Disregard for a moment private equity groups wanting to fill hungry consolidated plants and the “effectiveness” of print managers. Also put aside the fact that the market has shrunk 25% or more but many printers are geared up for pre-GFC conditions. All this will eventually “fix itself”.
The biggest culprits are printers who continue to poach print jobs at ludicrous pricing without knowing their cost to produce and not having the technology or ability to achieve anything near “lowest cost to manufacture”. Lowest price is only a problem if it impacts negatively on your bottom line. If you are a smart operator and can produce the cheapest and volume is your thing, good for you! There is a space and place for everyone, but too many printers don’t know their space or their place but instead try to be something to everyone, losing on all fronts.
Overcapacity will eventually take care of itself as the industry evolves. If suppliers stop supporting businesses that don’t pay their bills, this process will speed up. But if suppliers continue to provide payment holidays or other silly terms, thereby supporting bad business practise then we are adding to the problem, delaying change and improvements within
the industry.
In defining overcapacity, one also has to define whether it’s a case of “too many printers”, “too much equipment” or both. These days we replace two or three old presses with a new one with all the added technology. The new press could easily have the same capacity as the old presses combined. Capacity is not reduced. Headcount and cost is. What is important in the process of installing new technology is a mapping of the business; which we offer from Heidelberg.
Should government get involved? In Germany, the EU has been engaging with the web offset and gravure sectors on how to address overcapacity. Next could be the offset industry. The issue is: how can the EU take an active role in the restructuring of the European printing industry? The EU has long recognised that overcapacity is “damaging in the long term if urgent, coordinated action is not taken by decision-makers and other stakeholders”.
The topic of government intervention is an interesting one. Included in the EU discussion is “the role of the brokers”. Namely: “The print broker provided… specific examples of how printers labouring under overcapacity are played off against each other and how the lowest prices are achieved”. The opinion proposes that the role of brokers should now be “examined to determine their impact on pricing”. One has to ask why – the printer is not forced to take on print broker work!
Adding spice to this EU soup is the fact that the European Web Association sees the EU as “seeking to remove the power of decision from company bosses and to regulate… something that can only be solved in a de-centralised way by the employers, their motivated workforces and creative individual ideas.”
Which brings me back to the key point of overcapacity. You can try and “fix it” by government intervention, but at the end of the day it comes down to how we as participants conduct our business, what we consider acceptable and what is good for the industry and our own future.
Andy Vels Jensen is the managing director of Heidelberg Australia and New Zealand
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