PBL announced yesterday that it was planning to build an in-house printing and distribution facility for its ACP magazine business, with chief executive Ian Law saying the new facility would “deliver significant financial and operational benefits to the company.”
With ACP being the biggest client in Australia, with its 45 per cent market share of the magazine industry nearly double that of its nearest rival, current printer PMP is expected to be the big loser out of PBL’s decision.
However, in an interview with ProPrint this morning, Evans played down the impact of the decision, preferring to focus on the new three-year contract the companies have signed which will see PMP continue to handle ACP’s printing until the new facility is fully operational, with an option on a further two years if the new site is not ready in 2011 as scheduled.
“A normal contract with ACP is three years, so we see ourselves as having a normal contract, and five years is a lifetime,” said Evans.
“And there are no guarantees [the new facility] will go ahead.”
“We’ve been negotiating for a long period of time. They were keen for us to drop our trousers and drop our price, below what we felt were market prices, and we weren’t willing to do that.”
As well as the financial benefits being touted by PBL, Evans pointed to Law’s and PBL operations manager John Rowsthorne’s background at Rural Press as influential in the company’s decision.
“Not many publishers have the capacity or volume to do their own printing, but because of their newspaper background, they’re more confident.”
“If they go ahead, they’re going to find that printing magazines is very different from printing newspapers, it’s a lot more complicated.”
“I think their views of savings in the industry haven’t been accurate, and time will tell how successful they are.”
Whilst Evans would not be drawn on exactly how much business ACP represented for PMP, he claimed that “it’s not as large as a lot of people think.” With the publisher producing approximately 65 million magazine issues a year, some have put the figure at $80 million, which represents about 6 per cent of PMP’s total revenue.
PMP will now have to look elsewhere to make up for this financial gap, with many predicting havoc as the printing giant comes crashing into the market looking for new clients.
“We feel confident the market is growing, particularly in the catalogue area,” said Evans.
“The market’s grown by six per cent this year, and in the past it’s been as high as nine per cent growth. From my perspective, that will more than fill the gap left by ACP.”
“We’ve got plenty of time to consider what we’re going to do next.”
Evans also pointed out that PMP is not the only printer affected by the change, with IPMG and Webstar also set to lose work with ACP.
“It was disappointing that ACP decided to do it,” Evans admitted. “That aside, they have to do what they’re happy with.”
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