Author Archive

  • ‘There but for the grace’… reflections by a Melbourne printer on losing of his business.

    The collapse of your company, something that you have put your heart and soul into, as well as 60 to 70 hours a week for over 20 years, unleashes a myriad of feelings and emotions.

    First there is the depression of losing what has been your ‘baby.’ Something that you were so proud of, something that you nurtured from its infancy, something that you watched with pride as it grew employing many new staff,

    Then it is gone!

    The administrator says thanks but we don’t need anything more from you. You go home and then what? You feel you have let down your staff, some of whom have worked with you for over 20 years; your suppliers, many of whom have become ‘friends’; as well as your family and lastly yourself.

    Your dreams are gone!

    Once you have got over the initial shock and managed to partially drag yourself out of the very dark place you found yourself in, you start to think ‘what am I going to do now? The only thing I know is the printing industry.’

    You are over 60 and it’s too late to start again, and with all the vitriol that has been going around about your failure, nobody in the industry wants to know you. Your ‘friends’ have disappeared completely. Whether they were staff, suppliers, accountants or just acquaintances, the phone is dead. There is nobody who wants to give you a pat on the back and say everything will be OK, no calls to say how about doing some work with us? Not even a quick call to see how you are going.


    You sit back worrying where you are going to get money to put food on the table at the same time as the bills and demands pile up. It can take years for the fallout to be finished. Gradually you can see a path ahead, but that path doesn’t include any of your old friends.

    So before you all jump into the feeding frenzy of picking over the corpse of one who stood among you for many years, think … ‘There but for the grace of God go I.’


  • Remember This? PMP sheetfed boosts Promentum revenue – March, 2006

    Print21 is the longest running online news service for the Australian and New Zealand printing and graphic arts industry. Take a trip back in time and check out a selection of history highlights from our unrivaled news archive. This month eight years ago Promentum marked the purchase of PMP’s sheetfed division and celebrated soaring profits.

    Originally published 16 March 2006

    In the face of what it terms “subdued market conditions”, Promentum secured sales of $90.6 million in the first half of the financial year, up from $65.6 million for the same time last year. Profits also leapt 31.8 per cent to reach $5.5 million, up from last year’s result of $4.2 million.

    Alistair Hill, managing director of Promentum, attributed the revenue and profit gains to its purchase of PMP’s sheetfed division, as well as to a number of new blue-chip customers across the financial services, automotive, gaming and entertainment and consumer products sectors.

    “We have successfully integrated the recent acquisitions and established a very strong base from which we can expand over the next two years,” says Hill. “The widely reported subdued, but highly competitive market conditions, have not greatly affected our performance.”

    The company confirms it will continue to pursue acquisitions, with the strategy underpinned cost control and rationalisation of its operations.

    “Promentum is in a good position to take a leading role in the continuing rationalisation of the Australian printing industry, as scale and investment in new technology and equipment is required to stay competitive.”

    As part of this investment, Promentum installed a 10-colour perfecting press into its NSW premises in January, replacing two old presses, and in the same month commissioned a second-hand 10-colour press into Queensland. The company’s purchase of the PMP Digital Print Centre in Melbourne in August last year saw it extend into digital print.

    Hill points to his company’s extension of its print management capabilities as an area that will deliver significant growth in the future, claiming both its RT Kelly and our Penfold Buscombe businesses are picking up steam.

    “Many companies are outsourcing the management of their printing jobs in an effort to contain costs,” says Hill. “We expect that this segment will continue to grow over the next few years and are well positioned to share in this expansion.”

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  • Remember this? Pacific Print Group gets new name – GEON – Feb, 2007

    Print21 is the longest running online news service for the Australian and New Zealand printing and graphic arts industry. Take a trip back in time and check out a selection of history highlights from our unrivaled news archive. This month seven years ago Geon was at the peak of its power, pulling in more businesses under its banner, and revenues hitting $200 million.

    Originally published 15 February 2007

    Trading as GEON, the company will continue to allow its 12 subsidiaries, on both sides of the Tasman, to retain their individual names and management. GEON subsidiaries include: Agency Printing; Albion Graphics; AP Mail; Bays Press; BFG; Business Print Group; Brebner Print; Graphic Print Works; Graphic World; Impact Printing; Kiwi Labels and Printco. If the likely takeover of Promentum goes ahead in April it will add another batch of names to the GEON coat of arms.

    “As a brand, GEON is strategic, visionary and progressive in scope and will enable us to move forward with a unique offering focusing on providing customers with quality, service and security of brand in what is a highly fractured print and mail management industry,” said Gordon Towell, group chief executive.

    Employing more than 800 staff, the company recently won a $127 million battle for Promentum. Currently GEON generates an annual revenue of AUD$200 million.

    Towell said that he hoped the name change would strengthen the company even further. “The GEON Group will now aim to reshape the print and mail industry by combining the passion, skills and specialist resources of our employees, thereby providing a single integrated end-to-end solution in print production and delivery,” he said. “GEON will also provide the security of a full service offering within the one organization, reducing the potential dangers of multiple external suppliers and guarding client’s brands.”

    For those wondering where the name came from and what it actually means Wikipedia has an answer. Geons were chosen as a leitmotif for the company, to reflect its one-stop shop capability for providing print and mail services and material.

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  • Remember this? HP aims to be Number One in graphics market – Feb, 2004

    Print21 is the longest running online news service for the Australian and New Zealand printing and graphic arts industry. Take a trip back in time and check out a selection of history highlights from our unrivaled news archive. This month ten years ago, HP first took up arms in the graphics arts and declared its intentions to be the top player in the graphics market. Still fresh in the Indigo driver’s seat, HP came out swinging with it’s own ‘mini-drupa’ to launch its first HP Inidgo digital press, the 5000. The rest, as they say, is history…

    Originally published 12 February 2004

    Hewlett Packard has finally declared its goal position in the global graphic communication market.

    “We want to be number one,” said Executive VP, imaging and printing group Vyomesh ‘VJ’ Joshi.

    Two years after its take-over of digital pioneer Indigo, HP has its “ducks in a row,” and is ready to do battle with Xerox, Canon, Heidelberg, Kodak and whoever else has staked a claim in the digital print market.

    In a fully operational demonstration of all of its sheet and web presses, HP presented a ‘mini-drupa’ to the world media ten weeks before the real thing. With offerings that encompass toner, inkjet and liquid electrophotographic (formerly Indigo ElectroInk), technologies, HP is positioned to place digital image output devices at just about every level of the industry. Clearly, a lot of behind-the-scenes thinking and R&D has happened in the past two years.

    First all HP-Indigo machine rolls out.

    The HP Indigo 5000 is the first press that is 100% a result of the HP-Indigo cooperation, which actually began well before the take-over. Capable of printing 4,000 full colour A4 pages per hour, it images on virtually any substrate up to A3+. Great strides have been made in colour management with a fully configurable ICC-based system and HP’s own ‘CMYK Plus’ technology for extended gamut, automatic PANTONE replication and colour consistency across the range of other HP devices including large-format inkjet.

    A three-tray paper feed system can be expanded to six or more and the delivery pile can take up to 6,000 sheets. Image quality is indiscernible to offset, the liquid ink makes sub-micron pigment particles possible. This is one for commercial printers to take very seriously. It will be launched first in the USA and Europe at around US$450,000, with Australian shipments expected by early 2005, according to local and Asia-Pacific manager Michael Mogridge. “If Australian printers who see the 5000 at drupa want it badly, we would recommend installing a 3050 and then upgrading when we can fulfill orders,” he said. The 3050 is essentially an improved 3000 using a series 2 engine.

    Taking on Xerox and Canon.

    The second surprise is HP’s entry into the highly competitive production colour copier/printer market with the HP Color 9850mfp. At 50 pages per minute in full colour, this toner-based unit is aimed squarely at the Xerox 2060 and Canon CLC markets, namely quick printers, copy shops and medium-to-large corporates. A range of finishing solutions is offered and it is rated at 150,000 pages per month duty cycle. Optional EFI tools, workflow and colour management complete the offering.

    Coupled it with the closely-named 9085mfp, an 85 ppm mono copier/printer and HP has a complete document offering in the toner sphere, with small footprints and plenty of grunt for all but the largest quick printers and copy shops. Interestingly, two 9085mfps can be run in tandem and jobs distributed evenly, doubling print output to 170ppm, well into DocuTech territory!

    The range of HP digital imaging devices now covers low volume colour lasers and inkjets, large format inkjet, commercial sheetfed machines and industrial web digital presses. Add to that scanners and a 5.2 megapixel digital camera, pre-optimised for print reproduction, and you can see this is a serious assault on the market.

    HP generated over US$73 billion in sales last year. Anyone doubting its resolve to carve out a healthy share of the commercial digital print market should reserve judgement until drupa, and visit them in Hall 4, stand 4c23 where HP will have its largest display ever at a graphic arts exhibition.

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  • Currie sits HP Indigo operators up near the teacher

    A multi-million dollar dedicated training facility for HP Indigo operators is a major addition to industry infrastructure. Kitted out with two HP Indigo presses and certified by HP, the standalone facility near the Currie HQ in Hawthorn Victoria is redefining digital print training in the industry.

    With the ability to control enrollment numbers, Currie Group is ensuring every operator gets to sit up near the teacher in order to get the very best learning experience. According to Phillip Rennell, sales & marketing director, the establishment of the training facility is primarily in response to the needs of customers.

    “Customers want their operators to be effective quickly so they can maximise opportunities. We looked at the options of training on site or in demo facilities, but decided that a dedicated training facility would allow us to deliver a more comprehensive and thorough curriculum that would meet our customers’ expectations,” explains Rennell.

    Trainer Alain Barel shows the class the inner-workings of the HP Indigo

    Alain Barel, formerly with HP, heads up the Centre. He was the educator who set up HP’s Centre of Excellence in Singapore, the company’s major training facility in Asia. HP has certified the Currie Centre, which means that anyone who successfully completes a course is qualified to work on a HP Indigo press anywhere in the world.

    “The HP certification is very important to us because we want to make sure that we stay within the HP framework, which is recognised and respected. And our customers want to know that they have a trainee who is HP certified. We have to pay for that certification, but that is an investment we wanted to make.”

    Setting up the Currie training facility was not a cheap exercise, and Rennell says there are ongoing costs with ensuring that the technology is current and that trainers are kept up to date. “Our commitment is not just to set up the facility, but to make sure that we are at the leading edge of training and that means investing in our own trainers by sending them overseas on courses.”

    The Centre offers a variety of training packages from standard and advanced operator training to higher levels. “It’s a structured program that is part of a curriculum that HP has developed. In addition to standard models we have additional levels of training that we can provide, which give operators a level of independence beyond the basics.” That level of independence enables “shared maintenance,” which Rennell says allows operators and Currie’s qualified engineers to work more closely in diagnosing problems and finding solutions.

    The Training Centre has been designed to allow for future expansion. Rennell says that when the user base of customers expands in the B2 and label press segments it may warrant the installation of other machines and the implementation of dedicated training programs for these product lines also.

    “The B2 space is still fairly new, so training for these machines in the short term will continue to take place at one of the HP dedicated training facilities of which there are only a couple around the world. Longer term, as those models start to proliferate, we will have greater need for more training courses and therefore the investment will be able to be recouped,” he said.

  • Rollers set for shake-up – Print21 magazine feature

    The offset roller business is not one that regularly makes the headlines but with the entry of US giant, RotaDyne, into the local market, this key component sector looks set for a shake-up. Alison Stieven-Taylor examines the changing dynamics of the local supply scene.

    In what is likely to be a positive move for manufacturing in Australia, US roller company Rotation Dynamics Corp (RotaDyne) announced late last year its decision to acquire two local roller businesses, Ace Rollers/Rollmakers, giving it an Australian base for the Asia Pacific region.

    According to industry sources, RotaDyne had been looking for some time for an opportunity to set up a manufacturing facility in the Australian market where its rollers are distributed by Heidelberg under that company’s Saphira consumables brand. According to US-based president and CEO, Tom Gilson, RotaDyne sees Australia as a viable manufacturing base in which “to grow our business… and to further expand into other industries in the Asia Pacific region.” This is good news for local print service providers.

    But in a contracting market like print, another player, especially one with close ties to major press manufacturers, is bound to shake things up amongst the suppliers.

    The roller market in Australia has been serviced for many years by only a handful of companies. Brissett Rollers, founded by Terry Brissett, is the longest standing printing press roller manufacturer and supplier in Australia. Alongside Brissetts, German giant Böttcher is also a major supplier locally and is recognised as the largest manufacturer of rollers on a global scale. And now there’s RotaDyne, a heavy hitter with a presence in more than 50 countries and a vast range of roller products for all sorts of applications.

    “We have a long tradition of investing in R&D,” Mitch Mulligan, Böttcher Australia.

    Local legend

    The elder statesman of the roller industry in Australia, Terry Brissett, has been supplying the local market since 1960. The company’s success is largely attributable to his technical capacity to develop solutions for various roller applications, as well as a personal approach to service. The company has a manufacturing site in Sydney and national representation.

    Brissett Rollers has experienced the highs and lows of the printing industry, in its halcyon days employing more than 100 staff and manufacturing for the region. Today, its staff of 40 services a reduced client base, reflecting the changes in the print sector. For many years, Brissett Rollers had the market sewn up but the entry of other players has eroded market share, says Terry Brissett matter-of-factly, as has the continued attrition of print businesses.

    “We are still very strong in newspapers and the web area and we do that very well, but I expect these segments will continue to decline also,” although he asserts that the downturn will bottom out and “newspapers won’t go away completely”.

    Given Brissett Rollers’ longevity, I am curious to know if RotaDyne made an approach before acquiring Ace. Brissett confirms there was interest. “But there are always three or four people interested in our company. Interested is one thing and going ahead is another, especially in the print market, where nothing is concrete.”

    Anticipating further contraction in the print roller sector, Brissett Rollers, like its counterparts, is expanding its range to encompass other industrial markets.

    Made in Melbourne

    Since December 2012, RotaDyne Australia has been operating from its new Australian manufacturing site in Cheltenham, around 20km south-east of Melbourne’s CBD, in what was the Rollmakers plant. The company has already invested in updating the Cheltenham site with further improvements and additional process machinery including state-of-the-art quality testing equipment to be installed later this year.

    RotaDyne currently operates manufacturing facilities in Europe, Asia and across the US. As a major manufacturer, it is one of the few international companies that can control all phases of manufacturing, producing a diverse range of roller and rubber-compound products. The company’s new Australian managing director, Angus Scott, former owner of Ace Rollers, says: “The decision to manufacture in Australia was made to give a no delay service to the local print market. This includes common type press rollers as well as rollers for other industries such as wood, metal, glass, board, film, food and so on.”

    This diversity reflects Ace’s supply channel which includes light industrial markets as well as the printing industry.

    Scott continues: “The confidence by RotaDyne Corporate to invest in manufacturing in Australia exhibits strength in commitment, knowing that customers benefit in service levels and flexibility by using locally manufactured products. We at RotaDyne work closely with our customers, bringing the skills of our people, with the latest technology, to work as a team so as to offer solutions which meet exacting specifications. We have the ability to adapt to the ever-changing market and intend to take a larger share.”

    RotaDyne is a member of the Global Roller Technologies Group which consists of more than 50 manufacturing facilities located in the US, UK, Germany, Canada, Mexico, South America and Asia. It also has ten R&D facilities around the globe. Tom Gilson says the acquisition of Ace supports the company’s global philosophy to manufacture locally.

    “Our investment in Ace is another example of our commitment to the print media industry and also to Heidelberg our worldwide distributor.”

    The Australian facility will be accredited by Heidelberg whose fastidious approach to quality bodes well for those using the RotaDyne product. As Glenn Plummer explains, ”Heidelberg has a relationship with RotaDyne that spans the globe and we have been selling RotaDyne made rollers under our Saphira brand in Australia and New Zealand for some time. Local production means faster response to our customers and the ability to supply large orders and specials on short notice. Having Heidelberg accredited manufacturing in Melbourne gives total peace of mind to our customers.”

    Focus on R&D

    While the current focus is on new entrant RotaDyne with the market watching what impact the US player will have, German consumables giant, Böttcher, is also seeking to grow its market share through innovation and ongoing R&D.

    A family-owned business founded in 1725, Böttcher has a global footprint and a history of partnering with many of the world’s press manufacturers to develop roller technology. The company devotes around 6 per cent of its total sales to research and development.

    “We have a long tradition of investing in R&D,” says managing director, Mitchell Mulligan, Böttcher Australia. He reveals the company employs approximately 180 R&D/Quality Control personnel who are involved with all aspects of product development and polymer engineering.

    “We test in excess of 3,000 new compound formulas annually in a bid to solve complex issues faced by the rapid changes in press speeds, chemistry and dynamics. Our commitment to R&D adds value to our customers and provides stable and dependable processes.”

    He continues: “As a company we are still in a growth phase due to the development of innovations we offer the market and the breadth of our product portfolio, which is constantly being expanded to service many market segments both within and outside the printing industry. As it stands today, we can see no limits to the opportunities we have in front of our group of companies and will continue to work hard to deliver value to our customers by listening to what they need and developing the right solutions.”

    Böttcher services a pool of 80,000 customers globally and works collaboratively with its customers and partners, says Mulligan.

    “Our mantra is to deliver lower operating costs through the appropriate use of technology and the reduction in consumption of raw materials. Our products are engineered for longer life, superior performance, longer service intervals and dependable productivity.

    “Such attributes strengthen our position as a valued long term partner,” he concludes.

    In Australia, the customer pool is getting smaller and while servicing the local market with locally manufactured products makes perfect sense from a number of perspectives – greater quality assurance and accountability, local service and support, quick response times and ease of delivery – is the entry of another major supplier into the segment overkill?

    As to the question of competition Terry Brissett says, “RotaDyne, Böttcher and ourselves are the biggest players. Someone will have to amalgamate as it is not efficient, it doesn’t make sense from a profit or a commonsense point of view.”

    Watch this space.

  • The Quiet Achiever – Print21 Magazine feature

    Some companies are incredibly successful at building a strong business whilst flying under the radar. Melbourne’s Direct Paper Supplies in Dingley, 40 minutes south of the CBD, is a case in point. Over the past decade, this family-run business has quietly gone about establishing itself as a significant player in the paper merchant business. Alison Stieven-Taylor went along to find out more.

    Everyone loves a good news story and Direct Paper Supplies, owned and operated by the O’Neill family, certainly fits into that category. The company started life as a small provider of stationery products in 1996 with the company founder Charlie O’Neill and one worker producing writing pads for stationers and newsagents. When the limitations for growth in this market soon became apparent, the company changed its focus to become a converting provider to the paper and packaging industry. With the company experiencing rapid growth, Charlie’s two sons, Dale and Todd, soon came into the fold.

    Keeping it in the family (L-R) Todd, Charlie and Dale O’Neill of Direct Paper Supplies.

    “Growth really came through the demand from our customers to provide more than just converting services,” explains Todd. “As they requested more products, we expanded our range, which involved sourcing different lines of paper and moving beyond trade work to become a merchant.”

    Today the company competes with the multi-national paper merchants, carrying around 6,000 tonnes of paper and board products that are housed in its custom-built 13,000sqm high-tech warehouse.

    Direct Paper Supplies has come up in an industry that is highly competitive, and, in the process, has faced enormous hurdles and market pressures that would have beaten lesser men. Todd says, “In the early years it was difficult to access good quality paper because, at that time, all the major merchants had those avenues covered. It was a struggle trying to get good product because everything was closed to us. Supply today is plentiful and, pleasingly, we partner some of the world’s largest and best manufacturers.”

    A tour of the temperature-controlled stores that house the company’s range of papers and boards demonstrates the reach of the company in terms of sourcing product. There are labels from Austria, Germany, Sweden, Finland, the USA, China… and the list goes on.

    Strong service ethic

    The company’s reputation is built on its commitment to personal service. Go on, roll your eyes, everyone says the same thing, but the fact is this family business actually does go above and beyond to make sure they meet their customers’ expectations. As a result they have a strong base of very loyal printers who rely on them.

    “The fact that we are a family business is a real point of difference because our customers deal directly with the owners,” says Dale, who is in charge of the sales force. “I’m on the road all the time, however the other directors are always accessible, so we can make decisions on the spot.”

    Todd adds, “We run an open office and all the directors sit together with our staff so if there’s an order to be processed it happens straight away and everyone is aware of what’s going on. We have a flatter structure than the big corporations, so we can respond faster. The other thing our customers like is that we are an independent Australian-owned family company so we meet our customers on common ground with common understanding.”

    Direct Paper Supplies is focused on working with other family-owned businesses, an approach which Todd says is very deliberate.

    “We are playing to our strengths. The super printers are not on our radar. They have a different philosophy to us and we’ve always made our alliance with the smaller and middle tiers in the industry.”

    Fast turnarounds

    At this point in the interview Charlie O’Neill enters the boardroom. I’ve just asked about credit issues and if they’ve had to tighten their credit practices as other paper merchants have.

    “No, we’ve always been pretty tight with our terms, and we’ve never offered the extended terms that others have,” he says. “It doesn’t help the customer to offer extended terms as it gives them a false sense of where they are financially.”

    Todd says the company’s approach has always been “big is not necessarily the best”. He says their success is built on the fact that they are not a huge, unwieldy corporation that has to jump through its own hoops before helping out its customers.

    “We’ve got the flexibility to react quickly, to help our customers out of a bind, so if they pick up a job and need to turn it around quickly, we’ve got the stock on hand and can get it to them. Last weekend Dale was out in the truck delivering paper because one of our customers had an urgent job. We can do that because of the size of the company and our structure.”

    He continues: “If a customer has a job that is a little bit different, they can ring up in the afternoon and we can have the converted stock to them by 7am the next morning. That’s how we’ve structured the business, so we can cover any request from our customers. That’s our ethos – no problem.”

    Direct Paper Supplies offers a 24-hour, five days a week service. Its Dingley site sports the latest converting, sheeting and rewinding equipment which can process product from 30gsm up to 1,000gsm, and can provide any size from as small as A4 to the largest of wide format sizes, an expansive range that delivers maximum flexibility. New equipment has been installed in the past two years with the investment sitting at around $5 million.

    “We have the best and latest equipment in the country. In producing just-in-time work we are second to none,” says Dale proudly.

    The plant is minutes from the new Peninsula Freeway that connects Melbourne to the south and next to the site pegged for the Freeway’s expansion, giving the company direct access to the city’s main transport links. It predominantly supplies customers in Victoria but also ships product to Sydney and Brisbane.

    “It’s like five warehouses in one,” says Todd of the company’s five acre Dingley facility, “and there’s room to grow.”

    Even though the company has been in this location for only three years, its stores are stacked to the rafters with jumbo reels and pallets of cut sheets, and expansion plans are already on the table. There are individual stores for uncoated, coated and packaging products and the plant is about as hi-tech as you can get, clean, efficient and automated. The intelligence behind the design, including interior driveways that are large enough for delivery trucks to drive through from one side of the building to the other, is more evidence that the O’Neill’s are seriously smart operators.

    Sydney in sights

    At present Direct Paper Supplies employs a staff of almost 40 people, including a sales team of nine, positioning the company as a medium-sized business. Todd says, “There’s a perception in the market held by some that we are a small player.” A walk through the plant at Dingley should stop that thought in its tracks.

    Growth for the company has been consistent. “I’d like to say our growth has been all my doing,” laughs Dale who has been on the road for ten years, “but it’s not. We’ve got a great team of sales reps who are out there visiting customers daily.” I ask how important face-to-face communication is in the digital age. “It is a relationship-based business, there’s no doubt about that,” says Dale.

    But this doesn’t mean they’ve rejected electronic communications; all the sales people are armed with iPads which enable them to show customers a range of products and to get live stock updates so when they are at a customer’s site they know immediately if a particular stock is in the store and can get the order underway on the spot.

    Dale says the company has its eyes on the Sydney market, and has plans for expansion, but they are waiting for the right time and for the turmoil in the industry to settle before they make the jump. “We are looking for a sustainable solution so we are not going to rush in.”

    “We don’t want unmanageable growth,” states Todd. “We are at a position now where we can supply 90 per cent of customers’ requirements from our stores. With those who know us, we are very well-received, and we are now knocking on more doors. But we’ve never been frantic about growth and we’ll never let our service levels be compromised.”

    Dale adds, “The Melbourne marketplace is tougher because there are more merchants here, so we’re lean and battle hardened. We think we could do some good things in the Sydney market, and it would be beneficial for everyone because we have a very strong service mentality, terrific capabilities with our converting plant, and our time to market is better than anyone.”

    Todd concurs, adding that printers in Sydney haven’t benefited from the competition of the merchants as printers in Melbourne have. “We see ourselves as a good fit in Sydney if we can replicate what we do here.”

    In conclusion, the O’Neills tell me, “We’re a good strong business. We’re profitable and well-positioned for growth. The trade is not all doom and gloom. We’re a family business like a lot of the printers who are our customers. We really love the printing industry and there are a lot of great people working in it. We’re confident of a bright future.”

  • When the money runs out – Print21 Magazine Feature

    Printing industry news in recent years has been filled with stories of companies going bust. But just how many businesses have gone under and how do you know if you are about to become one of the statistics? Alison Stieven-Taylor looks at the business of going broke.

    With printing businesses continuing to fall into financial trouble every week, the fiscal state of the industry is a hot topic. And while business owners scratch their heads trying to find reasons as to why they’ve landed themselves in the financial mire, statistics suggest that they need look no further than their own reflection to discover why their business is failing.

    According to the Australian Securities and Investment Commission (ASIC), inexperience in managing a business, lack of strategic capacity and inability to manage cash flow are the three key factors that beleaguer the small business operator in Australia, regardless of industry. In 2010, 43 per cent of administrators cited lack of strategic direction as the reason for business failure, followed closely by poor financial management at 33 per cent. The state of the economy rated 26 per cent, a statistic that has more than doubled since 2004 as a result of the GFC.

    Of Australia’s 2.1 million-plus businesses, 96 per cent are categorised as small businesses and, according to the Australian Bureau of Statistics (ABS), around 50 per cent of these will fail within four years. While this debunks the myth that the majority of small businesses go to the wall in their first year, the statistic itself is only representative of those businesses that fail and close, and doesn’t factor in the many that just limp along and barely make ends meet.

    In 2010/11, the number of new businesses in Australia grew by only 0.4 per cent across all segments. In the manufacturing sector, where print sits, the number of companies exiting the market was slightly higher at 11.6 per cent compared those entering (10.1 per cent), representing a decline in the number of businesses for the fifth consecutive year. As far as states go, while NSW and Victoria reported small gains in the number of businesses entering versus exiting, Queensland, South Australia and Tasmania all recorded falls.

    Greg Evans, director of economic and industry policy for the Australian Chamber of Commerce and Industry (ACCI), says of the small business statistics released in the ACCI’s August report, “When you look at the small business sector it’s really in a hibernation or even survival mode at the moment… Small business isn’t borrowing, small business isn’t investing and small business isn’t employing.”

    Industries hardest hit by business closures have been building and construction, services, retail, accommodation and food, and the manufacturing segments. Specific statistics on closures in the printing industry are not easily secured, or defined, but according to Printing Industries, in 2007/8 the ABS reported there were 6,922 printing businesses operational in Australia. In 2010/11, this figure was 6,248, a fall of 674. In 2007/8, 908 companies exited the industry and, in 2010/11, there were 722 departures. The reasons for exiting are not just financial. Some business owners retire and close shop, but the vast majority exit because of trading issues.

    Low barriers a handicap

    According to Geoffrey Reidy, director of Rodgers Reidy , chartered accountants, the problem with industries like printing is that there is no requirement to have any business management experience to set up a printing shop, so the barrier to entry is very low. As a result, there are many companies that are being run by inexperienced operators who get themselves into financial trouble simply because they don’t have the business wherewithal to avoid the pitfalls.

    “I often see people who are very good in sales and think they can run their own business as a consequence,” says Reidy. “Sales are, of course, very important, but there are a lot of other issues a business manager needs to be on top of.

    “Also with printing, unless you keep up-to-date with the latest technology and market position, you can quite easily get left behind.”

    And being left behind can mean curtains, even for those who have been around for decades.

    “We had one company that had been in business for nearly 100 years, but without investing in new equipment and technology they went under,” adds Reidy.

    Reidy says the business management profile of the printing industry is not that dissimilar to that of the building and construction industry where, in NSW, the number of failures in that sector has become so great, the state government recently launched an inquiry. Each time one business falls over it has the potential to take a number of others with it and, in this sector, the devastation has been widespread amongst the small, unsecured contractors that populate the industry.

    According to Reidy, poor management can manifest itself in many different ways, from being extravagant when there is money in the kitty, to not knowing where the business is heading or keeping poor financial records.

    “A good manager doesn’t run on optimism. A good manager has control of the mainstream business and plans for future, while a poor manager drifts along in the ebb and flow and has no real idea of where the business is at.”

    Reidy says he has seen it all, from the profit and loss sheets that bear no resemblance to the true financial position of a company, to those companies that have traded on the premise of hoping for the best, only to be sorely disappointed that the good luck fairy didn’t sprinkle her magic dust on them.

    Tax debt spells trouble

    The terms insolvent, liquidation, administration and receivership all relate to businesses, says Reidy, while bankruptcy is an individual status. So what do these labels mean?

    In laypersons terms, a liquidator, administrator or receiver are all insolvency practitioners. The liquidator looks after debt on behalf of all the creditors. The receiver only looks after the secured creditors debt, such as the banks, and is charged with getting the best return for those creditors only. The administrator is concerned with the interests of all of the creditors. Most large companies go into administration to allow time to look at operations to see if there is a way the company can be sold or saved from liquidation, which means closing the doors.

    Moving from solvent to insolvent can happen in a matter of months and often starts with a company being unable to pay its tax bill. “There are lots of companies out there that might have huge tax debts, as an example, and they are insolvent, but trading on blind faith, optimism or stupidity that they will come out of it,” says Reidy.

    Of course trading whilst insolvent is an offence under the Corporations Act but Reidy confirms there are plenty of companies doing just that.

    “If these companies end up in liquidation, and the liquidator forms a view that the company was continuing to incur debts at a time when it was insolvent, then the liquidator can pursue the company’s directors via the court for debts the company incurred after the date it became insolvent,” he says.

    The first thing Reidy looks at when he’s doing insolvency work is tax and then superannuation instalments, both payments that companies often stop paying when they start to feel the pinch. Reidy says the tax bill is frequently the last to get paid, as the Australian Tax Office (ATO) is no longer viewed as a secured creditor.

    While most of us might secretly smirk at the thought of the ATO missing out, being unable to meet your tax bill should set off alarm bells, loudly. If you let your tax bill run out to three months behind, says Reidy, “You are most definitely trading whilst insolvent.”

    Signs of distress

    There are other signs too that things may be on the downward slide. Creditors should be current, but if the majority is drifting to 60 or 90 days that alarm bell should also be ringing. And if suppliers are stopping credit, says Reidy, this is a huge sign that something is amiss. He tells of one company that ended up being liquidated but not before the company had moved from one supplier to another as its credit was refused. “The director was on his third supplier by the time the company was wound up. He knew he was in trouble, but he continued to incur more debt.”

    Another factor that impacts the industry as a whole is the practice of quoting below cost to get work in the door in order to manage fixed costs. This is a road to nowhere, says Reidy, but is prevalent in industries where competition is fierce and margins low. And is detrimental to all, not just the company involved.

    The world of insolvency is full of stories that really defy understanding. In researching this article I’ve been told about company directors who take a second mortgage on their own homes or, even worse, on that of their ageing parents in order to prop up a business that has no hope of surviving. In the end they lose their shirts and everyone else’s at the same time. And what of the employees who have made salary sacrifices in order to help an ailing business, only to be short-changed as entitlements are lost in the wind-up? Or the directors who keep showing up on company boards despite their history of poor fiscal management? Or those who dip into their superannuation, often putting themselves in a precarious financial position at a stage of their lives when they can least afford it?

    The answer seems obvious. Don’t wait until you can’t pay your bills. Seek help to determine if you can steer a course to better days. And if not, then close up your shop before you have a pack of angry creditors after your hide.

  • Your 1st rock concert? Alison Stieven-Taylor at the NPA

    The National Print Awards (NPAs) was back in Melbourne this year at Crown Casino. With helium filled gold star-shaped balloons, John Farnham belting out Playing to Win (not live) and TV host Julia Zemiro (she was live) as MC, I could have been at the Logies, which were held in the same room earlier this month, save for the sea of black suits and the lack of sequins and high heels.

    Zemiro relied on her Rock Wiz banter to keep things moving asking presenters and winners alike what their first concert was – and of those she didn’t ask many were happy to share their rock concert stories whispering in her ear as they went past to collect their awards. Or maybe they were telling her their marital status? She did ask a few including a very bemused John Wanless, President of the NPAs, if they were single.

    While there was much backslapping and bonhomie, and a lot of laughter at the revelation of some first concerts – Depeche Mode and the Bay City Rollers among them – this year the NPAs gave off an air of fatigue that may be a product of the hammering the industry has taken by the digital revolution and the GFC. A steady diet of doom and gloom and recognition that the sand many chose to stick their heads in was in fact quicksand, has contributed to collective exhaustion.

    Wanless, whose first concert by-the-way was Ian Dury & the Blockheads, referenced the music industry as one that has survived massive changes transitioning from vinyl and cassettes to CDs and downloads. It is a good comparison, however, the music industry is not buoyant, and today there are fewer players in the market, attrition that continues as more bands release their own materials and by-pass the record companies altogether. The positive here is that more music is being made than ever and where there’s creation there is opportunity to sell services.

    Simon Lane, from Fuji Xerox, who this year has joined Heidelberg and Currie Group as the main sponsors of the NPAs, said in 2012 there will be a 100 million tablets in the US alone. “The industry is changing, you know it and I know it. I won’t tell you digital print is the future, but it is a device. The business still needs to change. In an online, mobile connected society relevance is the key…”

    Not taking away from the truth of his words, we’ve heard this all before. Change isn’t coming it’s well and truly here. It’s no longer just about what kit you’re operating. It’s about services, value adds and enhanced waffle – one salient point Lane made is that print sales people are not as professional as the people they are selling to.

    On Friday night the 450 strong crowd was remarkably decorous. Zemiro actually had to urge them to applaud, something I haven’t witnessed before, and there were only a few occasions when she pulled the schoolteacher routine with “eyes to me”. But the excitement that has been evident in past years was missing. Perhaps suppliers, and their customers, are more burdened by the thought of drupa, which is just around the corner. Certainly there has been much made of this drupa as a ‘make or break’ show.

    Alastair Hadley, who stood in for Andy Vels Jensen, gave the Heidelberg speech. Hadley will retire this year after a lifetime in the industry. Known for his irreverent manner, and quick wit, he quipped that in the future if printers become an endangered species then Sir David Attenborough could be invited to host the Awards.  Has anyone checked Attenborough’s diary?