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Promote print outside our own industry: Andy Vels Jensen

Monday, 29 March 2010
By Print 21 Online Article

Always big on opinions, and never afraid to voice them, Andy Vels Jensen, managing director of Heidelberg, once again delivered in his usual humour at the National Print Awards. In a transcript from his speech below, he explains what the industry should be doing to prosper, and why it’s still okay to call him Rock Bottom.

Good evening. My name is Andy Jensen, but I readily admit, my wrestling name, Rock Bottom, has kind of stuck with me for the past 12 months. And yes, that would probably tie into the fact that I unfortunately remain CEO of a non-profit organisation.

2008 was an awful year; that was until 2009 came around! When thinking of equipment orders in 2009, Lara Bingle comes to mind: "Where the bloody hell are you?"

I don’t know how you saw it, but I have this awkward feeling that the rest of the Australian economy forgot to take us along for the ride on the train called "recovery". Last year, by taking a shower with Brendan Fevola, Lara Bingle made more profit than most printers and suppliers. She even got a front seat at the Boxing Day cricket for free!

In the past, I have enjoyed meeting up with fellow CEOs within other industries, but it is no longer something I cherish. As much as I have the ability to feel happy for others’ good fortune, it depresses the hell out of me to hear how well other industry sectors are doing when we seem to be left behind at the station.

However, I’m almost dead certain that following tonight’s National Print Awards, everyone will know about us, what valuable passengers we are and everything will be just fine.

Maybe not.

And I can’t blame the National Print Awards for this as it’s a fine party for everyone in the industry and a major event for NPA to stage.

The question is of course, when we decide to celebrate print, does it not make sense to invite the people: who buy print; who decide where to spend their advertising dollars; and the people who come up with regulations and policies that either helps our industry or works against it? Is the annual NPA actually a lost opportunity to promote print and our industry?

Passengers on that "recovery" train include the local big banks. The same passengers who cried for help only 18 months ago, and duly received help from government, are now riding the train with record profits and huge provisions in their balance sheet.

Maybe the print industry should look towards the banks for inspiration. You can’t really blame the banks for being slightly reluctant when it comes to funding printers and their suppliers.

We don’t exactly have a great reputation for working with stable asset values, professional companies who know their cost to print or reliable businesses ventures. We continue to come across companies who are in print for the sake of selling, not for profitability.

Every day of the week we hear and see cases where one printer undercuts another by 20 per cent, even 30 to 40 per cent. How can they? What’s the point?

It’s like the banks charging a fee on "insufficient funds" when they know in advance there isn’t enough money. It’s like kamikaze pilots wearing helmets!

Just wait, we always say, these printers who sell on only price, will eventually go out of business.

I mean, man evolved from apes, so how many monkeys can be left within print?

As you may have noticed, there are plenty around and the ones who do fall from their trees have this amazing ability to recover and crawl right back into the tree they came from.

You will note, I never mentioned the word "reinvent themselves", and they certainly don’t seem to wonder why they fell out of the tree to begin with or learn from their mistakes. Shouldn’t we all try to keep them grounded? We should, but we don’t.

I have a fine example to share with you, so bear with me for a moment.

A customer runs into difficulties with his press investment. He contacts his existing supplier and cries help. The supplier immediately proposes the only safe and obvious option: invest in a new $ 900,000 press. The customer, however, doesn’t think he can afford it. But the supplier insists he can, he can.

He reminds the customer that "buying" a press now will put $ 135,000 cash into his pocket. The big banana – also known as the 50 per cent Tax Investment Allowance.

The supplier offers to sweeten the deal even further by offering a 360-day holiday on payments. To make 100 per cent sure it’s the "deal you can’t refuse" the supplier then offers to pay out the existing press without it costing the printer a single cent. The very thing that caused him to fall out of the tree in the first place!

In other words, you can get into four-colour offset printing with a new press by accepting $135,000 in cash, you enjoy full tax depreciation over 12 months and you have no payments whatsoever for 12 months.

Or, in other words, you get paid for falling out of the tree and you get to have another go without having to put your own hand in the pocket. The only thing missing is a picture of you in the shower with Lara and Brendan!

The question is of course, will this printer, as he enters back into the tree-tops, include in his print costing the cost of the asset? Somehow I don’t think so.

At what stage does he get equity in his investment? Potentially never!

Will he use the tax savings on improving his business? Fat chance, I say.

Or will he be using the $ 25,000-plus month advantage to drop prices and buy market shares? Eureka!

And if he does buy market shares, has he considered the repercussions? For himself? For the industry?

How does he expect to increase his prices 15%-30% after 12 months when he has to start paying for his asset?

What’s different now? He still has the same problems he was experiencing 12 months earlier when he fell out of the tree and caused injuries! The good news is that the print industry loses a member and the TAB wins another gambling retiree.

Right? Nope. This time the TAB doesn’t win. But the print industry sure does lose.

The fallen printer will find another equally minded person who will offer him a similar meaningless proposition. Before you know it, the resurrected printer will be back with the same unique selling proposition, offering quality printing and complete print solutions at unbeatable too good to believe prices.

If it looks too good to be true, it probably is. Maybe that’s how the banks make profits:

  • They don’t lend money to just "anyone",

  • They always do their homework before entering into business with anyone,

  • They manage their risks and exposures,

  • They understand their cost structure,

  • They know how to promote themselves to government and use policies/regulations to improve their bottom-line,

  • They innovate and differentiate their offering;

  • They are famous for charging like a wounded buffalo;

  • They all work closely together and somehow manage to increase their prices in concert with each other;

  • They always seem to offer some sort of new service; so as to be able to charge customers for anything and everything,

  • They don’t accept 360 days delayed payment terms,

  • And they certainly don’t see a need to undercut fellow banks by 30 per cent in order to gain business.

The world has changed but we, as an industry, have not changed with it. I believed the recession would and should have forced change upon us, but apparently not.

Will it happen in 2010? What if the next PacPrint reduces in size, like other shows, and there is much less income for our associations from shows?

Will industry associations then be forced to consolidate? Will printers and suppliers pull back, as they can’t afford to be a member and supporter of "everything"?

Good chance they will. But rather than wait for change to be forced upon us, wouldn’t it be better to welcome change with open arms and fix what needs to be fixed?

North American Indians say that when you discover you are riding a dead horse, best thing is to dismount and leave the horse. The advice we seem to be following these days is more along the lines of:

  • Let’s buy a stronger whip and whip that dead horse a bit harder;

  • Let’s visit other sites and countries to see how they ride dead horses;

  • Let’s establish committees who meet to discuss and come up with ideas on how to best ride dead horses;

  • Let’s harness four dead horses and then maybe, just maybe, the power of four dead horses will make it happen!

  • Or let’s provide additional funding to improve the performance of that dead horse!

I say listen to the tribal Indians: dismount and walk away.

Having said that, what is it the industry wants from associations? Firstly, the association needs to represent and promote the industry and in cases of threats, defend the industry. Secondly, printers want to be provided help when they need it; whether it relates to HR, health and safety, to interpreting regulations and laws.

The larger companies and printers will see a value in the former, whereas 85 per cent of printers see the value in the latter. Both areas are equally important, but why spread this effort across so many associations?

We simply fail to get any value for money and we fail to deliver in both areas. Too many unhappy industry members!

APIA is doing a fine job promoting and defending the industry as pertains to sustainability and the environment. Shouldn’t PIAA, GAMAA, and all the other associations, along with everyone involved in the print industry, get behind APIA on this cause, and provide them full support and funding?

Instead of making the same effort, potentially re-inventing the wheel? Everyone agrees that we as an industry are due for a major overhaul.

And in Heidelberg we know the customer is always right, even in situations where he is blatantly wrong, unreasonable and doesn’t know what he is talking about. I mean, why else do we continue to produce square boxes for round pizzas?

My call remains for fewer industry organisations, representing the total industry and backed by all 100,000-plus industry members.

 

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