2100 RiverEdge Parkway
Our commitment is to continue to build shareholder value by growing our businesses' financial returns. This means improving customer service, reducing costs and freeing up unproductive capital.... We expect to increase future shareholder returns by expanding our higher-growth businesses; developing new products and services; focusing our acquisition strategy on specialty custom printed information businesses; and seeking dominance in high-growth niche markets.
American Business Products, Inc. (ABP), a Georgia-based company, manufactures and distributes specialty custom printed information products and services. It is one of the nation's leading suppliers of printed business supplies, principally envelope products, custom labels, and custom business forms. Additionally, ABP manufactures and distributes books for the publishing industry and performs specialty extrusion coating and laminating of papers, films, and nonwoven fabrics for packaging and other products. Almost all of ABP's products are sold within the United States, but it is also a joint venture partner with a company operating in Europe. After over half a century of higher sales year after year by ABP (and its predecessor Curtis 1000 Inc.), in the mid-1990s ABP's sales leveled off and the company began a general restructuring and a consolidation of its manufacturing facilities.
Origin and Founder
ABP was born in 1882 as Curtis 1000 Inc., a family-owned printing business based in St. Paul, Minnesota. In 1942 Henry Curtis VI joined the company, then led by his father. By 1948 he had learned the workings of the business and had opened a new division based in Atlanta. He was named president of Curtis 1000 in 1958, but soon decided that there was potential for Curtis 1000 to become a larger, publicly owned business. In 1968 Curtis 1000 Inc. became a subsidiary of a new company, American Business Products, Inc., with Curtis as its president and chairman. The company made a public stock offering the following year.
Curtis remained as president until 1973 and as chairman until 1983. In 1989 he retired from the board after 47 years with Curtis 1000 and then ABP. During those years he guided the business from a small company with $13 million in annual sales, to a national corporation with five operating companies, a European joint venture, and annual sales of over $387 million. Just before retiring as chairman he chronicled the growth of his business and his philosophy in An American Adventure. Henry Curtis VI died on March 1, 1997.
Chief Products and Operations
The cornerstone of ABP is its business supplies printing operation, which traditionally has accounted for almost three-quarters of its total sales. Its wide variety of products includes business envelopes and labels, express and lightweight packaging products, business forms, and records management systems. Discount Labels, Inc. (New Albany, Indiana), an ABP operating company acquired in 1993, is the largest supplier of short-run custom labels in the United States. The outstanding feature of this operation is its 24-hour turnaround of orders. ABP has made a commitment to customer service in this area, with a sophisticated ordering system and more than 60 specialized presses that ABP developed itself.
ABP also claims to be the world leader in production of envelopes made from Tyvek@, through another operating company, the International Envelope Company (Exton, Pennsylvania). Tyvek@ is noted for being a strong, almost unrippable material made largely from recycled materials. One of IEC's chief customers is the U.S. Postal Service, which uses Tyvek@ envelopes for its priority mailers. IEC also produces lightweight shipping envelopes made from SHIP-lite@ (which in turn is produced by another ABP company, Jen-Coat) and heavyweight specialty paper envelopes and filing products.
Curtis 1000 Inc. (Atlanta, Georgia) still exists as an ABP operating company. Its product line includes on-demand digital printing, custom labels, envelopes, forms, color brochures, presentation folders, and fine business stationery. While digital printing is considered a huge growth area, ABP also continues to emphasize production of traditional business stationery.
ABP's operating company BookCrafters USA, Inc. (Chelsea, Michigan) specializes in orders for printing of books in quantities from 500 to 100,000 copies. Many of the books printed by BookCrafters are in specialty areas (for example, travel, cookbooks, university press publications, and books about computers). BookCrafters also handles digital media projects, another growth area. It maintains two distribution centers capable of holding more than a million books, one in Chelsea, Michigan, and the other in Fredericksburg, Virginia.
Through its operating company Jen-Coat, Inc. (Westfield, Massachusetts), ABP produces many familiar items: backing for peel-off postage stamps; sugar, salt, and pepper packets; fast-food sandwich wrappers; liners for juice cans; and material used to make surgeon's gowns.
ABP carries on a joint venture with a European partner, Curtis 1000 Europe GmbH, headquartered in Neuwied, Germany, with other facilities in Poland, England, and Luxembourg. This operation produces and markets Tyvek@ and paper envelopes in several European countries, with the plant in Poland serving eastern European countries such as Hungary and Czechoslovakia. In 1996 Curtis 1000 Europe GmbH introduced a product still in demand even after the end of the Cold War: a protective envelope for top secret government documents.
ABP's Discount Labels operation utilizes a sophisticated order-processing system to provide 24-hour turnaround on custom label service to 55,000 dealers. These customers also can receive round-the-clock status reports on their orders. In 1997 ABP planned to begin using the Internet to allow dealers to design and place label orders online.
ABP has concentrated a great deal of attention on developing innovative printing processes. It uses more than 60 specialized presses developed by the company itself. By the mid-1990s ABP also had launched digital printing operations, for printing of materials such as sales manuals, directories, product catalogs, handbooks, and business forms. This process allows ABP to produce only the quantity actually needed at any given time, so that there is no need for storage facilities for an inventory of printed objects. In 1996 the BookCrafters operation received almost half of all of its projects in digital format.
ABP's Jen-Coat operation likewise utilizes technologically advanced equipment in its production processes, including fiber optics communication and extremely sensitive gauges. In 1996 and 1997 ABP expanded its capabilities by installing four-color printing equipment for the packaging products manufactured by Jen-Coat.
Key Acquisitions and Divestitures
Jen-Coat, Inc. was acquired in 1990, and its laminating operations quickly became a major asset for ABP. In 1992, then-president Thomas R. Carmody attributed ABP's record sales for the previous year to the performance of Jen-Coat. In 1996, Jen-Coat accounted for over $100 million of ABP's sales for the first time.
Discount Labels, Inc. was acquired by ABP in 1993. Since then, Discount Labels has become the leading short-run custom label manufacturer in the country, and has continually brought in increased sales. In 1996, Discount Labels had double-digit sales gains and record sales once again.
In 1995 ABP's subsidiary Vanier Graphics, a producer of business forms and supplies, acquired Electronic Form Systems, a producer of electronic forms, for almost $10 million. Vanier brought with it a product line of electronic forms software, custom form services, and on-site training services. However, this partnership with ABP was short-lived. In December 1996 Vanier in turn was sold by ABP to the Reynolds and Reynolds Company, a leading provider of information management systems to the automotive, healthcare, and general business markets for $47 million. Although Vanier was profitable, long-term operations would have required major investments by ABP in order for Vanier to compete against the major competitors that had emerged in the forms industry. ABP president Robert W. Gundeck saw the divestiture of Vanier as part of an overall strategy to concentrate on ABP's core custom printing business.
Industry Consolidation in the 1990s
The printing industry in the United States had a dismal time during the early 1990s. One industry expert, John J. Serrell, predicted in a 1994 Printing Impressions article that industry consolidation was the best hope for bringing about profitable operations once again. Through the 1990s, consolidation in the industry became standard practice. The cost of equipment and facilities needed to operate a company made it difficult for small companies to survive, and lenders became hesitant to extend credit. The growth of electronic printing technology provided a new and continually changing menu of expensive equipment. Some companies made major investments in new equipment, only to find it obsolete soon after its purchase.
Adding to the problem was the history of the industry. Many printing companies were set up after World War II as family-owned businesses, and their original owners were ready to hand down these businesses by the 1990s. However, the market made it extremely difficult for such family-owned businesses to survive.
Figures provided in 1994 by PIA, an industry organization, indicated that there was significant overcapacity in the industry as well, further cutting into profits for the remaining companies. The end result was that the largest companies (such as ABP) had the highest profits and the best likelihood for survival.
Given this scenario, ABP opted to restructure and consolidate its operations in the mid-1990s. As stated by Gundeck in Serrell's article, "Larger firms have the ability to specialize in their markets. This adds value and enhances customer loyalty." Divestiture of the Vanier Graphics operation in late 1996 was a key part of this restructuring process.
ABP also decided to close numerous production facilities, beginning in 1995. By the end of 1996 ABP had closed 13 facilities, combining their operations into several large regional centers. It also committed about $30 million to modernizing and expanding its remaining business operations. Much of this investment was targeted for redesigning and automating order processing systems, particularly those at the Curtis 1000 facilities in which most of the plant consolidation also occurred.
Financial Performance in the 1990s
American Business Products had steadily increasing sales for almost 60 years between the late 1930s and 1995. In the early 1990s, sales grew dramatically: $463.5 million in 1992; $486.1 million in 1993; $563.1 million in 1994; and almost $634 million in 1995. However, sales dropped slightly to $631.6 million in 1996. During the same five-year period, employment at ABP also rose significantly, but dropped sharply when ABP began to close numerous facilities in 1995 and 1996.
According to the ABP annual report for 1996, the $563.1 million in sales in 1994 were at record levels, rising almost 16 percent over the previous year. Sales in the business supplies area were up 20 percent, with the acquisition of Discount Labels the previous year contributing both to this increase and to the companywide increase in sales. The book manufacturing operation also did extremely well, with a 12.4 percent increase in sales. In 1994 76.2 percent of sales were from business supplies products; 8.8 percent from book manufacturing and order fulfillment operations; and 15 percent from extrusion coating and laminating operations.
Sales for 1995 were likewise excellent, totalling $634 million and increasing 12.6 percent over 1994. Sales in the business supplies segment rose 11 percent; the book manufacturing segment saw a 17.7 percent increase; and the extrusion coating operation had a 17.6 percent increase. By business division, 75.2 percent of sales came from business supplies products; 9.2 percent from book manufacturing and order fulfillment operations; and 15.6 percent from extrusion coating and laminating operations.
However, according to the same report, sales in ABP's business supplies segment fell 1.8 percent in 1996 even though the custom label market grew rapidly. ABP attributed the drop to lower material prices that were passed on to customers, "processing bottlenecks" caused by the company's restructuring program, and "distractions caused by the Vanier sale." Sales in book manufacturing fell 6.1 percent, due to lower levels of demand from customers. The one growth area was in the extrusion and laminating operations, where sales rose 10.1 percent. As a result ABP devoted additional resources to expanding this operation. During 1996, sales by division were: 74.1 percent of sales from business supplies products; 8.6 percent from book manufacturing and order fulfillment operations; and 17.3 percent from extrusion coating and laminating operations.
Principal Subsidiaries: Curtis 1000 Inc.; BookCrafters USA, Inc.; International Envelope Company; Jen-Coat, Inc.; Discount Labels, Inc.; Curtis 1000 Europe GmbH (Germany).