New approach for print industry

CHALLENGING times lie ahead for the printing industry in WA, according to Paul Neiuhoff, WA regional co-ordinator for the Printing Industries Association of Australia. Mr Neiuhoff believes there are many issues confronting the printing industry in WA, most significant of which is the oversupply of printing companies servicing the State, which has resulted in price cutting across the board.

“Oversupply leads to printers being price takers,” he said.

“Customers will shop around for a price until they get the lowest quote. Customers take advantage of the situation, which does nothing for the health of the industry.

“Statistics show that profitability is declining and expenditure on assets is increasing, and the industry can not sustain this decline on a long-term basis.”

Advance Press general manager Kerry Harford agreed, suggesting there was an overcapitalisation in the market and that, in a vertical market such as Perth, the practice of price cutting and the current prices being offered for work are unsustainable.

When asked by Business News how the problem of oversupply might be overcome, Mr Neiuhoff said businesses needed to diversify and take the focus off customer relationships based on price, and move towards customer relationships based on providing a whole-of-business solution, where printing companies can meet both the design and printing needs of their customers.

He believes that, in order to provide a whole-of-business solution, many businesses will be faced with the prospect of having to form strategic alliances with competitors, or merging with other companies in order to remain competitive.

But Mr Neiuhoff emphasised that any strategic alliance must deliver win/win outcomes for all parties involved.

“Consolidation is not a bad thing and it is not just a matter of small companies being swallowed up,” he said.

“Businesses have to look at what they do well, what their competitors do well and maybe look at working together through strategic alliances to become more competitive.”

Mr Neiuhoff said it was possible that more international and interstate work could be generated by improved economies of scale and the benefit of combined resources that mergers and strategic alliances can bring to organisations.

There already is evidence of consolidation happening in the WA market with the merger of Picton Press and Muhlings Printers last year and the merger of Picton Press and Alken Colour Media last month.

“If things (business) continue to be tough in the industry then strategic alliances will become a matter of survival,” Mr Neiuhoff said.

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