Gordon Towell – the full Print21 magazine interview
Twelve months ago, Gordon Towell and Patrick Howard, publisher of Print 21, met at a time when the former was about to embark on an ambitious campaign to create the largest sheetfed printing company in the region. One year later, they met up again at the new GEON headquarters in Banksmeadow, NSW, to discuss how the various pieces of the puzzle are coming together.
It’s been a busy year for Gordon Towell, CEO of GEON. Given the task of creating a huge, branded, printing enterprise operating across the region from the South Island of New Zealand through to Queensland in the north of Australia, he has put together more than 15 different companies, amalgamated businesses, brought in his own management team, rationalised the workforce and initiated the construction of greenfield printing sites on both sides of the Tasman.
Along the way he has overseen the investment of $40 million in plant and equipment while continuing to gobble up independent printers – the latest being Advance Press in Western Australia – in pursuit of the vision of a private equity funded uber printer. The grand strategy is that the company will be able to take its place in the top 200 companies on the Australian stock exchange when it comes time to take it public in three to five years.
While it would be naive to imagine that such a huge undertaking would go without a hitch – the best laid plans of mice and men and all that – the remarkable thing is how much of it appears to have been accomplished as programmed. Certainly the urbane Towell seemed relaxed and comfortable with the progress so far when I met him in his new office at the former Penfold Buscombe site in Banksmeadow just before Christmas. Last time we met was in the offices of Gresham private equity in Macquarie Street in the city where he had temporary lodgings while the audacious takeover of one of the few publicly-listed printing companies was underway.
Then he was the new CEO of Pacific Print Group, the New Zealand raider that had set a cracking pace with 12 takeovers on both sides of the ditch before being snapped up by Gresham. The Penfold Buscombe takeover was the next key acquisition in order to gain the necessary scale for the grand scheme to progress. The deal went through in early May and Gordon Towell and his management team of Graeme Morgan, chief operating officer, and Ross Koscharsky, financial officer, shifted from the elegant locale opposite the Mitchell Library out to the industrial suburb of Banksmeadow to get on with the business of becoming printers atop the $400 million enterprise.
Brand GEON - everywhere; corporate branding is a must
In the intervening months several transformative events have shaped the company. First there was the rebranding as GEON (which basically means the shape of things). This corporate makeover extends to uniforms, websites, stationery as well as the numerous factories under the brand. Second, there was the purchase of Dynamic Press in Sydney and the acquisition of Impressive Laser solutions in Queensland, completing the shift to becoming a total facilities management and logistics enterprise at all its main sites.
In Melbourne the company moved Graphic Printworks into the former Penfold Buscombe premises in Mt Waverly. Agency Printing and Graphic World were amalgamated in Sydney, a new site in Queensland proved a tough nut to crack while in Auckland a new powerhouse printing plant at Highbrook, ranked the country’s most impressive facility with the largest array of Heidelberg long perfecting presses, is set to completed this month. Then there was the takeover of Advance Press in WA and the installation over Christmas of a large Müller Martini binder in Banksmeadow as part of a continuing intensive capital investment programme. Finally the launch of a digital facility with a HP Indigo in Melbourne's Docklands capped off the spending spree.
Extensive back room reorganisation has taken up much of the new management’s first year. In fact, Towell nominates one of his team’s most impressive achievements as the reorganisation of the invisible infrastructure behind the operations. It took, he says, “an unbelievable amount of work this year.” For the business to list on the stock exchange, it must operate as though it is already a publicly-owned company. So, for instance, Price Waterhouse Coopers has come on board as auditors and all the different sites have been brought onto the one accounting and communications network. Transparency in costs and operations is essential and there is a continuing upgrading in systems.
As to whether production and profit forecasts have been met, Towell is reticent with details other than to express himself well-pleased with the market’s response to the company’s offering and the company’s production levels. He dismisses any suggestion of competition presenting anything other than predicted results. As far as he is concerned, the grand strategy is on track. If there was one aspect that caught him by surprise it was the time scale and “the sheer amount of work” required to fit all the pieces of the jigsaw together.
“I underestimated the amount of time it was going to take to merge all the businesses together,” he comments. “A lot of the plans and strategies were achieved but not until the very end of the year.”
Get big or get out - only large printers will survive in the future
The GEON vision relies on a controversial strategy that has split the industry into those who believe that the printing industry must rationalise the four to five thousand enterprises across the region into a small number of large conglomerates and those who see the virtue of small- to medium-sized printing companies delivering personalised, low cost service under the management of their owners.
To Gordon Towell, the former is the “blindingly obvious” way forward; only half joking he foresees a future when “there will be only four major printing companies in the region.” He cites the pressure from customers, which are themselves increasingly large corporations, to reduce their number of suppliers and to hand over control of such non-core activities as stock control and print logistics to professional enterprises with similar management structures. Key to his operating vision is the concentration on different vertical markets, such as the publishing, marketing, and financial industries, which demand different solutions to meet a large number of differing requirements.
In this scenario only sophisticated companies of the scale of GEON can afford to invest the necessary capital in the required IT infrastructure, regional manufacturing centres and personnel to meet the expectations of contemporary corporate culture. Only large enterprises with centralised procurement can extract sufficient costs from the supply chain, leveraging the scale of their purchasing power to demand lower consumable input prices and advantageous capital equipment deals.
Extracting the dollars from the chain is part of the strategy
According to Towell, during the past year GEON has “driven out millions of dollars of costs” from the company’s $80 million yearly spend, not only in areas such as paper and ink but in the host of other inputs such as insurance that are essential to operate a major business. Sometimes this can produce swings and roundabouts such as when the Red Paper Group won the GEON paper supply contract and CPI picked up the ink. Months later, CPI took over the Red Paper Group in Australia in another example of industry consolidation. CPI now shares the GEON paper supply with Spicers Paper. Agfa is the sole printing plate supplier.
However, when it comes to the decision as to which paper, ink and chemicals the company should standardise on, Towell is careful to point out that cost is not the sole criteria. The ultimate product decision was left up to a panel of general managers to choose from a nominated list of products. Many of these printing professionals, such as Tony Scanlon in Queensland and Gary Nankervis in Victoria, are former owner-operators of the companies that were taken over. Together they represent generations of printing knowledge and provide an essential strategic advantage to the company.
Hardware, software and ‘wetware’ – people are the problem
If there is one area in which GEON’s plans have not worked out according to the original scheme it is with the people. There have been a number of desertions from the ranks, notably the older generation of former owner-operators such as Don Elliott of Agency and Ron Hoolihan of Graphic World in Australia. Towell is sanguine about such events, citing the difference in lifestyle decisions that a “lot of money” can make to people, many whom were close to retirement anyway. However, many of these ‘older’ operators took with them valuable personal contacts and industry insights. They will not be easy to replace.
GEON now is a company of 1,600 people spread over more than ten sites. Towell maintains that good communication with this diverse workforce is vital to the success of the enterprises. In this respect, in addition to many face-to-face meetings, he promotes the humble corporate printed newsletter as the most effective means of staying in touch. As Towell points out, “only 20 percent of our people work at a computer terminal.” Emails don’t make it to the factory floor.
There is no doubt that Gordon Towell places a lot of faith in the efficacy of systems and partnerships and nowhere is this better illustrated than in the close cooperation that has developed between GEON and Heidelberg. Over the year, more than 30 new full-size printing units have either come on line or been ordered. There is an almost palpable synergy between the two companies, both sharing the same vision of ultra-automated manufacturing process printing. It is the type of supplier/customer partnership that underlies the GEON reason for being; committed, transparent, value adding and determined to be number one in its market.
The only certainty about the future is that it is unknown. What can be known for certain is that, love it or loathe it, GEON will exercise a defining influence on the printing industry in Australia and New Zealand. And it appears it will continue to do so under the leadership of the imperturbable Gordon Towell.
(Editor’s note: That last sentence illustrates the difficulty of making judgements in a fast-moving world. It’s fair to say that at the time of the interview even Gordon Towell did not know what the future held.)