.gif)
News
Overcapacity gives way to optimism
The magazine print sector has been well and truly shaken up over the past 12 months. While it still retains many key players, some have fallen by the wayside, victims of the harsh market conditions that continue to dog the industry.
Back in January, one of the biggest – Quebecor World – pulled the plug on its only UK operation in Corby. With around 300 redundancies, it was a move that sent shockwaves through the industry.
Likewise, the collapse of Graphoprint last year had similar repercussions with 192 made redundant at the north Wales magazine and catalogue printer. Meanwhile, Polestar Greaves closed at the start of the year affecting 380 employees, and Trader Media Group’s Wiltshire print firm also succumbed with 164 jobs gone.
Sustainable future
It makes for pretty grim reading, but it’s the way of the world, according to BGP group sales director Bob Caley. “There have been many big names going, but that’s the tip of the iceberg,” he says. “With them coming out of the market, there is much equilibrium for the first time in 12 years. The sector needed it and many have gone bust because pricing has become unsustainable. You can’t invest at the pricing levels from last year.”
Pensord chief executive Tony Jones agrees that the climate over the past year has been difficult. “It is tough out there, and unfortunately, those doing less well will become more aggressive on price. Prices aren’t sustainable at the moment – they just can’t keep going down. I think we’ll see more companies merging and some will fall by the wayside.”
While business failure is bad news for the victims, it’s good news for those that remain as capacity issues ease. It’s also an indication that the market has “bottomed and turned”, according to Caley.
“Prices will start going up for printers,” he adds. “The capacity demand is now in sync and I am optimistic for the future.”
Room for optimism
However, Tony Ayles, St Ives sales director for the magazine division, reckons that despite some major departures, this has yet to filter down into the wider industry. “Quebecor exiting the industry is a major blow for print,” says Ayles. “It sent out a message to publishers, but I don’t think it’s had too much impact on capacity at this time.”
The upshot is that companies will find the period from August until the end of the year much busier with less opportunity for buyers to buy print at the last minute,” according to Ayles. “But there is lots of room to be optimistic. We have seen consolidation in the B2B and consumer markets, but printers will do well if they have invested well and give customers added value.”
Caley’s optimism is based on his own company’s experience. Capacity at BGP, he says, has been full for the past 18 months and, partly thanks to some companies exiting the market, it will be for the foreseeable future as well. BGP has also gone through a major investment programme and Caley believes the firm’s timing has been spot on.
“I am confident in the way the market is going,” he says. “We have shaped our business and everything we have predicted has proved to be correct.”
The good news is that BGP isn’t the only company in the sector that isn’t feeling the pinch. Pensord also appears to be riding the crest of the wave, although the trials and tribulations of the print sector haven’t been lost on its chief executive.
Jones’ strategy for success has been to make the company better targeted. Since the south Wales printer went through an MBO in June 2003, it set out on an “aggressive plan for growth”. So far it has paid off in spades – last year the business grew by 14% and profits were up by 50%.
“We are growing quicker than most of our peers,” adds Jones. “But we are going about it in a sustained way. We’ve done this by investing heavily in people and kit and this is paying dividends. It is about how you respond to the changing industry that determines whether you see the market as an opportunity or a threat.”
Another key part of Pensord’s business strategy has been to target the controlled circulation titles, a tactic that’s ideal for its sheetfed, short-run operation. “We are very specific in what we target,” explains Jones. “By working to a best product policy, we ensure the jobs we produce are optimal for our plant.”
He is keen to ensure every penny invested in equipment is money well spent and Pensord is now reaping the rewards in a sector that is going through choppy waters.
But consolidation hasn’t just hit the manufacturing side – the publishing sector is also undergoing huge changes of its own. This year, Emap was split into two as H Bauer snapped up its consumer arm, while the Guardian Media Group and private equity company Apax took over the reins of its B2B magazines division.
Reed Business Information is also set to be sold off. Its Anglo-Dutch parent Reed Elsevier is currently mulling over its options after putting the print division up for sale.
So do these developments spell a gloomy future for the magazine market? It depends which area you’re talking about, according to the PPA.
“There are three distinct markets,” explains a PPA spokesman. “Customer publishing is currently doing very, very well with brands buying into the idea that printed magazines can add to sales. Consumer titles are not quite so strong, but the recent ABC figures show that circulation is on the up.”
The B2B sector has also enjoyed dramatic growth, according to a survey commissioned by the PPA. The business media market is worth £23bn and print alone accounts for 47% of all revenue.
While these factors point to a relatively healthy future, there are some storm clouds gathering on the horizon. Bauer has launched a major print tender and some industry pundits predict that it could shift production of some its high-profile long-run titles to Germany.
However, suggestions that this could be part of a growing trend are rejected by St Ives’ Ayles. “The major factor in a publisher’s mind is their carbon footprint,” he says.
“Printing abroad brings up a transport issue,” agrees BGP’s Caley. “No publisher wants to be seen to be trucking titles back and forth.”
Caley notes that the strength of the euro against the pound has also swung in the favour of magazine printers. “A lot of UK publishers are finding it more expensive to print in Europe” he says. “Much work has migrated back to the UK although this is mainly in gravure, but it is helping the UK print industry as a whole.”
So despite some big-name casualities over the past 12 months, there appears to be much to be optimistic about. The shake-up may have been disastrous news for those affected, but for the companies still standing, the potential for new business wins and future growth look strong provided they have a solid and risk-averse strategy to work from.
COMPANIES IN THE SPOTLIGHT
Emap
Many in the magazine sector were sad to see the break-up of the publishing giant. The upshot of it all was that the group’s B2B division was sold to a joint venture of the Guardian Media Group and private equity house Apax partners and the consumer and radio arms were sold to H Bauer for £1.4bn. A review of Bauer’s newly acquired titles could result in some of the longer-run magazines printed in Germany.
Quebecor World
The print giant’s financial turmoil had an unfortunate knock-on effect for its Corby plant. Around 250 jobs went after administrators announced it could no longer keep the site open. The move was greeted with anger by unions and staff with most of the rage directed at the company’s parent Quebecor World Inc. BGP, St Ives and Polestar all picked up work in the wake of Corby’s closure. According to the administrator, the Corby business has been losing £4m a year.
Wiltshire
Part of the Trader Media Group, the Bristol site printed Auto Trader magazine but has been a casualty of the rise in online publishing. Circulation and page counts had dropped and Wiltshire fell victim to TMG’s restructuring plans. A total of 164 jobs were lost at the company, which was founded in 1953.
Graphoprint
Graphoprint shut last year with nearly 200 jobs going at the north Wales web offset plant. After a huge fire ripped through the site in 2005, the company underwent a restructuring, but crippling debts meant the company was forced to call in the administrators last June.
THE TOP 20: UK MAGAZINE PRINTERS RANKED BY TURNOVER
St Ives £425m
Polestar £375.9m
Wyndeham Press Group £120m
Pindar £110m
Goodhead Group £66m
The Artisan Press £42m
Southernprint £34.6m
Pindar Tewksbury* £30.7m
Apple Web Offset £30m
Warners Midlands £29.8m
Precision Colour Printing £29m
William Gibbons & Sons £28.4m
Garnett Dickinson £25m
Stephens & George £19m
Headley Brothers £17.7m
Acorn Web Offset £17.6m
Ancient House Press £14.3m
Friary Press** £12m
Pensord Press £11.1m
Buxton Press £10.5m
* Formerly Cooper Clegg ** Part of Media & Print Investments
Source: Figures are taken from the PrintWeek Top 500, accounts filed at Companies House where year end given, or from the companies themselves
Advertisement
Comments
Colin Thompson - 03 April 2008
Interesting information! But what about the net profit of these organisations?
The future is very `gloomy` for some of the organisations in your article and share with you my thoughts below.
STRATEGY FOR SUCCESS
Have you got it all mapped out?
Getting Strategy Right for your Success
Strategy is big business in itself and a key determinant of the success of businesses of any size. No successful business could survive without strategy, no matter how rudimentary. But it does not end there!
For Google the term `Strategy` is the pointers to over 450 million websites. More tellingly, search Amazon for books on `Strategy` and you come up with more than 52,000 options. The main option is the `Strategy` business model, an `Enterprise Business Model`. Comprehensive details on the website www.cavendish-mr.org.uk will guide you to the successful powerful business tools for your growth in 2008 and the future.
Even those armed with a coherent strategy and that by no means encompasses the entire business community, will find it worth no more than the hard disk it`s written on unless the organisation can put the plan into action. This means `all` employees buy into the `Strategy` plan and have the passion to make it work. Then you will have success for the company and each member of the team.
This article is all about: planning, executing and measuring strategy. Whether it`s connected with new challenges, like outsourcing, financial reporting or technology. All organisations that wish to be successful will have a `Strategy`.
When companies fall on hard times and even collapse, questions are often asked like, " Where was the board of Directors?" and "Why did they not take action to stop the company taking the wrong turn?" In most cases, the Directors do not know what to do and do not ask for help!
Directors can struggle to provide entrepreneurial leadership and spend little time discussing and implementing strategy. Greater complexity of business, combined with information overload, make it difficult for Directors to really understand the company and engage in constructive debate with management. A blend of skills, experience and people of `all` ages make a successful company. Take on board a successful, skilled and experienced Non Executive Director who will help your organisation and the personnel to be successful.
Now let us look at the `Strategy Score Chart` that prompts Directors to ask constructive, searching questions and helps them to determine key points at which they must make decisions and specific information that they require. In this way the Directors can obtain assurance about the company`s strategy position and progress, to improve the chances of strategy success.
The Strategy Score Chart provides a valuable framework for the Directors involvement in the process.It can also help Directors to maintain their focus on the major strategy issues, rather than getting tied up in detail.
The four dimensions to the Strategy Score Chart are;
1. Strategic Position
2. Strategic Options
3. Strategic Implementation
4. Strategic Risks
Strategic Position
This dimension focuses on providing information for the Directors rather than making major decisions. The Directors would focus on reviewing the information and considering its implications. The Directors would need to ensure that it is receiving timely and adequate information about the company`s strategic position. Are the relevant political and regulatory issues being reviewed? The Directors can make constructive suggestions about what other aspects of the environment need to be reviewed and how regularly the information needs to be updated. Does any particular aspect need to be explored in more detail? Are the Directors failing to challenge? The whole point is to ensure that the review of the strategic position is not just a once-a-year exercise!
Strategic Options
The Directors then need to be aware of the options facing the organization. These are the major options that have the potential to make or break the organization, such as a merger or acquisition. At any time there should only be about three or four options under consideration so the Directors give their full attention to the projects.
The Directors would need to know why these are the ones under consideration, what others have been looked at and dismissed and when the key decision points are in relation to each option. The aim is to help the Directors to have an informed discussion that will scope out all the options. These can then be worked up in more detail for a separate Directors discussion. What the Strategy Score Chart does is set out the Directors landscape.
Strategic Implementations
The dimension is all about overseeing the progress of the agreed strategy. The Directors need to be aware of the breakpoints and when decisions or intervention might be required. Also, covered here would be checking whether a post-completion audit had been carried out and what the key messages were. Check out `all` mistakes in relation to major projects. Answering this would allow remedial action to be taken. A balanced view must be taken at all times to gain the best results.
Strategic Risks
Finally, the Directors need to have the assurance that the main strategic risks are known and managed effectively in line with the organisations risk appetite. Directors must always be on the lookout for those risks that will impact on the company`s focus to achieve its strategic goals, such as reputation risk. Directors must look for opportunities to be grasped by taking well-calculated risks.
In summary, the Strategic Score Chart aims to help Directors exercise effective strategic leadership and avoid some of the pitfalls associated with lack of process, space on the Directors agenda and information overload.
The challenge is to develop a rigorous `Strategy Plan` that it can evolve into a robust and practical business tool. To help in this task we recommend the `Enterprise Business Model` which will show you a powerful road map for success, based on skills and experience in business. Also, the new publication `Accelerate with Impact`, with successful solutions for you to use. Visit www.cavendish-mr.org.uk for details.
Other powerful areas to read in your endeavour to achieve your Strategy Plan are;
Leadership
Strategy Business Planning
Business Performance
Scenario Planning
Financial Management - The CEO Function
22 Point Plan for Success
The Management of Change
Plus many more
visit www.cavendish-mr.org.uk for the books and business models on the order page.
One of the major industries in the UK and globally is the Printing Industry Sector, this sector is the 5th largest manufacturing industry that as many challenges and opportunities. The organisations in this industry sector need to have a `robust` Strategy to be successful or they will not survive. I have taken a birds eye view of this sector and I will guide you through on what I see. This section of the article is useful to any one in business to take on board.
Economy,Technology and Management of Change
There are a number of important factors affecting demand for printing in the UK. These include:
Trends in consumer spending
The state of the economy
New technology and the speed of change
Changing customer expectations
Globalisation
Environmental concerns
Energy and fuel `rapid` rises with few independent suppliers!
One of the most important factors affecting demand for printing in the UK and globally in developed countries is a trend in consumer spending. Indeed, this factor affects demand in a number of significant ways. Levels of disposable income and consumer spending have a direct impact on the amount of money companies invest in advertising, impacting a range of printing markets from advertising literature, catalogues and direct mail through to the number of pages - magazines and newspapers.
The more people are spending, the more companies spend on advertising, resulting in an increase in demand for printing. But, people are spending less rapidly, month by month. Also, there is a major switch to Print Management Programmes by corporate organisations. Together with a rapid increase in Internet Advertisements.
Consumer services companies are suffering a massive loss of sales, profits and confidence that will intensify fears that house-holds are cutting their spending budgets across the board rapidly. A large range of services in the entertainment, catering, leisure and travel industries said sales had stagnated over the past twelve months. The worst fall was among personal and leisure services companies.
We must bear in mind that retail sales make up 40% + of total consumer spending, with the rest going on cars and services of which are being hit with decline. Therefore, manufacturers are struggling in the face of softer demand and global competition. The USA is now in recession so the UK and the rest of Europe will follow rapidly.
Furthermore, trends in the way in which people spend their money are also important in terms of generating demand for printing. For example, the increasing number of both elderly (mature) people and people under the age of 30 in the UK has meant that there is more spending on leisure activities. This results in increased demand for the printing of items such as tickets and programmes for venues. On demand printing by Digital operations is increasing due to rapid turnarounds and personalisation.
The economy also impacts on the printing industry in a number of other ways. Adverse economic conditions result in companies cutting back on advertising expenditure, as well as food manufacturers cutting back on packaging costs. This can have a negative impact on the printing industry, resulting in fewer orders, and more basic work. Also, the import of printed products is increasing day by day. Plus, the over capacity in Printing in developed countries is running at 40% +!
The strength of the pound has had a considerable impact on the demand for printing in the UK. The strong pound, coupled with the not so weak Euro has enabled European companies to win valuable print jobs. But, other countries now have quality products, better price structures and delivery time scales that will impact on the European Printing Industry. Take on board the new research report, `The European Printing Industry and the Impact of China on the World` - Report in pdf - Inspirational information to help you now and in the future. This report is a must for you to have the powerful information for success. Please go to the order page on www.cavendish-mr.org.uk
The development of new technology and the speed of change has had an important impact on demand, and will continue to play a major role throughout the decade. Also, traditional Printing organisations personnel have an average age of 48 years old, very few trainees and a complete lack of training budget will effect this sector, due to the non-strategy element of the last 30 years. The Printing Industry in traditional terms is dieing rapidly and Digital Printing is growing very rapidly.
The world - wide - web, in particular is regarded by trade sources as an important factor generating demand for printing. Also, the vast developments in new technology have resulted in changing customer expectations. As printers are able to produce printed material faster, more cheaply and more efficiently, customers expect a better product and service. The customer will continue to demand innovative ways of being efficient and cost effective, this can be achieved by a `Print Management Service` programme.
The printing industry is a major sector in the UK. It is affected by a number of key issues. These issues are also world-wide concerns.
The principal issues are;
Over- capacity world wide
Economy
Rising Costs
New Technology and the speed of change
The Environment
Postal Deregulation
These factors have had and will continue to be very important on the development of the industry. In the medium term there will a reduced print manufacturing availability due to mergers/alliances and companies `going out of business`!
Over- capacity
As a result of the fragmented nature of the printing sector in the UK and the world, the industry has been affected by surplus capacity. This excess capacity will increase during 2008, despite continued retrenchment of employment, closures and failures among small, medium and large sized companies in the UK, Europe and the USA. Also, new print manufacturers in China, the Middle East and the `new` European countries will impact on the rest of the world economy. The investments in the `new print manufacturers` are exceptional high, due to low `overheads` and a higher return in a global trading environment. These investments in foreign manufacturers will impact on the UK `big time`, wake up to very skilled and experienced people of all ages from these countries. Many UK personnel work for these foreign manufacturers who are highly skilled and experienced. The UK industries have turned there backs on these very skilled and experienced people, but foreign companies recognise their worth, big-time! Age and experience have no barriers in the new developing countries.
It is currently believed that over capacity in the UK printing industry runs at approximately 40% +, affecting every sector. The effect of this over capacity has been substantial pressure on margins, forcing companies to look for alternative ways to increase profits, through moving into different or niche sectors or looking for these new sectors by mergers with other synergy companies.
Printers have invested large sums of money into `new equipment` in order to hold onto their customers. But, very little investment into the vital areas of people, training and business models. The customers requirement is for Print Manufacturers to have a comprehensive investment into `all` areas, not just equipment.
Again, this has led printers to strive for efficiency through cutting costs, resulting in redundancies and cuts in other business activities. But, utilisation of both expensive equipment and people are the major criteria.
Economy
The economy is an extremely important factor for the printing industry in a number of ways.
Economic conditions have a significant impact on investment.
Affects not only expenditure on advertising but on all printed material.
Levels of disposable income have impact on commercial printing.
Small changes in the economy have a significant effect.
Rising costs erode margins.
Strength of Sterling
Weak Euro
The UK could slump to the `bottom` of the world economic growth league in 2008 because of a slowdown in consumer spending.Forecast at the Centre for Economics and Business Research (CEBR) say Gordon Brown could also struggle to finance public spending plans.The decline represents a swift turnaround after the UK economy grew faster than any other major country in 2001.
The position will deteriorate further this year and 2009 as consumer spending and business investment continues to come under pressure. Look out for China Russia and India, plus the other developing countries rapid growth.
The biggest factor pulling down economic growth will be the `high street`, with consumer spending down. Also, Gordon Brown should come clean about nearly £100 billion of `hidden` Government liabilities.
In an embarrassing attack on what critics have called the Chancellor`s `creative accounting`. Critics have accused Brown of the sort of `off balance sheet financing` used by firms such as bankrupt energy trader `Enron`!
Other factors of concern
Lowest manufacturing out-put for 20 years
Lowest profit returns for 10 years
Productivity
The future is in rapid decline, we all should `wake-up` to the facts and stop this change together! If you have a strategy plan you can survive!
Rising Costs
Rapidly rising raw material costs.
Paper mills facing `untenable pressure`.
Increasing customer requirements.
A move from paper to printing on synthetic substrates.
New Technology
The development of new technology is one of the most important issues impacting on the European printing industry. Indeed, this is a world-wide issue.
New developments in improving productivity and efficiency as well as enabling printers to create new products for the customer have enabled many companies to forge ahead of their competitors.
Digital printing is the most important development since Litho. Digital presses have been available since 1995, so the technology is no longer in its infancy. The Digital market is expanding rapidly as more companies are seeing the advantages of Digital in terms of increased productivity and lower costs. Digital is taking market share from conventional printing by cost savings being a major key factor.
The development of waterless printing has also been important, but not as important as Digital in terms of reducing overall cost.
Another impact on saving costs is single fluid ink.
The development of print portals has enabled printers to bid for jobs on-line and allowed print buyers to deal direct via their web-site.world wide. This has increased productivity and efficiency in terms of time management.
The Environment
Key factors to impact on the printing industry.
Legislation-European Directive on Packaging Waste/Waste Strategy.
The Climate Charge Levy-energy tax on business.
Energy and fuel costs will increase by more than 20% annually.
ISO 14001 certification benefits-lower costs by using less energy and economic incentives such as taxes, charges and trade permits.
Postal Deregulation
Deregulation of the postal market.
Introduction of competition to Royal Mail.
Possible reductions in cost of mail, but a belief prices will increase by distance. The same policy in many European countries.
Large companies may not see direct mail as a cost-effective way when prices rise. This will inevitably result in a decline in the printing industry.
The future is about offering `solutions` to customers by operating a Print Management/Workflow Solutions Programme and methodically looking at how you manage your business with the `right` people. Take on board a training programme, business models, skilled and experienced people of `any` age, because that is what the rest of the world are investing into, by making there organisations successful by investing into people, business models, technology and managing the management of change. Also, keeping a close eye on the speed of change, that will effect your business.
Strategy for Success
In order for strategy to succeed, leaders have to be able to communicate well and foster a culture of `open communication` in their organisations. Otherwise, it will affect the quality of information and how a strategy is created and implemented for maximum reward. Excellent Leaders see their Directors and employees input as vital to success.
Clear exchanges of information that flows freely around an organisation and are fed back to the relevant people prevent misinterpretation of strategy and enable companies to react more quickly to change.
Leaders need to constantly monitor the progress of their strategy and if necessary , change it.
Now go and map out your `Strategy` for success.
Colin Thompson
Cavendiish
www.cavendish-mr.org.uk
To post comments please log in here