Author Archive

  • Print21 Magazine: Web offset powers on

    manroland Goss Lithoman: press of choice for Aussie web sector.

    Nothing beats high-speed web printing for sheer power of performance. Big offset presses, several stories high, pounding through the night turning out massive numbers of printed newspapers, magazines, and catalogues is validation beyond question of the power of printing.

    It is a highly capitalised, highly competitive sector, with barriers of entry so stringent there will be few if any new entrants. With a new big manroland Goss Lithoman about to land for Ovato later this year, Patrick Howard reviews the web landscape in the latest issue of Print21 magazine.

  • Screen Australia

    Booked up: (l-r) Darryl Wilson and David Reece from Jet Technologies, Peter Scott and Derek Field from Screen, and Matthew Vaughn from Jet Technologies with the Screen L350UV+ digital label press.

    UV inkjet is an up-and-coming technology in the world of digital label printing, and Screen’s L350UV inkjet label press has enjoyed considerable success in Australia and New Zealand, with five installations across the two countries. Now, the upgraded version has arrived on Australian shores.

    On the outside there is little visual difference between the Screen L350UV+ digital label press and its predecessor – the chassis looks virtually the same, save for the change in model number. Under the hood, however, there have been some significant upgrades, as Screen GP Australia’s managing director Peter Scott tells me.

    “One main difference from the previous model is that it now has an orange ink option. It is now CMYK plus white and orange, which increases the colour gamut,” says Scott.

    “In addition the L350UV+ has the ability to print at sixty metres per minute, up from fifty, which is a twenty per cent increase in productivity. It also has in the machine a chill roller, which allows it to print on thinner films and more heat-sensitive materials, so users can move into different markets.

    “The demo machine here at Jet Technologies is fully specified – the only option it does not have is low-migration inks designed for food-related packaging. We could bring in a machine with that option if we needed to,” he says.

    The original L350UV boasts five local installations: one in Sydney, one in Auckland, and three in Melbourne. More than a hundred are operating worldwide, and according to Scott, its customers could not be happier with it.

    “It has proven itself to be reliable, and customers have bought their second, third, and fourth machines from us,” he says.

    Jet Technologies’ showroom has seen four demonstration L350UV machines in operation, and now hosts the first L350UV+ to reach Australia. Scott expects it to be as successful as the original, if not more.

    “Global customers are now starting to trade in the old model and put the new one in, because of the extra colour and higher productivity. The L350UV+ is based on the original model, so the reliability, the head technology and all of those things are in place and have proven themselves.

    “As with anything Screen does, we look at improving the productivity and energy efficiency, and increasing the number of applications the press can handle,” he says.

    The demo machine at Rosebery has already proved popular, according to David Reece, sales director at Jet Technologies. “We were booked up for three weeks,” he says. “Label converters are coming in to see the machine in action, and they’re printing their own jobs to see the quality, high productivity, and low total cost of ownership this press has to offer.”

    Opened in 2014, the Jet Technologies demo centre has played host to not just the L350UV+ and its predecessor, but other equipment from the company as well; more is expected to come this year, including a laminator for the print and packaging division.

    “We always have a certain amount of equipment on show, be it Screen or otherwise – things like platemaking and rotary screen making equipment,” says Reece. “The L350UV+ is our flagship digital press on demonstration.”

    According to Reece, every L350UV sale Jet has made has been to customers who visited the demonstration centre. The showroom has been a useful tool not just for Jet Technologies, but the customers themselves, who can use it to learn more about the equipment they’re considering buying, he says.

    “The biggest benefit is that they can come, stay as long as they want – be it a day, two days, an hour – and run their materials hands-on with the machine to get all the information they need in an open and transparent way.

    “We have also worked with most of the major materials suppliers to qualify and test their products, and our customers can see how their own jobs will look on a variety of substrates,” says Reece.

    Screen and Jet Technologies customers can be assured they will not be left high and dry if they need help with their new L350UV+ presses.

    According to Scott, Screen has five engineers on the ground capable of handling the machine, while Jet Technologies offers application support.

    “The L350UV+ is not an orphan product – it is backed up by Screen and Jet Technologies’ experienced support teams, along with the whole Screen product range”, he says

  • Print21 issue 1080 – MIDWEEK SPECIAL

     

    A flurry of news this week signals the print industry is back into top gear. You’ll need to take a few minutes to get through this lot. With the results season now on us the news from the top end of town is a health check for the industry. And most importantly, the first issue of Print21 magazine for this year is about to land on your desks. It’s a great read packed full of news and information with a focus on digital print.

     

    Welcome to the print industry’s online news bulletin, delivered to print business owners and managers across Australia and New Zealand, and produced by Print21 – the people who know print.

     

    Wayne Robinson
    – Editor

     

     

     

  • Media Super

    Graeme Russell, CEO Media Super

    Media Super, like all industry super funds, appears to have come through the Royal Commission in good health. Among the blizzard of accusations of bad dealings and bad faith, the not-for-profit industry funds shone like a beacon. Print21 editor Wayne Robinson asks Media Super CEO Graeme Russell why that is.

    Superannuation funds have been in the headlines recently – and not all those headlines have made pretty reading, as the Royal Commission into Banking, Superannuation and Financial Services shone the spotlight into the darker corners of the industry. However, while the retail funds run by the banks and the likes of AMP suffered a litany of distressing revelations during the course of the Commission, the industry super funds that appeared came out more or less unscathed from the hearings.

    Sitting at the head of the printing industry’s super fund, Media Super, CEO Graeme Russell, now six years into the job, says industry funds generally have outperformed the retail funds. “There is a fundamental flaw, an irreconcilable conflict of interest with retail funds. They have to benefit both members and shareholders. Industry funds like Media Super have a single focus, and one stakeholder to satisfy: the member. All profits only go to members.

    “Industry funds generally have a values based foundation, as we were established to act only in the interests of our members. We are working solely for our members,” he says.

    The fallout from the Royal Commission has been spectacular, with members apparently abandoning retail funds in droves. Media Super alone has seen rollovers from other funds up by 60 per cent over the year before, and the final report is not even out yet.
    The Media Super fund that Russell oversees is the industry fund for the printing industry, as well as the media and creative arts industries. Its 80,000 members have some $5.5bn in the fund. Russell points to its rankings as evidence of its well being. It is consistently among the top performers; in the last 12 months, for instance, it is ranked as the top performer in the SuperRatings SR50 –Balanced Options ratings table.

    Not all print industry people are part of Media Super, although not surprisingly Russell believes those who are not should consider the Media Super option, especially if they are in a retail fund. He says there are three key reasons why print industry people should consider Media Super: performance, investment in print, and investment in the wellbeing of print people.

    High performer

    “First, according to SuperRatings, the performance of Media Super is strong. Our default MySuper product, the Balanced Option, has outperformed most retail funds used by major print employers for the last five years at least. Media Super’s My Super Balanced Option was ranked number one over the 12 months to November 30 last year,” he says.

    Part of the reason why industry funds in general and Media Super in particular consistently perform better than retail funds is that they make large investments in unlisted infrastructure and commercial property assets, both here and overseas. These have consistently delivered near or above double-digit returns. Media Super is one of the owners of IFM Investors, which is a vehicle for investing in infrastructure owned by a collection of industry super funds. Similarly, it is also a part owner of ISPT (Industry Super Property Trust), and of ME Bank, both also owned by a collection of industry super funds.

    “We have different asset allocations to the retail funds, and that has delivered superior performance over the medium to long-term,” says Russell. Industry fund members including those with Media Super also typically pay lower fees than retail funds, as they are not paying commissions or dividends.

    According to Russell, the second reason why many printing industry people choose to invest through their industry fund, Media Super, is that it invests back into the industry. A retail fund has no vested interest in the print industry, whereas an industry fund does. “We are strong supporters of the PIAA and of many industry initiatives, from Print2Parliament to the National Print Awards, apprenticeships, and encouraging young people to join the industry,” he says.

    “The third reason is that we are out there supporting people in the industry. For several years, for instance, we have offered print employers a mental health wellness programme, run by the industry funds’ own mental health foundation, Super Friend. Next year we will launch a financial wellbeing programme for our members: we will be visiting printers offering on-site training and education for financial health,” says Russell.

    The Media Super fund also provides a tool to track people’s retirement projections, enabling them to see where they will end up and whether they need to take further action. Typically people approaching retirement will want to be thinking about salary sacrificing if they can, given that compulsory super has only been part of the working life for less than 25 years. Those at the beginning of their working life should be in a good position by the time they come to retire with 40 years or more of super payments.

    Russell is proud of the mental wellness programme, which comes as part of industry and society accepting that mental health is not something to be brushed under the carpet and kept hidden, but is best dealt with in an open and non-judgemental way. Media Super is seeing an increasing number of claims through the Fund’s total and permanent disability (TPD) insurance based on mental health issues, and in fact it is now the number one reason people are claiming. “We want to be part of the solution that helps people before they get to that point and enables them to get help early, so they have a better chance of recovery and getting back to productive work,” says Russell.

    Well balanced

    The Media Super Board comprises 11 people: three from the PIAA, three from the AMWU, two from the Media Entertainment and Arts Alliance, one from Nine (formerly Fairfax), one from Live Performance Australia, and one independent. Russell reports to the Board, and his senior management team consists of himself, a chief operating officer, a general manager of investments, a general manager of engagement, and an HR manager.

    The $5.5bn fund has 80,000 members, and 13,000 employers making contributions, with the print industry the biggest sector; however, not everyone in print is a member, in fact far from it. A number of larger printing companies still use bank-owned or AMP corporate funds, almost all of which are delivering lower returns than Media Super.

    Media Super offices are located in mainland state capital cities, with around 30 full time staff working for the fund. The call centre and admin are outsourced to Mercer, in common with most of the mid to small sized industry funds.

    Russell himself has previous form in print: while he was studying at university he worked his way through in a phototypesetting trade house, which contracted out to local newspapers and magazines. A business degree and a chartered accountancy qualification took him eventually to the CEO of another industry fund, before he took the role at Media Super in 2013.

    Print’s transition
    After six years at the head of Media Super, Russell is in a good position to assess the print industry, which he says is in transition. “The notion that print is dead or dying is clearly far from the truth. What is happening is that print is in a period of rapid change. There will always be challenges with change. As I see the landscape, the bigger companies are well underway in their transformation programmes, and so are some but not all of the smaller companies. I’m not sure all of them will make the transition successfully. Some sectors clearly have a bright future: outdoor print for instance, as well as packaging and personalised print; others, envelopes for instance, have a less secure outlook.”

    With the nation’s super funds holding trillions of dollars, is Russell concerned about the government raiding the coffers through some form of taxation? “I think not, although there could be a rebalancing. At present the tax on super favours the higher income earners, and that does need addressing.”

    On the issue of governance, Russell and the other industry fund leaders are resisting government attempts to change the rules to bring them into line with the retail funds, pointing out it hasn’t exactly worked well with the retail funds.

    Advancing women
    One area that Media Super is especially concerned about is super and women. Under the current system women are disadvantaged, primarily because of their time out of the workforce during the childbearing and child rearing years. They also generally have lower wages, which translates into lower super. Russell wants changes. “We would like to see super continue to be paid when a woman is on paid parental leave. We also want to see it paid when people earn less than $450 a week, which is the current lower limit. Some of our members in the entertainment world may have some weeks when they are on low pay for one reason or another. It is simply not fair their employer does not have to pay super because they are not earning so much.”

    Strong position
    Super is a crucial part of the working life, and its guardians have a big responsibility. The message from Russell for people in the print industry is that Media Super is in a strong position and is consistently delivering a solid investment return. It has low fees and is focused on its members, while working for the good of the entire industry.

  • Making the switch back to Fujifilm plates

    Sydney’s Megacolour is a textbook example of an SME successful business surviving and prospering in one of the most competitive and changing markets –high quality general commercial printing. Nestled in the thriving industrial hub of Camperdown, just off busy Parramatta Road; Megacolour services clients from all over Sydney, NSW and nationally.

    “We have actually switched back to Fujifilm plates after five years with another type.” Michael Fang, Megacolour.

    The building exterior is modest but a hive of industry as pallets of paper and board are delivered for just-in-time production, with some taking up parking bays at the front. The twenty-four staff average two shifts per day for five, sometimes six days a week. Inside it’s another story, with a clean and well laid out modern printery, offering both digital and offset production, fully digital prepress and extensive in-house finishing. Little if any work is sent out – it all happens inside at Megacolour.

    Now celebrating its 25th anniversary in business, having been established in 1992, Megacolour is privately-owned and headed by Michael Fang and supported by a team of very experienced print industry people. Colour is managed throughout and certified to ISO 12647-2 standard by Mellow Colour.

    “We have a very close association with Heidelberg,” says Michael Fang,” we are almost completely a Heidelberg-supplied shop and have recently adopted the resource-saving Fujifilm SUPERIA system using LH-PJE plates and lo-chem “ZAC” intelligent plate processing, supplied by Heidelberg.”

    Heidelberg one-stop shop

    The spacious press hall at Megacolour features a B1 Heidelberg Speedmaster CD102-six colour press, a Speedmaster SM52-five colour B3 format press plus, for die-cutting, a trusty 1970s ‘S’ cylinder press with a 540 x 720mm sheet size and kept in perfect running order. Over in the bindery is a two-guillotine Polar cutting line, Heidelberg Stahlfolder, Muller Martini saddle stitcher and a PUR perfect binder and also a saddle stitcher from Horizon.

    Digital printing is housed upstairs in the prepress department, with three Konica Minolta A3 colour bizhubs, a C1085, C1070 and a C1060. In this same area, the plates are made for the offset presses, using a Screen PlateRite HD 8900E with automated plate loading and unloading into a newly-installed Fujifilm ZAC plate processor.

    Michael Fang notes: “We have actually switched back to Fujifilm plates after five years with another type. What attracted us back was the ZAC lo-chem system for the LH-PJE plates. The SUPERIA lo-chem system represents a considerable cost saving in chemicals, water and power and is a much cleaner working system. Being supplied by our partner Heidelberg was also a big factor.”

    Megacolour’s Prepress manager Brett Denning takes up the story: “The first thing we noticed after changing to the lo-chem system with the SUPERIA FLH-Z plate processor was that clogging in the processor virtually ceased. Where we once had a technician out cleaning and servicing the processor every month, we have only just had our first routine service call after three months and no down-time due to the processor malfunctioning, it’s been hassle-free.”

    “…clogging in the processor virtually ceased,” Brett Denning, Megacolour prepress manager with Michael Fang.

    Chemical usage plummets

    The reason why Fujifilm’s ZAC lo-chem system is so economical and reliable is in how it uses sensors and software to monitor the pH and conductivity of the developer bath. In doing so, ZAC technology constantly monitors target and actual conductivity while the software calculates just the right amount of replenisher to use, matched to plate throughput and image area processed. “Our chemistry costs have reduced significantly,” says Denning. Fujifilm has measured average savings of up to 75% in chemistry use across its worldwide installed base of ZAC lo-chem customers.

    The SUPERIA LH-PJE plates supplied by Heidelberg are thermal and positive-working, with a suitability for print runs up to around 300,000 and compatibility with UV inks. “Like everyone, we are finding our print runs are shorter and more frequent,” says Fang. “Magazine catalogue inserts can be over 100,000, up to 250,000 but much of our work is under 100,000, changed regularly. We need fast turn-around in the plate department and the new plate/processor combination has delivered this.”

    Proofing is carried out on an Epson Spectroproofer with in-built X-Rite i1 spectrophotometer and PDF files imported from Screen Equios workflow’s LabProof. Profiles are calibrated to ISO 12647, with Megacolour being the first Australian printer to upgrade to 12647-2:2013 – a revised characterization that takes into account the optical brighteners used in modern coated and uncoated papers.

    Managing the change

    The whole change process was project managed by Heidelberg Australia’s Northern Region Branch & Sales Manager Savas Mystakidis, who says: “Heidelberg and Megacolour have built a very strong partnership over several years through a mutual respect and trust of one another. From press supply and service to bindery and finishing. We have now completed the ‘one-stop’ loop by adding plate supply in partnership with Fujifilm.

    “The benefits are real and measurable in reduced chemical use, less downtime and higher efficiency. It’s all part of Heidelberg’s value offering to our customers by assisting them to get the most out of their equipment and production.  We would like to congratulate Michael and his team for taking such an important step for both day-to-day quality in his work and also the environmental benefits that Fujifilm’s ZAC lo-chem system brings.”

     

    www.megacolour.com.au

    www.fujifilm.com.au/superia

    www.heidelberg.com

  • The pressure’s on labels – Andy Mcourt

    Labels and short run packaging are being seen as some kind of El Dorado by digital equipment manufacturers, as click rates in the cut-sheet digital sector go even lower. There is unquestionably an over-supply of available digital label presses in a market where one or two players dominate and demand has yet to even remotely reach A3 cut-sheet proportions.

    Andy McCourt

    The battle line in the war of digital label production appears to be between electrophotographic means of production versus inkjet. There is perhaps a third front, in hybrid machines from mainstream flexo press makers who remain agnostic towards digital processes so long as they support the high-end results of multi-unit narrow web converting. Gidue recently launched it’s M5 ‘digital flexo’ press which automates just about everything except plate cylinder changes. Gidue uses the term ‘digital’ to describe the automation processes, not the way ink is laid down, which is still via photopolymer plates. However, the M5 claims job changes as fast if not faster than true digital and gone are the days of changing ink pans and aniloxes for special colours – all colour calculations are made digitally in the Esko prepress software which works in harmony with the expanded seven-colour Flint ink set.

    The Gidue example shows how traditional press manufacturers are keeping the faith with flexo and using ‘digital’ as a marketing term rather than true plateless digital where variable data is possible. Elsewhere in this issue, Print21 European correspondent, Nessan Cleary, takes a deep dive into the latest available technology, so this article looks more at the market, its roadmap and aspirations.

    How big is the market?

    Market size estimates and predictions vary wildly for the label sector. This is partially due to the fragmented nature of the industry, where producers are fiercely protective of their contracts and some labeling is conducted as part of the manufac-turing process, in-mould and shrink sleeve labels for example. However, one source that has proved very reliable is Mike Fairley, founder of the Labels & Labelling Expos and director of strategic development with the London-based Tarsus Group plc. Fairley has authoured many books on labeling and conducted deep research over a 35-year career.

    His 2011 estimate of the size of the global label market at sales value was USD$73 billion. Given CAGR (compound annualized growth rate) from several sources is between 4 and 7 percent; taking the more conservative figure this would mean that in 2015, the global sales of labels will be around US$85 billion (AUD $97 billion at current exchange rates).

    By drilling down to the actual suppliers of label converting stock such as Avery Dennison and UPM Raflaltac, the Fairley research estimates that approximately 42 billion sqm of labelstock is converted by around 30,000 converting businesses worldwide.

    The driving factor for the strong growth in labels is the world’s increasing demand for packaged foods, products and beverages. Even fresh produce can carry small labels on the mango, apple or banana skin. It comes as no surprise that the furnace of this growth is in the Asian markets of China and surrounds. India, for example, has a very low per capita consumption of labels and yet a burgeoning middle class developing with consumer tastes akin to developed countries. The US annual label consumption is around 15-16sqm/pa; Scandinavia 17-18 sqm/pa. Europe is at 8 sqm/pa but China has yet to reach just 2 sqm/pa – with a market potential of 1.3 billion people! India uses even less than one sqm/pa of labelstock per capita and presents 1.2 billion potential consumers.

    Mind-boggling figures of this magnitude should really drive home the opportunities presented to Australian packaged goods and labeling companies by the Free Trade Agreements announced last month, for both exports and joint manufac-turing ventures in those countries. As market-stall retailing changes and becomes an organized ‘chain’ business in these emerging countries; so packaged food and goods will rise, along with the labels that brand them.

    On the topic of branding, the highest proportion of labels printed in the world today are for private-label brands; WalMart, Aldi, Tesco, Coles, Woollies and so on.

    Digital’s place in labels

    What is digital’s place in this exciting boom market of label production? In truth, while digital has garnered an immense amount of publicity and does indeed show a lot of promise for the future, particularly in developed economies like Australia, it still accounts for only about 4 percent of global label production. Doubtless this will grow because there are more digital label presses being sold into markets. Between 20 and 25 percent of all new label presses are digital, but production volumes are lower albeit with higher value-per-label.

    Surprisingly, over 40 percent of the world’s printed labels are of the wet glue-applied variety, not self-adhesive, and these are typically printed by the millions on gravure or flexo presses running at great speed – not the realm of digital at all.

    Best estimates put the global installed base of narrow web digital label presses at around 2,500 for 2014 ( out of total label presses installed of about 29,000), with HP Indigo claiming a whopping 68 percent of these. Xeikon, with dry toner electrophotographic (EP) engines, claims around 10 percent with the remainder being inkjet and minor EP players. EFI Jetrion currently leads the installed base of inkjet presses but most of these are in ‘secondary’ label sites such as electrical tagging; safety labeling; manufacturer’s statutory markings and so on.

    Inkjet digitally printed labels are set to grow but make no mistake about it – EP liquid and dry toner presses are not going away; they still control the majority of digitally-printed labels and will do for some years to come. Long before the HP Indigo ws6000- series, was the pre-HP Indigo Omnius, so Indigo has effectively been in digital labels for about 15 years. Most colour inkjet label presses have been around for less than three.

    All the same, inkjet’s growth in digital label production will be on a strong upward trajectory. The arguments in favour are all too compelling; faster, lower cost-per-label, use of unprimed stocks, aqueous UV cured inks, white ink, wider web widths and so on. Screen’s Truepress Jet L350UV, distributed by Jet Technologies here, ticks all of these boxes and also solves the converting side with the just-announced JetConverter. This line even includes a flexo station, foiling, semi rotary die-cutting, twin rewind, matrix stripping – it’s a converter’s dream in a mini 50 metre per minute package and can work inline or offline.

    At the lower end of digital, there are many EP and inkjet ‘desktop’ machines that are intended to print on pre-cut stocks and offer little in the way of converting Memjet alone lists twelve label OEM partners, all offering similar engines at 9 or 18 metres per minute and not much converting with the exception of ColorDyne.

    A word on Rapid

    There used to be another Memjet OEM – Australia’s Rapid Packaging who showed the first working Memjet machine at Ipex 2010 and went on to apply its considerable converting expertise to turn the technology into a proper label press line that could die-cut, laminate, rewind and strip. Memjet ‘boned’ Rapid in October in mysterious circumstances – they just would not give a reason and Rapid said they were dumbfounded at the arbitrary axing of an agreement due to run until 2017, leaving them with almost $2 million in stock engines that Memjet would not allow them to build into their presses.

    Despite a good ‘shirtfronting’ (thanks PM), Memjet would not talk, only to say, “… it’s natural there will be an ebb and flow in our OEM partners.” Ebb and flow? Memo to Memjet: the worldwide $80 billion label industry is a major player in branded goods marketing and is a close-knit community of highly technical and experienced professionals who want to work with trusted partners – who don’t ‘ebb and flow’ like the tide. In Rapid, you have excommunicated a much respected label press manufacturer who exported machines to 54 countries and then put their faith in Memjet as its digital platform, sharing their own R&D and actually making Memjet technology work in a commercially-available machine for the first time.

    Non-critical desktop machines can perhaps tolerate perfidity in support and supply but working pay-for-label printers respect continuity, support, commitment and a trusted partner who ultimately helps them pay the rent and wages.

    With over 40 manufacturers of digital label presses today, it’s a buyer’s market so there is a need to be selective and analytical in choices that fit each individual company’s production requirements. Some inkjet machines are approaching the lower end of flexo print run capabilities and this alone delivers infrastructure benefits by eliminating plates and analogue makeready.

    Label printing is a great place to be but, as with all gold rushes, it’s not an El Dorado. Even if you find the gold; it requires refinement.

  • On the pitfalls of takeovers & mergers – Patrick Howard

    The printing industry is shrinking, there’s no doubt about it. Without a clear-eyed acceptance of that central fact we are unable to make sensible decisions about planning for the future. Printing paper consumption in Australia declined 300,000 tonnes since its peak of 1.5 million tonnes in 2008, a fall of 20 percent. The drop appears to have eased last year, so let’s not run about crying that ‘the sky is falling’ but there is no prospect of a return to the levels of consumption pre-GFC.

    There is no shortage of reasons for the decline in printing. Undoubtedly the internet and e-communication has a major role, but let’s not ignore the efforts of companies to reduce waste and target their marketing collateral at individuals. Most printing is to do with marketing and digital printing is all about printing less, not more. It bestows no dividend for longer runs; the final page costs as much as the first, no matter what the run length.

    So what are appropriate strategies for an industry with little or no growth potential? How should printers conduct their business in an ever tightening market?

    Few go-ahead business people are content with stability, with main-taining the same level of activity year in year out. Most see it, rightly, as a recipe for eventual failure. ‘Grow or die’ is an old saw that has a hard truth at its core. For many in the industry the path to growth is through gaining market share by any means, usually lower pricing to edge out a competitor. Of course the industry decries it and it’s always the other fellow’s fault, but printing lives in a perpetual price war, especially in this shrinking market.

    Playing the fool’s game?

    That kind of growth comes at a terrible cost, not only for the price cutter but for anyone else in the sector. It usually ends badly and we have no shortage of examples in recent times of printing companies going belly up even while their presses are still powering along. Price cutting as a strategy for growth is a fool’s game.

    Another growth option is through merger and acquisition. Again, this is fraught with risk and only appeals to the risk takers. Due diligence on a target business is often carried out in a super-heated atmosphere, especially if there is more than one bidder and there are valuers, administrators and liquidators shuffling about. Even the most forensic examination of another company’s operation can not be foolproof.

    There are many examples of printing companies that enjoyed a spectacular rise through M&As only to come crashing down when the true facts emerged. Bruce Peddlesden’s OnDemand in Melbourne is the most recent example but in recent times there was David Fuller’s Focus Press in Sydney and we’re still within memory of the GEON debacle.

    Right-sizing a business

    Yet, there is another way for business to grow and prosper even in the worst market. I direct your attention to the PMP Annual report in November where it was the pleasant task of Matthew Bickford-Smith as chairman to report what many of thought we’d never see again, a bottom line profit from the industry’s largest company. Once teetering on the brink of disaster, PMP is now talking about paying dividends to its long-suffering shareholders. Under the tutelage of Peter George, managing director, the company has focused on its core operations, sloughing its digital marketing arm, downsizing its workforce, consolidating its presses and premises and focusing on its core expertise of print and distribution.

    There is nothing magical about such sound business practices; revenue was still down but so were costs. Money is being ‘incrementally’ invested across the business, while the goal is to have a debt free balance sheet by 2017.

    PMP is not unaffected by industry over capacity with lower margins on its operations. Its operating revenue fell by 7.8 percent to $899.3m. Gordon & Gotch had a 5.3 percent volume decline.

    But PMP still made money. It goes to show that looking after the business, extracting costs, concentrating on what you do best is still the best avenue to profitability. At the end of the day, good business is about making money as well as working usefully and contributing to the common weal.

    Mind you, the board still expects significant rationalisation in the very competitive heatset market and is preparing itself. So, the dangerous waters of M&A have a fascination for even the best run businesses. We’ll have to wait and see.

     

  • Steve Edwards – Franchising for the future.

    On occasions, it’s difficult to recognise the printing industry Steve Edwards is talking about. From his perspective it’s a go-ahead, technology-based, profitable, growth sector with direct engagement in marketing, design, websites and internet-portal construction. It’s an industry where his Snap franchise, one of the largest print providers in the country, has ambitious strategies to evolve into a marketing services enterprise. He talks with Patrick Howard about how the next 12 months will see the start of a major transformation in one of the industry’s highest profile brands.

    Sometimes you can arrive on the right side of history. Quick printing was an innovation that drew criticism from commercial printers when it first made an appearance in the middle of the 20th century. Snap Printing’s famous slogan: ‘wait 20 minutes for your print or get it free’ brought howls of outrage from a printing industry that was masterful at keeping customers waiting in line, sometimes for weeks, to receive their print. Quick printing was looked down on and, in truth, there was often a ‘good enough’ standard to many of its products.

    But quick printing was on the right side of history, markets and technology. On the horizon was the on-demand culture that now defines our society, along with the internet, personal communications and the digital technology that would make it all possible. Quick printing came to encapsulate what customers wanted: no-fuss production and almost immediate satisfaction. Nowadays, all print is quick print with 24-hour turnaround from order to delivery as the norm, not the exception.

    For the Snap franchise it was always a question of waiting for the market and society, to move towards its business model, not the other way about. Its remarkably successful business model – it lost ‘Print’ from its name in 2008 –is focused on being at the forefront of technology and innovation. It is now the largest distributed purveyor of printing and related services to more than half a million clients every year, with a footprint that covers 156 centres in Australia; two in China; 21 in Ireland and five in NZ.

     In the beginning

    For such a diligently contemporary business it comes as a surprise to learn that Snap started in 1899, or at least the original Caxton Printing, quickly followed by the Imperial Printing Company did. One of the longest established companies in Perth WA, the Imperial owes its transformation into Snap Printing in the 1970s to Stan Watt, one of the first Australian businessmen to go to Harvard where he came across the then-novel idea of franchising. The Snap Printing franchise was the fourth chain to arrive in Australia – there are now 1,180 and Stan Watt went on to become a member of the Franchise Association’s Hall of Fame. He was part of the family that owned the original Imperial Printing and which still owns the multi-million dollar success that is present day Snap.

    According to Steve Edwards, CEO, although the privately held company is still owned by the family, Snap operates with the same level of probity as a public enterprise. “It has great protocols, very high governance and while it’s quite conservative financially we’re committed to being ahead of the curve in operations. Snap turns over $130 million per year and is debt free.”

    "The business is based on service, location and innovation.” Steve Edwards, Snap CEO.

    Selling service, not print

    The decision to remove the word ‘Print’ from the company brand in 2008 was the result of careful consideration and extensive research. It was more than a rebranding; it was a marker towards the future. Edwards could see there were larger opportunities ahead for the franchise and that the world was changing more quickly than many in the printing industry realised.

    “Dropping ‘Print’ from the name was an amazing process as many franchisees had a deep emotional attachment to the word,” he recalls at his North Ryde offices.  “They had bought into a ‘printing’ business and while print remains the core business, Snap in its new form has other horizons to conquer. There was a battle for the hearts and minds and it got pretty horrible but we came through it and it gave us a solid base for the future.

    “But rest assured, printing won’t leave our vocabulary. It’s where most of the money still is.”

    In the new world of Snap, while print is still part of the matrix, it is no longer the defining product. That has become Service or more particularly, Marketing Services. Print is delivered as part of an overall offering based on speed and convenience coupled with integrated marketing intelligence. The mix ensures higher than industry average returns to the franchisee, while helping its customers’ businesses grow.

    “We are selling a service. The aim is to evolve to being a service company from where it started as a manufacturing retailer. Snap is well placed because our service ethic suits the new market model. Other commercial printing models are not so nimble.

    “Demand is changing; certain elements of operational printing are declining, such as letterheads, envelopes and forms. The downturn in demand didn’t hit us as it did the more mainstream print. It wasn’t our core activity. While we are now quality-based printers, our service is based on quick print to acceptable quality that is reasonably priced.”

    Working on ‘bricks & clicks’

    Steve Edwards is acutely aware of the fragmentation of marketing and the proliferation of communication channels. You get the feeling he lives and breathes this stuff. The impact of the internet, of web-to-print, of digital marketing has overturned the certainties that sustained printing for centuries. The race is on to adapt to the changed environment. But Snap’s future is not based solely on the internet. In the internet age, Edwards strongly affirms the role of the local printing centre.

    “Clients like to deal with someone local. It’s still very important, people may not always come in but they drive past, they see our signs, they know we’re local. We integrate the physical centres with the internet or ‘brick & clicks’ to get the best of both worlds. The business is based on service, location and innovation.”

    As a result, the Snap website – branded print: design: web: – is a masterwork of product and location interfacing. A search query on location will turn up your nearest centre – for Print21 at William Street, Woolloomooloo in Sydney there are five locations to choose from; Darlinghurst is the nearest with four others in the CBD. This is high profile print service delivery, but there is more to come.

    Snap Marketing Centres

    Never say never, but… it’s unlikely any Snap centre will ever buy another small offset press. Apart from the fact that digital engines from Konica Minolta, Canon, Ricoh and Fuji Xerox have thoroughly displaced the technology,  there is a recognition that the Snap centre of the future will have little place for the manufacturing ethos of printing.  A new breed of Snap centre is on the way; indeed it has already arrived with the emphasis on intellectual value, marketing nous and delivering support to small businesses.

    So far there are four Snap Marketing Centres open – the first in Pyrmont, (NSW) then two in Melbourne and one in WA. The next sixteen are planned for this year and they’ll all be part of the new orientation of the franchise.  It’s a brand new look.

    The news SMCs have more focus on marketing intelligence, are a new format from the traditional centres, staffed by a minimum of two people, with around 100m2 of space with most production outsourced. They are not necessarily aimed at the traditional Snap owners demographic.

    “We want people who are happy to be in customer facing roles, pushing marketing services, transforming themselves into small entrepreneurs. The concept is to create a marketing vibe, something creative and fresh.  They’ll be able to receive orders, take meetings, provide a creative environment where customers will still be able to do self-service with copiers and so on.”

    “It doesn’t suit everyone, lots of our people like to print and that’s okay too but it’s about doing the best for your customers in the future in our four key areas: Print, Design, Web and Marketing Services. Our mission is to help our customers grow, to refresh and promote themselves. Our job is to be relevant to our customers, to promote and service them frequently and add value in all we do.”

    Marketing the brand

    Snap is without doubt the highest profile enterprise in the printing industry. Its advertising is everywhere from the sides of buses to billboards, trucks and sponsorships. In an industry notoriously backward in promoting itself, the Snap exuberance is more than refreshing. “Snap spends millions of dollars on marketing ourselves, our brand and our franchisees. We have hundreds of advertising billboards around the country with over 80 vehicles running around the streets,” says Edwards. “We’re into major change management; we’re extending the brand more than ever. I’d say we have one of the biggest marketing spends in the industry.

    It’s the high profile this marketing creates that attracts people into the franchise but even that is changing. The demands of the changing industry and Snap’s evolution are placing pressure on some franchisees.

    “Demographic changes are not so much of a challenge as is longevity. Some Snap franchisees have been there a long time. It is a challenge for them to change as we’re trying to evolve. Some of them want to remain as printers, that’s what they like to do and I’m fine with that.  A lot of them are doing really well as printers.”

    “We are seeing new types of people coming in to buy franchisees – mortgage brokers, marketing managers. The new franchises are especially attractive to young people who may not have the capital for some of the larger million dollar franchises. But the demographic is less important than the attitude. The oldest Snap franchisee is 78; he’s got a great mindset. Last year we saw seventeen new candidates take on twenty-one of the franchises sold, most of them for print integrated with marketing.”

     A long way to the top

    Steve Edwards joined Snap as chief operating officer in 2001, notching up massive flying miles back and forward from Sydney to Perth for ten years before, on the retirement of his predecessor, Grant Vernon, he became CEO in 2011.

    “It’s been an amazing ride. We outperform most of the industry in terms of gross margins, growth sectors, and opening locations. This year we’ll open sixteen new stores but will also sell twenty-one existing Snap franchises. Brokering is part of what we do.”

    He is on the national board of the Printing Industries but, as he says, he really has no time. “I find the printing industry interesting in itself and I like to give something back. There are people on the council that I believe in, such as David Leach and Bill Healey. They are trying to help transform the industry. As one of the biggest printing companies in the country I feel it is right to put something back in. But we have to get rid of the politics.”

    “The industry is struggling to transform itself. We have to change the collective mindset. Printing is not dead; some of the best and biggest firms are on the transformation path,” says Edwards.

    “Snap is also on a growth path. We’re doing well; we have some major products and innovation developments coming out in the next few months, with Apps etcetera. As far as I’m concerned, the ‘fun is just about to start’.”