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Ask the experts: how bad is it going to get?

Wednesday, 10 December 2008
By Print 21 Online Article
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No one has a crystal ball, but everyone has their own opinions on the current financial crisis. Print21 asked some of the leading local identities to offer an insight into what printers can expect in 2009.

Here’s what they had to say …

 

Andy Vels Jensen managing director, HAN
Heidelberg is coming off the back of four or five record-breaking years for equipment sales. It has already moved to tighten up its operations in Australia and New Zealand. Vels Jensen confirms there have been some redundancies, but none in customer facing positions. The company has changed its reliance on capital equipment sales, which are likely to be most affected by the downturn. At least 50 percent of its operational costs are covered by recurring revenue from service and consumables.

“You ask me how bad will it get? I didn’t think it was going to get this bad. Nobody knows what’s going to happen but we’ve taken all possible steps to preserve the very successful business model we’ve built up over the years. Our customers come first. We’ll make sure they continue to get the best possible service and support. I only hope the finance industry plays its part.”

 


Chris Mitchell group managing director, Blue Star Print Group

The huge private equity backed trans-Tasman printer represents the new style of printing corporations. Its professional management under new managing director, Chris Mitchell, is moving to limit the damage of the recession.

“The current global financial crisis is unprecedented. Our industry like many others is not immune to the impacts of the crisis. Our customers are looking hard at all elements of their operating costs and clearly, for many, print is a major spend category. However, Blue Star remains extremely well positioned in the printing industry with our broad range of capabilities and market coverage.

“We do expect the market to remain challenging, and certainly, no company can operate in a ‘business as usual’ mode. This means we need to meet the market with an even greater sense of urgency to execute our strategic plans effectively.”

 

Nick Kugenthiran general manager of integrated sales and marketing, Fuji Xerox
Currency fluctuations are the main concern for Kugenthiran, who has overall responsibility for the company’s printing focus. He has concerns for the low Aussie dollar’s impact on imports but is confident Australia is in a better position than most to see out a downturn.

“The long-term forecast for us is about one and a half percent GDP, which gives us fairly stable consumer confidence. As an organisation, I think that Fuji Xerox is in a great position to prosper because we are leaders in the industry and I am confident we have the economic strength to overcome any challenges. The feedback we are getting from our customers is all positive and print volume is growing by 4-5 percent.
“In this time of economic uncertainty, we will be focusing our energy on developing our people capability and expanding our product and services.”


Brian Evans CEO, PMP Print

The view from the top of the region’s largest printing company, PMP Print, is one of continuing good volumes from the mainstay catalogue market in Australia. Evans claims the heatset web market is almost immune to anything other than a catastrophic economic meltdown.

“Many of our customers are from the big-end of town, and they forecast that the catalogue volumes will stay up, if not grow,” he said. Magazine volumes are under threat as sales decline but even there Evans maintains there will still be good business.

It is New Zealand’s performance that really has him worried. He points out that with the fall in house prices as the country goes deeper into recession the whole real estate printing market has tanked with 50 percent fewer heatset pages in local newspapers. But the prospects are even worse when it comes to the sheetfed market.
It’s going to get a lot tougher next year,” he warns.


Servio Notermans managing director, Océ Australia

“This is a time to use your head, not lose it,” according to Servio Notermans.

He has good reason to be bullish about the digital company’s prospects, having finished his reporting year in November with all revenue targets met. The extended range of products from the Dutch-based company means it is able to leverage its activities across many more industry sectors, such as wide format. While conceding that business conditions are likely to be tougher in 2009 he claims that there are a number of large projects in the pipeline that have good prospects to meet and exceed targets. He nominates wide format and high-speed digital colour as the fastest growing areas.

“2009 will see an increase in the number of digital machines as printers look for alternatives to offset,” he said. “I believe digital printing will grow even stronger in the years ahead and Océ will be a leader.”

David Currie CEO, Currie Group
For David Currie, proprietor of the largest privately-owned graphic arts supplier in the region, this is his third recession. It doesn’t faze him anymore, but he has moved quickly to batten down the hatches, cutting costs where appropriate. This time around he believes the Currie Group is a lot better balanced to withstand any financial turmoil, with a good spread of recurring revenue to balance any downturn in capital equipment sales.


“HP Indigo is looking at having a very good year in 2009. Our order books are healthy. People will continue to look at the digital option as well as upgrade their finishing equipment. I don’t know how long this will last but I’m glad not to have too much money invested in the sharemarket.”

He jokes that the industry now has an infallible guide to the arrival of an economic slowdown—it comes when David Currie decides to renovate his house.

Andrew Price CEO, Stream Solutions.
As chief of the largest print management company, Andrew Price is fairly sanguine about the industry’s prospects. He reckons printers have become inured to continuing crises of tough competition, falling prices and hard times in printing. The weaker companies have already exited the industry and those that remain will be able to weather the storm.

“I reckon the printing industry is battle hardened by now. They’ve been challenged by harsh market conditions and new technology for years.

Most companies have their costs under control and are running lean operations. Any sloppily run companies will hit the wall in February when the work dries up. Those that survive will be the ones that deserve to.”

 

 

Tony Alexander chief economist, Bank of NZ
“Since the collapse of Lehman Bros investment bank in the United States in the middle of September, forecasts from us economists have been decidedly downbeat—and rightly so. Economic data recently released around the world shows collapsed levels of consumer and business sentiment, falling industrial production and household spending, falling house prices, and rising unemployment.

“In the northern hemisphere banks are very reluctant to lend and the situation will only slowly change. The same goes for easing interest rates and stimulatory fiscal policy. They will eventually have some impact on consumer willingness to spend and business willingness to invest and hire but it doesn’t look like the world economy is going to be out of recession until the latter part of 2009 at the earliest.

“Businesses have to cut their cloth to suit a challenging environment.”

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