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Vermillion, Inc.: Four years post-merger and company executives remain optimistic
By Pamela Mieth
Four years after Eastern Rainbow of Derry, NH, and Souhegan Color of Nashua merged to form Vermillion Inc., the executive management team remains optimistic and anticipates this year will bring an expansion of its technology services division and increased capabilities within its prepress and printing operations.

If all goes well, this could also be the year the company consolidates operations under one roof.

Robert Stuart Jr., son of Eastern Rainbow founder Robert Stuart Sr., and one of Vermillion’s three company divisional presidents, said the management team is carefully analyzing market needs to better serve existing clients and attract new ones.

Vermillion’s executives want to shake the economic doldrums that have plagued the industry for two years and return the company to the sales activity it enjoyed in 2000.

Stuart summarized Vermillion’s recent fiscal performance this way: “In terms of sales, 2000 was great; 2001 was weak, and 2002 was OK. I’m cautiously optimistic for 2003.

“The industry is in flux,” he said. “And we’re always looking to get better at the existing things we do. We’re trying to stay one step ahead.”

He said the company will expand its fulfillment services operations and promote its Vermillion Technology Solutions division, which offers web site design, software application design, and communication systems management. VTS generated 10 percent of Vermillion’s total sales revenue in 2002. He and his partners are also considering starting digital printing services.

Despite the ambitious plans for 2003, Vermillion remains focused on providinghigh quality prepress and printing services on which both original companies built their businesses and reputations.

An inauspicious start
The seed that has germinated into the multi-services company known today as Vermillion, Inc. was planted in the Stuart family basement recreation room back in 1976.

After years of working as a color stripper, Robert Stuart Sr. acted on a dream for many working people: he started his own company. With the help of his wife Julie, and their three children, Nancy, Julia and Robert Jr., Bob Sr. started Qualigraphics. The name was short-lived. To help emphasis the color aspect of the work, the name was changed to Eastern Rainbow.

The start-up company hired artists and together developed a technique for making flesh tones in separations, Bob Jr. said, which became a mainstay of advertising circulars for companies such as Bradlees. The company moved to Derry in 1977 and as the flow of work from Boston area advertising agencies and other clients increased, Eastern Rainbow moved 12 years later to its present 24,000-square-foot location in Derry near Interstate 93.

The younger Stuart had grown up working for his father as jack-of-many-trades, but joined the company officially in 1992 after four years of service in the U.S. Marine Corps, and time to earn a college degree. Once settled into his career, Bob took to the task of crafting Eastern Rainbow’s first formal business plan.

“In the mid-1990s we realized Eastern Rainbow couldn’t just be prepress anymore,” Stuart said. “We had to provide one-stop shopping.”

Slowly the expansion began
The company added some creative/design staff, and began to use the four-color press it had had since 1983 more routinely. Stuart said the company had used the press in-house, but hadn’t advertised it because they did not want to annoy their printer customers. As those customers expanded their services to include prepress operations of their own, it made Eastern Rainbow’s expansion into printing easier to justify.

As business continued to grow, the Stuart clan knew that one press and a lack of bindery services were not enough to last in business. In the late 1990s as they started looking for presses, they realized they would have to put an addition on their building to accommodate any grand expansion plans.
Instead, Eastern Rainbow decided to look for a partner company that shared the same business values.

The other half of the equation
Roy Simpson and Frank Shaffer had been boyhood friends in New Jersey. After graduating from the Rochester Institute of Technology, Shaffer worked at McGraw-Hill in the New York City area, while Simpson became an accounting manager and migrated west where he landed working for a Los Angeles law firm. The two remained in touch over the years. In 1983, Simpson took a vacation in New Hampshire. That time in the Granite State was the inspiration he needed for a major life change.

“I called Frank and told him I was tired of living in the city,” Simpson said. “New Hampshire seemed like a nice place. I told Frank that we should start our own business.”

Months later they bought a four-color press and, with two other employees, opened Souhegan Color. The company grew and prospered due to Shaffer’s solid technical and salesmanship skills and Simpson’s role as a “stickler for quality.” That combination helped Souhegan establish itself in the region’s marketplace as a dependable printer that could handle a variety of work. Within little time, Souhegan Color occupied a 27,000 square-foot facility in Nashua.

Neither Simpson and Shaffer nor the Stuarts realized it, but their respective careers in the region’s commercial printing industry were on parallel tracks. Over time, it was natural that the principals at both firms became aware of each other.

As the economy chugged along that made many printers flush with cash, it became obvious that there was more of the printing pie to grab. While Simpson and Shaffer knew one way to grow was through merger and acquisition, they weren’t actively looking for a partner. At least not until Bob Stuart Sr. approached them with the idea. That is when those parallel tracks began to bend and meet at merger junction.

A two-hour meeting, then a done deal
Enjoying good financial health, Eastern Rainbow had considered a few possible deals, but nothing came of those explorations. Then one day, the younger Stuart suggested that his father call Simpson and Shaffer.

The elder Stuart didn’t know the two men very well, but they knew of one another. Bob Jr. knew them casually through their reputation and through golfing events, which they always seemed to win. Simpson and Shaffer came to Eastern Rainbow for an afternoon discussion about the possibility of merging the two companies into a full-service commercial printing operation.

“We talked for maybe two hours,” Bob recalled. After the meeting, he turned to his father and said, “That’s a done deal.” It took a few more meetings to iron out financial and other necessary details.

“We liked them, they liked us and we got along well,” Simpson recalled.

In January 1999, about six months after the initial meeting, Eastern Rainbow and Souhegan Color merged.

Bob Stuart Jr. became president/prepress. Simpson was given the title of president/press; and Shaffer, president/sales. The three are presidents of their respective divisions, but report to a board of directors, comprised of themselves, Stuart’s sisters, Nancy and Julia, Bob Sr., the company’s chief executive officer who is still an active presence in the office, and his wife Julie.

“The president of the company isn’t any one person, it’s the board of directors, to whom we all answer,” Bob Jr. said, who added that some people might disagree with the management structure, “but it works for us.”

Making the merger work
In working out the merger, the new company heeded lessons learned when Eastern Rainbow bought a small company, Ultrascan, in 1997. The partners in the Eastern Rainbow-Souhegan venture first combined their operational structures, and then worked to unify the staffs.

The companies coordinated and combined accounting and business practices first, Stuart said, taking what was best from both and discarding the rest, and reassigning management responsibilities. “It was an arduous process, but we did it,” he recalled. The responsibilities have divided fairly naturally. Simpson agreed it’s been “pretty seamless. We all have respective responsibilities and don’t overlap too much.”

Working out the details and streamlining the coordination between the two facilities took up much of 1999, Stuart said, and the company was ready to begin investing in new technology in 2000.

An array of services
The executive team set its sight on expanding services. It purchased a computer-to-plate system with an Agfa Galileo 44-inch platesetter as the workhorse tool that have given printers greater control of color reproduction and help production reduce costs.

The new company kept its film processing services for clients who still work with film and use a Barco Gigasetter that provides a maximum of 63 by 96-inch film output capability.

Its biggest acquisition was the purchase of a MAN Roland 700 six-color 41-inch sheetfed press with aqueous coater and more. All told, Vermillion’s press line up includes the MAN Roland and three Akiyama 20 by 28-inch multi-color sheetfed presses.

It beefed up digital proofing capability to go along with the production power of five presses. The company has five Polaroid Polaproofs, one Polaroid Prediction, an Agfa Sherpa 43I, two Agfa Sherpa 2 proofing machines, an Agfa Sherpamatic and an Epson Stylus 3000 inkjet printer.

All major file formats are supported on both PC and Macintosh platforms. Prepress is fully outfitted for scanning and digital photography work with a Linotype-HELL Model S 3800 drum scanner, an Agfa T5000 scanner and a Scitex 342 Smart Scanner. It has the latest color management software. Vermillion uses WebNative to allow customers online access, and staff uses Agfa’s Apogee Pilot to enhance PDF workflow.

Other services offered by the combined company include color management, page/file production with expertise in market production requirements for advertising, design, book publishing, catalogs, point-of-purchase and large format work, page formatting and digital photography through strategic partnerships. The company has numerous clients that use Vermillion to manage their digital asset libraries as well.

Vermillion offers an extensive bindery operation through in-house services as well a strategic partner that includes Stahl folders (mini to map folding), 8-pocket saddle stitching, drilling to 10 holes, shrink wrapping, inline perfect binding, die-cutting, computer-controlled cutting, wafer sealing and more.

In fulfillment, Vermillion can handle data merges, personalize mailings, complete piece-work, delivery, mail management, metering of USPS permits, and special finishing applications.

What’s in a name
The merger meant a new name and a new web site were required — both of which led to bold new paths for the company.

The combined company went by Eastern Rainbow/Souhegan Color through the summer of 2001 as both names had value and they were working first to get the functional house in order. Finally, however, they were ready to create a new identity and ran a contest among employees. The winning entry came from the company’s vice president of technology, Owen Wooding, who ran across it in a 17th century poem. In vermillion, a deep red or red-orange,

Stuart said, Wooding said he saw “color, quality and the merger of old and new.” They agreed, and with the new name in hand, a new corporate identity including a web site was needed.

Stuart said the company has offered web site design services using existing staff for several years, but he wanted a fresh outside perspective for the new company’s image.

They hired Jack Perry, a web developer in Manchester who had his own company, but was struggling to keep the small enterprise afloat. Seeing an opportunity, Stuart and the others brought Perry aboard and created Vermillion Technology Services (VTS) in July 2001 with the goal of creating functional web sites for customers.

Since then, VTS has expanded to offer an array of services including digital asset management, workflow consulting and more. A year ago VTS began offering IBM products for resale, then expanded that line and also branched out into Microsoft and Oracle software products.

“It’s definitely a work in progress,” Stuart said. “We’re really looking forward in 2003 to grow that division.”

The Internet and technology services are a natural extension of being a “graphics solutions provider,” Stuart said. “If you’re just selling the brochure, you’re going to get pounded on the nickels and dimes, but if you can make it part of a larger package of materials or services, which the customer actually needs, it’s a win-win for both.”

“The challenge,” he said, “is changing the way customers — and sometimes even employees — see the company.”

About the Author: Pamela Mieth is a freelance writer in Cambridge, MA.
Photos by Dennis O’Brien.