Falling revenue and burgeoning debt doomed Edwards Brothers Malloy.
by Bertie Bonnell
From the July, 2018 issue
The 125-year-old Ann Arbor printer and its spinoffs turned Ann Arbor into a national center for short-run book manufacturing. But its last years were burdened with pension debt and fraught with Hail Mary strategies to save the business.
Edwards Brothers Malloy was created in 2012 from the friendly merger of two companies with symbiotic capabilities--Edwards Brothers, whose fleet of Timsons presses could quickly produce 500 to 5,000 books and whose specialized digital customization equipment served customers who needed even smaller runs, and Malloy Inc., with its vaunted TLC for small customers plus its established access to textbook markets. Edwards Brothers Malloy instantly became the country's sixth-largest book manufacturer, with more than 850 local employees at the time of the merger.
The blended company garnered $115 million in sales its first year. But just five years later, revenue had sunk to $80 million as short-run printing descended into unsustainable tiny orders, publishers printed books only as orders arrived, several large customers pulled out, and inexperienced self-publishing authors required more hand-holding than they were worth. Offset printing orders, a staple for Edwards Brothers, which required the production of expensive plates whose cost can be recovered only by large runs, nearly disappeared. Earlier this year, the company closed its offset printing plant in Lillington, North Carolina.
Even orders for textbooks, one of Malloy's bread-and-butter market segments, declined. Short-run orders for specialized academic books from university presses also fell, as did the distribution of academic journals. Many university libraries no longer order all of a journal's output, instead buying single copies when professors request them.
In the meantime, self-publishing had lost its oft-maligned "vanity" tarnish. John F. Walsh, associate director of the Harvard University Press, commented in The Chronicle of Higher Education at the time of the merger, "The technology allows anybody to call himself a published author if he is willing to pay a few hundred dollars for the privilege." Malloy had special programs to guide these authors through the
process of producing and distributing their small editions. But costs and income got out of whack as authors ordered fewer copies while still needing expensive assistance.
Bob Durgy, former sales manager of Edwards Brothers Malloy, thinks that management may have been "somewhat naive" in assessing the industry's problems, "perhaps because of a history of weathering tough times." (Edwards Brothers' patriarch, Marty Edwards, famously said, "We choose not to participate in the recession.") Plus, "The merger of two teams of manufacturing employees led to less than perfect execution for some large customers."
"Our situation was definitely affected by changes in the industry, but the problems that led to our struggle began in 2008," says Edwards Brothers Malloy COO Bill Upton. "Our pension plan, set up in the Forties, became underfunded during the economic downturn.
"A few years after the merger the company was able to turn over its pension to the Pension Benefit Guaranty Corporation in return for a sizeable note to be paid in the future. But we were still not close to a healthy bottom line. Now we are selling equipment, the Lillington real estate in North Carolina, buildings, and warehouses."
The money will help pay the company's debt. Durgy predicts that all the press workers will find jobs locally with other printers.
Today, U.S. book printers are riding perilously on the crest of a wave of revolution. E-book production and on-demand hard-copy printing, now used by virtually every publisher, as well as upstart reprinters of thousands of titles in the public domain, have transformed traditional publishing and printing.
Edwards Brothers Malloy hadn't sat out the transformation. Notably, it had installed self-contained reprinting facilities at the warehouses of three major book distributors. This innovative practice may anticipate the future of book manufacturing as it transforms to primarily a service provider.
Despite the closing, Upton says, "I'm optimistic about the future of the printing industry." Surprisingly, sales of adult trade books increased over the past three years--more than 5 percent so far in 2018 over last year--and e-book sales declined 10 percent in 2017.
"As to the pension plan," Upton says, "it was frozen in 2008, yet more than 1,000 people have received benefits or will in the future.
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