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GEON failure only partly to blame for sales collapse

Friday, 13 September 2013
By Patrick Howard
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The number of presses that came onto the market as a result of Geon going broke is only part of the story behind the decline in the number of press imports.

According to a report by industry bible, Pulp & Paper Edge, the value of printing press and machinery imports at AUD103.0M in 2012-13, was down 38.1% on the previous year. Although there is no direct correlation between the value of imports of papermaking and printing machinery, the report notes that imports of both types of equipment collapsed 53.4% in 2012-13 to AUD138.3M from AUD296.9M in 2011-12. In the past three years, the declines of both have trended in very similar directions.

paper vs printing value

A leading printing equipment supplier has blamed the fire sale of the Geon presses for much of the past year’s low sales. However the trend over the decade points to the rectification of an oversupply of equipment following the massive increase in the number of long perfectors installed in the early part of the decade.

The value of imported printing equipment has declined by an average rate of 12.3% per annum over the decade but by a very large 23.6% per annum since the peak in 2006-07. Over the decade, imports of reel offset presses declined by an average rate of 8.6% per annum, sheet offset presses by 13.5% per annum and other presses by 16.8% per annum.

According Pulp & Paper Edge, the very decline in the value of sheet offset press imports requires consideration, especially in light of increased importation of mill-sheeted paper. The lower Australian dollar and difficulty in other markets has meant machine manufacturers have dropped prices where required to win sales. That does not, however, translate into such significant declines in import values. In the four years since 2008-09 when the impact of the GFC was felt, the value of imported sheet offset presses has declined by an average rate of 28.6% per annum.

For Tim Woods Director – Industry Edge, the fall off in new printing equipment poses a real threat to the international viability of the industry. “The decline in new investment in printing equipment is a real problem. Either there will be a big lift over the next couple of years, or the average age of our printing capital will increase substantially. The risk is that a failure to re-invest in new equipment will push Australia’s  competitiveness to the brink. That could open the door for growth in imports of printed material,” said Woods.
“To some extent we might be observing available capital having been pushed into industry rationalisation rather than equipment reinvestment. Perhaps that cycle is about to end and the reinvestment cycle is about to commence?

The difference between printing equipment and papermaking equipment is obvious. Although imports of papermaking equipment have been at lower levels over the decade, they have been relatively stable. The last year’s decline means there has been an average annual rate of decline of 11.7%. Had that year been excluded, imports of papermaking equipment would have grown by 0.7% per annum.

value of imported printing equipment

To an extent then, the result in 2012-13 is expected. Equipment for Amcor’s new recycled paperboard machine at Botany in New South Wales was already imported, while the new equipment for Norske Skog’s upgrade of its PM2 at Boyer in Tasmania is limited in nature and value.

While one large papermaking investment can turn the value of those imports around, for printing equipment, the trend is everything as most investments are smaller in value. These issues will be explored in detail in the 2013 edition of the Pulp & Paper Strategic Review and at the Australasian Printing & Communication Papers Market Outlook Forum in Melbourne on Thursday 28th November

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