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Reed-Elsevierís Engineering Information Acquires API EnCompass; Parent Company Still in Turmoil
Posted On April 19, 1999
Engineering Information, Inc., a subsidiary of Reed-Elsevier since January 1998, has acquired EnCompass, the information division of the American Petroleum Institute. API's EnCompass abstracting and indexing service tracks the technical literature, patents, and business news of the oil and petrochemical industries. A major review of all operations and business strategies is under way, with changes on all fronts predicted to occur within a few months. Meanwhile, Reed-Elsevier cannot find a CEO to unify its operation.

John Regazzi, president and CEO of Engineering Information, announced Ei was "delighted to be able to provide existing and potential API EnCompass customers in the petroleum and petrochemical industries with this unique and comprehensive literature, patent, and business news service and access to the most extensive research databases available in these industries." Red Cavaney, president of API, stated that API was "pleased this arrangement provides continued service and growth to existing and future subscribers to API EnCompass databases." API began operating the highly specialized abstracting and indexing service in the mid-1950s.

The license agreement lets Ei continue to use the three database names connected with the API EnCompass serviceóAPILIT (technical literature), APIPAT (patents), and API EnCompass News (APIBIZ). Online versions of the files are currently distributed through Questel Orbit (which merges APIPAT with Derwent data), STN International, and DIALOG. EnCompass has no active CD-ROM product.

Both Regazzi and Jim Walters of API intend the change in ownership to lead to a broadening of API EnCompass' subscriber and user base. Walters stated that API just did not have the critical mass to build and grow the market for the files and to handle the new technical and marketing challenges of the rising Web. Regazzi plans to add new distribution channels, most likely including more Web presence similar to what Ei's Engineering Village on the Web now offers to the engineering market. However he also notes the new owner's commitment to "continue to serve the small but high-intensity users" of the API EnCompass files.

Searcher Nancy Lambert of Chevron depends upon the files: "I can't live without these files ... I could not do my job nearly as well without them. This is partly because of their in-depth indexing of refinery processing and petrochemistry, but it is also because they offer unique ways of accessing the patents and literature that can benefit chemical companies as well as petroleum companies." Lambert felt, however, that the files must grow their market to survive.

Past policies by the API may not have encouraged growth. For example, the API has long required all search services carrying their files to impose an unusual restriction: any user who did not pay annual subscription fees to API could only access the files for 2 hours a year. Searchers have complained about this practice for years. Other database producers in similar positions have usually chosen two-tier pricing, thus ensuring access but still motivating users with increasing usage to subscribe in order to get reduced subscription rates. We asked Regazzi whether Ei would abandon this policy. He could not answer at this time, but said that he had heard objections to the "2-hour coffin" from other users; at this point, he still had to measure how sensitive existing subscribers would be to a change.

The current re-examination of API will include re-design of the production process, including physical location. At present, according to Walters, the EnCompass operation includes 18 full-time employees and seven temporary employees. Regazzi told us that the lease for the facility currently housing the EnCompass operation in New York will end in September. At this point, they have not decided on the final location of the operation, but Ei's facility is only 10 minutes away, according to Regazzi.

The overlap between Ei's Compendex (Engineering Index) and the API files proved surprisingly small, according to Regazzi, with most of the existing overlap in the area of chemical engineering. He felt the synergies could be very powerfulóboth ways. For example, Engineering Information could contribute considerable material in manufacturing and mechanical engineering that might prove of interest to petroleum and petrochemical personnel.

Regazzi also hopes to integrate full-text input with the abstract records, e.g. Reed-Elsevier material. The Web-based Ei Village recently introduced Engineering Direct, which feeds articles from the Elsevier Science Direct Web service to the engineering community. Under Engineering Direct, users who subscribe to periodicals can gain electronic access to the same titles for a 15 percent electronic surcharge, while other users may choose to pay for blocks of articles across multiple periodical titles.

EnCompass and Engineering Information users could see new announcements of product and operational changes by late in the third quarter or early in the fourth, according to Regazzi.

"Parental" Concerns

Although operations and acquisitions at the subsidiary level continue, Reed-Elsevier headquarters still shows some turmoil. In August of last year, the Anglo-Dutch firm announced that it would unify its management structure and eliminate the two-board structure for governing the British and Dutch holding companies. To implement this change, they set out to hire a new CEO to run the unified operation. However, in the first week of April, Reed International and Elsevier NV announced that they had failed to recruit a top candidate for the new CEO job. Rumors circulate that the 8-month-old search for a new chief executive could continue late into the year.

Two members of the current board of directors, Pierre Vinken and Loek van Vollenhoven, resigned in a dispute over the hiring process. Vinken, the founder of Elsevier, was due to retire at the annual meeting April 14. Unilever chairman Morris Tabaksblat will succeed Vinken as chairman of the supervisory board running the company. Elsevier executive Roelof Nelissen will replace Van Vollenhoven as a non-executive director. Herman Bruggink and Nigel Stapleton will continue to share the CEO role in running daily operations for the company.

Rumors circulated that the failed merger with Dutch publisher Wolters Kluwer might start up again. Reed and Wolters abandoned the merger deal a year ago because of stated concerns that regulators might force them to sell off profitable businesses in return for approval for the merger. Wolters' improved profits and share prices, as well as Reed-Elsevier's continued vacuum of executive leadership, might renew merger discussions.

Barbara Quint was senior editor of Online Searcher, co-editor of The Information Advisor’s Guide to Internet Research, and a columnist for Information Today.

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