Chronicle trims printing contract

The Chronicle plans to cut back on its printing and has renegotiated its deal with the company that prints the newspaper.

In July 2009, the Chronicle shut down its presses and outsourced printing to Transcontinental, a Canadian company, which built a highly automated plant in Fremont under a 15-year, $1 billion contract.

Transcontinental will continue to publish the Chronicle, but will only do about two-thirds of the printing that the contract originally demanded, saving the Hearst-owned paper an estimated $30 million a year.

In exchange for the long-term savings – which Transcontinental said would come from using two printing presses instead of three to print the paper – Hearst will pay Transcontinental $200 million, according to a press release from Transcontinental.

The Chronicle’s average daily circulation has dropped from 251,782 in 2009 to 156,500 today.

Meanwhile, Transcontinental said that it will try to attract new customers now that it has additional press capacity due to the Chronicle’s retrenchment. Transcontinental’s plant at 47450 Kato Road in Fremont is only 9 miles from the Mercury News plant at I-880 and Brokaw Road.

New presses ordered for Chronicle

Montreal-based Transcontinental Printing has ordered three presses that it will use to print the Chronicle starting on May 1, 2009. As the Press Club reported in November, the Chronicle plans to get out of the printing business when its current contract with Teamster pressmen expires and turn the work over to Transcontinental, which will build a plant in the Bay Area. Graphic Arts Monthly reports that Transcontinental is investing $200 million in its new plant here and will install three Coleman XXL presses from MAN Roland. For those who love presses, here are the details Graphic Arts Monthly reported:

The presses will also be the first 6 x 2 blanket-to-blanket newspaper presses in North America. Each shaftless press will be configured with three eight-couple towers fed by four MAN Roland CD-15 XXL reelstands and operated from two Pecom control consoles, and be capable of producing 36 broadsheet pages in full process color, or 48 broadsheet pages with 24 in full color.

The outsourcing of printing is becoming more popular for daily newspaper owners. The three big national papers, NY Times, USA Today and Wall Street Journal, have been outsourcing much of their work for decades, though the Chronicle would be the largest daily to outsource all of its printing. In 2005, the 70,000-circulation Daily Breeze in Torrance, Calif., shut down its printing operation and outsourced to Southwest Offset in Gardena, Calif. Southwest also prints the San Mateo Daily Journal and the Daily News Group (Palo Alto Daily News, San Mateo Daily News, etc.) at its plant in Redwood City.

New presses to print Chron starting tonight

Tonight is the big night for the Chronicle -- the first edition to be printed by a contractor in a state-of-the-art pressroom in Fremont. Here's a link to the story. We hear that the contractor, Transcontinental, has been running test editions all week — and not just a few papers to prove that the presses work, but an entire press run of 354,752 papers.

The Chronicle has a 15-year contract with Transcon to print the paper. The value of the contract is said to be $1 billion.

As the Chronicle story noted, about 230 Teamster printers will be losing their jobs. The union was picketing the Transcontinental plant earlier but dropped the picket lines last week to allow union drivers could be trained on the pickup procedures at the plant.

Above, Carl Gisen, a pressman for 24 years, monitors sections of the Chron rolling off the presses at the paper's Union City printing plant, which is closing. (Photo credit: Michael Macor, The Chronicle.)

Chronicle to outsource printing

Chron Publisher Frank Vega (pictured) announced today that his paper is getting out of the printing business and has signed a 15-year contract with a Canadian company to print the Chronicle at a new plant in the Bay Area in 2009. Transcontinental Inc., the seventh largest printer in North America and the largest in Canada, will build and own the presses.

The story didn't say how this switch will affect the Chron's 237 unionized printers, who have been negotiating for a new contract after their last one expired on July 1, 2005, or other pressroom employees. Including the printers, the Chronicle's pressroom employs 400 to 450 people. The Web Pressmen & Prepress Workers Union Local 4N held a demonstration in front of the Chronicle on Aug. 11 to complain that the paper had not been bargaining with them in good faith and was attempting to gut their previous contract.

Transcon, in a press release, said the contract with the Chronicle plus the printing of other products at this new plant will surpass $1 billion in total revenues over the 15-year period. Transcontinental said it plans to invest $200 million in the plant and presses. A physical location for the new plant wasn't disclosed.

It's unusual but not unprecedented for a contractor to print a daily newspaper. Last year, the 70,000-circulation Daily Breeze in Torrance, Calif., shut down its printing operation and outsourced to Southwest Offset in Gardena, Calif. Southwest also prints the San Mateo Daily Journal and the Daily News Group (Palo Alto Daily News, San Mateo Daily News, etc.) at its plant in Redwood City. The Chronicle is believed to be the biggest U.S. newspaper to outsource all of its printing.

[PPC, Dec. 19, 2005: Chron may outsource printing] [PPC, Aug. 8, 2006: Chron pressmen's union to picket] [PPC, Aug. 12, 2006: Chronicle union faces Tuesday deadline]

Commercial printers move close to Merc

A is the Chron's printer, Transcon. B is the Merc.
C is the future plant of Southwest Offset.

When the Chronicle decided to shut down its presses and outsource the work of printing the paper every night to an outside company, it hired a Canadian printer, Transcontinental. Transcon decided to build its $200 million, 350,000-square-foot plant to print the San Francisco paper at 47540 Kato Road in Fremont ("A" on the map).

The plant is 41 miles from the Chronicle's offices at Fifth and Mission in San Francisco. But it is only 7.9 miles from the Mercury News press room at 750 Ridder Park Drive near the intersection of I-880 and Brokaw Road ("B").

In January, Southwest Offset Printing is moving its plant from Redwood City to a 68,502-square-foot facility at 587 Charcot in north San Jose ("C"). That plant will be 1.9 miles from the Merc. SOP will be printing USA Today, the Financial Times, the Salinas Californian, the Palo Alto Daily Post, Palo Alto Weekly, Menlo Park Almanac and Mountain View Voice from that location.

Transcon, in addition to the Chron, has picked up three editions of Metro Newspapers that used to be printed by the Merc, and is looking for more customers, according to News & Tech.

"It's slow but steady," said Transcon Operations Manager Mike Bany about the continuing maturation of the facility, according to News & Tech. He said Transcon's primary goal is the production of the Chronicle. But now that the plant's press and packaging workers have more experience, Transcon execs are ready to compete for more commercial business.

Report: Chron facing October deadline

The San Francisco Business Times reports that the new president of the Chronicle, Mark Adkins (he reports to Frank Vega), told staffers that if the paper isn't making money by October, Hearst will shut it down.

The Business Times attributes its information to "insiders."

If true, that's several months earlier than previously stated by Hearst. But Chron management told the Times that there was no validity to that date.

The Biz Times also says that the Chron is re-thinking its Internet strategy and may divide SFGate into two sites -- one that would include more links to external sources and another that would emphasize news generated by the Chron. They're discussing a pay model too.

Meanwhile, the company which is building a $200 million plant in Fremont to print the Chronicle starting in late June says "everything's on schedule."

Ted Markle, Transcontinental’s newspaper svp, tells News & Tech that it's sticking to its plans.

“We are excited and pleased about the progress we have made and the team we are building," Markle says.

“I think it’s a situation where, through this time of transition, there will be winners and losers in this industry, and because of the long-term nature of our kinds of relationships with publishers, we are going to be sure to partner with the winners," Markle says.

The Fremont plant is said to be larger than what's necessary to print the Chron, which has fueled speculation that the other big newspaper publisher in the Bay Area, may contract with Transcon to print some of its papers there as well.

Plans to outsource Chron printing on track

Despite the recession and a downturn in the newspaper industry, the company that plans to take over the printing of the Chronicle is moving forward with opening a new $200 million plant in Fremont.

Montreal-based Transcontinental on Friday reported a loss of $94 million for the quarter ended Oct. 31, compared to a profit of $38 million in the same period a year earlier. One reason it gave for the loss was the shutdown of some of its junk-mail operations in the U.S. Transcon eliminated 460 jobs at a junk-mail plant in Pennsylvania last month.

Still, Transcon chief executive François Olivier said in a statement Friday that his company will benefit next year from the 15-year contract to print the Chron.

When presses at the Transcon plant begin rolling, the Chron plans to close its remaining printing plants in San Francisco and Union City, eliminating more than 200 Teamster jobs. A Business Journal article from August points out that the 350,000-square-foot, 300-employee Transcon plant will be able to print more than just the Chron, creating some competition for commercial printers such as Fricke-Parks in Union City and Southwest Offset in Redwood City.

It's not known exactly when the new plant will open. Originally the plan was to open in February 2009, but more recently recruiting ads have said the opening will occur in the summer of 2009. The plant is being built on Kato Road near the Dixon Landing-880 interchange.

Chron printer adds Metro Newspapers as customer

Transcontinental, which opened a $230 million plant in Fremont last year to print the Chronicle, now has a second customer — Metro Newspapers, which has alt-weeklies in San Jose, Santa Cruz and the North Bay. That's according to News & Tech, a Web site focusing on pre-press and printing technologies.

Chron reaches tentative deal with Teamsters

The Chronicle reports that it has reached a tentative agreement with Teamsters Local 853 that could eliminate more than 80 of 235 jobs at the paper held by Teamsters members. The union represents delivery drivers and mailers at the Chronicle.

The 235 drivers are scheduled to vote Sunday on what was presented as the company's final offer, said Rome Aloise, the local's secretary-treasurer.

Departing workers would receive two weeks of severance pay for every year of employment, up to a maximum of 52 weeks.

The Teamsters also represent pressmen and mailers, but the Chronicle indicated that it will exercise buyout clauses in their contracts in June when the paper turns its printing over to a non-union operation, Transcontinental, which has built a $200 million, 350,000-square-foot printing plant in Fremont. By the way, Transcon is hiring.

Last month, members of the newspaper's largest union — California Media Workers Guild, Local 39521 — agreed to contract concessions that allowed for the removal of about 150 positions. Around 120 of those have been achieved through voluntary buyouts (see list at left). Layoffs are expected to be announced in coming weeks, the Chron reported.

Printing 3-D ad was no big deal

There's apparently nothing different a printer has to do when it comes to printing a 3-D ad. At least that's what the printer of the Chronicle reports after running a 3-D ad for Verizon on Friday.

"There was no problem. We just printed the files as supplied," Kathy Hunter, general manager at Transcontinental Northern California, told News & Tech. The only extra work required was inserting the glasses required to view the ad, Hunter said.

News & Tech says the Chronicle's production of a 3-D ad follows The Philadelphia Inquirer, which earlier this year published a special section with 3-D features. The Toronto Star in April 2001 published a 3-D issue, becoming the first North American paper to do so.

New Chronicle printer has a Plan B

Transcontinental, the Canadian company that's building a $200 million plant in Fremont to print the Chronicle, is prepared in case Hearst shuts down the paper. Transcon issued a press release yesterday that states, "The contract signed with Hearst Corporation provides for indemnification should the San Francisco Chronicle cease publication or be sold." In 2006, when the Chronicle signed that contract, it was said to be a 15-year deal worth $1 billion.

Hearst seeks 'significant' cost savings

Perhaps it is just a bargaining tactic with the unions, but Hearst Corp. issued a statement this afternoon saying that if it couldn't get "significant" cost savings at the Chronicle, the paper would be put up for sale and, if no buyer comes forward, the paper would be closed.

Hearst is in the process of closing its Seattle Post-Intelligencer, which has lost money since 2000, and the company has lost millions at the Chronicle.

The company did not specify the size of the staff reductions or the nature of the other cost-savings measures it has in mind.

Here's the statement:

NEW YORK, February 24, 2009 — Hearst Corporation announced today that its San Francisco Chronicle newspaper is undertaking critical cost-saving measures including a significant reduction in the number of its unionized and nonunion employees. If these savings cannot be accomplished within weeks, Hearst said, the Company will be forced to sell or close the newspaper.

Hearst said that the Chronicle lost more than $50 million last year and that this year’s losses to date are worse. The Chronicle has had major losses each year since 2001.

“Because of the sea change newspapers everywhere are undergoing and these dire economic times, it is essential that our management and the local union leadership work together to implement the changes necessary to bring the cost of producing the Chronicle into line with available revenue,” said Frank A. Bennack, Jr., vice chairman and chief executive officer, Hearst Corporation, and Steven R. Swartz, president of Hearst Newspapers. They added, “Given the losses the Chronicle continues to sustain, the time to implement these changes cannot be long. These changes are designed to give the Chronicle the best possible chance to survive and continue to serve the people of the Bay Area with distinction, as it has since 1865. Survival is the outcome we all want to achieve. But without the specific changes we are seeking across the entire Chronicle organization, we will have no choice but to quickly seek a buyer for the Chronicle or, should a buyer not be found, to shut the newspaper down.”

Hearst noted that these cost reductions are part of a broad effort to restore the Chronicle to financial health. The Chronicle has been asking its readers to pay more for the product through home delivery and single-copy price increases. In June, the Chronicle expects to begin printing on new presses owned and operated by Transcontinental Inc., which will give the Chronicle industry-leading color reproduction capabilities.

At about the same time Hearst issued that statement, the Chron posted a story at SFGate saying management will immediately seek discussions with the Northern California Media Workers Guild, Local 39521, and the International Brotherhood of Teamsters, Local 853, which represent the majority of workers at the Chronicle.

The article also notes that the expense of producing and delivering the newspaper to a seven-day subscriber is more than double the $7.75 weekly cost to subscribe.

Publisher Frank Vega said the challenge the Chronicle faces is bringing its revenue into balance with expenses so that the paper can at least break even.

UPDATE, 4 P.M.: Here's the memo that was sent to Chron employees today:

From Frank Vega, Chairman & Publisher
February 24, 2009

Dear Fellow Employees:

The rapidly declining economy, coupled with severely declining advertising revenues, is forcing nearly every newspaper company to re-think how it conducts business while continuing to serve its respective communities.

Despite all of our best efforts as an organization, The Chronicle continues to show staggering losses each week. Recent staff and expense reductions have not stemmed these losses, which are only worsening in the present economy. In response to our financial picture and the bleak economic forecast for the foreseeable future, our management team has begun a series of cost-saving initiatives designed to alleviate those losses.

First and foremost of these cost savings will be a significant reduction in force across all areas of our operation affecting both represented and non-represented employees. We will shortly begin discussions with union leadership on proposals. Our current situation dictates that we accomplish these cost savings quickly. Business as usual is no longer an option.

If we are unable to accomplish these reductions in the immediate future, Hearst Corporation, which owns The Chronicle, has informed us that it will offer the newspaper for sale or close it altogether. We know these are painful times for everyone and we face difficult choices. We share in the sincere hope that we will reach agreement with all parties involved on the concessions needed to continue to operate and provide the Bay Area with a quality newspaper.

I will update you throughout this process. Thank you for your support and good work, particularly in economic times that are difficult for all of us.

New Chron printer talking to other papers

Transcontinental, the Canadian company that plans to build a $200 million plant in Fremont to print the Chronicle, says it is talking to other daily newspapers about their printing their papers too. Transcon didn't identify those other dailies in its third-quarter earnings report but MediaNews is a likely customer.

Transcon said its planning for the plant is on schedule, the presses have already been ordered and construction will start this fall. The 338,000-square-foot plant, to be located on Kato Road, is scheduled to begin printing the Chronicle in the spring of 2009 when the newspaper's contract with its 237 Teamster printers expires. Transcon said it has launched a program called "Talent Greenhouse" consisting of group of 20 Transcon employees selected to work on the hiring of employees for the Chronicle project. The Chronicle and Transcon have said the 15-year printing contract is worth $1 billlion.

Merc boots Teamster printers

The Silicon Valley Business Journal reports that the San Jose Mercury News has issued layoff notices to 118 of its Teamster press operators and production workers. Publisher Mac Tully told the Journal that an undetermined number of those workers will be offered jobs at the company’s other non-union printing plants in Hayward and Concord. He said those who are rehired will receive compensation similar to what they receive now. The move comes two weeks after the Merc announced it would be selling its site at Brokaw Road and I-880, and print the paper at the other Bay Area plants. The Chronicle dumped its 220 Teamster printers in 2009 by outsourcing the paper’s printing to Transcontinental, a non-union operation.

What's next for the Chronicle?

With Hearst's decision to put its Seattle Post-Intelligencer up for sale (a first step toward shutting it down), all eyes are turning to the money-losing San Francisco Chronicle. As former Chron city editor Alan Mutter put it:

Given that Hearst Corp. has plowed more than $1 billion into the San Francisco Chronicle without seeing a dime of profit, it’s a fair bet that something is bound to change at my hometown newspaper. The only questions are: What? And when?

Jim Hopkins, the SF-based publisher of the Gannett Blog, does the math a little differently. He says the losses have averaged $800,000 a week since mid-2000. Some 440 weeks later, that would put Hearst's losses in SF at $352 million, not $1 billion. Either way, it's a lot of money.

Hopkins doubts the Chron will go fully digital because it is scheduled to outsource its printing later this year to a new production plant in Fremont being built by non-union Canadian printer Transcontinental.

Even so, I've wondered whether San Francisco would be the first major U.S. city to go web-only. And maybe it still will: The Gannett-controlled Detroit Media Partnership took only a partial step in that direction last month, saying it would end home delivery on all but three days of the week, probably starting this spring. Chronicle publisher Vega knows Detroit well. ... Vega surprised Gannett a year ago by luring away Bushee, who was then top editor at The Arizona Republic. Vega and Bushee have been tinkering on the paper ever since -- with plenty of help from old Gannett acquaintances. (Wink!)

Chronicle to be printed in Fremont

G.W. Schutz of the Bay Guardian tells us (see his comments under "Chronicle urged to go paperless") that Transcontinental, the Canadian company which has a contract to print the Chron starting in 2009, intends to build a 338,000-square-foot plant on Kato Road in Fremont. Schulz says his information is from a Chron source.

Chron Publisher Frank Vega announced last November that the paper planned to outsource its printing to Transcon under a 15-year contract worth $1 billion. Transcon would take over the printing when the Chron's current contract with its 237 Teamster printers expires. Transcon said at the time that it planned to invest $200 million in the new plant and presses. In April, Transcon announced it has bought three presses from MAN Roland, each capable of producing 36 broadsheet pages in full color or 48 pages with 24 in color.

Hearst bets $60 million on print's future

Will the printed word die anytime soon? Hearst Corp. is betting it won't. The owner of the Chronicle (as well as lots of money-making magazines and TV stations) is plunking down $60 million to buy a new press for its Albany, N.Y., Times Union newspaper. Why does that matter to anyone in the Bay Area? The Chronicle, which lost about $1 million a week from 2000 to 2006, has signed a contract with Canadian printer Transcontinental to take over its printing 11 months. Transcon is building a 338,000-square-foot plant on Kato Road in Fremont. Construction is under way and Transcon is recruiting workers.

Chron unveils redesign -- it's all ragged right

The Chronicle showed off its new look to readers this morning. It has replaced its headline and body copy typefaces, switched the body copy to ragged-right, and has added 0.5 rules in column gutters. Between stories are three horizontal rules. The headlines are now in serif type and a bit less dense than before.

In a note to readers, Editor Ward Bushee said the changes make the Chron easier to read and navigate "while retaining its distinctive, classic character." The changes were also made in anticipation of the Chron's switch to new presses in June. The paper will not renew the contract of its approximately 230 Teamster printers and instead will outsource the work to Transcontinental, a Canadian company that has built a plant in Fremont with state-of-the-art presses.

Starting Monday, Bushee said the Bay Area section will be combined with the Business section, which will start on the back of that section every weekday. Business has been on the back of Sports on Monday and Tuesday.

Editorial and opinion pages will move from the Bay Area section to the A section, similar to a move the Merc made in the past year.

Bushee also discusses the paper's financial situation. "The Chronicle is losing large sums of money each week and has been for some time. The primary reason for this is a decline in advertising revenue, which once supplemented the cost of producing a newspaper. Few readers realize that it costs more than $10 to produce and deliver each copy of the Sunday Chronicle." (Photo credit: Mike Kepka, Chronicle)

Merc may move some of its operations

Another MediaNews Group newspaper may be moving to a smaller home. In the past couple of years, MNG has relocated the San Mateo County Times, Oakland Tribune, Santa Cruz Sentinel and Palo Alto Daily News to leased locations. Now it appears the Mercury News may be next.

Publisher Mac Tully says he has hired a broker to sell the paper's headquarters near 880 and Brokaw Road. The Merc has operated out of that location since 1966.

A story Friday indicated that the Merc might move about 400 of its employees to a new location and keep its printing presses and other post-production equipment on the current site, which is about 32 acres.

A constant rumor, however, is that the Merc is looking to move its printing to the new plant that Canadian printing company Transcontinental is building in Fremont to service the Chronicle. The plant is larger than what the Chron needs, which has fueled speculation that one or more MediaNews papers might be printed there as well. (See item below.)

Tully said the Merc could either sell about two-thirds of the site, or sell the entire property and lease back a third for the production facility. An adjacent 18-acre property was sold by the Mercury News' previous owner last year for about $27 million. That property is now being developed for a new Lowe's home improvement store. (Photo credit: AP, Mario Jose Sanchez, Dec. 4, 2006)

Chron pages become 1 inch narrower

The new Chronicle came out today — the first edition printed on a contractor's presses — and, as the SF Weekly observed, the paper was an inch narrower than before. The Merc and other MediaNews papers went to a narrower size last year. The SF Weekly's Joe Eskenazi writes:

If any of the Chron's orgiastic coverage of its own doings mentioned that the new papers are noticeably physically smaller, well, it escaped us. In any event, the new-look Chron is 10.5 inches wide; last week's editions were just shy of a foot wide. Papers growing smaller as a cost-saving measure is not an exclusive Chron story -- but it sure feels disingenuous for the paper to tubthump that its new pages have sharper photos, don't wrinkle up, cure eczema, and are a part of this healthy breakfast and not mention this extraordinarily relevant detail.

Above is a video the Chronicle produced about the new presses it will be using at contractor Transcontinental in Fremont, and here's the story in today's Chron about the switch in presses.