wfn.org | Augsburg Fortress Publishers Endorses New Business Plan

[NEWS <NEWS@ELCA.ORG>]

ELCA NEWS SERVICE

April 28, 1999

AUGSBURG FORTRESS PUBLISHERS ENDORSES NEW BUSINESS PLAN
99-118-JB

     CHICAGO (ELCA) -- The board of trustees for Augsburg Fortress
Publishers (AFP), the publishing house of the Evangelical Lutheran
Church in America (ELCA), endorsed a series of strategic priorities
aimed at positioning AFP as "the premier Christian communication
organization" and refocusing AFP's business systems "to create a
market-driven organization."
     The priorities call for Augsburg Fortress to focus on ELCA
congregations and expand to the ecumenical market, develop and launch a
new marketing effort at select consumer markets and expand through
alliances, mergers and acquisitions.  The board adopted the priorities
without dissent as "directionally correct" at its April 22-24 meeting
here.
     The board also directed AFP management "to begin timely
implementation" of the business plan.  Each priority included a series
of action steps.
     The business plan was developed by Manchester Companies, Inc., a
Minneapolis consulting firm.
     In 1998 the board directed the Rev. Marvin L. Roloff, AFP
president and chief executive officer, to work with a consultant to
develop a business plan for the publishing house.  The request resulted
from the board's concern about "excessive inventory, declining sales and
unprofitable years."
     "I think what the board did was take some very bold but necessary
steps as we look at the role of Augsburg Fortress as the publishing
house of the ELCA and beyond in the ecumenical world," Roloff said after
the board meeting. "That's big news as far as I'm concerned.  It's
challenging, but it will be very fulfilling."
     The priority to become "market-driven" resulted in some questions
from board members.  Some members suggested a market-oriented philosophy
may conflict with the publisher's mission as a church-related
organization.  Without dissent, the board decided to retain
"market-driven" when it adopted the plan.
     "It obviously calls for a shift in philosophy within the
publishing house," Roloff said. "This adds a perspective that says,
before we develop a product, we know there is a market and there is a
use for it."
     The plan was prepared over a nine-month period.  The consultants'
report included interviews with people throughout the company and the
ELCA, studies of similar companies and a detailed examination of trends
in the publishing business, said Mark W. Sheffert, chairman and chief
executive officer of Manchester Companies.
     Having a detailed business plan is not the only solution, Sheffert
said.  "The real key is execution," he said.
     "If Augsburg Fortress continues the way it's been continuing, it's
not going to survive," Sheffert told the board. "Our goal is to help
Augsburg Fortress Publishers achieve its mission.  That's what we were
hired to do.  It's not going to do anyone any good if it's not around."
     One trouble spot for the publishing house is persistent sales
declines, which have become the most significant threat to the long-term
health of AFP, said Robert McNulty, AFP vice president for finance, in
his report to the board.  AFP has been plagued by declines in sales
every year since 1990, with the exception of 1995, he said.
     "While the overall financial condition of the house remains quite
strong -- with positive cash flows, excellent liquidity and substantial
reserves available for investment in growth -- our inability to reverse
the slow erosion of market share poses a long-term threat which is
becoming increasingly significant," McNulty said.
     Recommendations in the business plan include hiring a vice
president for marketing.  A search is already under way, Roloff said.
It also calls for reorganizing some AFP staff into "strategic business
units" -- three institutional units (ELCA, ecumenical and special needs)
and three consumer units (children and families, "teens plus," and
adults).
     In addition to priorities, the plan adopted by the board suggested
business and financial goals for AFP:
     -- expansion of market share of ELCA congregations from 70 percent
to 90 percent by broadening business efforts to serve "special needs and
mega-church segments;"
     -- increase revenues per congregation by 15 percent to $6,000 per
year "by deepening penetration of AFP's existing congregational
relationships;"
     -- increase relative productivity, as measured by revenue per AFP
employee, by 10 percent to $165,000 per employee; and
     -- achieve a 10 percent revenue growth rate by 2003 with a 5
percent operating profit in the same period.
     Profits should be "reinvested into increasing the mission of AFP,"
said Bruce Senske, vice president, Manchester Financial Group Inc.
     "As a publishing house, we have not been a good steward of the
mission -- not only in dollars but in lost opportunities," said Timothy
I. Maudlin, AFP board member, Eden Prairie, Minn. "Being a good steward
is part of the mission of AFP."
     During its discussion of the plan, the board adjourned into
executive session for more than an hour.  The purpose of the session was
to discuss personnel matters, said Richard E. Lodmill, acting AFP board
chair, Seattle.  AFP Board chair Todd P. Engdahl, Denver, was unable to
attend the meeting.
     After the board meeting Roloff said he would share the plan
immediately with all AFP employees.
     "They will be fully informed, so that all understand this is the
plan of Augsburg Fortress," he said.

For information contact:
John Brooks, Director (773) 380-2958 or NEWS@ELCA.ORG
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