Richard Rasmussen Market Watch September 2011

If anyone missed the elephant in the room, it’s the 21 printing companies that went into administration and liquidation noted by industry analyst, Richard Rasmussen, over the past four months in his regular  Market Watch bulletin. 

It's been a tough trot for the printing indusry in recent itme. I've been shocked at the number of companies falling over and going into administration. And it's not only on the production side. Some big supplier names, such as Australian Envelopes and SupplyOne have folded as well. On the production side Moore is the largest casualty, but smaller companies have felt the pain as well. Names such as Colourscan (QLD), Embassy (VIC), Supreme (WA), JT (QLD), Work and Turner (VIC) are well known companies that have fallen in recent times.

Last month the industry saw one of the region’s largest printers, Blue Star, dodge the proverbial bullet. And a close call it was. Couple this with the some major rationalising plants – see Blue Star, GEON and Colorpak. This latter is a result of its acquisition of CCH.

Suppliers have been busy on the acquisition front as well. Last month one of the largest MIS suppliers in the world changed hands – “EFI buys Prism” as did one of the industry’s major graphics software suppliers, “Platinum Equity buys Quark”.

There has also been major change in the web industry. Franklin web recently installed an 80-page Lithoman, and Hannanprint purchased of a 96-page web for its new manufacturing plant in Warwick Farm, as part of a $90 million dollar investment. Webstar, part of Blue Star NZ also recently opened a new plant in Auckland. Clearly they are confident about the future.

There also seems to be a lot of digital machinery going in. Fuji Xerox claims that it has installed 56 new 800/1000 presses since July 2010, and has four on order. That’s fairly impressive, as is the six HP Indigo sales that have been reported in the last four months. They don’t have it alone either. Océ, Ricoh, Nexpress and Konica Minolta, have reported their fair share of successes as well.

Wide format is also near the top of the installation list. There have been some major HP inkjet sales / installations. So the doom and gloom of the closures needs to be tempered with the successful positive stories.

There have been numerous sales and acquisitions. Not all of these are struggling businesses; for example many I have on my books are doing very well. Clearly there are some opportunities out there for people who want to purchase businesses. Five printers were acquired last month, and these were just the ones I heard of or have been involved in selling. I’m sure there were more.

With every closure there is also opportunity, as with some fast moving firms filling the void left by the demise of Australian Envelopes – see TMF (new manufacturing site in QLD) and Hosking Envelopes (new warehouse, envelope printing site in VIC).

At the end of the day what we are seeing are market forces at work.
What is distressing is to see the flow-on effects of the forced closures – proprietors losing their businesses and possibly homes, staff being laid off and the long list of creditors.

I think if you asked some of those proprietor’s, would you have done something differently, if you had your time over again? many would say:

• “I should have seen the writing on the wall earlier”
• “I could have done a better job of exiting”
• "I should have acted earlier”
• “I should have sought advice earlier”
• “There were alternative options that I should have explored, or known about”

That’s not to say that all could have been saved, but many could have exited more graciously and with more money for their staff, creditors and themselves.

Early detection and the hard-nosed addressing of the issues is the key. Not sticking one's head in the sand is another. Being able to accept the market realities, no matter how unpalatable the prognosis is vital. As Kenny Rodgers says, You got to know when to hold 'em, know when to fold 'em, Know when to walk away and know when to run.

The reality is that too many hold ‘em for way too long.

What many don’t realise until it’s too late is that there is a lot of value in their goodwill and client base. 75% of all enquiries I get are for client bases, usually along with some staff and frequently some machinery.

There are many instances where proprietor’s have moved into other printer’s premises, taken their clients, some staff and perhaps machinery and have come out of it very well. If done properly the creditors and staff get a better outcome. There are options out there that should be explored. The earlier printers seek help the better.

You can obtain a detailed summary by subscribing to my Market Watch bulletin, www.ascentpartners.com.au.

Later this week I will post PDFs on the site (free download) of the last three editions of Market Watch, which summarises the industry’s liquidations, consolidations, alliances, mergers and major equipment sales / installations, and businesses we have on the market.

I’m sure I’ve missed some of the major activities – so please let me know as and when these activities occur. This goes for suppliers with their major sales/installations. There have been numerous reported, but I’m sure just as many machines have gone in to the market, unnoticed.

Come on guys, let me know.