NASHVILLE, Tenn. — A rogue wave hit Quad/Graphics Inc. last July in the form of a catastrophic fire and the sudden and unexpected death of Quad/Graphics president and cofounder Harry V. Quadracci.

Quad was able to survive that perfect storm due to extensive contingency planning already in place, said Tom Quadracci, who succeeded his brother as chief executive officer.

Tom Quadracci
President, Quad/Graphics

At last month’s Web Offset Association meeting, Quadracci recounted how Quad/Graphics, the world’s largest privately owned commercial printer, dodged disaster.

In the beginning of 2002 the economy was going into a recession, stocks were sliding and advertising was declining.

At the same time, Quad was in the midst of upgrading its flagship Lomira, Wis., printing plant, adding an HK Systems automated storage and retrieval system.

The plant, described by Harry Quadracci as “the future of Quad,” sprawled more than 2 million square feet, boasting an ASRS capable of carting (and storing) more than 32,000 pallets of printed product.

The purchase of the ASRS reflected Quad/Graphics’ policy to earmark substantial funds on an annual basis to upgrade systems and technology. The company spends about 15 percent of its $1.8 billion in annual revenues on new equipment, about triple the industry average.

The first rogue wave hit hard. On a warm July evening, a catastrophic failure occurred in the ASRS structure. In just over a minute, the entire structure collapsed; the plant’s high-intensity lighting system erupted in flame within seconds. The multimillion-dollar blaze destroyed a 115,000-square-foot, 10-story portion of the mammoth facility, claimed the life of one person and was the largest in Wisconsin’s history.

Just weeks later, the second wave hit with the unexpected death of company founder Harry Quadracci.

“Never in our wildest dreams did we expect events like that,” said Tom Quadracci.

Despite the twin blows, Quadracci said the firm met all of its clients’ obligations and deadlines.

It was able to do so, Quadracci said, because of careful planning. Among the advice he gave:

• Expect the unexpected — Quadracci credited the company’s disaster recovery plan for guiding how it would respond. “Our plant was a gravure plant and due to the high explosive nature of roto gravure we spend a lot of time working on a disaster recovery plan,” Quadracci said. Because of the plan, Quad executives and managers knew what steps to take to get the building in operation again. In fact, the part of the plant undamaged by the fire was back in operation within 36 hours after the fire was put out. “Focus on a disaster recovery plan and make sure it is current,” he said.

• Check insurance policies. “I didn’t read our insurance policy before all this happened,” Quadracci said. “There are so many things in an insurance policy that might prevent you from recovering all your losses. It pays to have someone who is an expert review the policy and make sure that you are completely covered.” Quad/Graphics carried $1 billion of insurance. “I thought that would be enough for any eventuality. However, after experiencing a major loss and seeing how insurance companies try to mitigate the loss, it’s very important to make sure that all of the smaller provisions are covered,” he said. For example, clients’ printed products might not be covered, and “because title will have passed to them they will not be able to recover any business loss,” Quadracci said.

• Create an employee succession plan — “It’s important for all key employees to have the person who will succeed them identified and have an active plan on how they are training that person [to take over if necessary].”

• Communicate — “Companies need to overcommunicate,” he said. Each Quad/Graphics employee, for example, has an e-mail address and each staff member is asked to check his e-mail daily at kiosks and terminals sprinkled throughout the plant. In addition, Quad/Graphics subsidizes the purchase of home computers. During the crisis, Quad management kept in constant contact with 1,800 employees who work at the plant. Quad/Graphics devoted an equal amount of time talking with clients; the firm’s entire roster of vice presidents, for example, was sent out to meet personally with customers. Their mission: explain what happened and how Quad/Graphics would still be able to serve their needs. Vendors, meanwhile, stepped up. Within days of the fire, paper companies shipped 38,000 rolls and 50,000 pounds of paper that would be required to reprint everything lost in the fire.

• Create a robust electronic infrastructure — Quad/Graphics’ IT policies require that all systems are upgraded simultaneously throughout all of the company’s facilities. The company also relies heavily on inventory and job-control applications, all of which allowed the firm to quickly shift operations to other plants to meet deadlines. “Our plants do not have to do anything different [than they already are equipped to do]. That really helped facilitate the recovery from a major loss,” said Quadracci. “Inventory control has to be very sound and very complete. Inventory records must be backed up. You need to know what you have in-house so that you are able to reproduce it.” In its case, Quad/Graphics knew within two hours everything stored in the ASRS. Production management applications, meanwhile, informed managers of the jobs that had to be produced first to meet customer deadlines. Managers also knew which employees were available and their skill sets, thanks to labor management software.

In 2002, despite the fire and death of Harry Quadracci, Quad/Graphics emerged from its perfect storm relatively unscathed, posting record earnings.