that printing might be dying, but the people who are our customers – not the actual printers, but the end-users – are never going to stop printing,” he said. “That was one of the reasons (it appealed to me). The other is it is a service business. I like that concept.”
Hoffman had spent the majority of his professional career advising numerous Fortune 100 companies, as well as medium- and small-sized privately held organizations across a variety of industries. “My entire career was spent going into a business and trying to figure it out in two weeks and then improving their processes,” he said. “For me, this was just another case or another project. I utilized the same skills from my consulting career to evaluate the key points of the business. I think it helped that I had worked with so many different businesses, and I could relate to this one.”
Hoffman hasn’t made any major changes to the way Phillips Graphic Finishing does business, but he has made a few smaller adjustments, including equipment purchases and policy changes. “It’s really just been a few little tweaks here and there,” he said. “That was my intention for the first year. I knew it was going to be a learning curve to figure out what the most effective changes could be. I’m still not even a year in. But, on the other hand, it was a very well-run business for many, many years.” He said the biggest change was hiring a director of finance, “but that was part of my plan.”
The staff’s reaction to the ownership change was marked with cautious optimism, Hoffman said. “I think they were surprised because we kept everything pretty silent until we brought everyone into the conference room. Doug said, ‘I sold the business; here’s the new owner’,” he recalled. “People don’t really like change in general. I think they were trying to feel me out. The first couple of weeks, I don’t think people opened up to me or tried to get to know me. They just wanted to see what I was going to do. Were their jobs safe? Was I going to do stupid things and make everyone’s life miserable? Or, would I have new ideas and want to change the company for growth? Hopefully they’re pleasantly surprised that my plan is to grow the company and make their lives easier.”
As he took over, the learning curve was steep. But three key people, in addition to Shelly, helped ease the transition. “At first it was really, really intense,” he recalled. “Even though I had studied and talked to a lot of people, it’s not until you’re in a bindery that you really figure out what printing is all about. I had no background in printing, so lucky for me the people who are here are very, very good teachers. The plant manager, customer service manager and sales person – anytime they brought something up to me, they would educate me on the question they were asking or explain why they did something a certain way. Then, after a while, I started to pick it up. Probably in the first three months, I knew enough to be dangerous. After six months, I knew enough to make decisions and be confident that I was knowledgeable enough to make the right decision.”
One detail of the sale, Hoffman explained, was that Shelly would stay on for six months to answer questions and ease Hoffman into the business. The plan was for Shelly to be involved less and less as time went on, but it didn’t quite work out that way. “At one point, he came to me and said, ‘Andy, I feel like I’m wasting your money. You know enough, and I want to get on with my life.’ And, we were good with that. He was supposed to be here for six months, but he only stayed for four.”
The response to new ownership from customers has been positive. “It’s gone like I had hoped,” Hoffman said. “I didn’t really want to raise any red flags with anyone. I think everyone was happy with the quality (of our work), and we are trying to keep that same quality and same high opinion that people have of Phillips Graphic Finishing. I don’t think there’s been too much change in that area.”
A ‘very good’ workforce
Phillips Graphic Finishing offers a comprehensive range of binding, finishing and diecutting solutions including saddlestitching, perfect binding, wire-o and spiral binding; handwork, mounting, film laminating, inline gluing and insertion; folding; diemaking and diecutting; and foil stamping and embossing. The company has state-of-the art bindery equipment including a Kolbus perfect binder; two Heidelberg saddlestitching lines; two Bobst folder-gluer lines; two Bobst Speria 106E diecutters; a stable of MBO folders; and four Polar cutters. On the finishing side, it utilizes three Heidelberg Cylinder Letterpresses; two Heidelberg Windmills for foil and diecutting; a Cioni foil stamper/emboss/deboss/diecutter; a Franklin foil/emboss/deboss stamper; a Kluge foil/diecutter; and other clamshell handfed diecutters and embossers, as well as two BR Moll Regals, fully automated diemaking equipment, wafer sealers, eyeletters, a Crathern mounting machine, round cornering and drilling, two Punchmasters, a collator, two Rilecart Wire-O machines, a Coilmaster Junior for spiral binding and three remoisten glue machines.
“We serve the commercial printing industry,” Hoffman said. “The end customers vary to a large degree, but we do a lot in the form of marketing materials for pharmaceutical companies, financial services and banking companies, manufacturing companies, consumer goods and colleges and universities.”
The company’s production facility is open 24 hours a day, including weekends as needed. It operates a three-shift schedule with approximately 80 employees, with a goal to provide the highest quality and fastest turnaround times available in the industry. “Our employees are cross-trained to give us the flexibility to run several different types of machinery on all three of our shifts,” Hoffman said, noting every shift is assigned a weekend at the beginning of the year. “If we have work that needs to be done on a particular weekend, we have a shift to cover it,” he said. “We plan ahead for it.”
One of the things that surprised Hoffman from the beginning is “how good my workforce is from a technical standpoint. They are very technical craftsmen – everything you want to have in a workforce,” he said. “We have so many great ones here who have been in the industry and in the business for a long time. The flip side is that there really are not that many printing programs or trade schools in the area anymore. It’s hard to find newer employees that have had as good of training as in the past, so we have to do it in-house.”
Phillips Graphic Finishing utilizes an informal training program for new employees, who are trained on the machinery they will be working on first. “We usually hire new employees for specific needs and have our existing expert operators train the new employees,” Hoffman said. “We also will bring people from one shift to another so that the new employees can learn from more than one individual and gain experience running alongside different operators.”
Because there is a wide variety of jobs that come through the plant, Hoffman said it is difficult to train people to become experts on every type of job they will run. “We also send employees to vendor-based training on an as-needed basis,” he said. “There used to be full apprentice programs at printers and binderies that just don’t exist anymore. I think there are people interested in the industry, but when you say ‘graphic arts,’ now they think digital and using computers, not using machinery or setting up work on saddlestitchers, diecutters or something like that.”
Even though Hoffman hasn’t been in the industry long, he has learned that every week and every month is going to be different in terms of types of jobs and size of runs. He’s also learned schedules aren’t always set in stone. “We are very up-front with our customers about what we can do when it comes to scheduling,” he said. “We don’t take on jobs saying ‘Yeah, we can do that in two days’ if there’s no possible way we can get it done in two days.”
Poised for the future
While the recession hit many bindery and print finishing operations hard in the last decade, Hoffman said Shelly’s leadership helped Phillips Graphic Finishing weather the storm. “I think that Doug was very good at directing Phillips through the (recession),” he said. “He saw the economy getting worse, and he became much more lean in terms of doing business. He was focused on maintaining.”
Now that he is in charge, Hoffman would like to see Phillips do more packaging, kitting and special projects, utilizing the highly skilled handwork people already on staff. With the ability to produce all of the pieces for those projects in-house, he said doing fulfillment is the logical next step. “I see that as a growth area,” he said. “Even for some of the boxes and packaging that we already make, we can start doing the fulfillment for those items.”
He obviously wants Phillips to continue its pattern of growth. “We are focusing on new growth areas in terms of machinery and people,” Hoffman said. “We have had lots of success recently in the folder-gluer area working on consumer goods packaging. We recently purchased our second Bobst folder-gluer to double our capacity, and we feel that will be a driver for growth in the near term. This is an area of focus that will help us grow in the next few years.”