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Montreal, October 17, 2006 – “For
our companies, the most urgent question is: are these emerging
economies, led by China, a threat or a new opportunity for
development?”
After noting that emerging economies have been the most striking
feature of the global economic landscape of the past 10 years,
Rémi Marcoux, founder and executive chairman of the
board of Transcontinental, addressed this question before
an audience of about 400 at the luncheon held by the Board
of Trade of Metropolitan Montréal. He also noted that
he would explain “how a Quebec Inc. company like Transcontinental
is dealing with this new reality in its own industry.”
Mr. Marcoux said that China first appeared as a threat on
Transcontinental’s radar screen when some of the company’s
North American customers started to print certain products
there. Realizing that the area where China posed the greatest
threat was in the printing of labour-intensive and non-time-sensitive
products, management conducted an in-depth review of its portfolio
of activities in light of these factors.
“At first glance, the threat did not seem so big for
us, since 75% of our deliveries are time sensitive or, like
direct marketing, involve complex additional operations,”
he noted. “But for the remaining 25%, we wanted to find
out more and so I went to China with two of our senior executives.
We visited a dozen printing plants in several major cities,
talked with their managers and suppliers and met with observers
of the Chinese economy. Overall, we realized that our image
of China was outdated.”
Rémi Marcoux explained that China’s development
plan was broadly based on the South Korean model, with a focus
on technology and innovation: “In general, China is
trying to move from an economy based on cheap labour to one
based on knowledge and added value. So it has much less need
of our capital than it does of our know-how and technologies.
In terms of the printing industry, we came back with the conviction
that we would encounter increasing competition from China,
and that the most vulnerable activity for Transcontinental
is book printing, a segment that is part of our growth strategy.
So, what’s our plan?”
Mr. Marcoux then outlined Transcontinental’s response
to the situation: strengthen its position in black & white
book printing, particularly for short and medium runs (up
to 200,000 copies in the case of a bestseller like Harry Potter),
with very short turnaround times; develop very short-run digital
book printing (800 copies on average) that can be done in
under 10 days so that publishers can test the market; focus
more on niches like bestseller reprints, which are highly
time sensitive; offer more services before and after printing
to keep customers loyal; continually invest to improve efficiency
and reduce costs; and become a world leader in the adoption
of state-of-the-art technology. Plus, Transcontinental has
“permanent and sustainable” competitive advantages
that include being close to the customer and having a skilled
and dedicated workforce that can quickly adjust to new technologies.
He ended the first part of his presentation by saying: “I
do not in any way wish to underestimate the competition from
emerging economies, but I believe that Transcontinental is
in a good position to face it. “
With respect to the second half of the question, Rémi
Marcoux noted that the printing industry in China is attractive
to Quebec companies because domestic demand there will be
very strong in coming decades and the foreign presence in
this market is still very low compared to other industries.
However, China still has deep roots in the planned economy,
a legacy of more than 50 years of communist rule, and the
printing industry faces an additional obstacle: “Printed
products are the country’s primary method of disseminating
information and the government is not ready to transfer control
to a private corporation, and even less so to a foreign one.”
The audience was given a broader sense of China and its business
possibilities through video statements by five business people:
Henri-Paul Rousseau, chairman and CEO of the Caisse de dépôt
et placement du Québec; Pierre Fillion, the Canadian
Plastics Industry Association’s interim general manager
for Quebec; Alain Com-Nougué, president of Aciflex,
which manufactures bathroom products; Laurent Verreault, chairman
of the board and CEO of Groupe Laperrière & Verreault;
and Michel Tassé, president of Fertek Group, a metal
products manufacturer.
The full copy of the speech will be available on the Corporation’s
Web site at www.transcontinental.com at 4:00 p.m. today.
Profile
The largest printer in Canada and seventh-largest in North
America, Transcontinental also ranks as the country’s
leading publisher of consumer magazines and French-language
educational resources, and its second-largest community newspaper
publisher. Transcontinental distinguishes itself by creating
strategic partnerships that integrate the company into its
customers’ value chain, notably through its unique newspaper
printing outsourcing model and its value-added services. From
mass to highly personalized marketing, the company offers
its clients integrated solutions which also include a diverse
digital platform and a door-to-door distribution network of
advertising material. Transcontinental is a company whose
values, including respect, innovation and integrity, are central
to its operation.
Transcontinental (TSX: TCL.A, TCL.B) has more than 14,000
employees in Canada, the United States and Mexico, and reported
revenues of C$2.2 billion in 2005.
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For Information:
Media
Jake Brennan
Media Relations Coordinator
Transcontinental Inc.
Telephone: (514) 954-4000
jake.brennan@transcontinental.ca
Financial Community
Stéphane Milot
Director, Investor Relations and
External Communications
Transcontinental Inc.
Telephone: (514) 954-2821
stephane.milot@transcontinental.ca
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