Jim Grote is a development officer and freelance business writer in Louisville, Kentucky, email@example.com
The Simon family's Publishers Printing Company has held its own against the corporate giants for some time. Loyal employees and reinvested profits have played no small part in the success, as Jim Grote discovers
Just 30 minutes south of Churchill Downs (home of the Kentucky Derby) Publishers Printing Company, the eighth-largest publication printer in North America, is beating the family business survival odds by a long stretch. While less than 3% of family firms have the stamina to make it to the fifth generation, Publishers remains one of the last family-run special interest magazine printers on the continent, proudly holding its own against Fortune 500 behemoths such as RR Donnelly and Quebecor.
'High-tech' and 'down-home' converge in tiny Shepherdsville, Kentucky where the Simon family has put together the winning trifecta of a 'business first, family second' attitude among shareholders; a family atmosphere among employees; and a focused, single-market niche among competitors. Nor does it hurt their survival odds that the time factor in magazine publishing, unlike book publishing, insulates Publishers from foreign competition. Given computerised files, Publishers can turn around monthly magazines in six to seven days and weekly magazines in as little as 24 hours.
German Catholic newspapers
Insulated, but not isolated, the Simon family's European pedigree provided them with an unusual business niche in America. In 1866, after a stint as a drill sergeant for the Union army during the Civil War, Nicholas Simon purchased an interest in a German language newspaper in Louisville, Kentucky and started a firm dedicated to German Catholic printing. An immigrant from Bavaria, ironically Nicholas came to America to avoid the continual conscriptions that landed his own father in the Napoleonic army which invaded Russia.
The German language emphasis continued under Nicholas's son, Frank Xavier, who took the helm in 1880 and soon landed a large contract to print the newspaper, Katholischer Glaubensbats [The Catholic Messenger of Faith]. During the third generation of Simon family management, the firm's focus shifted slightly. Alfred Joseph Simon, who became head of the business in 1925, began printing the firm's first nationally distributed publication in 1929, the Market Grower's Journal for gardeners – a far cry from German Catholicism.
Current CEO Nicholas X Simon attributes the first three generations of family unity to the small size of the business – "There wasn't much to fight over!" At the end of Alfred's tenure, the firm only had 25 employees. Nick's father, Frank Eugene Simon, who joined the firm in 1946 and became president in 1969, deserves credit for jumpstarting the small family operation.
Special interest magazines
Frank moved the company's location from Louisville to Shepherdsville. Under his leadership, the firm switched from cold-set to heat-set printing and from newspapers to short-run and medium-run magazines (under 500,000 copies). Printing their magazines on large web presses when competitors still used sheet-fed equipment gave Publishers an edge up in this niche market. At Frank's death in 1990, more than 800 employees were printing close to 300 magazines.
In 1990 Nick became president and, under he and his brother Michael's tenure, doubled the size of the business. Today with 1,670 employees the company has captured 10% of the US market, printing over 1,100 different special interest magazines annually.
With 1m sq feet of manufacturing space in two production plants, presses run 24 hours a day, five days a week. On a typical day, eight large trucks full of magazines leave the plants, bound for post offices in cities all over the US. This 'Drop Shipping Advantage' helps customers receive their magazines quicker with less handling damage and at lower postal rates.
Reflectors of our society
You name it and Publishers prints it. The special interest magazine niche can get very specialised, including business-to-business magazines like Aviation Maintenance, lifestyle and hobby magazines like Art Doll Quarterly or Y'all (a magazine for Southerners), and regional/city magazines for St Louis, Las Vegas, and Charleston.
As Nick says, "Very few of our magazines see a news-stand. For any trade or industry you can think of, there's probably a magazine for it." With its home in bluegrass country, Publishers has a natural lock on horse magazines. They print The Blood-Horse, the bible to the Thoroughbred Racing Industry, along with Arabian Horse World, American Equestrian, Tennessee Walking Horse and Hoof Beats, the magazine for the US Trotting Association.
Other sports magazines include the entire Beckett series of Beckett Baseball, Beckett Football, Beckett Basketball, Beckett Hockey, and so on. These monthly price guides for sports trading cards ship to small hobby shops as well as massive department stores like Wal-Mart. Since these cards trade like stocks, price fluctuations are followed closely, and it is crucial the magazines hit stores on the same day around the country.
Police chiefs, fire chiefs and hospital executives across the country share one thing in common – a subscription to Homeland Security Professional. And surgeons share one of the innumerable medical journals Nick prints – Wounds. Perhaps Publishers' most exotic publication is Bloomberg Japan (in Japanese).
Shifting from the serious to the superficial, there is actually enough demand from beauty salons around the country to warrant not one, but two, monthly magazines, Nails and Nails Pro, devoted solely to the subject of fingernails and toenails. Collectors of athletic shoes have their own magazine, Sole. And for business people running parking garages, there's the indispensable Parking Today.
While the banal subject matter of many special interest magazines might easily be dismissed, one professor of journalism, Samir Husni, has dedicated his life to these periodicals. A walking encyclopaedia of obscure publications, Husni, better known as 'Mr Magazine' (www.mrmagazine.com), believes magazines are the "best reflector of our society", and therefore worthy of critical study.
Nick Simon must be in the right business, being something of a walking encyclopaedia himself. A self-acknowledged bookworm, he read the entire World Book Encyclopaedia as a child. After graduating from Northwestern University in Chicago with a degree in history, he continued his omnivorous custom and today reads three newspapers every day, The Wall Street Journal, The New York Times and Louisville's Courier-Journal.
A risk-taker like his father, Nick runs a business built on shifting sands. The narrow readership of special interest magazines produces a substantial longevity risk in their life spans. Husni tracks over 700 magazines in his annual guide to new consumer magazines and finds that 60% fail in their first year. Only one in 10 make it an entire decade. Says Husni, "We're seeing more new startups, but we are also seeing a faster death rate."
Frugality in the fourth generation
However brief the lifespan of his products, the Simon family's business strategy is far from short-term. Nick attributes the longevity of Publishers to the "business first, family second" attitude instilled in him by his father, Frank. Frank poured all the company profits back into the business, taking risks and making smart bets. The $600,000 web press Frank leased from a bank in the 1970s (because he couldn't afford to buy it) paid off handsomely. Today Publishers is debt free and operates 21 web presses, costing between $2m and $7m each.
But that success did not translate into family largesse. "I never grew up thinking my family was rich because my father put all the profits back into the business." Nick and his brother Michael plough the majority of their profits back into the business with only modest stock redemptions each year for themselves and three other passive family shareholders.
Nick still recalls his father's frugality speech word for word. "Nick, you can't control your price but you can control your costs. The market sets the price but you set the costs." Despite this cost consciousness, Publishers retains a family culture that seems almost anachronistic in today's slash and burn corporate world. It is a family business not only in ownership, but also in workforce.
Philanthropy and the fifth generation
According to marketing director, Ned Kulka, "While family members are kept apart in direct lines of supervision, it's not unusual to find three generations of a given family working in the company. With approximately 50 married couples employed here, it's easy to play something similar to the 'Six Degrees of Kevin Bacon' game at this firm. This is a culture diametrically opposite to Fortune 500 culture."
Although the family atmosphere creates more than its share of soap operas, Nick takes a philosophical line on the matter. "It has many more positives than negatives," he says. "It's funny that my father often chastised me for being too generous and for giving too many second chances. He'd say to me: 'You have your collar on backwards.' But it was his influence that instilled both the family culture and the philanthropic bent in the current Simon generation."
Publisher's donates over 5% of its pre-tax profits to charity, particularly in the areas of Catholic education and social services for children. More unusual than this financial generosity is Nick's department of three full-time employees who spend 85% of their time doing pro bono printing for over 25 local charities. The approximate value of this service? $500,000 a year. One result of such altruism is that in 2003 Nick received Greater Louisville's prestigious Philanthropist of the Year award.
A fast horse out of the gate
Not that everything is roses for Publishers Printing. Nick has few illusions that he could ever start a company like Publishers in today's market. "Large competitors have taken a big slice out of our profit margins. Luckily our horse had already left the starting gate by the time the publicly-traded companies got into the special interest magazine niche." Still he remains convinced that his goal of $250m in annual sales is attainable.
Among the many reasons for Publisher's success – great location, great employees, low taxes, reinvested profits – ancestry plays no small part. The German Catholic character of frugality, philanthropy and attention to detail has paid dividends over the years. And perhaps loyalty should be added to the list.
As Nick says, "Companies are always wanting to buy us, but we have no intention of selling. They are convinced there must be some price at which we will capitulate, but we don't have a price." This 'no sale' approach, rooted in a reciprocal loyalty between employees and owners, has clearly proven to be a wise bet.