PBL chief executive Ian Law said today that the facility would most likely be established in the western suburbs of Sydney, with the company hoping to have it up and running by 2011.
“We have undertaken an exhaustive analysis of the printing options available to us and it became clear during the process there were compelling reasons to take control of the production of our publications,” Law said. “The new technology available will deliver significant financial and operational benefits to the company when it is fully operational.”
PMP has played down the news, pointing to the fact that they have signed a three-year contract extension to handle ACP’s printing until the new facility is fully operational, with an option on a further two years if it isn’t ready by the scheduled date.
“The improved contract with ACP provides PMP with ample time to migrate its printing capacity to alternative market segments,” said PMP chief executive Brian Evans. “A key strategic objective for PMP has been to further enhance its leadership position in the growth retail catalogue segment, which is growing in excess of six percent per annum.”
Whilst Evans admitted being “disappointed” with PBL’s decision, the company also reported that it was “satisfied that the loss of the ACP volume by 2011 will have minimal impact on the business as the company will have substantially replaced that volume by the end of the contract period.” ACP is believed to account for roughly 6 per cent of PMP’s revenue.
Law said that PBL had identified three potential sites to locate the new production and distribution facility and he expected a decision to be finalised soon. At least five new press and bindery lines will be installed at the facility, with discussions with manufacturers expected to conclude in the coming weeks.
ACP Magazines’ distribution arm, Network Services, will relocate to the site.
“Most of the costs related to the establishment of the facility will be funded through long term leases of land, buildings and equipment and there will be little demand for up front capital,” said Law.
“The significant volume of internal work provides a platform which will ensure this facility will be profitable in its own right. We have identified additional cost savings relating to freight and other ancillary services that can be achieved by printing in one centralised production and distribution facility.”
“The new facility will provide ACP Magazines with a lower cost base for its existing business and it will provide greater flexibility in terms of new publishing initiatives,” he said.
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