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Colorpak calls for 15% price reduction from suppliers

Friday, 05 July 2013
By Print 21 Online Article
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Colorpak is delivering a price-point ultimatum to its local suppliers, challenging them to meet its call for a 15 per cent price reduction in their products and services, and establishing new supplier payment terms of at least two months.

In a letter sent to suppliers on 2 July (seen by Print21), Colorpak managing director, Alex Commins (pictured), said the company was instigating a ‘supplier challenge’ seeking a 15 per cent price reduction on existing prices from businesses that supply the company.

The letter requested that the price reduction occur no later than 1 August this year and added that Colorpak was open to ‘any ideas’ that would help to deliver the requested outcome.

According to Commins, the aim of the price reduction request was to help enable Colorpak to maintain its competitiveness in the Australian folding carton industry amid difficult local trading conditions.

In the letter, Commins said:

You will be aware that manufacturingin Australia is facing increasing pressures to remain competitive against global competition. Customers expect local manufactured prices to match cheaper imported alternatives. In a number of instances, our customers have moved their manufacturing bases offshore to secure cheaper labout and materials. This appears to be an ongoing trend.

In addition to the call for 15 per cent price reduction from suppliers, the company is establishing payment terms that will see suppliers’ invoices from the beginning of August onwards paid 60 days from the end of month of their lodgment.

In the letter, Commins said that the new payment terms are in response to the current economic environment as well as a ‘general trend’ from large corporate customers.

In early February, the Australian-listed print and packaging company reported a net profit after tax of A$4.72 million for the six months ending December last year, despite recording an $11.37 million drop in revenue for the same period compared to the previous year.

The trans-Tasman print company, which posted a net loss of $-3.23 million after tax for financial year ending June 2012, recorded a six-month revenue of $92.73 million, down from the previous year’s result of $104.1 million for the same period in 2012.

8 Responses to “Colorpak calls for 15% price reduction from suppliers”

  1. July 05, 2013 at 1:40 pm,

    Inky McFee
    said:

    It’s not April 1 is it? Let’s see how tough the merchants and consumable agents are on this.

  2. July 10, 2013 at 8:42 am,

    Survivor
    said:

    Great idea? If we can’t run an efficient business why not just pass the problem on to those that support us – our suppliers.

    An opportunity for all Suppliers to stand their ground. Colorpak are not the only packaging game in town

  3. July 10, 2013 at 8:46 am,

    PeeKay
    said:

    As frequently stated, the devil’s in the detail – payment is 60 days from the end of the month of lodgement.

    Invoice on 30 August; received on 1 September; posted in accounts a couple of days later; payment made 30 November and cleared perhaps four days later.

    That’s 90+ days payment terms in anyone’s language.

  4. July 10, 2013 at 9:35 am,

    Corey1
    said:

    Lets see how silly these suppliers really are.

    They will drop their prices, make even less (if any money) but hey…….Colorpak will make more money.

    This seems to be an endless circle for these poor suppliers.

  5. July 10, 2013 at 10:55 am,

    vignette
    said:

    I wonder if Colorpak has received any government grant money………..

    Surely, Colorpak’s suppliers are in the same boat regarding pricing pressures?

    One has to think, what will Australia be manufacturing in 20 years…….. Sadly, the answer will be not much.

  6. July 10, 2013 at 12:37 pm,

    Freddy Flintoff
    said:

    Really!!!

  7. July 16, 2013 at 10:11 am,

    Printy McPrint
    said:

    Spot on Survivor.
    What great business management, we need to reduce costs, let’s just send a letter to our suppliers and make it their problem. Gold!
    I wonder if I can get a refund on my MBA???

  8. July 16, 2013 at 12:58 pm,

    Sweet Success
    said:

    There is nothing wrong with Manufacturing in Australia!
    Those companies that have invested in technology, focused on value, implemented programs to multi-skill their employees, and reduced their overheads by looking after their highly effective team members and eliminating those positions within the business that are not critical – those businesses are flourishing, and will continue to flourish. Businesses like Colorpak with ‘old school’ managers like Alex Commins sitting at the top, and likely has not gone anywhere near the shop floor doesn’t have his finger on the pulse, well these companies are doomed.

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