Nothing beats high-speed web printing for sheer power of performance. Big offset presses, several stories high, pounding through the night turning out massive numbers of printed newspapers, magazines, and catalogues is validation beyond question of the power of printing. It is a highly capitalised, highly competitive sector, with barriers of entry so stringent there will be few if any new entrants. With a new big manroland Goss Lithoman about to land for Ovato later this year Patrick Howard reviews the web landscape.
Something had to give. Three years ago there were five major commercial heatset web printers locked in a ferocious cost cutting battle; PMP (now Ovato), IPMG, IVE Group, Franklin Web and AIW. They were a combination of old-fashioned familyowned businesses and publicly listed companies all competing at the bleeding edge of margins. Stealing magazine and catalogue volumes from one another on price was a death spiral that could only end in failure. Something had to give.
As always overcapacity was blamed for the attack prices. It made sense to keep the massive presses running, even if the prices achieved barely covered costs. Bidding against one another, the only winners were the magazine publishers and the big catalogue clients. The catalogue sector has an estimated overall volume at around 400,000 tonnes per annum, which has proved relatively stable.
Ours faster than yours
Larger-than-life owners and operators revelled in a high-octane mix of ego and ambition, battling over who would come out on top. The prize was the dominant role in the highest stakes game in town. The tension could not have been higher.
In Sunshine, Victoria, Phil Taylor presided over Franklin Web, a third generation printing business founded by Len Taylor in 1936. Widely recognised and respected as a smart operator, if irascible bloke, he held a significant, if not dominant role, in catalogue printing. Engaged in a high-stakes investment game of one-upmanship as new multi-million dollar presses were introduced by his competition, he faced off primarily against Peter George, managing director of publicly listed PMP, and Michael Hannan, chairman of family-owned IPMG, both larger companies run by ambitious and powerful identities.
Then in 2017 it all changed. IPMG (Independent Print Media Group) merged with PMP in what essentially proved to be a reverse takeover. The ACCC took a good long hard look at the two largest printers in the region joining forces. The deal got the thumbs up, reversing a decision taken more than a decade before. As the major domino fell it set off a whole string of mergers and acquisitions.
Geoff Selig, scion of a leading print family in NSW, had taken his diversified marketing services business, IVE Group, public two years before in prescient anticipation of just such an event. The company’s web business was based around WebStar, a Silverwater-based web printer with a significant share of the heatset magazine market. In taking IVE public he raised sufficient capital to be able to pay a mix of equity and debt of $116m for Taylor’s Franklin Web, as well as buying out Melbourne web printer, AIW.
Charles Garrard, AIW chairman at the time, said the company was not immune to the effects of overcapacity in the sector.
For Taylor it put him on an equal footing with his adversaries. Before stepping back from day-to-day involvement he encouraged the expansion of Franklin Web to a greenfield site at Huntingwood, in Sydney’s west. IVE Group, as one of the big two, was now a fitting competitor to PMP, which this year rebranded itself as Ovato. Between them they account for 95 per cent of the lucrative catalogue market.
Web printing is all about the machinery. In the past decade the industry has seen 48-page presses trumped by 64-pages, then to 80-pages and latterly the largest in the country, a manroland Goss 96-page Lithoman press. The price tag has similarly climbed with the latest Ovato addition reported to be costing in the region of $24m. Following the frenzy of consolidation, IVE Group emerges with three plants. A new Rotoman 65 web powers up the Web Star magazine plant at Silverwater, along with a Heidelberg Sunday press transferred from the closed AIW plant in Melbourne.
The catalogue printing Franklin Web site in Sunshine now boasts a big Goss 80-page, once the largest presses in the country, that also came from the closed AIW plant. It takes its place alongside two 80-page manroland Lithoman presses and a KBA Comet. This latter stands as an aberration in the sector, one that Phil Taylor was ambivalent about for many years.
The decision by IVE Group to expand the Franklin Web brand into Sydney with a $50m site at Huntingwood is in response to the need for a national footprint to service the massive Coles catalogue contract it won from Ovato. Two brand new 80-page manrolandGoss Lithomans represent a massive increase in capacity in the sector. They print in a near ‘hands off’ automated environment, in what industry observers are pointing to as a new era in printing production. Operating 24/7, the plant is able to churn out four million pages an hour, under the supervision of just ten staff. There is one printer for each press per shift with another switching between the two.
IVE’s new Huntingwood plant forced Ovato to revisit its press investment strategy. Despite having previously said there were no new presses on the horizon, a new manroland Goss Lithoman 80-page web is due to go into Warwick Farm at the old IPMG site mid-year. It will lead to the retirement of five older web presses, transforming the plant to a similar level of automation as its rival.
It may seem counter intuitive to be buying new presses while blaming over capacity for the sector’s problems. However the new generation presses are faster, more efficient and productive. The name of the catalogue game is cost per page, and to compete requires the latest technology.
As the two big groups in the heatset web-printing sector settle down for some serious long-term competition, it’s worth remembering there are still alternatives. Spot Press (see story p19) in Sydney is not about to invest in a new press, but its Goss press power is perfectly capable of pumping out quality colour heatset newspapers, magazines and inserts.
Sydney-based Access Print Solutions bought Graphic Print Group, the SA Cadillac Printing business, in 2015. Its GraphicWeb business provides a useful regional resource for local catalogues, newspapers and magazines.
Then there are the big newspaper plants that have largely converted to heatset presses. They produce their own magazines and inserts and also compete for commercial work. Their presence, as much as anything else, means the ACCC has no concerns about a lack of competition in heatset web printing. It may not be a zero sum competition anymore but it’s still one of the fiercest fought.