Fairfax plan to shut down Chullora newspaper printing

A leaked memo from Fairfax management sets out plans to shutter the massive printing plan with the loss of 100 jobs, according to internet news site, Crikey.com.

The bombshell confirms the company’s intention to either share rival News Limited facilities or, failing that, to develop a smaller printing site of its own.

Executives of the nation’s two largest newspaper groups have been meeting secretly for months, amid much industry speculation, to discuss the viability of a joint print venture. Fairfax has also met with APN about a possible New Zealand print merger. According to the Crikey report, News Limited has said any speculation of an imminent agreement is incorrect.

The possibility of sharing production facilities in Sydney and Melbourne has long been high on the newspaper companies’ wish list. With falling circulations and reduced advertising the business model of the dailies is under pressure.

However sharing presses and distribution infrastructure is fraught with problems, not least centered on which masthead gets the first copies off the presses when there is a scoop to be had. Similar moves have fallen short before, but the economic pressure is steadily increasing.

The latest news follows Fairfax Media's full-year statement, which revealed a goodwill write-off of $650.7m that pushed the group into a post-tax loss of $400.9m. A staggering figure when compared to the media groups $270.3m profit last year, yet sales and earnings remained stable with falls of 0.6% and 5% respectively.

Greg Hywood, Fairfax’s chief executive maintains the years after tax loss is due to substantial impairment and restructuring charges. “The vast majority of these charges are of a non-cash nature and have no impact on the operating strength or debt levels of the company.”

“We have recently launched a major cost reduction program that will further enhance our operating performance. We have looked very closely at all the processes and functions undertaken within the company and I am confident that over the next two years we will be able to reduce costs by at least $85 million.

The two-year cost reduction plan reflects the papers timetable to reorganise its metropolitan business model. The company has also racked up $23.9m after tax in restructuring charges this year. The Chullora plant has produces the Sydney Morning Herald, The Australian and The Australian Financial Review as well as the weekly Sun- Herald.

APN has also started to rationalise its newspaper operations, consolidating production of two of its QLD daily titles out of Bundaberg and Mackay into Yandina and Rockhampton early next month. This year the trans-Tasman group has reduced its Australian regional division headcount by seven per cent.

One of the biggest newspaper print sites in the country, Fairfax’s Chullora site prints around 13 million newspapers and sections each week. It also employs 230 permanent full-time staff and 140 casuals. The heavily unionized workforce fears mass redundancies are on the cards.