Compatible industries help DavCo develop
DavCo Advertising Inc. in Paradise Township, Lancaster County, gives visitors a lot to look at.
There's the antique letterpress with which the late David Esh founded the company in 1974. There's an array of promotional products, from pens to apparel. And there's a panoply of print products.
It's an apt introduction to the company, which has found success in vertical integration, complementary offerings and diversification. Esh's three sons took the reins of the business about 18 years ago; Rick is president, Jerry is CEO, and Don is vice president.
In 2003, they built a 35,000-square-foot facility and moved the business there. Rick says they've seen steady growth as the business grew by word of mouth, staying in the black through the recession and now posting annual revenues of about $7.5 million. They had 47 employees at last count and recently confronted the question of whether to expand the facility or invest in equipment.
They chose equipment, buying a Ryobi 924 press to add to the Ryobi 754 that has been their flagship press for 11 years. It's not a replacement; they got it to add capacity and to be able to accept bigger jobs.
“As our work volumes grew, we were running into opportunities to bid on larger jobs” but found themselves unable to compete pricewise because of their press's size limitations, says Rick. The print market is still relatively competitive around here, he says, but since 2008 there has been quite a bit of consolidation and “we just feel like now is a good time to expand our market share.”
Currently, he says, print is about 60 percent of the company's business, but that's not just products hitting the press. Although not an advertising company in the traditional sense, DavCo offers full pre-press, design from concept services including photography and graphic design. A lot of its customers are small to mid-size businesses and nonprofits, he says, and for some of them DavCo effectively becomes their marketing company.
“We reduce steps, eliminate other parties, and that makes it easier for the customer,” says Rick. And if those print customers decide to venture into promotional productions, DavCo is happy to assist.
On many of the promotional products, DavCo serves as an intermediary, generating the artwork that goes to the producers but never actually handling the goods. The exception is apparel; DavCo has done screen printing and embroidery since 1996.
“We're seeing that division grow more in the last two years,” Rick says of the promotional products. The majority of that work is business to business, he says, and after cutting back during the recession, many companies are now starting to invest in that area again.
DavCo also has one big customer of note on the apparel and promotional side: Auntie Anne's Inc. According to Dale Smucker, vice president of purchasing and distribution, DavCo has been a supplier since 1989, when Auntie Anne's started as a pretzel stand. Today, he says, Auntie Anne's has more than 1,000 U.S. stores, and DavCo provides the uniform shirts, hats, aprons and nametags, as well as supplying promotional giveaway items.
The company has maintained its relationship with DavCo, Smucker says, “due to their dedicated customer team and commitment to response time.” And, he notes, over the years DavCo has received several of Auntie Anne's supplier awards.
Tale of two industries
DavCo Advertising has two major divisions, printing and promotional products. Here’s what their industry associations have to say about the past years.
“We’ve grown nine out of the last 11 years,” says Paul Bellantone, president and CEO of the Promotional Products Association International. “The only two that we were down were 2008 and 2009, after the recession. When we compare ourselves to other industries, the dip that we took was not as severe, and the recovery was quicker.”
That’s due to a variety of factors, Bellantone says, including a diverse customer base — if health care’s down, construction or technology might be up — and relatively low price.
“The average order size for promotional products is between $750 and $1,000,” Bellantone says. And, he says, no matter what the economic situation, people find a way to use promotional products, because they’ve found them effective. One study found that 47 percent of people keep a promotional product for a year or more, and 59 percent of those receiving the products have a more-favorable view of the company.
Ronnie H. Davis, senior vice president and chief economist at Printing Industries of America, says that, like most businesses today, printers are facing very competitive conditions for reasons including “the slow economy, competition from other printers and competition from digital media.”
“However, printing is still very much an opportunity industry for those that focus on their customers and current trends in their specific market space,” Davis says. “While the number of printers in the U.S. is slowing shrinking, there are still more printers than there are McDonald’s outlets and the surviving printers are well positioned to capture the market shares of those that leave the industry.”
Printing remains one of the largest U.S.-based manufacturing industries, with total annual shipments around $150 billion, he says. Further, printers are evolving, becoming marketing communication providers and offering integrated print solutions mixing print with other media.