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Automation arrives for coupon printer

Cox Target Media is reinventing itself to more than double production with half the number of employees.

By PAUL SWIDER
Published July 25, 2006

ST. PETERSBURG - It looks like just a big box from the highway, but inside a printing revolution is under way.

Jim Sampey has to remind himself that he is not launching the space shuttle with the $200-million he is spending on building, training and equipping Cox Target Media's new facility off Interstate 275 in St. Petersburg - he's just printing coupons.

"This is such a dramatic business change for us," said Sampey, executive vice president for operations at Cox Target Media, which has spent the past four years engineering a new production process for the printing and distribution of those little blue Valpak coupon envelopes. "It will be a cultural change."

Considering the company prints 20-billion coupons a year and plans to more than double that with the new facility, a complete reinvention was in order.

"Our production process has been in place for 36 years," Sampey said of the company Cox acquired in 1991. "We've just thrown people at it."

The company now has about 900 employees working on production and mailing from its Largo facility and another in North Carolina. The process is a melange of machines and staffing strewn across warehouse and add-on space. An individual coupon hops from one end to the other and back round again, being physically handled as many as a dozen times before hitting the postal system.

In the new automated plant, from the time paper feeds into the printing press until the postal carrier takes the blue envelope, no human hand will touch a coupon.

"We were getting to the point where, the more we sold, the less efficient we were getting to be," said Bill Disbrow, the company's president and chief executive officer.

Once the company decided to reinvent, it went all the way, he said. "You don't get that many opportunities in our industry to be in a greenfield," he said.

With only a partly mechanized process, Valpak had employees of assorted skill levels doing mostly manual labor. Starting at about $8 an hour, the jobs were simple, straightforward, mechanical. Shifting to a highly automated system not only meant higher efficiency, it also meant the need for a skilled work force working smarter rather than harder. The new facility will more than double production, using half the number of employees.

The project is ambitious, but Disbrow said the demand in the industry is such that he expects the investment to pay for itself in six or seven years. As mundane as a coupon may seem, he said, people like them and use them. Cox has 60,000 advertiser clients.

For two years, Cox has been telling its employees of the change to come. The plant in North Carolina would close. All employees could compete for positions at the new facility, but the company would usher them through education and evaluation so the competition would be fair. All the jobs would be new to everyone, so no one had an edge.

The first hurdle was language, because English will be a necessary skill in the new environment. The North Carolina plant has some Spanish speakers, but in Largo there are 17 different languages among the workers. Cox brought in English instructors and Sampey said workers now tell of children beaming that their parents finally learned English.

The next step, which the company is just beginning, is more technical training. While some will lose jobs, salaries in the new plant start 50 percent higher and advancement is based on skill, not experience, Sampey said.

"There are going to be fewer jobs but a lot more opportunities," said John Campbell, a 57-year-old mechanic with 20 years at Valpak. "I haven't heard any feedback that people are unhappy. People are open-minded. They are waiting to see what will be available."

Sampey said it is doubtful many from North Carolina will choose to relocate, which is why the company is trying to sell the plant with the employees. It is advertising a discount to any buyer that keeps the staff.

"We say something like, 'Hire 300 people, get a plant for free,' " Disbrow said.

The change has to do with business practices, too. Cox markets the ability to target to populations of 10,000 households, a so-called Neighborhood Trade Area. In the old process, Cox would mail by NTA but print in larger batches. Now, a customer can aim a different offer to every neighborhood.

"You could always buy 10,000 from us," Disbrow said. "Now you can target 10,000."

The new system makes that possible. A laser imprints huge aluminum plates straight from a computer file. Those plates are set into one of the two new presses to run 10,000 coupons in 12 minutes before the plate is recycled.

Another plate comes into another part of the press immediately after that while the first space is reloaded. Paper running through at 2,500 feet a minute never stops. Each press consumes 12 tons of paper every hour.

The company's existing system takes four days to create a customer's product, start to finish. The new system will accomplish that in four hours.

The coupons don't ship straight to the household; the preparation to mail 500-million envelopes a year requires careful storage and tracking. At the north end of the new building is an eight-story silo staffed by robotic cranes. Running up to 30 miles an hour on a monorail in corridors the width of a pallet, the cranes pick and pack from an in-house rail system to any of thousands of shelf spaces in the vertical equivalent of 200,000 square feet of storage. Those shelves will be sheathed in glass block and the cranes lighted so drivers on I-275 can watch the process as they pass.

Display has become important for Cox because as it has created its new process, it has become aware of its uniqueness. Printing, Disbrow said, has always been a big-batch business, so Cox's small-batch targeting philosophy jarred its vendors.

As Sampey traveled the world collecting machines from Italy, Japan, Denmark, Germany and more, all those technology companies began to see the future.

"Creation of the automated document factory is what's going on in our industry," said John Lombard, president of Bowe Belle+Howell, which manufactures the collating machines Cox is using. "There is no better example today" than Cox.

Sampey said he has built a touring platform into the 10-acre building because he expects students and colleagues alike to want to see the state of the art.

"The scope of this project is absolutely amazing," said Werner Naegeli of Muller Martini, the Italian firm whose machines interface between press and collators. "This is the most advanced material handling concept ever realized. It will be a guideline for the future of the industry."

[Last modified July 24, 2006, 22:55:50]