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Paper tender from Stream Solutions causes furore

Friday, 17 October 2003
By Print 21 Online Article

A senior industry source says a number of leading printers are strongly opposed to the tactic, claiming the purchase of paper by PMCs will further erode the profit margins of printers. If it becomes the norm that orders for printing jobs arrive with paper already bought, the printer “will be reduced to simply running the machine.” A concerted action campaign is being threatened to oppose the move.

The confidential tender document was sent to most paper merchants and was supposed to have closed last week. The industry source claims that date has now been extended. Paper companies contacted by Print21Online, although confirming the existence of the tender document, are bound by its secrecy clause and would make no comment.

According to Dennis Cooper, general manager of McMillan Printing Group, the loss of paper buying is a crucial matter for the printing industry. He fears that medium-sized printers will be unable to compete on price against jobs where PMCs, such as Stream, have a competitive edge with cheaper paper rates as a result of buying in bulk.

“Make no mistake, the only reason they are tendering for the paper is to get cheaper prices from the merchants. If this succeeds it will be a disaster for the printing industry, which has made all the investment in presses and machinery,” he said.

Such claims are groundless, according to Andrew Price, ceo of Stream Solutions. He says the drive behind the paper sourcing initiative is coming from its blue-chip clients who want to ensure that the paper being used in their jobs is environmentally sustainable.

He maintains the tender document is essentially an “information gathering exercise to see if there is a better way to deliver value to our customers. No decision has been made on whether Stream will in fact enter the paper chain.”

Price dismisses threats of an action campaign as “immature nonsense. I’m extremely disappointed that not one of these printers has picked up the phone to discuss their concerns with me.”

One of the issues in contention is the practice of regarding the paper merchants as unofficial bankers to the industry supplying extended lines of credit for major printers. Price claims that Stream Solutions pays its supplying printers on an industry standard 59 days, while some of those firms retain the money, using it as internal working capital and only paying the paper merchants after 90 or 100 days. This prevents Stream from getting the benefits of its prompt payment terms from the paper merchants.

“We’ve been told by paper merchants they would much rather deal with us, than with some of these under-funded printers. We would be prepared to back our paper orders with bank guarantees,” he said. “Besides, we would not be the first customer to supply paper with jobs. Anyone who does work for ACP has paper supplied.”

Opposition to the Print Solutions move is certainly not universal with a number of major printers offering support. Rod Dawson, managing director of Southern Colour in Mebourne had this to say in an unsolicited submission passed on by Price. Southern Colour has been a consortium partner with Stream over the past three years on major accounts. Our relationship has been successful due to the open communication between the management of both companies.

With the recent Stream paper tender we were consulted and informed of the processes that were to take place. There has always been a clear understanding between our organizations on this issue and we support Stream on this current initiative.

Gary Donnison, ceo of Printing Industries, said the issue was one of market fairness. “We want to make sure that printers, large and small, are not discriminated against. It’s up to the paper companies to ensure that all customers receive the same treatment.”

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