In the continuing narrative of the Hannan-owned IPMG, there’s a new chapter under way, under a new CEO. It’s just over one year since Kevin Slaven took on the top role at Australia’s second largest printing group after PMP.
The multi-million dollar enterprise is a multi-site, east coast printer in the middle of a transformation to become a marketing communications business. In an exclusive interview, Patrick Howard talks with the man driving that change.
Kevin Slaven’s progress towards his current position as CEO of IPMG is informed with a sense of symmetry. Before joining the company as Chief Financial Officer in 2000, the chartered accountant served his time in industries that are fundamental to the contemporary printing industry – IT and timber. This gave him a thorough understanding of the dynamics of information technology, as well as grounding in the politics of pulp and paper; essential qualifications for an effective print company leader.
Certainly the forthright Slaven lays no claim to being a printer, happy to leave that part of the operation to industry notable, Craig Dunsford as CEO - Print. Yet he is more than engaged with directing the company, being especially focused on the market forces that are shaping the industry.
Over the next three to five years he predicts IPMG’s revenue from printing will be matched by the company’s digital marketing business, as this becomes an increasingly important part of the Group’s service offering. Although print tonnage through the company’s massive heatset web printing plants in Sydney, Melbourne and Brisbane has stabilised and even shown a slight increase in the financial year just completed, the transformation of the media world into a multi-channel matrix means print is no longer the pre-eminent communication medium of yore.
Under the aegis of Michael Hannan as chairman of the board, Lindsay Hannan as executive director and with his predecessor, Stephen Anstice, also on the board as non-executive director, Slaven has no shortage of printing industry knowledge and experience to draw on, but I get the sense that he is most focused on what newcomers such as James Hannan, Digital COO and scion of Michael, are doing.
IPMG Digital is a growing series of businesses that consists of an award-winning digital creative agency called Holler; a data hosting enterprise, Blue Central and Traction, a digital communication business, amongst others. SBM is the evolved Sinnott Bros; a seminal prepress house that morphed some years ago into being a marketing and advertising industry production studio. All together the digital businesses currently contribute around 20 percent of the group’s revenue but Slaven is convinced the future of printing lies in being able to augment all marketing services for clients.
Catalogues open digital doors
“The important thing for us is to grow our business in areas that offer a broader breadth of offerings, which is why we invest heavily in digital marketing services business and customer engagement,” says Slaven. “There is a growing awareness within our customer base that we do have the additional services that can add to their marketing profile. That’s an educational process for our customers and one of the things I’ve been concentrating on for the past 12 months and will continue to do so as time goes by.”
Most of the customer engagement comes from IPMG’s huge catalogue printing business. It is among the top three such printers in the country – the other two being PMP and Franklin Web. It is an area where Slaven sees continuing growth.
But the catalogue business has its own challenges for printers trying to expand their offerings. As Slaven tells it, the difficulty of customers accepting the printing industry as creative partners has a lot to do with different buying departments. Creative services are sourced very differently from purchasing print. Only in retail catalogues have the two come together.
“When we first put our toe in the water around the digital side we spent a lot of time trying to sell both print and digital services to customers. But, the reality was that the buying departments within the customers were separate, totally different. Now while the marketing departments of our retail catalogue clients understand the importance of printed catalogue, they also see there’s opportunity from a digital point of view to enhance the value.
“We’re at a growth phase and looking to expand the services that we offer. Whether that be print-dominated or digital-dominated we don’t care, as long as it’s supporting the service offerings to our customers.”
Print is here to stay
The orientation of IPMG may be shifting but it is still very much grounded in print. The commissioning of a huge state of the art printing plant at Warwick Farm in Sydney’s west and the multi-million dollar investment in a new manroland Lithoman 96-page press, saw a major shift of resources and focus from the Alexandria site where the Hannan printing plant had laid the foundations of the company’s prosperity for decades. Slaven is careful to make the point that while printing is becoming a more embellished part of a multi-channel marketing mix, it still holds its own as an effective medium.
“None of this should be perceived as anything negative on the side of print, because we believe print is here to stay. It’s a fantastic medium in its own right. We view our responsibility to assist our clients to enhance the print product through additional services.
“Whilst structural change is inevitable [in printing] my general feeling is that things have leveled off fairly well. Print volumes did fall for a few years until around 2012 but since then certain sectors have grown, others fallen off. Some of that is a bit of market share we’ve picked up, but generally it’s a reflection that the market has stabilised. I’m optimistic about the future of print.”
However, he is realistic about the continuing decay of print margins and doesn’t expect any change there for some time, if ever. Print may be part of his customers’ supply chain but they too have their own cost pressures. There is no room to hike prices or increase margins in the competitive world of heatset web. This is perhaps the single biggest factor influencing investment decisions. It’s not that the company cannot afford to acquire the latest but as a former CFO, Slaven is keen to emphasise that it’s about the returns, not the technology.
“The biggest thing in our industry is that capital investment is so heavy. In order to invest in new technology that’s coming out, we have to be assured of getting a return for it. It’s a fine tuned balance between offering value to our customers through new technology and enhancements and the acceptance that we need to get an adequate return.”
He rebuts any suggestion that IPMG has a strategy of not investing in sheetfed presses because, with a lower barrier to entry in the sector, the competition is fierce and the margins are practically non-existent. What he will admit to is having no intention of increasing capacity in sheetfed in the near future.
“Sheetfed is clearly more competitive than web because the capital investment is so much lower. I think that the market has settled down quite a bit because there have been some casualties over the past few years, Geon being the most recent high profile one. Some sensibility has come back into that market. Having said that, it’s still highly competitive. While we do run our own fleet of sheetfed presses, we’re not intending to increase capacity. You’re not going to spend the investment unless you can get a return on it.”
Where digital works
The significance of the ‘digisphere’ to the future of IPMG is well entrenched in the corporate culture, but there is a good deal of caution when it comes to where digital printing fits in. For a company with such a huge stake in the market it has a relatively low level of digital print capacity. SBM was one of the earliest adopters of HP Indigo and it still produces high-end marketing material. Offset Alpine also runs digital.
Slaven has no plans to increase the amount of digital printing in the near future, despite keeping a continuing technology watch on developments overseas, saying: “Digital printing is a hard one at the moment. We haven’t overly invested [in digital] at this stage on the basis that we have enough capacity in the business. We have such a breadth of presses in our fleet. Certain jobs suit the 96-page Lithoman out at Warwick Farm; others suit the nimble M600 with coater that we’ve got at Offset Alpine. We can service any end of the market.”
He is conscious of the lower barrier to entry not only to sheetfed printing but even more so to digital. This he equates to greater competition and a sector where IPMG cannot leverage its natural advantages. “There’s a big difference between buying a Lithoman 96-pager and buying a digital press.”
IPMG and Blue Star
The industry was transfixed in recent months by the announcement that IPMG and Blue Star would merge to form the largest printing company in the region. (Currently IPMG is second in tonnage to PMP.) According to Slaven it didn’t happen because the costs were likely to prove too high and the benefits too little. But he is careful to emphasise that it all ended amicably. Even though both companies now know the other’s strengths and weaknesses, Slaven maintains that part of the original impetus to merge was the lack of competition between the two.
“We’re not really fierce competitors. We only compete in a fairly narrow band, mostly around Offset Alpine and Webstar. That was one of the original appeals.”
Now the focus is back on growing the business. Slaven points out that IPMG is, with perhaps one exception, one of the few large printing companies that is debt free and owns its own real estate. He bristles at the suggestion that it has become a cumbersome giant unable to match it with competitors.
“The simple fact is we can print and deliver anywhere. One of our competitors said recently that the big players can’t be as nimble as him. I don’t accept that, we’re as nimble as any printer in the country. The idea of IPMG as a big cumbersome printer is just not the case. That’s why we have plants up and down the eastern seaboard, so we can be very nimble and respond to our customers’ needs. And don’t forget, customers’ needs change.”
He believes there is plenty of scope for further consolidation in the industry, even among the small group of large web players. The economics are there, the difficulty as he sees it is getting the process to work.
He identifies legacy EBAs (enterprise bargaining agreements) as a symptom of the rigidity that is holding back the industry. In fact, he blames them as one of the factors that stopped the Blue Star merger and still hinder the industry’s ability to compete with overseas suppliers. “From an industry point of view, there is definitely opportunity for whole plants to close and merge. That’s a capacity issue. Within IPMG, time will tell whether that will happen or not.
“We cannot compete [with overseas suppliers] on print where there are long delivery times, our wage rates are just too high. There are still a lot of legacy EBA issues associated with our industry, which have passed down generation to generation. They make it difficult for us to compete. And, they make it a lot more difficult to perform the industry rationalisation and consolidation that I think the industry in this country needs.”
A company in transition
IPMG is a company in transformation, along with the industry it leads. It is now a very different company from where it began. “We used to have a printing business and a publishing business. We then went to a printing business and a digital marketing business. The strategy now is to effectively morph these businesses into one. We still have all our core print competencies and we’re investing in technologies but we want to enhance the experience for our customers to get to their customers.”
There are some fundamentals that will not change in the foreseeable future, even as it transforms. Slaven firmly believes in the competitive advantage of maintaining printing plants in both Brisbane and Melbourne in addition to the Sydney powerhouse. That is one consolidation that is off the table. As to the IPMG strategy of keeping separate and distinctive brands within the same group – Hannanprint, Offset Alpine, Inprint etc – he recognises that it may be something that needs to change.
“It was a deliberative strategy for many decades and proved to be appropriate and worked well. As time goes by it’s probably got less and less relevance. From an efficiency point of view it makes more sense to combine a lot more internal services so we can meet our customers’ needs.
“We’ve invested heavily in an MIS across all of our printing sites; [Technique from EFI]. That roll out is in its final stage and it means we gain all the efficiencies of one print company while still having the advantage of different brands out in the market. It’s part of meeting our customers’ needs. We’ll have to see what happens.”