Printing industry figures say the merger of Blue Star and IPMG into Australia’s biggest printer will be good for the industry, but are wary of the likely cutbacks to follow.

Australian’s second and third biggest printers announced a heads of agreement yesterday which would see them combine printing operations by May 30.

AIW Printing chief executive Paul Ward says the merger is positive for the industry as it goes through change and upheaval.

“For a number of years now we have all spoken about industry overcapacity and how it has depressed the market, so some form of consolidation was inevitable,” he says.

“I think it is good to see two of the bigger players leading the process and I wouldn’t be surprised to see further consolidation continue.”

Ward says as the merger is a benefit for the industry, it is a benefit to AIW – though as they don’t compete directly it was unlikely to have much immediate impact.

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PIAA president and Look Print chief executive David Leach says, if done well, the merger will be good for the industry, as too much competition is hurting the market.

“Two big companies will stop competing and that has to be good. The worst thing that’s happened to the industry recently is people undercutting each other to get clients,” he says.

“The past 10 years have seen a fair bit or consolidation and it’s about time something like this happened.

“Anything that stops printers bashing each other over the head with a dollar sign is great for the industry.”

Leach says he is confident the new business is in the right hands, making it likely a better, leaner business will emerge and help drive the industry forward.

“Geoff and Michael are pillars of the industry and are interested in building a sustainable industry and that helps everyone. They are very good operators who have done a lot for print and are well respected,” he says.

“In the wrong hands this could go very wrong, but it’s in the right hands.

“A merger will hopefully make their business more profitable through economies of scale, rather by lowering prices which has been detrimental.”

Leach says the move will be especially beneficial for smaller printers that will now have room to go after more clients while the new behemoth targets the top of the market.

“You need a lot of money and equipment to go after huge clients and this will let them do that better. The smaller market will be left to the smaller printers that are better suited to servicing it,” he says.

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Centrum Printing managing director Percy Vij says the merger is healthy for the industry because it gives more opportunity to everyone else.

“Any consolidation is a good move. It’s necessary for everyone’s survival, you can’t have too many big players,” he says.

However, he says consolidation always comes at a price because people will lose their jobs as the two companies inevitably rationalise their operations.

“It’s good for business and they have to look at it from that point of view, but there’s always a downside. It’s unfortunate, but that’s just business,” he says.

“With limited job prospects in print these days it’s hard to know where they will go.”

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PIAA chief executive Bill Healey says: “Blue Star and IPMG are very well led organisations, so I assume this decision has been made with a lot of thought and consideration.”

“They realise a lot has changed, not only in the market but for many of their clients’ industries,” he says.

Healey says consolidation is to be expected and is likely to continue as it is necessary for the industry.

“There’s no doubt print will remain a key part of communication, but it will have to operate under different business models that will require consolidation at all levels of the industry, along with diversification,’ he says.

“Our members need to see themselves as multiplatform communication companies, not just printers.”

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