Author Archive

  • Pack to Australia with home-grown gravure – Print21 magazine article

    That’s right, it’s a headline with gravure in it. You don’t see too many of those in Print21. Working against the accepted wisdom that only major multi-nationals and overseas printers can afford to invest in gravure presses, an Australian family-owned print business in Melbourne is looking to make a name for itself in the highly-competitive flexible packaging market. Simon Enticknap investigates.

    On being told that an Australian packaging company had installed a new gravure press, my first reaction was akin to one of those incredulous folk in the Jeep ads (Gravure? You bought a gravure?). After all, it’s not something that happens every day. Any day, in fact.

    In all my years of writing about new printing equipment I’ve seen countless grey photocopiers, innumerable silky-smooth offset presses whirring away, massive newspaper presses and heatset presses, complicated-looking label presses combining any number of processes, even the occasional screen printing line. But gravure? Like the mythical unicorn, it was rumoured to exist but was rarely sighted. Even at trade shows, gravure was like the long-lost cousin of the printing family, renowned for its high quality and work capacity but regarded as something of a relic in these short-run, instant print on-demand times.

    Of course gravure still exists and, in some markets, has actually been expanding in recent years. In Europe, where gravure has a long history of being used for publishing and catalogue work, there has been something of a decline in line with media shifts to more online consumption, but packaging print is a different story, particularly in Asia, where demand for gravure presses has been on the rise.

    Again, this growth is in line with market changes; as the Asian economies develop and become more consumer-driven, the demand for high quality packaging increases. Gravure plays a major role in meeting this demand. In Japan, for instance, where the packaging is renowned for being of the highest quality, gravure print is the dominant process. Elsewhere, too, gravure is more prevalent than its long-term rival, flexo. The European Rotogravure Association (yes, the process has its own industry body) estimates that there are 500 packaging gravure plants in India alone. Some estimates suggest that, throughout Asia, gravure accounts for 80 per cent of flexible packaging output compared to 20 per cent for flexo. In the US, it’s the other way round.

    Locally, Australian packaging companies have tended to follow the lead of Europe and the US in making flexography the dominant process. Partly this is due to the size and nature of the local market which generates much smaller packaging volumes. Flexo has also long claimed a cost-advantage over gravure, particularly for shorter packaging runs. In recent years too, flexo suppliers have done a tip-top job in selling the quality improvements in flexo print, to the point where flexo is now regularly described as having ‘gravure-like’ and ‘offset-like’ qualities.

    In response, gravure equipment suppliers have developed presses that offer shorter make-ready times, more automation, reduced waste and lower energy consumption. Cylinder preparation has become faster and cheaper, to the extent that some advocates now suggest there is little difference between gravure and high definition flexo in terms of overall costs.

    On one point there is no debate however: if you want the highest quality, then gravure is the way to go.

    The local hero

    For many Australian businesses, however, the biggest problem has been where to go to find gravure print, especially if they’re not big multi-national companies or major exporters. The answer, in many cases, has been Asia. Certainly the phalanx of Chinese packaging printers lining up to display their wares at trade shows is hard to resist. The quality of the brightly-coloured samples looks enticing and no doubt the price is very attractive too. True, it might take a bit longer for the finished product to arrive and, if something goes wrong, it’s a long way to go for a reprint, but for many Australian businesses wanting to use gravure quality packaging going offshore has been the only option.

    Until now.

    The man responsible for this particular gravure headline is Phillip Rolls of Melbourne-based packaging company, RollsPack. The family-owned business, operating since 1985, has been predominantly a flexo house up until now, specialising in the production of tamper-evident bags such as courier satchels as well as food packaging. The recent installation of a new gravure press, however, is set to usher in a whole new era for the company and, in the process, open the door for many more Australian companies to gain access to the benefits of gravure print.

    Getting into the gravure: Phillip Rolls, RollsPack MD (front, centre) and members of his management team (from left): James Luttick, factory and operations manager; Anna Angelovski, national sales manager; Gerard Taylor, CFO; Mike Morgan, technical/QA manager. (Absent: Lidia Taneski, internal operations/purchasing manager.)

    Like many in the printing industry, Rolls has seen the gradual drift of Australia-produced packaging offshore. In part this has been driven by the decline in the manufacturing base; as companies move their production facilities into Asia, so the packaging follows suit. The result is the slow erosion of any local packaging capacity to meet the demands of Australian manufacturers. While large multi-nationals are well-catered for by the likes of Amcor, local SMEs who need and want to source their packaging locally face a dilemma. For many of these businesses, access to high quality gravure work has been out of reach, unless they were prepared to look overseas.

    With the installation of the new press, Rolls hopes to attract precisely those local producers who may not have the packaging volumes to suit an Amcor but who nevertheless want the shelf appeal that gravure offers.

    “We’re out there to support the SME suppliers to the supermarkets and other markets,” he explains. “There are a lot of them who are not getting serviced well enough and that’s what we’re trying to do, to offer that quality and service to them.”

    Winning on time

    On the phone, Rolls comes across as a passionate and determined advocate for local manufacturing. Rather than accept the inevitable – that local suppliers cannot compete against low cost overseas companies – he has decided to take them on at their own game. The key advantage he holds compared to overseas suppliers is in lead times.

    While many overseas suppliers promise quick turnarounds, the reality is often very different. Australian companies buying overseas may have to compete with US and European buyers with their much larger volumes. The result is that the work has to be fitted in when it is convenient and there is less urgency to get it done. Add on the fact that once the work is completed, it then has to shipped out to Australia, and the result is that a typical turnaround from order to delivery is 8-12 weeks. With the installation of the new press, RollsPack is now offering local customers a four-week delivery time on its gravure print. That’s a big advantage for local suppliers under pressure to get their products on the supermarket shelves as quickly as possible.

    Many local suppliers also operate on a just-in-time basis, only holding sufficient stock to meet their immediate needs. Again, that’s much easier if there is a secure, reliable supply close at hand.

    Then there’s the question of quality. While acknowledging that much of the work being done in Asia is of a very high standard, Rolls says he has also seen product arrive for clients which has been “totally unsatisfactory”. By that stage, of course, it’s often too late to do anything about it. With RollsPack, however, customers have the assurance of dealing with a local source which is accessible and verifiable, and where the supply chain is much shorter.

    “We’re trying to partner with our clients as best we can,” says Rolls. “Our primary concern is to try and make an Australian product and engage with the Australian workforce and services.”

    Elephant in the room

    Phillip Rolls is enough of a realist to know that for all the fine talk about supporting Australian business, when it comes down to the nitty-gritty of sourcing their packaging, client sentiment is hugely influenced by price. It is, he says, “the elephant in the room” in any discussions with clients who talk about sourcing locally-made packaging but who eventually go overseas, prepared to turn a blind eye to work practices and production methods that would be unacceptable in Australia.

    “That’s the challenge we’ve got,” he says. “We don’t make a big fuss over it. We just have to move on and see how we can do better.”

    Nothing exemplifies this attitude better than the investment in the new press. Moving from a flexo-based operation to gravure, although a major step, has been a smooth transition so far, says Rolls. The company undertook extensive research overseas to see similar machines in operation and to assess the quality of the final product. Staff have been retrained on the new press and although Rolls says the company is still an “infant” when it comes to gravure, the process of bedding in the press has gone well.

    He is reluctant to divulge too much information about the new press, although he says it has been specified to meet “Japanese packaging standards”. The bare details are that it is a nine-colour press with dual-sided printing for 5/4 up to 8/1 colour splits, running a maximum web width of 1,000mm with a variable repeat length and a top speed of 250 metres per minute. It uses an electronic line shaft with Sumitomo drives, shaftless bi-directional unwind and rewind, and a gas drying system. It is also a much cleaner press environmentally, says Rolls, than gravure presses of old or compared to some of those he has seen operating overseas.

    Waiting for digital

    Even with the new press still getting up to speed, Rolls says the need to assess new technology is never-ending and constant.

    “Technology can change traditional businesses over night so we’ve got to keep an eye on where technology is going in our industry.”

    Much of the talk in packaging circles these days is about where digital technology is going. Rolls says that when he first saw the Indigo presses 20 years ago, he thought “This is our future”. Today though, it is a future that is still waiting to come to fruition. Although the quality of digital print is good, he says, the production speeds and web widths haven’t progressed sufficiently to make it a viable proposition in his line of work for anything but the shortest runs.

    So for the moment, it is gravure, one of the oldest print processes, which is bringing innovation to the local packaging market. It might sound counter-intuitive in today’s digital age but it’s a move backed by sound local knowledge and a determination to match it with the best in the world. Certainly Phillip Rolls has no qualms about making such a bold move.

    “I sleep well at night, I don’t worry about what I do. I just trust what I’ve seen and learned, my gut feel, and I feel this is the way we need to go and we’re doing it.

    “Who knows,” he adds, “we might buy another one if it all goes well.”

  • Taking aim at the phoenix – Print21 Magazine feature

    Nothing provokes such an intense reaction in the printing industry as the phoenix. The merest hint of a company using the liquidation process to avoid paying its debts and carry on as normal is enough to raise the ire of honest, hardworking printers. And why not? It’s an insidious and destructive practice as well as being illegal. But if it’s really so bad, why isn’t more action taken to stamp it out? Simon Enticknap looks at recent attempts to fight the phoenix.

    It’s become a regular feature of reporting on the printing industry. Every so often, like the proverbial bad penny, a story emerges of a suspected ‘phoenix’ company rising from the ashes of its own combustion. This is the practice whereby a company goes into liquidation and then miraculously re-appears, often with a similar or the same trading name, perhaps even in the same premises with the same equipment, staff and customers. All that has changed in the process of re-birth is that the new company has managed to slough off all the bad debt associated with the old company, leaving creditors with nothing to grasp but thin air.

    It’s a practice that generates intense ire within the industry, not surprisingly given the pain that a single phoenix can inflict on many people in different areas. The creditors of the old company, typically the paper companies and trade printers, are obviously the biggest losers. Not only do they face the prospect of having to write off their debts with the old company, they are also often placed in the invidious position of having to continue trading with the new entity in the hope of clawing back some of their losses. Other creditors may include the staff of the old company who face the prospect of losing some if not all of their entitlements.

    Phoenix companies are bad for the rest of the industry too. Their re-emergence means that instead of benefiting from the demise of a loss-making competitor – one which may well have been undercutting the market – rival printers now face the prospect of competing with a new player unencumbered by debt and free to pursue its previous bad habits.

    Finally, phoenixing is bad for the rest of us as it has a direct impact on government revenues and spending. Typically in these circumstances, the Australian Tax Office is one of the biggest creditors of the defunct company due to the non-payment of PAYG and superannuation guarantee remittances. The Australian Tax Office (ATO) estimates that phoenixing activity costs the government about $600 million each year in lost revenue. In addition, the government may face the prospect of having to fund workers’ lost entitlements through the Fair Entitlements Guarantee (FEG) scheme which covers unpaid wages and leave entitlements, placing an additional strain on the public purse. In the first half of 2013, Printing Industries estimates that $25 million was paid out in FEG entitlements for the printing industry alone.

    It’s a big bird

    So how big a problem are phoenix companies? A report put out last year by the Fair Work Ombudsman estimated that the total impact of phoenixing on the Australian economy was between $1.78 billion and $3.19 billion per annum. The ATO estimates that there are about 6,000 phoenix companies in Australia.

    Given the scale of the problem, any reasonable person might expect that the authorities would be doing everything within their powers to crack down on the practice. Certainly, in the past, there have been successful prosecutions by the Australian Securities and Investments Commission (ASIC) against blatant offenders. In one case in 2009, for instance, directors of eight separate companies were banned from managing corporations for two years each for breaches of their duties in relation to phoenixing. Interestingly, in this case, the solicitor who advised the directors was also banned for six years.

    ASIC also has the power to disqualify individuals who have been directors of at least two failed companies over a period of seven years in which the liquidator has made an adverse report, such as for misuse of company assets, breaches of duty or where the unsecured creditors receive less than 50 cents in the dollar. According to its annual report, ASIC disqualified 57 directors from managing corporations in 2012–13.

    While this demonstrates that individuals can be successfully targeted for engaging in phoenix-like activity, it’s also clear that this is still just scratching the surface and that the practice remains widespread. Business groups in particular have been vocal in their calls for governments to do more to tackle the problem.

    In response, the previous Federal Government introduced legislation which it claimed was targeted at phoenix activity although, rather typically, the expectation wasn’t matched by the reality. The first bill, the Corporations Amendment (Phoenixing and Other Measures) Bill 2012, basically gave ASIC the power to wind up dormant or abandoned companies. This addresses the situation whereby a company is not placed into liquidation but simply abandoned so that any creditors seeking redress have to apply to the courts to have the company wound up. If the company has already been deregistered rather than wound up, the creditors must first apply for it to be re-registered and then placed into liquidation – a convoluted and expensive process.

    Giving ASIC the power to wind up these dormant companies is therefore beneficial for creditors, particularly for any staff who have been left in limbo by the abandoned company as liquidation automatically triggers access to FEG payments. The liquidation process may also uncover evidence of phoenix activity although, despite its title, the legislation itself does not directly address such issues.

    Ironically for the print industry, it was this Bill which also authorised the publication of all insolvency notices on a single website, thereby eliminating approximately 53,000 newspaper advertisements each year and cutting an estimated $15 million in ad spending.

    Defining the problem

    The second piece of legislation, the Corporations Amendment (Similar Names) Bill 2012, was aimed at removing the limited liability protection for directors who start up a new company using a similar name to a company which has previously gone into liquidation. This mirrors similar legislation in New Zealand and UK and, again, it aims to address one specific aspect of phoenixing, namely the repeated misuse of limited liability protection to avoid meeting debt obligations.

    Again, this Bill sought to discourage phoenix activity without explicitly defining and targeting it. And, as such, it can be easily circumvented. There’s nothing to stop a phoenix company director from using an entirely different company name to maintain their exemption from personal liability. (Besides, this is all rather moot now as the Bill still languishes in Parliament with no sign of progress.)

    These wishy-washy attempts to address the problem serve to highlight one of the key obstacles in combating phoenix activity, namely defining exactly what it is and how it differs from honest business practice. After all, it is in the nature of business for people to go bankrupt, possibly for reasons beyond their control or just plain bad luck. In such circumstances, no red-blooded entrepreneur would resent somebody having another go, and it makes sense that such people might start another company in the same industry using the skills they had already acquired. And if the new company comprises Fred Bloggs and his son, it might be entirely appropriate to call it Fred Bloggs & Son even if this is the same name as the old company. There’s nothing intrinsically wrong in doing any of these things.

    The problem arises when these legitimate practices are used knowingly to avoid meeting existing debt obligations. Most accepted definitions of phoenixing include some element of intentionality or deliberate evasion. But, as any lawyer will tell you, proving intent can be devilishly tricky.

    Law enforcement

    The other point raised during recent attempts to combat phoenixing is that substantial penalties already exist for company directors who engage in such fraudulent activity. For instance, sections 180-184 of the Corporations Act which cover directors’ duties have been used previously to prosecute directors who engage in phoenix activity. Directors who breech their duties recklessly or with intentional dishonesty can face fines of up to$220,000, five years imprisonment or both. The fact that people have been successfully prosecuted under these provisions – and jailed – should act as a sufficient deterrent for anybody considering this course of action.

    There are also provisions in existing taxation legislation to prosecute directors who use phoenixing to avoid their tax obligations. Earlier this year, for instance, the ATO executed search warrants at the premises of 80 labour hire companies in South Australia suspected of using phoenixing to avoid paying accumulated tax debts.

    The problem then is not a lack of legislation but rather enforcing what already exists. It’s significant that the Printing Industries ‘call to action’ on phoenixing for the new Federal government highlights the need to “ensure business operators understand and meet their obligations as outlined in the General Duties of Directors Section of the Corporations Act” and “enforce more vigorously laws relating to insolvent trading”. It also calls on ASIC to “vigorously apply” the banning policy in relation to company directors involved in multiple liquidations in the printing industry.

    Perhaps in response to these calls for action, ASIC recently announced that it was launching a new crackdown on putative phoenixers with a surveillance program of 1,400 suspect companies, mainly in the building and construction, labour hire, transport, and security and cleaning industries.

    Greg Tanzer, ASIC commissioner, said in a press release: “We are looking at failed companies, mostly within the small business sector, from July 2011 onwards where there have been allegations of illegal phoenixing.

    “To date, we’ve identified a target group of 1,400 companies. We’re now paying special attention to approximately 2,500 individuals who were directors at the time these companies failed or ceased being directors shortly before the companies were wound up.

    “In some cases, company failures are nothing more than bad luck. But there are some people who deliberately walk away without any intention of meeting liabilities and establish a new company to conduct the same business. We are committed to weeding out these individuals.”

    It will be interesting to see what, if anything, results from this crackdown. The phoenix is a tough old bird, highly adaptable to new environments and, by it’s very nature, almost impossible to kill. Tracking it down and eliminating it wherever it raises its ugly head is a task that is likely to continue for some time yet.

  • From pack to print – a tale of two industries

    Two trade show this year highlighted the fortunes, dynamics and destinies of two different industries. Auspack in Sydney highlighted all that is new and shiny in the packaging market, while PacPrint in Melbourne showed the printing industry at its finest. The differences and parallels reveals a lot about how these two markets are faring and what the future holds. Simon Enticknap (pictured) reflects on the important lessons to be learned.

    Before PacPrint, there was Auspack. The packaging show in Sydney was a sizable event, drawing about 300 exhibitors and a crowd of around 6,000 visitors over four days (compared to 140 exhibitors and 13,000 visitors over five days to PacPrint). There are obvious synergies between the two events – packaging is an important market for print providers and one of the main growth areas in recent years – but it is the differences between them that are most revealing.

    The Auspack show is mounted by the Australian Packaging and Processing Machinery Association (APPMA), and so the equipment focus is largely on the materials handling aspect of packaging rather its print production. Nevertheless, the print-related exhibits that were on display were interesting and even the non-print equipment was instructive.

    The key difference between the machinery on show at the two exhibitions is that, for the packaging sector, automation is king. Because of the volumes involved and the speed of processing required to keep down costs, practically every action involved in weighing and picking and filling and sealing and transporting packaged goods has to be done by machine. Packaging machinery employs robotics to a degree rarely seen in the printing industry.

    Packaging at this level, typically post-print, is done on an industrial scale and the focus is on making the machinery do it faster, more accurately, more reliably and smarter than ever before. This is an arena in which humans are simply no match.

    Of course, there is automation in the printing industry as well. The big web offset sector has become increasingly robotic with major plants using automated guided vehicles for tasks such as transporting reels of paper. It is now possible to run fully-automated systems from the platesetter to the press that will perform multiple plate changes with no human intervention – apart from telling it what to do.

    In terms of software, prepress, MIS and web-to-print systems are all highly automated these days by necessity. The whole point of having an online ordering system is to let the machine do the order-taking work so your business can be open all hours. Adding automation before a single image is produced helps to drive efficiencies, eliminate bottlenecks and maximise the profitable running of the available equipment.

    Increasingly too, this is flowing through to the operation of the production equipment as well. It was interesting, for instance, to see at PacPrint how Canon’s addition of Océ’s Prisma front-end to its production equipment is now offering operators the ability to run practically a hands-off print room across different types of equipment and presses – managing job loads, calculating optimum run times, and monitoring paper volumes, all via a screen at a central command desk. Very Star Trek.

    Digital presses, in particular, are pretty much designed to manufacture printed products from end-to-end with no human intervention, although what happens to the finished item off the back of the press is still more than likely to require the services of a bipedal hominid of some kind.

    In reality, the implementation of automated systems in the printing industry is rather piecemeal. With some notable exceptions, most print companies are a mix of manual and machine operation. In part this reflects the status of print as an industry. Packaging and processing – the art of filling and boxing – makes no bones about the fact that it is part of the manufacturing sector, the all-important end bit that stands between manufacturers and retailer. Printing, however, is more ambivalent.

    On any given week, I hear experts telling me that printers need to adopt a more manufacturing mindset and eliminate process inefficiencies through the application of more automation. The next moment I’m told that printing must move away from its manufacturing roots and become a service industry in which the production of ‘things’ is secondary to the need to deliver a service. In practice, printers tend to fall between two stools. Such is the nature of print.

    A helping hand

    So how far would you go to automate your press room? For instance, would you employ, so to speak, a robotic arm to pick up boxes or bundles and plonk them down in another location? No? Chances are there will be a European backpacker prepared to lift and carry for a few shekels a day. But will the backpacker work non-stop 24 hours a day (you might have to find three of them)? And will they work without ever getting tired or, worse of all, possibly suffering a work-related injury?

    An interesting demo at Auspack from Ferrostaal was a high-speed palletising robot, billed as the fastest of its kind in the world, suitable for lifting items off a conveyor belt and stacking them neatly on a pallet or in a carton. Such robots are capable of performing thousands of lifts per hour without ever slowing down or needing a rest break. While mainly targeted at packaging applications,Carsten Wendler at Ferrostaal said there had been interest in the robot arm from printers as well.

    Carsten Wendler at Ferrostaal said there had been interest in the robot arm from printer as well.

    Ferrostaal says this system is ‘plug-and-play’, able to be delivered, installed and working on the same day. It comes with a colour touch-screen control that allows operators to store and recall different bundle and pallet sizes, while the gripper enables variable size items to be handled without changing any mechanical parts. Wendler said the ROI on the robot is attractive compared to manual labour.

    Certainly, for any printer needing to palletise or pack regular-sized bundles at high speed, the idea of a robot doing the work is an interesting proposition. Whether there is a role for robots in the print industry on the same scale as in the packaging sector is doubtful though.

    The digital lag

    While the packaging sector leads the way in terms of robotics, in other technology areas it is the printers who forging the way ahead.

    Anybody from outside the print industry who attended PacPrint could be forgiven for thinking that the industry is dominated by digital presses of one type or another. Offset, flexo and gravure technology was pretty thin on the ground despite accounting for the vast majority of the print items produced throughout the industry. Partly this is due to the logistical difficulties of exhibiting these mature technologies but it is also indicative of the mindset of the industry.

    Printers are focused on the future and that means digital; it’s where the truly innovative technology, the processes and systems which have never been seen before, are emerging. It was notable that PacPrint featured a number of new digital technologies that were making their debut, and not just in Australia but worldwide. That’s why people go to such shows – to see what’s coming up.

    Joe Foster of Foster Packaging does short run and mockups on Indigos.

    When it comes to packaging print though, it’s the total opposite. Nearly all the print on show at Auspack – and there was a lot of eye-catching examples on all types of boxes, bottles and bags – was produced using conventional methods (I’m loath to say ‘analogue’, a term which is used erroneously as a catch-all for anything ‘non-digital’) – flexo, gravure and offset. By and large, digital print in the packaging sector means marking and bar-coding, typically in just one colour – black.

    Even so, the small amount of digital print – in the sense that most printers understand it – that was on show at Auspack was among the most interesting. For instance there was Foster Packaging specialising in packaging mock-ups and short runs using an HP Indigo press. Managing director Joe Foster is clearly something of an innovator when it comes to pushing the limits of what is possible with digital packaging. He claimed that the only substrate he’s not be able to put through an Indigo is nylon – and there are ways around that hurdle too. The samples he showed at Auspack looked first-class but he was a lone trail-blazer.

    Elsewhere, the likes of Label Power and Label Print Systems were demonstrating the latest Memjet-powered digital printers from ColorDyne Technologies. On the Label Print Systems stand, the narrow web ColorDyne Technologies CDT-1600C was printing full colour self-adhesive labels measuring 275 x 98mm at a rate of about 1 per second. The quality is certainly good enough and the cost per label is about 20 cents each. A run of 500 labels then is going to take about 10 minutes to print and cost about $100 in consumables. The A4 sheetfed version, the CDT-1600S, was equally as impressive and offers a wider variety of applications beyond labels and tags.

    Blink and you’ll miss it: The Colordyne printers on display at Auspack and PacPrint highlighted the cross-over potential of high speed digital inkjet production.

    Such production numbers are not likely to concern serious label-makers but they might interest their customers, particularly if they only require short production runs and don’t want the hassle of keeping large quantities of labels in stock. This is a shift that happened in other print markets years ago as end users discovered they could produce their own in-house colour much more easily and cheaply themselves, thank-you very much. Printers were forced to respond as whole markets disappeared before their eyes; either they got on the digital bandwagon or they went looking for other things to print.

    Judging by the vast array of gravure/flexo/offset packaging on display at Auspack, that transformation hasn’t happened to any large extent in the packaging market. Maybe it won’t, but the technology is there, at the right quality and the right price, for it to take place.

    The Chinese gorilla

    There was another noticeable difference between the two exhibitions: China. Not so long ago, it seemed as if every piece of major equipment shown at PacPrint came with its own Chinese clone, typically available for a fraction of the price. This year I saw hardly any Chinese-made equipment compared to previous shows. In fact, remarkably, I probably looked at more UK-manufactured equipment this year from the likes of Morgana, ABG and Autobox than I did equipment from China. Who would have predicted that 10-15 years ago?

    There are a number of theories as to why this should be so. China Print, held a couple of weeks before PacPrint, is now a major drawcard for the region, pulling in over 180,00 visitors over five days (compared to 314,000 over the two weeks of drupa) so perhaps that distracted attention away from the Australian market. It may also reflect the changing technology focus at PacPrint. The fact that there is now such an emphasis on digital print and processes excludes the Chinese equipment manufacturers as a matter of course.

    In contrast, the Auspack show had about 50 companies based in China and Taiwan exhibiting directly at the show, and that’s not counting those companies with local representatives or local companies with off-shore manufacturing. China now produces nearly 40 per cent of all the packaging machinery manufactured worldwide, quadrupling its output since 2006 to over US$18 billion. The next largest manufacturer of packaging machinery is Germany at US$7.5 billion.

    Most of this Chinese machinery is to meet booming domestic demand but clearly there is an export market too, as shown by the number of exhibitors of both machinery and packaging services at Auspack. Some of the Chinese-manufactured pack samples on display were undoubtedly of a very good quality, as can be seen any day of the week on your local supermarket shelves. With quoted lead times of about 4-6 weeks and, presumably, extremely competitive pricing, Chinese-manufactured packaging (as well as from Malaysia, Indonesia and Thailand) is the 800 pound gorilla in this market.

    Packaging supply chains are complex beasts though in which price is just one element. There is reliability of service too, as well as quality control, regulatory compliance and product consistency. Sometimes, depending on the packaging, it is better for the packaging supplier to be close to the producer in order to reduce transportation costs. Chinese packaging companies are also competing in a fast-growing domestic market, one in which labour costs are likewise going up which puts pressure on pricing.

    It was interesting then to see the solitary Australian packaging printer exhibiting at Auspack, Van Dyke Press based in Sydney. Specialising in packaging products such as the peelable lids found on pots of noodles or dips as well as in mould labels for the likes of margarine pots and ice cream tubs, Van Dyke Press addresses a very specific market segment. It caters particularly to the local margarine and butter industry – FMCG items that cannot be easily imported. It’s a market which, unlike clothing or electrical goods, is not going to shift wholesale offshore and which requires a dedicated, responsive packaging supplier close at hand.

    Is it a niche? To the extent that it is a very targeted product range, then yes, of course. But it is still a very big niche; run lengths are into the millions and there is an ever-changing demand for new products.

    It just goes to show that, whatever may be happening elsewhere in the world, if you have the right product mix and stay close to your customers, there will always be a demand for locally-produced print and packaging. The message to printers that emerged was to go out and find that sweet spot, and then hang on to it for dear life.

    Simon Enticknap is the Editor of Print21.

  • Vote 1 for print – Print21 Magazine feature

    It’s election time again, which is good news for printers. In the immediate aftermath, there’s a good chance that investment plans and consumer spending which have been on hold in the lead-up to a potential change of government will be activated, boosting demand for print collateral. At the same time, election campaigns are themselves significant generators of print from both politicians and government. Best of all though, it is an opportunity to witness print in all its myriad magnificent forms. Simon Enticknap gets ready to enjoy the spectacle.

    I had my first electioneering door knock back in July, well before anybody knew officially when the federal election was due to be held. At the same time, I received my first piece of election print – a four-page A5 brochure very nicely printed on uncoated stock by Canprint – in what will no doubt prove to be a steady stream of mail-outs and letter drops right up until polling day. And I don’t even live in a marginal electorate.

    There’s been a lot written about the new dynamics of electioneering using social media tools to engage with voters via cyberspace. No doubt this campaign will see social media used in ways which are new to Australian politics, following the trend set by recent US presidential elections. For many candidates though, when it comes to communicating with the electorate, print still delivers. Nothing quite beats physically putting your message in the hands of the people whose support you are seeking.

    Equally, there’s nothing quite like an election for highlighting the versatility and effectiveness of print as a communications media. There are the mail-outs – letters, brochures, pamphlets and pre-poll info – stickers, banners, badges, those ubiquitous corflute placards attached to every power pole in sight, not forgetting the millions of how-to-vote cards printed by each political party and then promptly discarded or recycled within seconds of being handed over.

    And that’s just the printing done by the contestants. There’s also the vast printing operation undertaken by the Australian Electoral Commission (AEC) to print the millions of green and white ballot papers – totalling 43 million at the last election – as well as the ballot boxes (50,000) and polling booths (150,000), the polling officials’ manuals, the scrutineers handbooks and so on. Approximately 8 million households also receive the AEC official guide to the election in what is one of the biggest print and mail-out campaigns in the country.

    All in all, the federal election is a huge printing and distribution operation that will pump millions of dollars into the local print industry – and if you miss out, you may have to wait another three years for the next one.

    Printing pollies

    Politicians love to print – especially when they are using taxpayers money to pay for it. Traditionally, sitting MPs and Senators are granted an annual allowance towards the cost of printing and distribution of information for “parliamentary or electorate purposes”. Spread across the 150 seats of the House of Representatives plus 76 Senators in the upper chamber, the allowance represents an unofficial industry assistance package, especially useful in regional parts of Australia.

    Under the previous Howard government, the allowance was increased to $150,000 per annum for lower house MPS ($30,000 for Senators) with the additional proviso that up to 45 per cent of this amount could be rolled over into the following year, enabling members to build-up a very handy war-chest come election time. The annual postage or communications allowance was also increased to $45,000 and any unused portion could also be rolled over to the following year.

    Inevitably, this led to accusations of rorting and misuse of the allowance system for party political purposes. Critics argued that it gave sitting MPs an unfair advantage over other candidates, enabling them to bombard voters with campaign material during an election. There were also allegations of misuse. As part of a federal police probe (which earned the predictable moniker of ‘Printgate’), three Queensland Liberal MPs were investigated and their offices searched for evidence of misuse of entitlements, although the three were subsequently cleared of any wrong-doing.

    From a print perspective though, it was not a good look and helped to reinforce the view that the allowance was an unnecessary extravagance. Nobody wants to pay for print they don’t need, least of all taxpayers.

    When Kevin Rudd first became PM, he quickly followed through on a pre-election promise to cut the printing allowance to $100,000. Then in 2009, in the wake of a damming Auditor-General’s report which found that nearly 75 per cent of printed material was in breach of Parliamentary guidelines, the allowance was slashed to a miserly $75,000. The move earned Rudd the ire of his own backbenchers and he was forced to stare down a revolt from within the ranks. A few moths later he was gone, ousted by the same caucus members.

    The moral is: don’t mess with a pollie’s print.

    A bigger pie

    So does the limit of $75,000 still apply? Well, yes and no. According to the Department of Finance and Deregulation, the current parliamentary printing and communications entitlements for MPs include:

    • Cost of commercial services for printing and production of e-material (including design, artwork, photography and translation) for parliamentary or electorate purposes, distribution of printed and e-material, and the establishment and maintenance of websites to the value of the standard rate of postage ($0.60) multiplied by the number of enrolled voters in the Member’s electorate plus $75,000 per year.

    The 60 cents per voter is supposed to cover the cost of a mail-out to each voter in an electorate although, with a mass mail-out, the actual costs would be considerably less per letter. The end result though is that MPs can spend significantly more on communications than the lump sum of $75,000 suggests (Senators are still restricted to $40,000).

    So, for example, in the electoral division of Fraser in the ACT which had 133,488 voters enrolled at the end of 2012, the allowance would be over $155,000. The average division of about 94,000 voters works out at an allowance of $131,400 per year, or nearly $20 million of communications business across the country.

    Given that the total allowance also provides for the production and distribution of ‘e-material’ such as websites and email campaigns, this presents an ideal opportunity for printers to demonstrate their multi-channel communication credentials. Instead of just quoting for a print-run of 20,000 DL flyers, why not up-sell them to an integrated media campaign comprising print, online and direct mail? The money is there to be spent, so go and grab some of the action. After all, it’s your taxes at work.

    Move to the right

    The honourable Members of Parliament are not the only political players with a print budget to spend. All the major political parties are also big buyers of print, especially during an election campaign, and once again, it is taxpayers who are paying for it.

    This is because every first preference vote for a party or individual at the forthcoming election is worth $2.49 in election funding (provided the party or person collects more than 4 per cent of the vote in any electorate or State). In the last two elections, between 50-60 per cent of candidates reached the 4 per cent vote threshold which qualified them for funding. For the major parties, this can amount to quite a substantial lump sum. In 2010, for instance, Labor received about $21.2 million in public funding, the Coalition about $23.6 million and the Greens $7.2 million. Even the Australian Sex Party received over $11,000, just a few hundred dollars more than the Shooter and Fishers, which perhaps says something about our national priorities.

    Of course, parties and individuals have their own sources of funding as well, and not all this money gets spent on printing anyway; television advertising takes up biggest chunk of it. Print is still in the mix though and, especially at election time, it is competing for a slice of the political pie. How much gets spent on print at a federal level is hard to determine. While political parties must declare any donations or receipts above the $11,900 threshold, there is no requirement to detail how the money is spent.

    It’s a different story at state level though where the reporting requirements are more demanding. For instance, at the last Queensland state elections in 2012, both the Labor and Lib/Nat parties spent about $7.1 million each on their respective campaigns. Of these amounts, Labor spent about $660,000 on print and distribution while the Lib/Nats spent approximately $760,000 on print alone and another $1 million with Australia Post for postage. It’s a similar story in NSW where during 2010-11, the year of the last state election, the Liberal party out-spent Labor for print and distribution several times over.

    So, with millions of print dollars up for grabs from the major parties at the upcoming federal election, your best bet for a piece of the action would appear to lie with Tony Abbott rather than Kevin Rudd.

    Pressure on print

    Away from the noise and hurly-burly of the campaign trial, perhaps the most significant role for print in the federal election is in the administration of the vote itself – the voter rolls, the polling booths and, of course, the all-important ballot papers.

    The 2010 federal election cost $100 million to stage of which $6.2 million was spent on printing and publications and a further $6.5 million on mailing and freight. Several print companies – the likes of Canprint, Fergies Print & Mail and Computershare – have successfully tendered for print contracts with the Australian Electoral Commission (AEC) this time around, and it will be their task to ensure that the print element of the election process goes off without a hitch.

    In 2010, over 43 million ballot papers were printed (comprising both green House of Representatives and white Senate ballot papers). This time around, the numbers will probably be about the same, especially now that the proposed referendum on local government has been axed which would have necessitated an additional 20 million ballot papers being printed as well.

    The challenging part of the ballot paper production is in the timing and the fact that the presses can’t start running until all the candidates are known. In a short campaign such as the current one (less than five weeks), there will only be about three weeks in which to get everything done after nominations are finalised. Moreover, a substantial number of ballot papers need to be printed within days so they can be available at early voting centres in Australia and overseas. At the last election, about 850,000 votes were cast either by post or at early voting centres.

    Hands up for an e-vote?

    As with most other print-based activities, there has inevitably been speculation as to whether or not election print will eventually migrate to an online world. Certainly in terms of campaigning, the main parties are devoting more resources to online advertising and social media etc, but what about ‘e-voting’? Will a digital click ever replace millions of printed ballot papers and pencils on string?

    The proliferation of minor parties and independents running for the Senate raises the possibility that the printed ballot paper – already measuring over a metre wide in NSW – has reached its physical limits. As a result, some pundits predict that the shift to e-voting is inevitable, mainly because of the flexibility and ease of voting from any location and the speed and efficiency of tallying the vote. And, besides, some people just don’t like pencils and paper.

    Locally, there have already been some experiments with electronic voting, either in the form of a computer terminal at a polling station where voters can cast their vote electronically or as a ‘remote’ vote via a secure internet connection. Both forms have been trialled to some degree at state and territory level.

    Generally though, there is still significant resistance to the idea of shifting to an online vote. There are concerns about security, obviously, and the possibility of digital votes being lost, corrupted or even hacked. People trust the physicality of the ballot paper, the tangibility of print. And it’s not just the safety of the systems involved which is a concern. Taking part in an election is not simply about the vote; it’s also about participation, the act of turning up in a public place to perform a collective duty. Moving the act of voting from the polling station to the privacy of the home, where people may be more susceptible to pressure from friends and family, changes the character of voting itself.

    As a research paper on e-voting put out by the Parliamentary Library last year commented: “There are some subtle aspects of ‘doing democracy’ for which the rapid-fire concatenations achievable in cyberspace may not be so congenial.”

    Indeed. Enjoy ‘doing democracy’ in September and take time to appreciate the role that print plays in one of the defining rituals of our society.

    I’m a printer and I vote

    So the hopeful candidates for your federal seat have turned up to collect their how-to-vote cards. Here is your opportunity to do a little electioneering on behalf of printers across the nation. After all, as is regularly pointed out, printing is an industry which operates in every electorate across the country; collectively, printers have a voice that should resonate all the way to Canberra.

    So what do you say? Bill Healey, Printing Industries CEO, says this is a good opportunity to remind the prospective pollies of the importance of print in a “multi-channel communications” environment, particularly given the manner in which expenditure committees these days tend to view government print budgets as an easy target for cost-cutting. Presumably if they are there to buy print, this is the ideal moment to remind our representatives that print is in fact a terrific communications tool and offers the best value for our money.

    Having done that, lead them gently to the boardroom, sit them down with a cup of tea and present the following shopping list of printing industry election issues, as suggested by Printing Industries:

    • Fair and transparent government print procurement processes.
    • Australia Post’s bulk mail pricing policies and competition with printers.
    • Access to cost-effective energy sources.
    • Support to ensure the supply of skilled labour, including overseas workers on 457 visas.
    • Taxation reform such as reducing the company tax rate, lifting the GST on books and magazines, and abolishing payroll tax.
    • A reduction in ‘red tape’ and unnecessary regulation impacting on businesses.
    • Support for the industry in its transformation from manufacturing to creative services.
    • A review of the insolvency laws to prevent ‘phoenix’ companies.
    • A workplace relations system with flexibility and appropriate rewards.

    Having made your case, send them on their way with all best wishes for the forthcoming election campaign and let the democratic processes work their magic.