Posts Tagged ‘McCourt’

  • The digital packaging promise – How real is it? – Andy McCourt’s ReVerb

    With almost religious fervour, many in our industry believe that digital processes can accomplish anything…eventually. While digital’s track record in SRA3 sheetfed printing, wide and grand format, labels, mono books and transactional printing is impressive; most attempts at breaking into the lucrative packaging sector have floundered; so far.

    The success of digital label presses from HP Indigo, EFI Jetrion, RapidX, Xeikon and others can be explained by the nature of the label market. The end product is print-intensive, on a narrow web. Inks are applied to a familiar substrate and finishing systems are openly available to foil, emboss, coat, matrix strip and rewind. There is existing demand for short-run colour labels that can be applied to a wide variety of products from smaller producers of foodstuffs, beverages, cosmetics and so forth.

    Moving up the packaging foodchain, we get to flexibles where, apart from prototypes and test marketing, the sheer speed and versatility of flexographic and gravure presses stands firm against digital. Add to this the fact that flexible packaging is less graphic intensive and more to do with the protective function of the bag. Of course, stunning graphics adorn most BOPP, LDPE, PET, Foil and Paper bags but the materials and converting define the end product. Even humble plastic bread bags require micro-perforating to allow the bread to ‘breath’ and delay the formation of mold. Reels of printed flexible packaging do not become fit for purpose until formed, welded or glued, wicketed and heat-sealed.

    Most flexible packaging uses white ink and this tends to slow down digital presses, as does the addition of special 5th, 6th and 7th colours. While producing great quality, this has relegated digital presses to be servants of the larger, faster flexo and gravure presses – to produce tests, prototypes and gimmicky personalized short runs.

    Next are the folding carton and corrugated packaging sectors where again, we are seeing great leaps in the level of graphics applied. Where once a corrugated carton would be plainly printed in one or two colours; pre-print and treatment techniques are producing cartons with outstanding colour, design and detail. The digital manufacturers have their eyes keenly on this market and would like a healthy slice of it; but there are barriers.

    Corrugated lives in a world of its own! While working in the UK in the 1990s, I was asked to promote a Corrugated trade show by the Ipex organizers. “They have their own trade show just for corrugated boxes?” I mused. I soon discovered a captivating world of high-precision engineering, converting, die cutting, assembly and; just as an afterthought; printing. Here lies the heart of the matter.

    With folding cartons and corrugated, printing is by far a junior partner in the manufacturing process. In his recent masterful analysis, Jeff Wettersten of US Packaging consultants Karstedt Partners noted from his days at a company called Inland Container, a maxim from a senior sales executive: “if we make digital printing about the ability to print a box, we all lose.” It’s worth checking out Karstedt, they are on top of their game: www.karstedt.com

    This is a powerful observation. Converters have many options for the supply of graphics to their containers but their first priority is that the container is manufactured with high-integrity and fit to…well, “contain.” The print on the box is almost as superficial as McDonald’s “D’you want fries with that?”

     

    Do you want Printing with that?

    My primary advice to anyone looking at digitally-printed production of cartons is to look at the converting end first, and then decide on a digital print platform. You might be surprised at the new names you will come across such as:

    Barberan: Barberan is a Spanish company established in 1929 and today is a major supplier of lines to add value to MDF, Particle board, doors, furniture and so on by printing, laminating and wrapping patterns on the otherwise plain materials. Packaging containers are a recent addition.

    Sun Automation: Converting manufacturers first, and now with the CorrStream digital print engine for corrugated board.

    You might also want to check out trends for digital printer suppliers to form allegiances with converting manufacturers such as September’s Kodak-Bobst one: https://print21.com.au/kodak-and-bobst-pack-a-punch-with-deal/65976

    Then of course are the B2 and larger digital inkjet presses from Screen, Fujifilm, HP Indigo and upcoming Landa Nanography. Converting the printed board digitally is only just beginning to be addressed by firms such as Highcon and delicious embellishing by the likes of Scodix.

    However, for the main part conventional converting lines for digitally-printed corrugated and folding cartons remain the preferred option. On the press side, VLF offset presses rule the roost.

    Unlike labels, digitally-printed cartons are more challenging markets to enter and be successful in. There are some established and very knowledgeable players who are seen by their customers as thought-leaders – they look to them to lead them into new areas such as personalized packaging and versioned products. The press is not driving this thinking; costs, brand appeal and converting innovation are.

    There is no doubt in my mind that digital printing will come to have an impact on the folding carton and corrugated markets, but I do doubt that it will be as rapid, or as penetrating, as in commercial digital print, wide-format and labels.

    Perhaps ‘hasten cautiously’ should be the byword. Happy New Year.

  • Who really killed Fairfax? – Andy McCourt’s ReVerb

    Since last week’s release of Pamela Williams’ book Killing Fairfax, the media and blogosphere has been abuzz with opinions, views and predictions. In this week’s ReVerb, Andy McCourt gathers together a lineup of the likely suspects behind the publisher’s perceived demise.

    In the wake of the release of Killing Fairfax, The Australian newspaper went as far as to say that Fairfax would, by 2015, cease printing its Monday to Friday editions of The Age and The Sydney Morning Herald (SMH) altogether – an assertion that was scathingly rebutted by Fairfax CEO Greg Hywood in a rather grandiose old fashioned ‘thunderer’ editorial; not once but twice in the weekend and Wednesday editions. Maybe all he needed to write was: “Well they would say that wouldn’t they?”

    The 330 printers and staff at Chullora and Tullamarine are already on death row job-wise. Fairfax has openly stated that these print supersites will close by mid 2014. Hopefully, some will find employment within the remaining printeries such as Ballarat, Richmond and Newcastle but with 1,900 Fairfax Media redundancies by 2014 announced last year, the signs are not good. Tullamarine opened in 2003 and Fairfax now depreciates its presses over 10 years useful life, so the heavy metal owes them nothing.

    Killing Fairfax may be a sensationalist, celeb name-dropping take on the situation but it is well researched and crafted by Williams; who is ironically a Fairfax employee and was granted a six-month sabbatical to write the book. The whacky world of media whoredom is further illustrated in that a Murdoch company – Harper Collins – published the book. Howzat? Another book by a former Walkley-winning Fairfax editor Colleen Ryan, The Rise and Fall of Fairfax, was released on July 1st by Melbourne University Press and is a less sensationalist account and therefore drew less publicity than the ‘A’ list name-backed version.

    What is of more concern to our printing industry is that the once-mightiest and longest-established media empire in Australia and New Zealand is under the microscope for potentially abandoning print – denied of course by the Board and even majority shareholder Gina Rinehart reinforced this saying: ‘as long as it makes commercial sense,’ Fairfax would keep printing newspapers.

    There’s no need for verbs intransitive; the ‘old’ Fairfax is actually dead. The last director-shareholder with the family name, John B Fairfax, made a sour exit in late 2011, selling out and losing around $900 million in the process for his family company Marinya Media. The last Fairfax on the board, JB’s son Nicholas, resigned in November 2011. So, with the motto “Fairfax is dead, long live Fairfax,” here is a list of possible suspects for the homicide, presented in ‘whodunnit’ fashion.

    James Packer and Lachlan Murdoch: these two likely lads as much as confessed at the book launch but may have been verballed. “I think we killed Fairfax,” Packer allegedly said. “We did” said Murdoch and they were seen toasting to this. Forensics point to the Packer-Murdoch weapons of seek.com, realestate.com and carsales.com as causing mass hemorrhages from Fairfax’s rivers-of-gold classified advertising.  Further investigations reveal long-held animosities stemming from stories published in Fairfax titles about their Dads. Seems they regard the Fairfaxes as stuck-up silvertail parvenus. They, of course, are your everyday likeable larrikin billionaires. Verballed but not guilty.

    Gina Rinehart: Galled at Fairfax journalists’ probing and publishing of her family matters, Rinehart first tried to stop it through litigation, (bad move with the media) and then started buying shares. Her ally ‘Hungry’ Jack Cowin won a seat on the board and she now sits at just under the 19.99% ownership that would trigger a an automatic take-over offer. Six years earlier, Fairfax was worth 20 times Rinehart’s nett worth. Today, the world’s richest lady could afford thirty Fairfaxes as it is now valued below $1 billion. The sad part is that this is apparently a case of a very wealthy mining person buying into a media group, not for a good investment or love of newspapers, but to shut up, or get rid of, journalists for revealing the truth. Is this what our forebears fought for? She and Cowin could mince up Fairfax and make burgers out of it, then sell off the scraps and it would not matter one jot to them. Definitely one in the frame.

    Warwick Fairfax Jnr: The unfortunate Warwick Jnr. Took over the Fairfax crown jewels in 1987 and promptly set about re-privatising the listed company. Unfortunately his ‘banker’ was ‘last resort’ Laurie Connell’s Rothwells which went belly-up in the crash of ’87…eventually followed by John Fairfax’s receivership in 1990 when Warwick’s takeover vehicle Tryart could not meet its debt obligations. Canadian Conrad Black cobbled together a consortium – Tourang – and bought Fairfax out of administration in 1992. This was the first death and resurrection of Fairfax and young Warwick certainly has to shoulder some blame, but he has been out of the picture in the USA since 1991, away from the Killing Fields.

    Journalists: Journalists?? Sorry to say, but the very people who have made Fairfax newspapers so great over the years have contributed to the Killing. When David Kirk ran the company, he wanted to take The Age and SMH tabloid. ‘Over our dead bodies’ cried the avant-garde journos; and they eventually got their wish. The line sold to the public was that the presses could not produce tabloids (why can they now?) but I have from reliable inside editorial sources, that the journo lobby would not tolerate a reduction in editorial space from broadsheet luxury.

    Their power was drawn from the infamous ‘Editorial Independence Charter’ written in 1991 by then Chairman Sir Zelman Cowen, that Rinehart has consistently refused to ratify – in other words leave the door open for interference in editorial matters. However, the journos’ fear of ‘tabloidism’ was irrational and would have still been subject to the Charter had The Age and SMH gone ‘compact’ years ago. Didn’t they realise that it is advertising that pays for running newspapers?

    News Corp: News has outfoxed Fairfax at almost every turn for the past 30 years. News Corp prints papers that more people buy, went to paywalls for online/mobile content way before Fairfax and has more efficient production sites, best illustrated when the Brisbane Courier Mail went from broadsheet to tabloid in 2006, it was accomplished seamlessly, reduced costs and increased circulation. Even in Fairfax’s core metro territories of Melbourne and Sydney, News Corp titles outsell The Age and SMH by a country mile. There are only two national dailies in Australia and The Australian outsells the Financial Review almost twofold.

    News Corp also has the suburban community freesheet markets by the short ‘n curlies. Free mX commuter newspapers have also succeeded where Fairfax failed. News Corp Australia prints, sells and distributes over 17 million newspapers every week. Maybe News’ success could be put down to the fact it is run by people who really know newspapers and their communities; just maybe.

    Technology: Are the iPad, iPhone, online services and social media to blame for killing Fairfax? Hardly; Fairfax is into all these platforms and its websites attract more visitors than even News Corp’s (pre-paywall). Blaming technology is a cop-out; a media organisation’s job is to reach audiences and attract advertisers while delivering content that people want. Profits should follow if good management, vision and execution are in place. Not guilty.

    Successive boards: Since Sir Warwick Fairfax died, the boards and CEOs of his company have chopped and changed, appointed publishing-illiterate CEOs, failed to have long-term plans, ignored warning signs of public media tastes, shunned technology until dragged kicking and screaming into it (or executed it woefully-remember f2 online?) and fought with each other. Alan Kohler, a former Fairfax editor, put it most succinctly at the launch of Killing Fairfax: “It’s the main job of a board to ‘smell the smoke coming under the door’….The Fairfax board couldn’t even see each other for the smoke – and they still couldn’t smell it.” I can’t beat that…a serious case for the prosecution.

    I dunnit: Privilege: this is not a confession. But I did cancel my home delivery of the SMH. Not that I didn’t like the paper; I do but I got fed up of retrieving a soggy glad-wrapped tube from the wet grass. Even glad-wrap can’t protect a newspaper in a Sydney downpour. The wrapping itself was frequently unfathomable, requiring a chain-saw to get it off. The remains of the newspaper were then so curled up they required a ten-ton drop hammer to flatten them out. Contributory manslaughter, maybe, but I plead insanity, triggered by frustration.

    We all dunnit: You, me, society, GenX, Y and Z and the butler. Our tastes and desires in media have changed. Not enough of us want the much-vaunted ‘quality’ Fairfax type of journalism and we don’t buy enough newspapers or subscribe to e-versions anymore. The core product -news – is available instantly in our pockets via smartphones and the more serious commentary or investigative stuff is shunned for: ‘Kim’s mummy-tummy gone as she frolics with Kanye in a barely-there bikini.’ Ho-hum; bet Kanye looks daft in that. Moreover, we decided to look for new jobs, houses, cars and relationships online; we want the well-written pieces but we want them for free. Fairfax is sooo-Twentieth Century and we are über-cool urbanite 21st Century know-alls who don’t need smart-alecky publications to inform us about this and that. We want to know who wins the X-Factor and The Block; how to lose weight and who is dating who.

    We are all in ‘the frame’ for killing Fairfax; some more than others but the fundamental rule applies, as it always has: adapt, change and act or die out.

    For Fairfax Media, especially the printers, I hope it is not too late.

  • China’s rise dampens 2nd hand print equipment sales

    The used printing equipment markets both at home and overseas continue to be in the doldrums with prices below half of what they were a decade ago. The recent Geon and Blue Star auctions showed that there are still buyers out there, but they expect low prices.

    Gone are the days when a top-brand press might be worth close to the purchase price three or four years later. The traditional used equipment buyers from China, India and other parts of Asia are increasingly buying new presses.

    “The used graphic machinery game has changed enormously,” says Andy McCourt, who has both auctioned and sold millions of dollars in equipment over the years to buyers locally and overseas. “Not so many years ago used equipment trade was worth more than new – around $40 billion a year versus $35 billion for new.

    “I don’t have the numbers for today but they are decidedly down due to the rise of China, the impact of digital where the used market is nowhere near as strong as with offset; new media and post-GFC effects,” he says.

    McCourt says he has been trying to help Smeaton Grange, NSW printer Tony Wolf & Son offload his late 1988 Roland Favorit RVF OB (pictured) for some time. According to McCourt, he “very nearly had it sold to Turkey but that went quiet and recently a Bolivian buyer went all the way up to requesting invoicing and bank details, but never came through with the money. The owner now has to vacate his premises and move elsewhere, so it’s ‘give-away time’.”

    According to McCourt, the Roland press is in good mechanical condition and was printing great commercial work all the way up to last Christmas. It’s still powered up for a demonstration near Liverpool and is a four colour plus coater Favorit RVF with new IR lamps throughout. Sheet size is B2; 720mm x 520mm. Tony Wolf will accept $10,000 ‘take it away’.

    “I can point to several of this model, probably not in as good condition, on the world market for $35,000 to $50,000 – there’s even one in Europe asking $95,000. At $10,000 to take-away, it’s an absolute steal,” says McCourt.

    Anyone interested should contact Ian Wolf by email: ian@wolf.net.au or phone: 02 4646 1714.

  • Click go the sheets boys! – Andy McCourt’s ReVerb

    Andy McCourt weighs in on a second round of debate about the local printing industry’s digital click-charge model following a spate of lively reader comments last fortnight in response to his ReVerb article, ‘Give the click the flick’. This time around, McCourt highlights how it can often be horses for courses when it comes to the click-charge model race.

    “Click go the shears boys, click, click, click
    Wide is his blow and his hands move quick
    The ringer looks around and is beaten by a blow
    And curses the old snagger with the blue-bellied joe.”

    Apologies to all the genuine shearers out there but this traditional Aussie bush ballad could easily be adapted to the pace at which digital click-based printing is thrusting into our industry – with sheets instead of shears.

    Two weeks ago I had the audacity to challenge the click charging model in the digital printing sector in what was originally entitled: ‘Is it time to give the click the flick?’ Publishers being what they are, and quite rightly so, condensed this to ‘Give the click the flick’ – it makes more sensational reading. But the debate is still there, naked and raw.

    I have never said click-based charging where the digital press supplier gets a slice of the printer’s profit is wrong. With the pun unashamedly intended, I’m not saying it’s ‘fleecing.’ It’s a business model offered and it’s up to the printer to negotiate a rate on the basis of his volume if he wants to; or buy equipment on a non-click basis of paid-for consumables and service if he prefers and is able to drill down to his real costs.

    Evangelists, disciples and atheists

    Nevertheless, the article produced some emotive commentary, which I will divide into three categories:

    EVANGELISTS: True believers in the click, mostly suppliers who of course benefit from it because each month hundreds of thousands of dollars turn up based on metered usage of their equipment. It is in the best interests of suppliers to keep their machines in production, and so service is included, and this takes some worry off the shoulders of the customers.

    DISCIPLES: Customers who have done well out of forging close relationships with suppliers on a click model. They don’t have to worry about accurate costings – it’s all done for them and hidden inside the click rate and, so long as they can maintain or increase monthly volumes, they roll over to a new machine every 2-4 years. So long as prices per A4 (still the standard sheet area for resale calculation) do not drop below the click+paper amount, they make profit and are happy, so “it’s not broke and we don’t see why it needs fixing.”

    ATHEISTS: Believe in the separation of power between Church (brand of supplier) and State (the wider printing industry). Will not accept suppliers taking a chunk of their profits with digital anymore than an offset vendor taking a cut of every offset sheet. Prefer to finance equipment, pay for consumables, parts and service and calculate their own cost of production, which should be lower than the click+paper model.

    There are also the Agnostics; a sort of hybrid between Disciples and Atheists. They have majority offset or flexo (if labels) production where a click is unthinkable, but also run a digital division where they accept click charges because it is too much trouble not to, for the small amount of production it represents.

    It is apparent to all in western developed economies that digital production is growing at a rate where it will eventually catch up to or overtake offset in the number of pages produced. When is a matter of conjecture. This is occurring at both micro (many installations of lower-volume digital presses into SMEs and print departments) and macro levels (high to very high volume digital, mostly inkjet webs).

    Shift happens

    With this shift in our industry come new challenges in costing. Marco Boer, VP of US research organization IT Strategies, recently commented: “Even those who have bought and are running these ink jet production printers on a daily basis may not fully understand their costs; all they know is that they are making profit.

    I think Boer is right, so long as there is ‘slack’ in the market, demand is rising and profits are being made; who cares what a click is? In the same discussion: “The Pluses and Minuses of Inkjet ROI” initiated and superbly articulated by Xerox USA veep of Inkjet Dustin Graupman here, the issue of ‘co-dependency’ between suppliers and printers comes up.

    This co-dependency appears to be the kernel of the issue – at what point is a supplier welcome to be an integral part of a printer’s business and at what point are they like party guests who won’t go home at midnight even though you have your pyjamas on already? Worse still; what if they sleep with your spouse? By that I mean the contentious issue of suppliers becoming printers and competing for accounts that you may already be servicing: it’s happening.

    Think about wide-format digital, possibly the most successful sector in the graphic arts right now. The click or usage charge model just doesn’t exist there: businesses buy the presses, buy their inks coatings, service and parts and are in control of their costs and mark-ups. The presses have resale value as used machines because someone else can buy it, run it, and do so on the level playing field of an open market. Most small format digital presses are hard to sell openly as used because, without a re-negotiated click/service from the supplier, they are almost worthless. It’s almost like restrictive trade since only a supplier can put their own equipment back into market, holding all the ‘aces’ of parts, service, consumables and click rate.

    We are an industry in change; not just because of technology but also in the way we function at the business level. Certainly, the awful failures of the past couple of years have highlighted the need for a re-think of the way traditional sheetfed offset businesses are run and financed but we should not forget that, for every failure there are several success stories who have quietly held their ground and can now pick up the low-hanging fruit left behind by the failed companies.

    With the increased thrust of digital, each business must decide what works best for them. Higher volumes of digital approaching offset might necessitate a re-think of the click model and therefore knowing the real costs – a task made more complex by the myriad variables of digital. I’m working on such a calculation method, and it is indeed complex.

    In the meantime:

    “ Shearing is all over and we’ve all got our cheques
    Roll up your swag for we’re off on the tracks
    The first pub we come to it’s there we’ll have a spree
    And everyone that comes along it’s, “Come and drink with me!”

  • Give the click the flick – Andy McCourt’s ReVerb

    The click-charge has come a long way since its earliest days in the office copier market. Now it’s king of digital production printing. Andy McCourt reckons it’s time to give the click the flick and move to a more mature charging model for what has become a major print production sector.

    When the wonders of digital production printing arrived in the printing industry in the 1990 it came complete with a business model directly from ‘photocopier central casting’  – the charge-per-click impression model. But as digital printing becomes mainstream, it is time to abandon this taxation-like system and consider non-click models that allow printers to take back control of the pages.

    The best business model to accumulate large sums of money is the taxation system. With GST, for example, the more we buy and use, the more we pay to the state and federal coffers. In return, we receive benefits back: schools, roads, health services, a defence force and of course the machinery of government itself; those lovely Canberra and Wellington pollies and public servants that we cherish so dearly.

    The attraction of the taxation system did not escape the pioneers of photocopying. Making copy machines, selling them and supplying toner and developer would deliver only a manufacturer’s profit margins. But what if they could gain a small amount of revenue from every page that was copied? In return, the copier suppliers would provide maintenance service, parts and toner – maybe even paper at a push. All they needed to do was get the maths right.

    A case of doing too well

    The pioneer copier company – Xerox – did get the maths right and how. So successful were the Xerox copiers of the 1960s and 70s, particularly the iconic 914, that the US Federal Trade Commission took anti-trust action against the company, since it held almost 100 per cent of the market. Xerox was forced to license its entire patent portfolio so other firms could make copiers – and also charge click rates. The torrents of cash flooding into Xerox resulted in the establishment of the famed PARC research centre, where the PC, GUI, mouse, laser printer and PDL were developed, but never commercialised by Xerox as young tyros like Steve Jobs and Bill Gates seized on the computer revolution.

    So, the copier world became addicted to clicks – and why not? It was, literally, a license to print money – for the suppliers. When Canon introduced the CLC 1 in 1987, the licence extended to CMYK colour – with some villains taking ‘printing money’ too literally and forging banknotes on them. They were always caught, unaware of certain security features woven into the images, that enabled tracking back to source (warning: they are still there today).

    Click charges made fortunes for copier suppliers and paid for the BMWs beloved of highly-commissioned copier salespeople in the 80s. But then someone wrote a RIP that turned colour copiers into printers; page-per-minute speed accelerated and in 1993 Indigo and Xeikon set the copier world on a collision course with traditional printing with the introduction of the first true digital colour presses.

    As digital page volumes increase, the stampede to ‘control’ page output and secure click charges accelerates. Theoretically, the number of MIF (machines in the field) should bear a direct co-relation to the monthly click volumes charged, but faster digital presses have made this assumption suspect. The game now appears to be identifying the high volume printers who can guarantee a fixed number of impressions/clicks per month or year. We are talking several millions here.

    No ‘clicks’ with offset

    The notion of an offset press manufacturer charging a ‘click’ on every impression made on one of their machines is horrifying to any self-respecting printer. However, back-door ‘click-model’ offset press sales have been made here in Australia and New Zealand – with disastrous results.

    Where a press supplier offers a TCO (total cost of operation) deal to a printer that includes finance, plates, prepress, blankets, ink, service maintenance and buy-back/trade-in prices based on annual metered usage after 3, 4, 5 and up to 7 years; this is a click charge by another name. It was a method favoured by Geon and the ‘old’ Blue Star Group, and we all know where that ended up.

    Being given a heatset web press on a payment holiday did Diamond Press no favours in 2000 – they won most of the Olympic printing contracts but went under owing millions in April 2001. There were others. Events such as these should make one think about the long-established and proven way to start or expand a business: begin with a great idea and business plan, investment, working capital, proficiency and hard work. If you make it too easy for anyone to enter a business sector with little or no capital commitment, no concept of real costs and suicidal pricing, there is only one likely outcome.

    The click-only trap

    A recent development in click marketing is for high volume digital presses installed on a ‘click-only’ basis. With no capital outlay and the press remaining the property of a supplier, the printer is in effect a ‘facility manager’ on behalf of the supplier, who reaps a fixed per-page ‘click tax’ based on a guaranteed minimum number of impressions.

    A printer under such an arrangement becomes little more than a labour-and site-provider for the supplier, who benefits from ‘gifted’ clicks that can be serviced directly should things go wrong because most digital suppliers have print management divisions. The ‘free machine, pay click’ model also disadvantages other printers who have financed their equipment, perhaps securing it against personal assets.

    Perhaps, now that digital presses are faster, more robust and utilised on more than one shift, it is time to sell them on an equipment + service + consumables + parts basis and leave the cost calculations up to the printer, just like the offset world. Operating leases can still be used to make monthly payments on a rental basis and keep Capex off of balance sheets, should that be desirable.

    As click-charges go down, it becomes more attractive for suppliers to pitch for major volume accounts through their print and facilities management divisions. This presents an ethical, as well as commercial, dilemma to the industry – just when is it acceptable for your machinery supplier to also compete against you as a print service supplier?

    One complaint on the supply-side is that ink or toner coverage in practice, exceeds that which is the norm when click rates are set. In mono transactional statement days, a high-volume digital press could be assured of no more than 15 or 20 percent coverage. Enter CMYK++ and solid colour backgrounds and it can rocket up to over 100, 200 or 300 percent – no problem if you are on a fixed click-rate regardless of coverage but take a look at the fine print of your contract and you may find ‘excess toner use’ clauses in there!

    Maybe we should ‘flick the click’ altogether for production printing, keeping it only for light volume and office-type printing which is where it all began with copiers. Efficient suppliers should still be able to make their profit goals by pricing service contracts, parts and consumables appropriately. The fear of inferior third-party inks and toners finding their way into big brand equipment is easily addressed in the warranty and service contract terms.

    However, to do this, digital printers need to know their true costs and very few do. In the next ReVerb, I hope to have ready a downloadable spreadsheet that should help anyone considering a new digital press to calculate their true cost-per-impression and make informed decisions on whether a click or no-click model is better for their business.

    Digital printing is generally a more profitable business than offset but it’s just a question of who gets the lion’s share of the profits.

  • Auspack Plus packs a mighty punch – Andy McCourt’s ReVerb

    Auspack Plus kicks off in Sydney this week, with the packaging and processing expo hosting a dizzying array of suppliers within the sector. Andy McCourt investigates how the trade show is excelling in an industry that is just as difficult and competitive as the local printing industry.

    Auspack Plus – PacPrint’s close ‘cousin’ trade show – held in Sydney this week, is a growth success story in just as challenging an environment as printing and the graphic arts.

    As PacPrint shrinks, Auspack Plus is growing. Without VIEE Image Expo, PacPrint stands at around 9,000 square metres – down from 17,000 at its peak. Auspack Plus is at 7,300 square metres; smaller but on an upward path.

    PacPrint – in two weeks – will be a great show, due in the main part to huge efforts put in by digital suppliers on giant stands, such as Currie Group, Ricoh, Agfa, Fujifilm/Fuji Xerox, Konica Minolta, Canon, Kodak and Screen plus others. Auspack Plus has more exhibitors but typically on smaller stands.

    Yes, PacPrint is a not-to-be-missed event but contrasting it with the growth of Auspack Plus, perhaps there should be some pause for thought with respect to future directions of both PacPrint and PrintEx….and maybe lessons to be learned from Auspack Plus?

    Looking around Auspack Plus, it’s hard to believe that there has been a GFC, high Australian dollar and poor manufacturing environment. The show is the largest it has ever been, a total sell-out of around 7,300 square metres of actual stand space. Shuttle buses are bringing visitors in from the airport and CBD and the car parks are filling up. Delegations from China and other Asian countries are plentiful alongside many local visitors and exhibitors.

    Luke Kasprzak, Auspack Plus event manager.

    Event Manager Luke Kasprzak (pictured) puts the success down to knowing the market, listening to what it wants and ‘providing the right platform for business, education and networking.’ In the midst of Auspack Plus are the 2013 APPMA Awards of Excellence, a vital part of the event, says Kasprzak: “It’s recognition for outstanding innovation in packaging and processing from design to production.”

    Looking around the Auspack Plus show floor there are many familiar names that can also be found at PacPrint: Ferag, Esko, Ferrostaal, Kurz, Label Print Systems and Spectra Training. Some of these are divisions within the organization that specialize in the processes of packaging while others, such as Label Print Systems are directly involved in supplying the equipment and converting systems to produce labels. LPS’ new Memjet-powered Colordyne printers in both roll-to-roll and sheet & envelope versions were on display and these can also be seen at PacPrint from 21st May in Melbourne.

    The Ricoh name was also spotted on the Milford Astor stand – for their thermal ribbon transfer printers more so than the printers and copiers.

    Joe Foster of Foster Packaging does short run and mockups on Indigos.

    Printers servicing the packaging sector are also exhibiting such as Brookvale, NSW’s The Van Dyke Press with a range of labels including in-mold, heat-seal, wrap around and flexibles. Le Mac is a major player in all aspects of labels and packaging in Australia and beyond and this company has Australia’s only Dotrix digital press for short run flexible products. Le Mac even had personalized Coke bottles on display, and two delightfully outgoing, blue-haired, promotional ladies!

    The internationalization of AusPack Plus is very apparent with over 60 overseas exhibitors, out of a total of around 240. There are many new exhibitors from PR China in particular but also from Thailand, Malaysia, Korea, Taiwan and Italy. Even early on the first day, the buzz from the floor was very lively and the shuttle buses were bringing more and more visitors into the show.

    “We expect in excess of 6,000 trade visitors,” said Luke Kasprzak; “and we have 27 countries represented here. The event is one hundred percent owned by the APPMA, with a sub-committee specifically assigned to the success of the show.”

    DIGITAL IMPACT IS SHOWING 

    Auspack has always featured a good number of suppliers for marking and encoding printers; Imaje, Domino, Zebra to name but three.

    What is very apparent at the 2013 event is that the digital printing is enabling the packaging industry to step up to full-colour labels produced either in-house or in short runs from trade sources.

    An example of this is Foster Packaging’s Mock-Up-Studio, who specialize in mock-ups and short runs for many kinds of pouches and cartons.

    Large Chinese delegation at Auspack Plus.

    “We produce the mock-ups using HP Indigo technology on pre-treated substrates and then finish and fill them by hand, so they look like the real thing,” said Joe Foster, head of the Dandenong, Victoria-based company.

    Foster helps its global clients design, develop and test new packaging ideas but also own a gravure press for production.

    Amid all the conveyors, fillers, bottlers, check weighers and sealers, full-colour digital labels are also an increasing feature of Auspack Plus. It can be expected that this will be a growth area for the next show in Melbourne in 2015 where no doubt new generation, faster digital label presses will be everywhere.

    Auspack Plus is owned by the APPMA – the Australian Packaging & Processing Machinery Association – and organized by Exhibitions & Trade Fairs Ltd. It runs for four days from 7th to 10th May, and is being held at Sydney Showground, Sydney Olympic Park.

  • ‘Phoenix’ laws under the microscope – Andy McCourt’s Reverb

    In a timely supplement to last week’s Reverb article, Andy McCourt (pictured) looks at the growing attention being directed at the sort of laws that allowed February’s GEON receivership and legal debt nullification, with a British parliamentary review tackling ‘pre-pack’ provisions.

    A Parliamentary Committee in the UK will conduct a thorough review of the abuse of pre-packed administrations in late Northern Spring, it was has reported that by a leading UK publication, Accountancy Live.

    It was reported in Print21 on 25 February that the KKRM attempt at placing GEON into administration and then buying all or some of it back from the receivers was a UK/US-style debt-wiping ‘pre-pack.’ It would now appear that legislation in the country that allowed pre-packs to flourish from the 2002 Enterprise Act, is now back-tracking due to massive abuse of the administration process.

    Pre-packs have never been a prominent feature in ANZ insolvency practice, but the net effect has undoubtedly been achieved in the past, by using DOCAs -Deeds Of Company Arrangement. Not all pre-packs per se are negative; if properly conducted in consultation with creditors and other stakeholders, they can constructively save companies and preserve jobs. However, the temptation to totally wipe out due debts and staff entitlements and start afresh has, more often than not, proved too great for the pre-packers (some would say ‘phoenixers’).

    In halting the KKRM-GEON pre-pack, Australia and New Zealand have established a landmark case for any future attempts both within and without the printing industry. With GEON, all the hallmarks of a pre-pack that would return little to creditors but make large sums for KKRM were apparent:

    • KKRM was asked to provide emergency funding, reportedly $3 million, to keep GEON trading in February. It was declined.
    • KKRM was in possession of a debt of approximately $92 million it had acquired at a heavy discount from bankers.
    • KKRM as senior secured creditor called in the receivers to GEON Group companies, and followed this with an offer of repurchase.
    • KKRM declined to pay past due GEON debts to paper suppliers in order to secure on-going paper supply. If these debts had been paid or guaranteed, paper supply would have been forthcoming.
    • In post pre-pack failure comments, KKRM has indicated that, had it succeeded, plant closures and job losses would still have been implemented

    Lord Younger, in announcing the review to the House of Lords on 13 March said:

    “On the review issue surrounding continuation of supply to insolvent businesses, this is now the subject of a government amendment being debated shortly. We propose to consult on the issue prior to implementing reforms and I am satisfied that this will address the concerns in this area.”

    KKRM via its Australian partner Allegro Funds was asked a series of questions to contribute to this article but has offered “no comment” to all.

    The complete announcement from Accountancy Live can be read here.

  • After the fall: GEON – Andy McCourt’s Reverb

    In the aftermath of the GEON collapse and the ongoing developments seeing parts of the group sold off and other parts shut down, Print21‘s Andy McCourt (pictured), investigates the increasingly complex series of events surrounding the failed print group’s demise and lays it out plain and clear for all to see.

    The outpouring of grief, disappointment and outrage over the situation with Geon and its group of companies, shows no sign of abating. For displaced staff, the injury is being compounded by the insult of not having separation certificates issued and being told to register with FEG/GEERS for any hope of a portion of their entitlements. This is a dark time indeed in the history of the printing industry, industrial relations and insolvency practice. Put another way, it’s a diabolical disgrace.

    I knew and did business with several of the business owners whose firms subsequently formed the agglomerated Geon group. Don Elliot (Agency Printing) has already aired his disgust publicly and questioned how a very profitable business can be handed over to new management who so swiftly destroyed all the value. The Van Weeren family of Dynamic Press, which suffered the tragic early death of its heir apparent and my friend Ray, would have to be one of the most successful family-run mid-size printers ever. Hard-nosed to do business with and demanding to work for, but committed to maintaining secure employment in a family atmosphere.

    The late Ron Hoolihan of Graphic World can not speak for himself so I will try: he’ll be turning in his grave. I am told on reliable authority that another printer who sold to Geon/Gresham wept openly when news of his former business’s closure and sacking of staff was announced.

    So, how do these MBA and CPA-endowed wunderkinds of the financial world manage to raze-to-the-ground and trample upon a collection of good businesses that were once the pride and joy of family owners, highly profitable, tolerable employers and so attractive that they were bought for good sums? Is there a post-graduate course in blithering idiocy for some MBA-PE types?

    The pride that existed on the pressroom and bindery floors of these once great businesses never went away. This was the human capital that the likes of Geon and the ‘old’ Blue Star were fortunate to inherit. The private-equity backed owners played it to the hilt, citing all the usual corporate platitudes of ‘loyalty’ and ‘people are our greatest asset’ and ‘proud to be a member of such a great team’ – before turning on them like a cobra striking at its prey and then severing all the lifelines that might offer hope. “Don’t be evil” is Google’s motto; theirs may well have been: “Be evil.” Having acquired once proud businesses and staff who took great pride in their work, all that this particular branch of private equity management could deliver was false security.

    Lulled by corporate mission statements and platitudes; mind-numbed by banal work practices requiring skilled press operators to stop printing while they swept the floor, kept yellow lines bright and the old lie ‘people are our greatest asset’ – savvier Geon staffers just quit, while those with fewer choices stayed in a place that, according to some, seemed to take on all the characteristics of Orwell’s dystopian 1984 – complete with Proles, Newspeak and Thought Police. Not to mention a Big Brother.

    A DISGRACED BRAND NAME

    Then there’s the renaming – Geon – it’s what a great industry friend, now retired, would call ‘an exercise in applied wankmanship.’ The more academically inclined might call it epistemological solipsism, but ‘applied wankmanship’ will do. Geon: – do you know what it means? There are three possible meanings, all of them apposite to the press-wreck we have witnessed. A Geon can be a theoretical object or shape corresponding to ‘Biederman’s Recognition-by-Components Theory’ – is that clear? In Physics, a Geon can also be a theoretical electromagnetic or gravitational wave held together solely by its own energy field. In Geology; it’s a long, long extinct time period such as Jurassic and Mesozoic.

    Not only did Geon, under Gordon Towell’s  CEO watch, choose an appalling name to replace the more logical Pacific Print Group, but it then, under Graham Morgan’s watch, ‘refreshed’ the brand mere weeks before disappearing up its own Geon. This makes Nero look like a brave firefighter in ancient Rome.

    Destroying brand value, profits, jobs and reputations has many faces but the most prominent one I can see in all this is: greed – closely followed by incompetence. Becoming wealthy is not necessarily an essential by-product of greed. Some people can create fortunes by just being honest with themselves and others – Warren Buffet for example; Bill Gates is another. Even our own Kerry Packer was unfairly charged with being greed-driven; I think he was more achievement-driven and hyper-competitive; like Dick Smith, another example.

    No, the greed that has driven Geon to where it is now is all the corrosive, amoral, lying, exploiting and manipulative kind of greed that betrays its own needs and wants. Gresham Private equity thought it could make a massive return for its #2 Fund by loading Geon up with debt, leeching all the value out of it and selling it off like discarded old wife – for just $1: ONE DOLLAR!! according to the AFR’s ‘Street Talk’ columnist Anthony Macdonald. KKRM saw that it could buy Geon’s (and other) debts at a huge discount but claim back the full amount by use of a dextrous piece of corporate chicanery whereby anyone owed unsecured money – including staff – by Geon would suddenly be cast into a mire-filled ditch of unrecoverable bills and claims. If anyone believes that the asset sale followed by liquidation of Geon will realize more than the $92 million it owes to KKRM, the Tooth Fairy will visit you at 5am tomorrow.

    A DEEP AND DISTURBING KNOCK-ON

    It’s not just the big debts to paper companies, the ATO and staff entitlements that should worry us. Geon dealt with scores of smaller suppliers, contractors and service providers.

    With an estimated $120 million of debt – $92 million of which is KKRM’s secured amount purchased for much less than half of that from Lloyds/BOSI; it is easy to focus on big unsecured creditors. However, the hurt drills down deep into our industry with dozens of small suppliers and contractors, such as David Crowther’s  Colour Graphic Services who provided ISO 12647 implementation, uniting and certification services to GEON.

    Crowther notes: “I’m not saying what we are owed but it is a very significant amount for a small service business like ours. We deliver a very high level of personalised technical support and training which makes it all the more painful when that goes unpaid for. I have made a lot of close working relationships with GEON staff, and even have a few close friends that I have known for over 35 years. Yes I have been hit hard, but there is always someone worse off than yourself and I really feel for those struggling with a family, mortgage and wondering where there next pay check is coming from.

    “For me I like to take a positive outlook and not to dwell on the past. There is still a number of high quality, well run printing businesses that I deal with day to day, so it is head down still doing the best I can to deliver what I believe is the regions best colour quality systems support,” he says, just one example of many.

    As these smaller creditors seek to re-engineer their businesses to cope with cash losses, they themselves may struggle to meet their obligations. Some will survive – usually by mortgaging personal property – but some will fall by the wayside in a sad but inevitable knock-on effect as certain as tsunamis follow deep sea earthquakes. Most of these will go unreported as the Geon debacle winds down.

    IN THE LAP OF THE RECEIVERS

    And winding down it is; we are nearing the final round of asset sales prior to the March 25th, or thereabouts, second creditors meeting. McGrathNicol, on both sides of the Tasman, are furtively seeking buyers.

    Andrew Grenfell and William Black of McGrathNicol NZ, in response to my questions on Geon’s NZ operations including the world-class Highbrook supersite have said:

    “(We) are pleased to confirm that offers were received by the deadline of Friday 8 March 2013. The receivers are currently working through those offers. As negotiations have not yet completed the receivers cannot comment further at this time.”

    With yesterday’s news that wages will continue to be paid by the receivers until the end of this week, things are looking better for some of our Kiwi friends than they are this side of the ditch, unless you are one of the unfortunate ones to have already lost their jobs, courtesy of the receiver.

    The GEON administrators, PPB Associates, are there to administer the assets of the business because the directors believed the company was, or risked becoming, insolvent. Sources close to PPBA are at pains to point out that it is the receivers, McGrathNicol, and not PPBA who have the necessary employee information to issue separation certificates and advise asset purchasers such as Blue Star on how to contact staff to whom they wish to offer re-employment.

    PPBA does however have a role to play in the availability of the Fair Entitlement Guarantee (FEG: formerly GEERS) to ex-Geon staff. They are working closely with both FEG and McGrathNicol to determine the best outcomes. For employee entitlements to be paid from Geon receivables, there must be a surplus from the realized ‘circulation assets’ i.e. debtors, cash-at-bank and non fixed-asset incomes. First dibs go to the administration and receiver’s fees, then staff entitlements. For fixed assets (presses, property etc), the secured creditor KKRM comes ahead of staff, so there is little hope there of a surplus.

    McGrathNicol is highly respected  in the insolvency world with several high-profile receiverships and liquidations either under their belt or in progress such as ABC Learning Centres, Allco Finance, Banksia Securities, Harris Scarfe and the infamous HIH Insurance to name but a few.  Like all registered receivers, they must declare independence and impartiality in any receivership or liquidation.

    Receivers’ and administrators’ fees often come in for criticism and they are certainly high, with a Senior Partner charged at anything up to $700 per hour and even a junior admin assistant at $160. The hours for multiple associates can mount up to a frightening level; PPBA disclosed their estimated costs for the first six days alone of the Geon administration at around $100,000, before McGrathNicol’s fees.

    Receivers and administrators pay themselves first ahead of all other creditors. When you consider the risk they take in guaranteeing wages and debts during the administration, this is understandable but can sometimes result in all surplus recovered assets being used to pay fees. I know this from experience; I was once owed a paltry $3,500 by a company placed into liquidation. I optimistically put my claim in with the receivers, only to be informed a few weeks later that there was no surplus as all the recovered monies had gone in fees and the company was 100% liquidated.

    THE QUICKER THE BETTER

    So, the best hope for staff entitlements is that McGrathNicol can wrap this one up fast, keep fees down and leave some money left over from circulating assets (there is an ASIC formula for calculating the percentage of their fees attributed to circulating/floating and fixed assets). At this stage, no one knows, and in the meantime they have fired workers on both sides of the Tasman to keep their wage bill under control.

    Receivers and liquidators are all-powerful; the Kings of the jungle in the corporate menagerie. They have teams of forensic accountants to go after the money and if they find illicit goings on, must report these to ASIC who can and have, as in the case of HIH (Ray Williams and Rodney Adler), prosecuted and put perpetrators in gaol. They are the fiscal waste collection and recycling service for businesses; an essential service that cleans up other people’s mess and attempts to return distilled purity to the market. Sadly, there is always collateral damage and that means individuals and families. Insolvency Law is currently under Treasury review with the Insolvency Law Reform Bill, and none too soon.

    It is heartbreaking to read some of the ex-Geon employee and smaller supplier comments on this forum. The spin and disinformation fed to them appears to have continued right up to Geon’s last breath, creating the false sense of security. Even the AMWU was ‘Of the view that this was a very viable company.’

    For many of the proud and highly skilled staff of Geon, everything will be too late but the hope on the horizon is that the new houses of Blue Star/Wolsely/Selig in Australia and Blue Star/Mercury/Sturgess in NZ are built on much more solid foundations with industry-knowledgeable heads, a firm capital base and realistic expectations of returns.

    The pride of members of the ANZ printing workforce is immortal: – the false security engendered by Geon Group is already smouldering in the dust of decay and putrefaction.

    McGrathNicol Australia and KKRM via Allegro Funds were invited to answer a series of questions for this article but at time of completing, have not done so. Thanks to PPBA and McGrathNicol NZ for their input.

  • GEON – It’s a Pre-Pack! Andy McCourt’s ReVerb

    Shock, emotion, uncertainty, anger and vitriol have reverberated around our industry since the announcement of GEON’s administration followed by receivership. In the midst of this, logic and reality appear to have taken the back seat. Print21’s Andy McCourt (pictured) takes a closer look at the situation.

    The term ‘Pre-Pack’ may not be widely used here but it is well known in the UK, particularly in the printing industry. In simplest of terms, a Pre-Pack administration is one where the directors have already made a deal with the administrators and receivers before placing a company into CVA (Company Voluntary Administration). The deal of course is to buy all or part of the company‘s assets back and continue business under a new name or a slightly changed version of the old name (e.g. XYZ (2013) Pty Ltd).

    Changes in 2002 to UK law, known as the Enterprise Act, made Pre-Packs legally achievable over the more dubious practice of Phoenixing. Predictably, there has been an avalanche of unpopular Pre-Packs since then. Australian law has never embraced the concept of Pre-Packs but there is no doubt the practice exists here in process if not name – click here for details.

    Corporate Law firm DLA Piper notes:

    “Despite all of the impediments outlined above, pre-pack transactions have been successfully implemented in Australia by way of a receivership sale of assets or a restructuring and trade-on through a Deed of Company Arrangement.” The full article can be seen here.

    So, a rose by any other name smells as sweet and it is possible that KKR/Allegro (KKRM) are using gray areas of Australian corporate law to achieve a Pre-Pack outcome at GEON. Incidentally, the M in KKRM stands for ‘McKeller’ after the project name to acquire the distressed debt from Lloyds and BOSI. It’s after our poet Dorothea McKellar, ironically, who wrote ‘My Country’. Insolvency law has been under review by government committees for some time. There appears to be a dire recognition for the need to change, but a distinct lack of strategy and policy to achieve it. See my column from April 2010 here.

    The June 2012 Act known as the Tax Laws Amendments Measures have been reported elsewhere to make illegal ‘Phoenexing’ to avoid PAYG tax and Superannuation Guarantee Levy payment obligations, with directors supposedly personally liable for Tax and SGL. However, first ‘Phoenixing’ must be proven and any country town solicitor would be able to challenge that. All it needs is a new company name and anyway, directors with less than 12 months service are not liable.

    This means, if any of the KKRM executives have taken or will take on directorships of GEON (currently only Samford Maier and Jack Crumlin are listed as directors), they are not liable under the Act. Speaking of Jack Crumlin, he is a partner in Norton Crumlin Associates of North Sydney, who still have the (pictured) proud boast on their website about helping Gresham and GEON. Just how is ‘success’ defined in your world, Jack? Anyway, GEON is being groomed for a Pre-Pack, not Phoenixing because Phoenixing is naughty and possibly illegal.

    Why Pre-Pack? This is the simplest question to answer. It wipes out all debt and yet leaves the assets of the concern in the hands of the former owners for a fresh start. It’s a dream process for the owners, a nightmare for creditors – unless as the owner, you are also the most senior secured creditor and your ‘debt’ suddenly becomes equity in a business with plenty of assets but no liabilities.

    It is still possible that KKRM might be ‘gazumped’ that is that the Receivers might receive a higher offer from a third party and they are legally required to consider all the best outcomes for the business. If this happens, KKRM still win as any proceeds from the sale, less fees, would go to them in majority.

    This is how the growing world of private equity works. The degree of financial and legal sophistication is light years ahead of the average print business owner-operator. Nothing in what is happening in the GEON receivership is illegal, it would appear. Sure, there is moral outrage and gnashing of teeth by unsecured creditors – and understandably so.

    Employees of GEON would have to be the group that is suffering most and what is about to happen is a 2-edged sword. Their only hope of continued employment and perhaps even some of their entitlements such as long service leave and super, is that either the Pre-Pack is successful or a White Knight buyer scoops the company. It’s not a nice space to be in.

    And what of GEON’s customers and long-term contracts? By definition the contracts are voided by the insolvency…they can choose to keep printing with GEON or take their business elsewhere.

    The entire issue is vexed with contradictions and conundrums but this is the price we pay for operating in a free market economy. When it is working well, we praise the system; when it fails, we curse it.

    I expect to see a Pre-Packed GEON emerge within 10-14 days, there are time requirements on the process. Where it goes from there is anyone’s guess.

    Let’s hope the lessons are learned and learned well.

  • Paper: not so yesterday – Andy McCourt

    In the era of the ‘paperless’ office, kindles and well-meaning environmentalists demonizing the blank page’s use in day-to-day business, Andy McCourt revisits some of the reasons why it will continue to remain vital to the world at large.

    Responding to stupid and ill-informed statements about the use of paper and printing has become quite passé since the old adage: ‘there is no cure for stupidity’ remains true.

    However, doing a spot of Christmas shopping in a Dick Smith store, I came across the pictured POS display promoting the Kindle: “Who thinks paper is so yesterday? – Dick Does.”

    Oh really? Apart from the sign being printed on paper board, in the next aisle were dozens of inkjet and laser printers and, in pride of place, a tower of reams of A4 paper on special (pictured). Every product in the store used paper in some way to package and promote. Woolworths, Dick’s parent company until recently (it’s now owned by Anchorage Private Equity), could not survive without paper for packaging, signage, labeling, receipts and presumably in the bathrooms too.

    The biological entity Dick Smith, was, and still is, a great supporter of Australian printing. His Australian Geographic magazine, catalogues and, today, his marvelous all-Aussie Dick Smith Foods use sensible and environmentally-sound print and paper. He never would have supported such a stupid headline by the current Dicks.

    If any of those Dicks are reading this, if you care to rise above your state of ignorance, modern managed forests and paper production are more sustainable than the internet and torrents of e-waste. UN research shows Europe has 30 per cent more forested area now than in 1950, North America also has more and the leader in increasing its forest area since 2000 is China at 1.6 percent annually.

    Managed forests lock-in carbon and water and for every tree felled, more than one is planted. One of the end products is paper (the other being timber) and this can be recycled over again – unlike most e-waste. Carbon emissions from internet/computer related use today are almost on par with the airline industry – approaching 400 million tones of CO2 a year.

    Australian printers such as Finsbury Green have greatly reduced water, solvent, VOC, carbon and paper waste over the past decade, to the point where Finsbury will be carbon-neutral by 2015.

    Kindles and other e-readers are fine if they encourage literacy. Like it or not, ‘Fifty Shades of Grey’ started out as an e-book and has now reached 60 million copies sold in paperback. But for Dick to say paper is so ‘yesterday’ is clearly headed in the wrong direction.

  • So you think you’ve gone digital? Think Again – Print21 Magazine feature

    Say digital to most printers and they think digital printing. Say it to the rest of the world and they think internet, online, mobile, tablets, e-readers and TV. With the stellar growth of the digital economy, all print providers need to have a strategy that accesses it, says Andy McCourt. Having a website is not enough; having W2P is better but to truly extract dollars from the digital economy, you need an all-encompassing strategy and a heart for change.

    The majority of printed products convey information. Even printed packaging, although it also protects and preserves, is there to convey information about the contents; the brand, the ingredients, the use-by date. Sectors such as printed ceramic wall tiles, floor covering, wallpaper could arguably be purely decorative but even these convey information about the culture and aesthetics of their originators.

    Today’s information business is operating in two economies and, yes, they are also two-speed economies. The digital, bits and bytes-based economy is roaring ahead to the extent that many of the most valuable companies in the world are primarily players in the digital economy like Apple, Google, Facebook, Microsoft and Amazon. Print media is stuck in an ‘atoms-based’ physical world where costs are rising, distribution is lengthy using trucks, ships and planes and, although global growth exists, it is tiny at around 1.36 per cent CAGR (source: smitherspira.com). When dissected into Western and Asian/emerging markets, it is clear that print media is declining in the West and growing in regions such as Asia, South America, Africa, the Middle East and former Soviet bloc economies.

    This is not to say that all areas of printing are doing badly right now. Outdoor media, for example, posted a third quarter growth of 6.5 per cent last financial year, its 11th consecutive period of growth (source: OMA). Billboards and other roadside attractions were the major earners and these are all currently printed; however there is a nascent digital screen display threat even to this market.

    Many digital on-demand printers are doing well such as Sydney’s SOS Print & Media which more than doubled post-tax profits to $520,000 in FY 2010-11, the result of a smart sales strategy and heavy investment in high volume digital production. Melbourne’s On Demand is prospering for very similar reasons.

    Some of those bêtes noir of our industry – print managers – continue to grow despite some recent well-publicised failures. Genii Print Management based on Sydney’s northern beaches has just topped $10 million in sales from a scratch start in 2009. Established by former Blue Star web sales manager, Marcus Smith, with a bit of help from his UK mate, Simon Biltcliffe of Webmart fame, Genii claims to buy about 50 per cent of its print within Australia with the rest coming in from China. The sales and production team continues to grow as they win more accounts.

    The term that defines virtually all of the success stories in print is digital. Not just the act of printing digitally but, as Nicholas Negroponte said in his 1996 magnum opus, ‘being digital’. Being digital encompasses all manner of digital technology, leveraging the digital juggernaut to move atoms. Take Kogan <www.kogan.com.au> for example: it sells the same appliances, computers, TVs and mobile phones as Harvey Norman but while Harvey’s profits dive, Kogan’s rocket because it is an all-digital sales channel for atoms-based products: – they’ve tapped into the digital economy and printers can do it too. Hopefully these eight steps will set you on your way.

    Supercharge your website: So you have a website that was designed five years ago and tells the world you are a craft printer with a ten-colour perfector and a Tiegel. I’ll be frank with you – no one is interested. Supercharging your website is about making it sing and having new information daily. ‘Last updated October 1876’ is the kiss of death on websites. A website is not a substitute for an advertisement or a brag-book. It is a business in itself – or businesses since you can have many. Get professional web designers to make it over, identify the products you offer first not the equipment they are manufactured on, incorporate W2P as a priority, not an afterthought. Sell to the world – the internet is global. What? Who is going to buy 1,000 NCR three-part A5 docket books from me in Iceland I hear you ask? Probably nobody but could you manage business cards with special finishes, books by Australian authors, photobooks with a free stuffed Koala or personalised drink coasters? Even some trade printers know the way to supercharge a website, such as <www.lepcolourprinters.com.au> – take a lead from them.

    Embrace W2P: Embracing web-to-print is not an option. Now or later, it is a necessity. In her book, Jennifer Matt of the US webtoprintexperts.com, states it quite succinctly on the cover. Web (where your customers are) 2 (how to reach them) Print (what to sell them). People now spend more time on the internet and mobile devices than reading printed products (source: WPP), so it makes sense to try and reach them there. W2P has other advantages in that it automates the order process, captures all existing and new customer data, enables the selling of additional items (binders, branded coffee mugs, corporate apparel, software, business aids) and can lessen credit risks by having up-front payment options.

    Get your app together: Apps, or mobile applications, are the biggest thing in marketing today. They are those things that come free with your iPhone or Android phone or can be downloaded from various app stores such as Apple’s iTunes. While many apps are for entertainment, business apps are rapidly becoming the preferred way to shop for mobile and tablet users. While W2P simplifies customer interaction and ordering in the office or home, apps can push specific customer experiences wherever the smart phone goes. By 2017, around 3 billion smart phones will be in use around the globe and mobile transactions will amount to about $730 billion (source: comScore & Juniper Research). Already mobile apps exist that deliver a printed product: <www.mypersonalpostcard.com> is one and <www.moonpig.com.au> is another. You can even take a photo with your iPhone, upload to an app and have a printed t-shirt delivered within seven days. I am an app developer myself and will be releasing the first one in early 2013 – selling a particular kind of print to the world and producing it all in Australia. If I can do it, you can too!

    Appoint a social media/SEO Google-iser: Even with so much evidence around them, some printers continue to drink their own Kool-Aid and see social media, Google Adwords and search engine optimisation (SEO) as petty subordinates to the might of the press. It’s time to reverse the thought pattern. The most successful companies today have whole departments dedicated to seeding, engaging with and fertilising the social media world. The world’s largest media buying company, WPP, will spend more with Google next year than it did with a ‘major’ media group. This will be via Adwords, affiliate marketing, referrals, tagging, YouTube and so on. One of the best practitioners in our industry is @PenguinUKbooks on Twitter – take a look and learn. Whether in-house or outsourced, your SM/SEO Google-iser will be the best investment you can make if you plan to be in business for the next 10 years.

    Hey, you get on my cloud! If you are old enough to recognise the play on this Rolling Stones hit of the 60s, you need to take note. Cloud IT services that enable you to accomplish all that is needed to engage with the digital economy mean that you don’t need to buy expensive software and employ geeky IT people. It can all be licensed and operated in the cloud. Cloud computing is an article on its own but, to grasp the point, go to <www.pixfizz.com>, take the demo, set yourself up in an online photobook business for as little as $500 a month and start selling photobooks to the world.

    Offer things other than print: When I worked in London, a British comedian by the name of Les Dawson was celebrity presenter at the UK Print Awards, held at the swanky Dorchester Hotel. Les liked a drink and when he came to announce the Gold Award for ‘Self-covered four colour offset catalogues, saddle-stitched and less than 32 pages’, he suffixed it with an aside ‘Whatever the *#@! that means’. You see, we can get obsessively absorbed in the process of print and convince ourselves that it is all people want from us, when in actuality they want a nice warm and satisfying buying experience. If you do a good job on a person’s business cards, who is to say they won’t buy embroidered polo shirts from you? Look at the specials on <www.gorillaprint.com.au> and you’ll see printed tote-bags on offer at 99 cents each, minimum order 500. They don’t even print them; the order goes to an offshore producer who ships the finished items. See the point? Another good example of this ‘full service’ offering is <www.prografica.com.au>.

    Stop quoting – start winning business: A popular definition of insanity is to keep doing the same thing while expecting a different result. In the printing business, this is: make or receive a sales call; prepare a cost estimate; quote the customer; wait. After a long wait, call the customer and ask, “Did we win that quote, John?” Upon being told sorry, no, say, “OK, well remember us for next time eh?” With W2P and apps-based selling, YOU decide the price, the customer accepts it and pays you up-front, or at least a 50 per cent deposit. Honestly, if I were a commercial print shop today I’d never issue another quote, knowing the job will be touted around five other printers. That’s a race to the bottom. Direct the enquirer to your website and say, “Everything you need to know is there and it’s so easy to use… let me know if you have any questions that are not addressed there.”

    Innovate, educate or vacate: Innovation in any business is an on-going essential. Ignore it and you will suffer. Look at Nokia; one minute kings of the mobile phone world, next minute wondering what happened when iPhones and Android smart phones took all the sales away. You also need to educate and share knowledge, not only with staff but with your customers too. Sharing knowledge for free elevates your standing and predisposes the beneficiaries to do business with you if you ask nicely enough.

    If all this seems too hard, it could be time to walk into the sunset and direct your energies towards an exit strategy, where you can sit on your verandah with your iPad and connect to the wonderful world of the digital economy in tranquil surroundings while writing a brief for ‘App-retirer’ – the mobile app that makes it easy for anyone to plan their retirement safely and financially soundly – from someone who did just that. Send for free booklet.