NERVOUS TIMES ON TARIFFS, BUT GOVERNMENT ORDERS LOCAL PROCUREMENT

The enormous disruption to global trade caused by Donald Trump’s Liberation Day tariffs may result in a windfall for the Australian print industry, as prime minister Anthony Albanese instructs government to procure within Australia.

However, Australian printers producing work for products that are exported to the US may take a hit if the ten per cent tariff on Australian goods dents or halts exports. Kellie Northwood, CEO of VMA said, “Our members provide printing, labelling and packaging across a range of Australian goods and products exported to the USA. This includes more than $200m in wine and beverages, to the $1.3bn in pharmaceutical products. If those sectors suffer as a result of the newly imposed tariff, our members may also be affected.”

Northwood also said out that the approximately $80m in paper and paperboard related products and articles exported to the US will also now be 10 per cent more expensive to buyers there, which may have consequences for volumes.

Albanese’s instruction to government departments to buy Australian-made products came as part of a five point plan to counter the tariffs, which have upended 80 years of global trading conditions, and caused consternation around the world.

Printers have long-held ambitions to print the bulk of jobs for the Australian government, and government funded institutions such as universities, museums, and government agencies, but have been continually thwarted by what they perceive as short-sighted civil servants opting to print overseas, taking the narrow ‘because it is cheaper’ view, over the broader ‘keep the money in the country’ approach.

The print industry says that with taxes, the government would get back the difference virtually immediately if print was procured domestically, and says that the money the government spent on print locally would be used to pay Australian mortgages and support domestic household consumption, and will be invested in print equipment, print people, and local communities, all to the benefit of the country. In the US taxpayer procurement has long been mandated as USA-first policy, with overseas procurement only if no local product is available.

Northwood said, “As part of our work on sovereign manufacturing, our Made in Australia brand and programme for members is now more important than ever. The VMA has been advocating to all levels of government to ensure their procurement practices require the use of Australian printers and packaging companies for all government work. However, in practice they have not always ensured the products are ultimately made in Australia. VMA will continue pushing the government to walk the talk of this announcement and prioritise buying print domestically.

"Our current estimates indicate the Australian government is exporting some $120m of government work annually, and government departments are buying thermal receipt papers from off-shore providers, something we encourage the government to review under its procurement policies.”

However, another downside for the local print industry is that the wide ranging tariffs could ultimately adversely impact pricing of printing equipment, and printing papers, coming into Australia.

The US is a key market for the German and Japanese offset press manufacturers. North America, of which the vast majority of sales are to the US, for example represents about a quarter of the revenue for Heidelberg at A$1bn, and 30 per cent for Koenig & Bauer at A$635m. Komori’s sales to the US last year were about 15 per cent of its total, with a value of some A$200m. Taking anywhere near these numbers out of production would impact overheads per press significantly.

Digital press developers such as Canon, Fujifilm, Konica Minolta, Ricoh, HP and Xeikon also all have major markets in the US, and will also be impacted by tariffs, Wide format printer manufacturers will also be affected to the same degree. The impact would be similar to that of offset presses, with reduced revenue sending the overhead cost per press manufactured higher for everyone else.

Tariffs on goods into the US from China are now 54 per cent, from Japan 24 per cent, from Germany, the rest of Europe 20 per cent, and Israel 17 per cent.

As well as instituting the five point plan, the Australian government has provided the anti-dumping commission with an additional $50m to help it prevent product dumping, which typically occurs when overseas companies have excess product to clear, or want to enter a new market, and they sell at what is claimed to be below cost price, or below the price they sell in their domestic markets. Kellie Northwood said the VMA is well aware of the potential issues, and said, "Beyond any immediate effects, there are additional risks to the Australian economy in the medium to longer term.  We call on the government to ensure Australia doesn’t end up being a dumping ground for foreign companies that become uncompetitive in the US markets.”