A century of paper and ink
Friesens' printing excellence -- and employees -- put Altona on the map
Sat Dec 22 2007
By Bill Redekop
ALTONA -- There are a lot of great stories about book printer Friesens Corp., which celebrated its 100th anniversary this year.
There's the story about how it became Canada's largest hardcover book printer, from such an unlikely location thousands of kilometres from its markets.
There's the story of how it reinvests $7 million a year in equipment, a colossal amount in the printing industry, to make itself the most modern book-printing plant in the world.
And there's the story about how it employs 560 people in a town of just 3,400.
But the best story may be the one you hear only if you hang around Altona for a while. It's about the lonely union reps who are sometimes assigned to recruit at Friesens.
A union organizer from Winnipeg will drive down every few years to pitch employees on unionizing. Employees will listen politely (because they're small-town folk and are hospitable to visitors), say they'll think about it, escort the union rep back to his or her car, then forget everything they just heard.
Why would they unionize? Journeymen, like pressmen, earn more than $50,000 after five years. That's 10 to 15 per cent higher than any other employees in southern Manitoba, according to a Pembina Valley Development Corp., survey. It's also higher than any competitor in the United States.
And that's before the extras. Friesens Corp., has a profit-sharing plan. It's based on how the company performs, of course. But the profit-sharing has been paying out on average about five weeks' extra salary per employee. That works out to a 10 per cent bonus.
It gets better. The employees also own the company. Repeat: The employees own the company.
A share program was implemented in the early 1980s. Only employees can own shares, so there are no outside shareholders or mutual fund managers dictating how the company is run.
The shares pay out annual dividends. Those dividends have been averaging an extra $3.5 million a year in recent times to the over 500 employees who have bought shares (they're not given away). Payments depend on a person's holdings, but they average more than $5,000 each.
Finally, there's the appreciation on those shares. Share value is based on audited book value of the company, not on public trading like a listed company. As of Oct. 31, the share price was $6.79. That may not sound like much, but the shares started out as penny stock and have split five or six times.
What it means is that some shareholder employees have done well -- very well. Some employees have become millionaires from their shares alone.
Since 1999, at least nine employees and likely more have cashed out shares upon retirement -- only employees can own shares, remember -- worth more than $1 million each. And these aren't just top-ranked executives but include guys on the floor, like paper cutters, who have been with the company a long time and who reinvested their dividends into shares. For other employees, the share program has allowed them to retire in their mid-50s. (Employees also have a pension plan and full Blue Cross coverage.)
"The people who have 'em, love 'em," said a man in the Altona Motor Hotel beverage room, referring to the shares. (Unlike some Mennonite towns, Altona not only has a beverage room and beer vendor, but wet lounges and a liquor commission outlet, and has had them for as long as anyone can remember.)
How does Friesens do it? Employee ownership, says David Glenn Friesen, the third-generation Friesen to run the company since founder David W. Friesen, and the company president who masterfully guided the company the last three decades before retiring this summer.
"We have a fabulous staff who are working their hearts out for themselves... as opposed to for some rich guy," said David Glenn. "So they're not booking off sick on Monday. They're not booking off sick on Friday. They're not putting sand in the gears. They're building a future for themselves and their families."
Wow.
People say wow a lot when they visit Friesens. The first time Great Plains Publishing president Gregg Shilliday visited 15 years ago for his Manitoba 125, a three-volume history of Manitoba, he couldn't find Friesens. He went past some buildings he assumed was the hospital and finally stopped at a gas station to ask for directions. Of course, the complex he thought was a hospital was Friesens.
Wow is what people say when they see the flawless, high-end books Friesens produces.
And wow is what people say when they step into its printing plant. The plant looks more like something out of a Stanley Kubrick science fiction movie. It's almost all white, but a matted white without any glare, and spotless.
White? Spotless? Remember, this is a printing plant and printing plants the world over are dark, dingy places with dust and ink smears everywhere and more litter on the floor than after the Shrine Circus.
"At the end of each year, we paint the walls, all the (ceiling) pipes are vacuumed, the floors are resurfaced, because it's the employees' equipment," said Curwin Friesen, the company's youthful new president.
Everything in the plant is new, too. There are six lanes of conveyor belts, each about 40 metres long, all with some component of book assemblage careering down their rubber treadmills. There are computer screens for new paperless proofing. There is a "perfect binder" purchased from Germany two years ago that lays glue down the book spine.
Then there's a large robot bought in Japan, which looks like it's right out of the old Lost in Space television show, that stacks boxes of books onto pallets. "It's to reduce repetitive-motion stress," explained Curwin Friesen.
Why does Friesens Corp. own $50 million of the best printing equipment in the world? Because it has to. Because if you're going to be located in Altona, and you expect clients in Toronto to visit and do business with you, and expect clients in New York to visit and do business with you, and in Vancouver and overseas, etc., you better not just be just another average printing plant
"I'm a big believer in (Winnipeg entrepreneur and author) Sheldon Bowles's saying, 'You got to have raving fans,' " said David Glenn. "There isn't anyone who comes here who isn't impressed."
Then you combine that with small-town service. "Their customer services is exceptional," says Altona-based writer Les Kletke, who has self-published six books, all at Friesens. "Even though I only have 2,000 books printed, they treat you like you're their biggest customer. Even the guys on the loading dock come out to congratulate you."
You'd think the ongoing technological improvement would result in mass layoffs, but it hasn't. Staffing has been pretty consistent at 560 people in recent years. The company has simply continued to grow its market. Another 100 or so people work the sales offices across North America.
The David Glenn Friesen era saw him take the company from a couple hundred employees in the late 1970s, to 675 today. He has moved the plant from a single shift, to two shifts, to 24/6 production. The plant is closed on the Sabbath.
Implementing shifts was tough, and some people left the company over it, even extended family members. It's also tough on staff, but it's the only way to maximize the returns out of the equipment, especially with the rising Canadian dollar. (A surprising number of plants in southern Manitoba operate 24 hours, like Decor Cabinets in Morden, Triple E and Lode King in Winkler and Loewen Windows in Steinbach.)
David Glenn's biggest decision was narrowing the company's production mix. It was into printing newspapers, wholesale stationery and commercial printing, as well as books, when he took over.
"If the company was to succeed, we had to specialize and we had to be in product that travelled well, and books are probably one of the best," he said.
He also developed the company's yearbook division, which has its own 100,000 square-foot plant. And he found ways to overcome the obstacles of operating out of Altona, an hour's drive south of Winnipeg.
That is, if Friesens were based in Toronto, a delivery truck would simply pick up its finished books and drive them across town to McClelland & Stewart. If Friesens were in Winnipeg, a third-party carrier would pick up the books and send them by air to Toronto, where a delivery truck would deliver them to McClelland & Stewart.
But because Friesens is in Altona, the company had to buy its own fleet of trucks to deliver books to the airport. It's the only book printer in Canada that has a truck fleet. Ten trucks go back and forth to Winnipeg all day long. For years, Friesens couldn't even get couriers to drive out to Altona to transport proofs -- a sample of the copy and layout before it goes to print.
Taxes are also higher in a small rural community because there is a smaller tax base to pay for services like water and sewers. Telephone costs are higher for obvious reasons. Friesens used to rent phone lines for $1,200 a month from Manitoba Telecom Services. And it's hard to find staff. That's one reason why wages are so solid.
However, Friesens also turns disadvantages into advantages. Because it is removed from a major urban centre, it can't farm out some processes like colouring or pre-separation or binding like other printers. So it has to do the entire process itself.
"When something goes wrong, what was happening (with other printers) was the printer was blaming the colour house if a customer didn't like the colour, and the binder was blaming the printer, and the printer was blaming the binder," said David Glenn. "We could go to a customer and say, 'If there's a problem, you deal with us.'"
Its biggest advantage, however, is staff. Every company says that today, but it's really true here. The commitment from staff is not only for what's best for themselves and their families, but for what will sustain the company, and therefore the community. Friesens is the lifeline for Altona, which plays second fiddle to larger Mennonite communities like Winkler and Steinbach.
"This company was built originally to provide employment in town," said David Glenn. "When my father and his brothers were finished, they didn't say let's take the money and split it up and let everyone else start over. Their goal was to have a healthy community.
"Whatever money the company has made has always gone back into the company. It hasn't gone to an owner and managers and heaven knows what else."
Friesens supports the community in countless ways. For its 100th anniversary, it threw a giant party attended by more than 1,000 people, with a free concert and food and handed out a new coffee-table book on Altona, and a hardcover children's book A Is For Altona. It is co-publishing the new Manitoba Encyclopedia with Great Plains Publishing. And something people will be hearing a lot more about soon is its new $1-million art gallery and sculpture waterpark that seems almost guaranteed to be a new Manitoba tourist destination.
It's also building a new black-and-white book plant, to go with its 125,000 and 100,000 square-foot plants for colour book printing and yearbook printing.
It's also headed into uncharted waters. Although his surname is Friesen, Curwin Friesen is the first president not from the bloodline of its founder. David Glenn Friesen is chairman of the board.
The timing hasn't been great for Curwin. The Canadian dollar has risen 20 per cent against the U.S. dollar in the last year, which will make past dividends and profit shares for employees difficult to maintain. Friesens has ramped up production by 10-15 per cent to make up for reduced margins, by going from 24/5 shifts to 24/6.
Curwin, 37, is a native of Altona who studied economics at the University of Waterloo, earning the Governor General's Award for highest academic average. He has also taken courses at Harvard and worked on Bay Street before returning to his hometown.
"We've been in business 100 years. We are celebrating that, but we're more interested in the next year. Longevity doesn't mean we'll be around forever," he said.
Just don't send any doomsday talk his way about how e-books are going to kill print.
"E-books most likely will have a niche in the future. But I'll remind you that when radio first came out, books were going to be dead. And when TV first came out, radio and books was going to be dead. (But) communication tends to grow, not shrink," he said.
"The Internet is a boon to us in some ways. Publishers can publish all kinds of esoteric work that they couldn't publish before because they can actually find customers for them via the Internet." New technologies are also making printing books cheaper and are allowing printers to make shorter runs, he said.
bill.redekop@freepress.mb.ca
The book on Friesens Corp.
A snapshot of Friesens Corp., Canada's largest hardcover book printer:
* Friesens prints 20 million books a year on 4,000 to 6,000 book titles.
* The company's sales gross $85-$90 million a year.
* About 48 per cent of its business was in the United States the past year.
* Friesens Corp. employs 675 people. About 560 are in Altona and the rest are in sales offices across North America.
* Friesens has sales offices across Canada, including Toronto and Vancouver. Its offices in the United States include Denver, Chicago, New York, Los Angeles, Oklahoma City, Minneapolis and San Francisco.
* It has printed 20 million copies of the Robert Munsches children's book, Love You Forever.
* Its share price as of Oct. 31 was $6.79, versus $6.20 the same date a year earlier, despite the sharp spike in the Canadian dollar.
* Ten per cent of the company's profit before taxes is returned to employees each year in a profit-sharing agreement.
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