Arandell Corporation

views updated

Arandell Corporation

N82 W13118 Leon Road
Menominee Falls, Wisconsin 53051
U.S.A.
Telephone: (262) 255-4400
Fax: (262) 255-8218
Web site: http://www.arandell.com

Private Company
Incorporated: 1922 as R & L Service Inc.
Employees: 600
Sales: $170 million (1998 est.)
NAIC: 323110 Commercial Lithographic Printing; 323119 Other Commercial Printing

Arandell Corporation is one of the nation’s leading printers of upscale catalogs. Its customers include many department store chains, including Saks Fifth Avenue, R.H. Macy & Co., Lord & Taylor, and the May Department Stores. It also handles the catalog printing of Coach Leather, Warner Brothers, and many others. It is one of the five largest catalog printers in North America, and one of the few companies that owns the large and sophisticated equipment needed to produce high-quality color catalogs. Its services include not only printing but mailing of finished catalogs. The company has its own post office on the premises of its corporate offices in Menominee Falls. It ships out printed catalogs on average of more than 80 truckloads a day. It also works with its customers on database management, targeting mailing lists so catalogs reach only the most likely consumers. Arandell also assists its customers with website development and electronic commerce.

Early History

Arandell Corporation was formed from the merger of two southeastern Wisconsin printers. That area of the country had a strong tradition of printing. Wisconsin was a major paper producer, and also had abundant water. These factors made printing easy and economical. In the 19th century, Milwaukee attracted many immigrant lithographers from Germany who found work printing beer bottle labels at the city’s many large breweries.

The two companies that became Arandell Corp. both started in the area around the same time. One company, founded in 1922 as a sheet-fed printer of labels for brewers and for sausage-makers, was first known as R & L Service Inc. In 1949, a man named F. Edward Treis purchased an interest in R & L and became chairman and president of the company. In 1953 Treis changed the name of the company from R & L to its phonetic equivalent, Arandell. The second company was the E.F. Schmidt Company, founded in Milwaukee in 1923.

By the mid-1950s, E.F. Schmidt was one of a small core of specialized sheet-fed lithographers in Milwaukee, each of which held onto a particular market niche. Schmidt was renowned for making calendars. Its calendar business spread through the Midwest in the 1950s and 1960s, and then on to New York. Its customers were mainly large corporations, which ordered vast print runs of imprinted calendars as gifts to employees and clients. Some of Schmidt’s prominent corporate customers were General Electric and Pan American Airways.

In the mid-1970s, Schmidt was one of only a handful of manufacturers in the United States that had such sophisticated equipment as wire binders and plastic binders to produce quality calendars. Since few other companies had made this technological investment, Schmidt had few competitors. The company made a major technological transition in the 1970s, switching from sheet-fed equipment to the so-called web process, which uses giant rolls of paper. This transition entailed the construction of a new plant, which the company built in nearby Menominee Falls, Wisconsin. The company’s success had attracted potential buyers, but the printer remained in the hands of the founding Schmidt family, with Harold Schmidt as president, and another Schmidt brother as chairman.

Merger and New Market in the 1980s

E.F. Schmidt balanced out its calendar business, which peaked in the fall, by printing corporate annual reports in the spring. This gave the company two busy seasons, but in the intervening months, it scrambled to pick up any kind of work it could get. Despite this, the company continued to grow in the late 1970s, adding a second web press in 1978. But that year, Harold Schmidt died, and the company’s remaining management faced an uncertain future. The calendar market had begun to shrink. The giving of fancy corporate gift calendars became less common, and more and more calendars were printed by private publishers who made small runs of calendars with special interest topics (butterflies, cats, etc.). This was not a market Schmidt could compete in, because the commercial calendars generally had a much smaller press run. These could be made profitably by a small sheet-fed printing house, not by a company with the large-scale web printing capabilities of Schmidt. Also, the company’s two major products, calendars and annual reports, gave the firm two busy cycles and two uncertain and slow periods. A steady year-round business would have been more suitable. So after Harold Schmidt’s death, the company began to look for a new market.

Just after Harold Schmidt died, the company’s vice-president, Robert Burrington, got a call from a major paper manufacturer who was doing a survey to determine printing needs in the upcoming 1980s. Burrington agreed to participate, as long as he could see the results. What he saw convinced him that upscale catalog printing was going to be the next boom in the industry. With a growing population of affluent but busy young people, the direct mail market was expected to grow. Catalog printing was similar to the fine calendar printing Schmidt was versed in, and it required large runs that would keep Schmidt’s equipment busy all year round. So Burrington actively pursued the catalog market. He looked first to Dallas, a city that housed several upscale mail-order businesses, including the Horchow Collection and Neiman-Marcus. Burrington hired a Dallas-area printing salesman to spearhead Schmidt’s campaign. The salesman, David Mixon, arranged to use existing film from a previous catalog and do a mock run for several potential Dallas clients. Schmidt flew representatives from the potential client companies to Menominee Falls to see the mock print run, and show them firsthand what a quality job Schmidt was capable of. This strategy was a big success, and within a year, Schmidt was printing catalogs for Horchow, Neiman-Marcus, and several other Texas department store chains. Then the company began trawling the New York market for similar business.

Catalog printing required specialized printing skills. Customers required exact color reproduction, so that the green pants in the catalog were the same green as the ones in the store or warehouse. E.F. Schmidt had proven it could move into the catalog market, but it needed money to buy new equipment if it was going to pursue customers nationwide. The Schmidt family decided to look for a merger to give the company cash for expansion. Though E.F. Schmidt at that time had sales of around $20 million, its buyer, Arandell, turned out to be a much smaller company with sales of only around $6 million. However, Arandell outbid other larger competitors in order to get in on Schmidt’s growing catalog business. The sale took place in 1981, and the merged company became known as Arandell-Schmidt Corporation. The new corporation continued E.F. Schmidt’s drive to capture the catalog market. Robert Burrington, Schmidt’s vice-president, stayed on in direct marketing, and members of Arandell’s Treis family became president and chief operating officer.

By 1985, Arandell-Schmidt had an impressive roster of catalog customers. The most renowned names in department stores all did their catalog printing at Arandell, including Bergdorf Goodman, Saks Fifth Avenue, Macy’s, Bullock’s, Blooming-dales, and Lord & Taylor. The company got 75 percent of its sales revenues from catalogs. Most of the rest of its business was in brochures for companies like Chrysler and Volkswagen. Less than five percent of its business was calendars. The company shed its annual reports business almost completely, since producing them in springtime interfered with the rest of Arandell’s work. Sales grew enormously. The year after the merger, annual sales were $24 million. The next year, they had risen to $38 million, and by 1984 the company was bringing in $52 million. Arandell continued to invest in new equipment. By the mid-1980s, it operated five web presses as well as three sheet-fed presses. The production expansion had cost the firm around $13 million, and included the construction of new buildings to house the equipment. The company also opened a mailing department in the mid-1980s, allowing it to not only print but distribute the catalogs. It also invested in ink-jet addressing equipment, so it could print consumer addresses directly on the finished catalogs. To handle growing nationwide sales, Arandell opened regional offices across the country. By 1985, the company had offices in San Francisco, Dallas, New York City, Minneapolis, Detroit, Chicago, Los Angeles, and Kansas City.

Company Perspectives:

Arandell Corporation, based in Menominee Falls, Wisconsin, provides an extensive base of services to the catalog industry including customer selection, pre-press and printing, mailing and postal optimization, and ancillary services. Known for its commitment to innovation, Arandell is active in the development and implementation of new technological tools and services for the catalog industry.

Stock Offering Doesn ‘t Happen

Sales at Arandell continued to rise quickly. Sales for fiscal 1987 were over $70 million, and in May 1987 the company announced that it would make an initial public stock offering. Its growth curve was exceptional, and likely to be smiled on by Wall Street, and the company could use the money raised to reduce its debt. Stock in the private company was held by owners and top executives. F. Edward Treis, who had built up Arandell since 1949, held over 80 percent of the stock. Another large block, totaling over 13 percent, was held by the firm’s executive vice-president of finance, George Kaiser. Kaiser and Treis planned to sell substantial portions of their holdings, so that after the offering, about 30 percent of the company’s stock would be in public hands. But on October 19, 1987, the stock market crashed. Members of the Treis family, including F. Edward Treis and his sons Donald, Edward, and James, along with other managers, decided to cancel the stock offering. Abruptly, three top executives quit the firm. George Kaiser resigned, along with Larry Vorbrich, who had been head of marketing. Then Robert Burrington, who had spearheaded the company’s shift into the upscale catalog market, left Arandell to take a position with a competitor. Donald Treis took over the presidency of the company from his father, and Arandell continued to operate as a private firm.

The early 1990s were not as booming a time for the catalog industry as the 1980s had been. Sales at Arandell did not move up much between 1989 and 1990, hovering at just over $82 million. An increase in the postal rate made catalog mailings more costly. As a result, retailers searched for ways to hone their databases in order to eliminate costly mailings to consumers who were unlikely to buy. Arandell’s customers had been placing catalog orders three months in advance, but the time shortened to one month in the early 1990s, as client companies struggled to refine their mailing lists.

Though the recession years of the early 1990s proved more difficult for the company than earlier years, Arandell persisted in its pursuit of the upscale catalog market. By 1994, the company had decided it needed more capacity, and it invested over $10 million in new equipment. It bought a new web press, as well as new bindery equipment. This was the single biggest equipment purchase Arandell had ever made. The new technology increased the firm’s capacity by 60 percent, allowing it to go after bigger customers and to offer bigger press runs to its current clients. While some other area printers had been swallowed up by bigger competitors, Arandell aimed to become bigger itself, and keep itself privately owned.

Two years later, Arandell upgraded its bindery equipment by installing new computer software, making Arandell one of the most automated binderies in the United States. It was putting out over 300 million catalogs a year by that time, and its customers included new names such as Toys ‘R’ Us, American Express, Amway, and Cartier. To serve customers who were manipulating their mailing lists to target specific populations, the company’s sophisticated equipment was able to print different versions of catalogs simultaneously.

The company continued to innovate in the late 1990s and beyond. Its postal system continued to grow in size and sophistication. In 2000, Arandell’s director of postal systems was honored by the U.S. Postal Service for new programs he had implemented at the company. Arandell used an advanced tracking system to make sure its catalogs arrived on time, and it also established an Internet-based information system that allowed its customers to share tracking and other information with the Postal Service. Also in 2000, Arandell began using an Internet-based work-flow management system to help its customers follow the status of their catalog orders. Customers had often needed to visit the printing plant at odd hours to check on press runs, and last-minute changes or equipment failures could be disastrous. The new technology allowed customers to access the status of their jobs in real time from their desktop computer. Customers could also use the new system to receive proposals, make changes, and track their print job at all stages of development. The company remained in the hands of the Treis family into the 2000s. Donald Treis continued as president, his brother James was vice-president for marketing and sales, and patriarch F. Edward Treis remained chairman and chief executive officer.