I worked at Geon for about 10 years in a number of roles. I saw the potential for this collapse coming for the past 18 months, but always held out hope that we would survive, as Geon was a magnificent business. The Sydney and Melbourne sites alone averaged approximately $480,000 per day between them, largely profitable work in a very competitive environment. Our pricing was always competitive, but we worked very hard at minimising our costs by improving our supply chain, using our buying power and entering into contracted arrangements with our key suppliers. We also increased production efficiencies by using lean manufacturing methods to keep our costs down. Despite this, we lost far more work on price than we won. The overlaying brief was not to bring in any work that we could not profit from.
Print brokers
The dominant and most successful sales force in printing in Australia is not any one printing company, but the print brokers and intermediaries, who have developed very convincing value propositions for clients. They have sought supply, based largely on price, from the manufacturing printers and have won the majority of large contracts in recent times. In the case of a tender for example, they could use up to half a dozen printers selected on price to produce the cheapest bottom line against the best price produced by any one single printer. Geon could compete against this because of our size, but we lost far more than we won. The brokers are a force to be reckoned with and getting stronger.
But I did not foresee the speed of the final days, or expect to experience the tension and emotion of the waiting of the last week.
Exodus to Blue Star
I did not foresee what can only be described as a focused attack on Geon. The simultaneous departure of two very senior managers, one from Melbourne and one from Sydney, who came from Blue Star and were re-employed by Blue Star; the sudden departure from Geon to Blue Star of the Victorian sales manager; the job offers from Blue Star to most NSW and Victorian sales staff – but not Queensland – with a time limit set for their acceptance and their subsequent departure before any other printing company could approach them.
Merchant blockade
Nor did I expect to see – for the first time ever in this industry that I know of – the three major paper companies display a united front to deny Geon of paper, despite guaranteed payment of all future purchases from the receivers. This left Geon facing ruin and with no hope of trading out. I cannot blame the paper companies, as when I consider the appalling way our senior management treated our suppliers, it is not surprising support was not there when we needed it most.
I certainly did not expect to see Blue Star step in with an offer for our now failed business and their eventual purchase of Geon NSW and Victoria only, no doubt very cheaply. Queensland was, of course, closed down and all staff dismissed.
On walking around our factory in that last week and having conversations with staff from all departments, I heard stories of the need to sell homes, sleepless nights, the humiliation felt by staff going home and telling their spouses that they will not have a job, anger and threats of violence, tears and depression. I also realised from the questions I was asked, how little the factory staff knew, or were told of our circumstances or likely outcomes.
The last day
On the last day, which was probably the worst of my working life, to stand on the factory floor with the staff of Geon and listen to a representative of the receivers describe to us that we are no longer required, and if we had not already been spoken to, please collect our envelopes and go on our way. This was supplemented with some nice words, that most could not hear, from the production scheduler who was one of the “lucky” few to be offered a position with Blue Star.
Senior management who had asked us to be loyal and help fight our way out of this, had asked us to take pay cuts, had asked us to use up long service leave and holidays and in some cases cancel pre-booked holiday flights, had asked us to take days off without pay, and claimed in the weekly blog that they had created a culture of trust and honesty at Geon and were “proud” of us, were not present. I am old fashioned in that I hold loyalty as a value very highly, and sometimes to my own detriment, but I expect it in return. We all felt humiliated and foolish.
However, Geon was exposed and vulnerable, as despite the work by us all to be profitable and the innovative methods we devised to remain so, we could not stem the bleeding of money. This was in the hands of the management at the top.
Poor management
I could talk about the revolving door of senior managers, their short-term decision making and total lack of rapport with the printing industry, their reliance for print-related advice from an old timer with very few hands-on skills. I could talk of software choices and implementation that cost Geon millions of dollars with little return other than a flawed common database, and in some cases with ongoing monthly charges for software bought, implemented and not being used.
I could talk of the way they integrated other business into Geon without consideration for the new customers or of the costs involved, that left us with empty factories across NSW and Victoria costing tens of thousands of dollars in wasted rent money every month.
I could talk of the wasted years and revenue before unified paper buying was adopted. I could talk of the frequent and regular flights between Australia and New Zealand and interstate by many of our managers and the accommodation and restaurants and limos to and from the airport. I could talk of the years Mt Waverley operated without anyone in charge; instead it was run by a committee of many. I could also talk of the promotion to senior positions of internal staff, positions way above their level of competence, in order to save recruiting and wage costs, the appalling staff selection choices and the resulting years of internal politics and low morale.
I could also talk of the exorbitant salaries paid to senior sales and management personnel and the massive wages and bonuses paid to top management despite our losses and a lot more besides.
There is now no point in discussing these issues as Geon no longer exists.
KKR and Allegro
When the chief executive announced to the floor staff that Geon was going into receivership, he also said that he asked the investors for more money to bring about further changes he wanted to make, but that money was not forthcoming. What investor in their right mind would throw more money into this company after witnessing six to seven years of decline and one debacle after another?
In every single one of the above scenarios, I could propose a single, simple alternative decision that would have turned the loss into a profit and this is not because I am clever nor is it the wisdom of hindsight. It is a sad reflection of the results of a great printing company run by people with the egos that prevented them seeking suitable advice and who seemed to emanate a sense of shame with being associated with the trade of printing.
Geon produced large volumes of often complicated work, and provided a service for this type of work that attracted business from some of Australian largest print buyers. Blue Star said they cannot absorb the full volume of Geon’s work and the smaller printers are waiting to pick up the balance, a lot of which will be beyond their capacity to produce. It will be interesting to see if the final wash-up is more work going offshore and what the paper merchants do with their newly found market power.
I know many in the industry are clapping their hands in joy at the demise of Geon, but we work in an industry in crisis, and this is a sad and devastating day for many of us who have also put our lives and talents into this industry and been let down by private equity’s inability to find suitable people to manage their investments.
Let not the staff of Geon hang their heads in shame in the face of this industry joy. Let the three highly paid decision makers and their “advisors” do this on their own.
My future choices are to leave the industry and seek work elsewhere, or join the many others now seeking work within the industry. I am as yet undecided and face a very uncertain future with a family to support.
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