Corporate conglomerates rule in 2006 –News commentary by Andy McCourt

Now, 210 years later as 2006 draws to a close, the individual skills that enabled our first printer to better himself, are of far less significance.

We are changing from the traditional 80/20 mix of 80 per cent small-to-medium enterprises and 20 per cent large corporates, into a split that favours the corporate conglomerate.

As more printers with turnovers between $10 million and $20+ million are incorporated into the big groups, we are seeing the gradual demise of ‘indentured apprentice done good’ print shops. These are enterprises that have grown and prospered on the ambitions and dreams of skilled printers who have created enlarged family-style businesses where the buck often stops with a guy who might be in a suit one day, and overalls the next – doing what he learnt 30 years ago; printing.

For such baby-boomer printers, now approaching retirement age, the prospect of taking some well-deserved equity out of their businesses and handing over management to a conglomerate or private equity firm is enticing indeed. As one such printer told me “I didn’t want to die on the job.”

Taking a trans-Tasman view; just look at how the makeup of our industry changed in 2006 or will change in 2007:

• Blue Star Print Group: Chaired by the canny American Tom Sturgess, today’s news CHAMP wins consolidates its trans-Tasman position as a huge, well-capitalised force in both web and sheetfed printing.
• Pacific Print Group: Now a private-equity (Gresham), controlled entity with its own group managing director, PPG ran out of take-over targets in New Zealand and has successfully incorporated five Australian businesses into its dynamic structure, the most recent being AP Mail Management. More will follow in 2007 for sure.
• IPMG: Back under Hannan family control and fiercely independent, it sold off its magazine publishing interests to News to focus more on printing activities.
• Promentum/Penfold Buscombe: under the gun from its own PE buyout offer, or is this just an old fashioned takeover. $100 million offer
• APN Print: Installed some of the most modern web equipment anywhere and opened its Yandina, Qld. Mega-site in October.
• Rural Press & Fairfax: As a spin-off from changes in the media ownership laws, these two natural allies came together corporately, creating a print and publishing empire reminiscent of Fairfax’s glory days – complete with eponymous senior exes in John B and Timothy Fairfax.
• PMP: finally consolidating its gigantic investment in new heatset web kit and settling down to work on profitability and capacity issues.

Despite the boomtime for mergers and acquisitions, private equity buy-ins and consolidation into very large printing groups, opportunities for smaller, niche operators still emerge.

There are some things that are hard to achieve in corporate environments, which often have to work to rigid systems and can be unresponsive to ‘tailor-made’ needs. Fast food giant McDonalds had to adapt to this as it watched its systemised ‘one burger fits all’ model subverted by bespoke players like Subway, Oporto and Nandos. Now, McDonalds itself offers a variety of salads and exotic choices.

The key is service – and smaller operators can service other SMEs in a way that the big groups may find hard to maintain. Smaller print buyers may feel they do not get the level of service from corporate print groups that is willingly offered by the shop with a couple of SM74s with coaters, good bindery and a ‘can do’ attitude.

Nevertheless, print capacity is moving towards the big guys. If you thought 2006 was a big year for ownership change in the industry, wait till Father Time swings his sickle and ushers in 2007!

Wishing you all my compliments of the Season and a safe, happy time with those who you love, and who love you back.