The printing giant announced at last week’s AGM that it would consolidate its five Auckland sites into two over the next 18 months at a cost of $29m. The plan represents the second stage of the company’s ‘Transformation Plan’, which is expected to bring annualised benefits of $28m.
In an interview with ProPrint, PMP chief executive Richard Allely (pictured) would not be drawn on the exact number of staff expected to be shed or which sites would be closed, but admitted that redundancies would be an “unfortunate consequence” of the consolidation.
“When you go from five sites to two and you have a cost reduction, that translates to redundancies,” he said.
Allely said the company was currently negotiating the tenancy of one of its new sites, and that discussions with employees at all NZ sites are ongoing.
He added that the consolidation was largely motivated by the company’s recent contract wins, which include a 10-year contract to print APN’s magazines and a five-year contract renewal with Fairfax New Zealand.
“The primary reason is so that the type of work we’ll be doing suits the contracts we’ve won, and we can do it better on one site instead of four,” Allely said.
“The strategy for our Print business is clear: we want to be the lowest-cost and most customer-responsive business in the market and at the same time achieve a return on funds employed that outperforms the industry,” he added.
PMP will also reduce its equipment ranks in New Zealand from eight presses to five. This includes the reconditioned Goss M600 purchased from APN’s closing Manukau site, as well as a 48-page press that is arriving from Mexico.
Allely said that the company had also “earmarked some cap ex” to purchase another press for its Perth site with the aim of enhancing the facility’s catalogue printing operations.
“For some time the board has been committed to upgrading that site. Our balance sheet now enables us to do that,” he said.
“There’s a lot of work in Perth that we can’t do because we don’t have the capacity; we’ve been printing and freighting it from Victoria. This will give us the flexibility and capacity to deal with the work in Perth, as well as picking up a lot of the local work that we miss.”
Allely said the new machine was likely to be a secondhand 64-page press, as the company seeks to take advantage of the strong used equipment market created by the GFC.
He said the company was down to “a shortlist of three” and is looking to have the press up and running by the start 2011/12 financial year.
PMP expects to pour $30m into the capital expenditure exercise, including the three new presses. Approximately 90% of this is to be spent by 30 June 2011.
Further details about the consolidation plans will be announced in PMP’s half-yearly results.
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