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Businesses pay for cutting prices: Hagop’s commentary

Tuesday, 26 October 2010
By Print 21 Online Article

Industry activity may have picked up, but printers are being warned to resist the dangerous trend of dropping their prices.

In the recently released September 2010 quarter Printing Industry Trends Survey Report, trading conditions registered modest improvements in the printing and associated industries.

According to Hagop Tchamkertenian, (pictured) Printing Industries national manager for policy and government affairs, the greatest challenge facing printers is to lift their productivity levels without eroding profit margins even further.

“Printing business operators must remain focussed on containing costs given rising labour costs and the well-established downward trend in selling prices,” he said.

He also warned printers to avoid the “established trend” of lowering prices to unsustainable levels in order to win work. “If you are constantly lowering your prices then there’s only one way your business will go,” Hagop said. “We have seen a lot of companies shutting their doors because of this.”

The Industry Trends Survey Report showed that the outlook for general business expectations over the next six months remains favourable across most states. The most optimistic state over the outlook period continues to be South Australia with a net balance of 50.0 per cent followed by Victoria with a net balance of 38.7 per cent.

The vast majority of sectors are once again forecasting improvements to take place in general business conditions during the next six months.

The Other Packaging and Paper Converting, Greeting Cards, Calendars and Diaries and Business Forms and Continuous Stationery (no change forecast) are deviating from the generally optimistic forecasts.

The September 2010 quarter outcome shows capacity utilisation/activity levels were reported as being higher in the Cheques and Securities, Labels, and Paper Merchants sectors.

Considerable levels of excess capacity were reported in the Screen Printing, Graphic Reproduction, Folding Cartons, General Promotional and Commercial, and Digital Printing sectors.

With most sectors reporting increased investment or no change in plant and machinery, reported deteriorations were confined to the General Promotional and Commercial, Screen Printing, and Greeting Cards, Calendars and Diaries sectors during the six months to September 2010.


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