Printers ride out rationalisation

THE printing industry in WA is facing a period of rationalisation as a result of deteriorating levels of volume and decreasing profit margins.

This state of affairs will lead to further merges, such as the recent take-over of Frank Daniels by Touchstone Colour, according to Advance Press joint manager, Kerry Harford.

Mr Harford believes the printing industry in WA is following the same path as that in the eastern States, where there has been a rush of mergers and acquisitions during the past 18 months.

He said WA probably still had room for one or two more mergers or acquisitions.

“I think that there is too much capacity in this town (Perth) as far as machinery goes and business levels have probably dropped by about 20 per cent,” Mr Harford said.

“There is less business being chased by the same number of printers and people keep buying machinery.”

He attributes the tough times in the printing industry to a combination of events, such as the past years’ global slowdown, the State Government’s decision to cut $6 million dollars from government department budgets for annual reports, and the cutting of the marketing budget, which will equate to a loss of about $6 million for the printing industry.

According to Zipform Pty Ltd managing director David Edwards, the printing industry in WA is currently dealing with rationalisation and a push by clients to print lower volumes of product and hold less stock. This is challenging for companies with large equipment, as it decreases profit margins.

“In terms of rationalisation, I would say it is the larger companies amalgamating and trying to get better utilisation,” Mr Edwards said.

“We have seen recently Frank Daniels go from the mix and a few others before that, and I think there may be one or two others to go.”

But it is not all bad news for the industry. Tough economical times have led to companies actively seeking out new markets, with several of the bigger printing companies now looking towards the eastern States and Asia as new export markets.

According to Mr Harford, WA printing companies have to look at how they can add value, and should be looking to enlarge their market share through such things as exporting their services.

An industry source believes that WA printing companies can more than adequately provide an economically viable alternative to eastern States and Asian companies who are looking for printing services, and that today’s technology allows for ease of information and data transfer between the printer and their client.

According to the source, the eastern States market is particularly accessible for WA printing companies as transport costs can be reduced by using back freight services offered by local transport companies. He believes many of the larger printing companies in WA can provide a better quality product in many instances.

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