Large printing companies are a good and necessary part of the industry. They have the scale and the capacity to invest in new technologies and create the jobs to employ and train the next generation of printers. They instil efficiencies in production, service the needs of the largest print buyers and, at best, anchor the printing industry as a modern manufacturing industry.
This needs to be said in the light of recent events but the issue at stake is not the size of printing companies but their ownership. The recent debacle came about as a result of investors attempting to use printing as a cat’s paw to engage in financial manipulation. The hedge funds and private equity people had no interest in running printing companies. It was a financial play, plain and simple, and as such they deserved their fate. Unfortunately they took down a lot of employees and suppliers in their fall.
Their demise clears the ground and, by and large, leaves the industry in the hands of people who intend to make a living from producing print. This is a very healthy thing. Owner-operators are the historical tradition of printing. The very name ‘printer’ means so much more than someone operating a press. It identifies the owner of the business.
Most printing businesses are small-to-medium affairs employing less than10 staff, many under five. Indeed, Clive Denholm of CMYKhub, a man who has his fingers on the pulse, tells me there are 14,000 businesses in print sales in Australia, with an average complement of 1.1 staff. These are mostly designers who have become the frontline and first point of contact for people wanting to create a piece of printing. He also quotes the IBIS statistic of 5,700 commercial printing companies.
At the far end of the scale there is IPMG, perhaps the largest printing company in the region after PMP. Certainly it’s in a lot better shape than the ailing publicly-listed giant whose share price is currently languishing around 24 cents after dipping below 14 cents early this year. IPMG is privately owned by the Hannan family who have been in the business of printing for over a generation. Their only purpose in owning and running the number of printing companies they do is to make money… from the print. Their investment in a greenfield site at Warwick Farm with a multi-million dollar purchase of two manroland 48-page state-of-the-art web presses is indicative of a long-term vision. Perceptively, Steven Anstice, the retiring CEO of IPMG, said he would not spend a dollar in commercial sheetfed printing because the market had become totally debased.
The survival, or perhaps resurrection, of Blue Star printing under the Selig family puts another family back in the saddle of one of the top four printers. For sure, Geoff Selig has private backers, everyone needs financiers, but importantly he is in control. He has repudiated decisively the strategy of being a big printing company purely for the sake of it by not taking up the New Zealand business. He ‘gave’ the ACT business to Opus. These are the actions of a printer who wants to run a profitable business, not bulk it up in order to launch it on the stock exchange, the original PE strategy.
Tom Sturgess in New Zealand is in a similar position owning the rest of Blue Star and the remains of GEON. But there are many large, efficient, profitable, family-owned printing companies in the industry… too many to even begin to list.
With the smoke clearing it is time to take stock and celebrate the end of the price war that has bastardised printing in the region for the past seven years. This is not overstating the case. The genius behind Gresham Private Equity’s foray into printing, Roy McKelvie, told me the strategy was to mop up the small printing companies. His tactics were to buy the latest equipment in order to gain the lowest production cost and then to “never be beaten on price”.
I took this to be a declaration of a price war on the industry. How long it remained the tactics of GEON is debateable after the original strategy was derailed by the GFC. But it certainly informed the corporate culture there for far too long. Owners who have a fair dinkum stake in the profitability and long-term survival of their printing companies would never adopt that kind of suicidal pricing.
It has taken a while but, with one or two exceptions, the printing industry is back in the hands of printers. Suddenly the future is looking brighter.