Author Archive

  • 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’.”