Printing Industries has raised the issue of deteriorating credit availability with the Federal Minister for Small Business Craig Emerson. The meeting held in Canberra followed the recent request by the Federal Government that Printing Industries explore in detail the issue of credit availability in the printing industry and report back its findings to the Government.

As part of this process an on-line survey was prepared and emailed to member companies. The following are the findings.

The first question related to comparing credit availability now with the situation that prevailed 12 months ago. Almost half of the respondents (49.4 per cent) reported deterioration; just 0.6 per cent reported an improvement while 50 per cent reported no change. Based on these responses there has been a significant deterioration in finance availability during the past 12 months.

On the question of whether respondents experienced withdrawal of credit or were refused credit in recent months a combined total of 14 per cent answered “yes”.

The respondents were also asked to indicate the purpose of the credit refused. The most common responses given were as follows (in order):

• Acquisitions activity

• Overdraft facility

• Equipment purchases

• Working capital/cashflow

• Expansion

Assessing both the short and long term impact of the credit crunch, the respondents were asked if credit availability deteriorated further and it was not possible to access credit what impact would that have on business during the next 6 months (short term impact) as well as during the next 12 months (long term impact).

In the short term (next 6 months):

• 50.4 per cent of the respondents indicated that they would be reducing employment levels

• 69.8 per cent said they would be deferring/postponing their investment plans

• 33.1 per cent said business viability would be placed at risk

• 10.1 per cent indicated other impacts such as limiting spending and suspending director’s salary; injecting more money from shareholders; and considering relocating.

In the long term (next 12 months):

• 45.3 per cent indicated they would be reducing employment

• 65.7 per cent said they would be deferring/postponing their investment plans

• 51.8 per cent said business viability would be placed at risk

• 5.8 per cent indicated other impacts such as becoming less competitive; being forced to close the business; and reduced turnover and profitability.

In comparing the responses of the likely impact of the credit crunch over the next 6 and 12 month periods, one noticeable impact was the significant rise in the proportion of businesses that may no longer be viable.

If the credit crunch continues with businesses in the printing and associated industries failing to access credit, then 33.1 per cent of the respondents indicated that the viability of their businesses would be placed at risk during the next six months. This proportion rises to almost 52 per cent of respondents in the long term (defined as 12 month or more).

In recent week’s the Federal Government has been encouraging financial institutions to maintain the credit flow to viable businesses and following the recent meeting in Canberra between representatives of the banking sector and the business community, convened by the Minister for Small Business Craig Emerson, the Minister announced that it will establish a small business complaints clearing house.

Under the proposed arrangement, the Minister’s office will receive complaints about access to and the cost of bank finance and refer them to the Australian Bankers Association which will pass them on to senior management of the relevant banks for action and follow up.

Hagop Tchamkertenian, national manager for policy and government affairs for Printing Industries, says the Federal Minister for Small Business was fully briefed about the Associations’ recently conducted survey on prevailing credit conditions.

He says, “I informed the Minister that deteriorating credit availability is already impacting on our industry in terms of job losses and postponement of investment plans. If it is allowed to continue it will start to place more printing and associated businesses at risk.”

Tchamkertenian continues, “The message that I conveyed to the Minister was that credit should continue to be available to all viable printing and associated businesses.”

He continues, “The most recent Printing Industry Trends Report pointed to a significant deteriorating trend when it showed that the reported outcome for finance availability was the worst reported outcome since March quarter 1990.”

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