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May the ox be with you: Andy McCourt’s commentary

Wednesday, 17 December 2008
By Print21

In 2009, we all need the strength of an ox, says Andy McCourt, who gives his commentary on what lies ahead.

If the Chinese lunar calendar is any guide, 2008 has really lived up to its name – the Year of the Rat. Although orientally-touted as a year ‘free from turbulence,’ in the West a rat, is a rat, is a rat. Sneaky, dirty, untrustworthy. Come Australia Day, which in 2009 falls on the same day as Chinese New Year, we can welcome in a much nobler and stronger creature – for it is the Year of the Ox.

The story from antiquity goes that when the ‘Green Emperor’ called the animals up for a pow-wow, the rat hitched a ride on the Ox’s back to cross a river. On the other side, ratty jumped down and ran ahead – thus becoming the first animal in the Chinese cycle of years, instead of the Ox. Typical.

In January, I picked ‘Eight for ‘08’ – trends for the rat year. How did I do? Well here they are briefly, with self-assessed and totally unbiased scoring.
1) Super-Greening of the Industry – hey, just look at us now and check out December Print21 magazine’s lead feature on Finsbury’s ‘green-eyed warrior.’ I reckon I got this one right. 10/10.
2) Processless Violet Plates – ummm … where were they at drupa? Sure they were there but the hype went all-damp and no one seemed to give a rat’s thing. Off-target, 4/10.
3) Plummeting Cost of Digital Colour – well, it hasn’t ‘plummeted’ but it’s heading down as equipment gets faster and TCO (total cost of operation) moves closer to offset. Close, but too exuberant, 6/10.
4) Digital Presses at Litho Speeds – drupa showed it can be done, and in full colour, with Océ JetStream, Screen Truepress Jet 520, HP’s prototype inkjet web press and Kodak’s Stream. Only snag is, there are none installed in Australia and New Zealand yet. A bit previous 7/10.
5) Digital Paper’s Great Leap Forward – The company I mentioned, UK’s Plastic Logic has almost completed its factory in Dresden and is wowing all with demonstrations; click here for an amazing video. Good pick 10/10.
6) Last drupa for Graphic Arts Film – well, we won’t know until the next drupa will we? But film was hard to find there and Konica announced it was exiting that business. Flexo and Screen may still use some film by 2012, and also less developed economies, but to all intents and purposes, ‘direct-to’ is killing it off. Not bad 6/10.
7) Company to Watch; Wellcom Group – they continued their growth with their fantastic digital asset-management service approach and added around $20 million to turnover. Keep watching; and admiring, 9/10.
8) Even more Print Management – just look at the new accounts won by the major PMCs but, some printers with slick sales and marketing scored a few centuries too. Half right 5/10.

Onto the Ox-wagon of 2009
The forces re-shaping the global economy right now drive right into the heart of the printing industry. There is little doubt that more pain is to come with finance harder to obtain, debts called in and spending cuts, but strong businesses who weather the storm will be well prepared for the inevitable upturn. A former President of Shell, Rein Willems, addressed over 300 business leaders in The Netherlands this month and he put innovation right at the forefront of success-enablers, ‘to win in the new economic system.’

The present economic downturn, including the implosion of large parts of the international banking system, is just the beginning of a new economic system. The company or organisation that understands best and earliest the direction in which the new system is heading, and is able to innovate in that direction, will be a winner in the next upward cycle,” cites Willems.

Most significantly, he added: “Sustainable innovation can only flourish when government offers a long-term stimulus.Too often it is a stop-and-go policy, while sustainable innovation is intrinsically a long-term play.”

We are already seeing signs of Government stimuli – first with the financial aid packages that will hopefully turn into real strategic plans for industry. The ‘hands off, low-regulation’ method has failed miserably. In the USA, UK and here it has merely enabled crooks, charlatans and scammers to exploit the system to an appalling degree – even the former head of the NASDAQ, Bernard Madoff, has been arrested for the biggest financial fraud in World history – AUD$76 billion. In Australia, the child-care firm ABC learning – who many long-established community child care operators said were up to no good five years ago – came crashing down and is under investigation.

So what is the ‘new economic system’ and how can print businesses innovate to do well in it? Reuter’s analyst John Kemp gives a clue; he wrote:
After six decades of uninterrupted credit creation and an unprecedented era of consumption and prosperity, the credit process has come to an abrupt halt. If credit has been the locomotive of the modern economy, the third quarter of 2008 marked the point when the engine stalled and the economy began to roll back down the hill.”

So one thing the new economic system will likely feature is less credit, and that applies to credit terms offered by printers too. The smart printer will come up with innovative new ways to deal with customers, not chasing work ‘to keep the presses busy;’ supplying digestible bites of business printing (meaning mostly digital), that are either paid for in 7 days, or paid up-front by use of business credit and debit cards. It will be the work you say ‘no’ to that will keep you in business. By the way, Rupert Murdoch stated last week that News Corp: ‘didn’t owe a penny to banks.’ All News borrowings are from the public sector and very long-term. So maybe we should fire our banks?

The new economic system will put real values on assets, not over-inflated ones for the purpose of gaining more finance. Credit and debt coupled with bizarre financial instruments that sell both as ‘investments’ (derivatives), have pushed the world to the brink of fiscal anarchy. In 1952, for every $1 of US GDP, there was a manageable $1.32 of debt. By the end of 2007 it was $3.55 – three-and a-half times more debt than the USA was producing – where could it possibly end up except where it is now?

We elect Governments to run countries and states, implement policies and improve society. Most are reacting well to the financial meltdown but it is fair to say, at least in the USA, the Bush administration caused it by taking all the controls, checks and balances off. They allowed lunatics to control the asylum.

In the new economic system, there will be a return to ‘old values.’ A fair days work for a fair day’s pay; a reduction in ostentatious showy displays of wealth; an aversion to reckless risk and every ‘rat with a gold tooth’ that offers a too-good-to-be-true high-return investment will be shown the door. The economic principles that America was built on, as written in Adam Smith’s The Wealth of Nations will be resurrected. In the 1987 film Wall Street, Martin Sheen’s character Carl Fox summed it up nicely when admonishing his Gekko-apprentice stockbroker son:
“Stop going for the easy buck and start producing something with your life. Create, instead of living off the buying and selling of others.”

Create. That’s another word for innovate. The new economic system will place great value on the ability to create new ways of doing business, new edgy ideas, turning conventional thinking upside-down. Also from the movie Wall Street arch inside-trader Gordon Gekko famously said:
“I create nothing. I own.”

So hitch up the wagon of innovation to the strong Ox of common sense, perseverance and industry and you should ride out the first half of 2009. As Chauncy Gardner said in another great movie, Being There:

“In the springtime there will be growth.”

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