Overseas print management companies are expanding into Australia. Last year, international group HH Global set up on our shores. It is not alone. The company joined Staples Australia, the local arm of the US stationery giant, which acquired Corporate Express in 2010. More recently, another US-based stationery company, OfficeMax, grabbed a foothold in Australia through the acquisition of Complete Print Solutions. Meanwhile, global print management giant Williams Lea has been quietly active in Australia for some time.
All of these firms share a common strategy built around a global market. They come with scale from global footprints and sophisticated software to procure print at the cheapest possible price.
Andrew Price, the co-founder of Australian print management company Stream Solutions and now executive director at Paperlinx, says the big driver is globalisation.
“From what I’ve seen in Europe, which I guess applies to Australia, there is a trend for large print buyers to form global deals. We see it over here with large print managers that are getting large corporate accounts. It might start off as a European deal and before you know it, it includes the US, Asia and Australia.
“What we have seen is that with large corporates, they’ll do a deal initially in the UK with a print manager and once that’s bedded down, they’ll say, ‘Now we’ll give you Europe’, and they’ll gradually roll it out across the globe.”
He says most of the international print management groups currently in Australia are targeting local operations of global companies such as Google, Pricewater-house-Coopers, and Procter & Gamble. The deals are often done above the heads of the local management of these multinationals, who may have historically had their own buying arrangements with local printers and print managers.
“Generally, what you find is that when these large global companies come in, the local branch of a global corporate has very little say. They just get told, ‘All of your print is going to XYZ print manager as of tomorrow’, end of story,” Price says.
Knockout blow
It is hard for local print management companies to compete. No matter how cost-effective or efficient an incumbent supplier is, or whether they have strong relationships with local printers, the bigger global procurement companies can land a knockout blow – worldwide scale.
“Competitiveness has nothing to do with software,” Price says. “The competitiveness is just the fact that these guys are so global and are doing global deals. From what I found, it didn’t really matter how good our software was [at Stream], it was that they were doing a global deal so everybody got pushed aside.
“Print is a relationship game to a certain level. If you’re a huge multinational company, the relationships have nothing to do with it because they have formal tender processes and external procurement consultants. In the big end of town, those relationships get swept aside and mean next to nothing. That’s the job of the procurement department, to make decisions on everything but relationships.”
Australia may be a relatively small and mature market, but it must seem like an easy target given the similarities to the US and Europe, and an attractive one, considering its key strategic position in the economic powerhouse of the Asia-Pacific region.
It seems we will continue to attract overseas print managers. For instance, sources have told ProPrint that Chicago-based Inner Workings is looking at making acquisitions here.
“They have knocked on a few doors and talked to a few companies and can’t find what they want for the money they’re prepared to pay,” says one source, who asked to remain anonymous. Emails to Inner Workings went unanswered.
No threat, yet
Essentially, the strategy of the global print brokers is to win global contracts and manage the Australian print requirement for those accounts. As a result, local print management companies don’t regard them as that much of a threat, at least for now. However, all this could change. It is only a matter of time before these global players start targeting the big Australian corporates. One print manager, who did not want to be identified, was scathing about their ambitions.
“I’m not aware of any great success they have had. I certainly haven’t run into them,’’ he said.
“Personally I would have expected Williams Lea to do a lot more than they have and we haven’t seen them and they are a company of some standing in this space. The only accounts they seem to run are through global connections.
“It’s a very tough marketplace and it doesn’t matter whether you’re a paper merchant, a printer or a print manager. I’m not aware of any great success they have had. I certainly haven’t run into them.
“It’s probably premised on, ‘If you have a global footprint you can win global customers’ but we certainly know it’s not that easy to find a regional solution, let alone a global one. While it sounds good, there isn’t any great evidence of that being the case,” says the print manager.
“I don’t see any of them as a major threat at the moment. They could turn into that but there’s more challenging issues at the moment and many competitors locally.”
Gary Sandilands, chief executive of Sydney-based Business Print Australia, says the only print managers that would be affected would be local brokers with global contracts.
“It really depends whether it’s part of a global arrangement for those international print managers,” Sandilands says.
“If you’re a local print manager supporting a local business of a global print management arrangement, then I think you would be under a bit of stress. There are plenty of European and American businesses here that could be serviced by these larger, offshore print managers.”
But they shouldn’t cause much grief for print managers with local clients, Sandilands says.
“Their strategy is to support international deals from large global businesses. I don’t think they can offer anything different from local players.”
Furthermore, he says local operators have a competitive advantage because they know the market better. They know how to work with local manufacturers and where to find the best printers.
“As local players, our knowledge of the market is more extensive,” he says. “That may change over time as they pick up other clients. But print is a relationship game. It’s about relationships and services. From that point of view, I think the local players have a competitive advantage with their local knowledge.
“The focus for them is supporting the international arrangements. Certainly with Williams Lea and HH Global, that’s why we don’t come across them that often.”
Big end of town
Marc Flior, HH Global’s Australasian operations director, agrees that the company’s aim is to win multinational accounts.
“We are working through at least five tender processes. Most of those are regional tenders so a number of Australian suppliers won’t get a throw in that because they don’t function within the region.
“We are not targeted at smaller companies. We definitely are targeted at large international companies because of the type of services and the way we offer our functions.”
Any new accounts will add to HH Global’s client list, which currently includes Bayer, Nokia and DE Master Blenders. Flior says global print managers have turned their attentions to Australia simply because overseas companies operate here. It has nothing to do with going after the Australian market.
“I don’t think you can look at it in isolation,” he says. “A large volume of HH’s deals are global deals and, therefore, to service those global deals, you’ve got to be in those major 30-32 countries in the world, otherwise you can’t service the major areas.
“They are signing global deals and it’s country independent. Australia is critical to supporting that and that’s the basis for having a presence here. It’s not about looking at a new market and saying, ‘Let’s go after the Australian market’.”
But our printing industry is not exactly in rude health. What drives global brokers to think they can make a buck in Australia when so many are struggling? “There are very successful printers out here and there is profit to be made if you run your business appropriately,” says Flior.
He rejects suggestions that global print brokers lack sufficient knowledge of the Australian market. Flior personally ran the procurement function for the Commonwealth Bank for many years, including its print spend.
“The people around me have extensive experience in print and mail houses in Australia and globally,” he says.
“We’ve got great relationships with a vast number of printers across Australia. Because I have a background in that, I have put together a panel of suppliers with which we have a very good relationship. The people I’m working with have got a background in the Australian print industry and, therefore, we don’t have any issues around that.”
Not a broker
What sets his company apart from the local print managers, he says, is its sophisticated technology platform. He claims this had not been replicated by any other player in the industry here.
“We are not a broker,” Flior says “We’re not going to buy print for people on their behalf. That’s not what we offer. The basis for what we offer is a very comprehensive technology platform that enables them to get control and visibility of their spend patterns but also manage their retail point-of-sale strategies and how they execute those. That’s the fundamental difference.”
He claims the platform ensures clients get value for their money.
“We have an integrated technology platform that’s broken up. We have one that we use from a buying perspective, a procurement hub that enables us to go and get quotes and deal with all of that.
“We also have a comprehensive platform that does project management and activation management for go-to-market strategies and execution strategies for retail clients. We have a platform where you can have your catalogues, your artwork design, your artwork approval and your management system built into one linked system. That just doesn’t exist locally. All of these other guys don’t have a single user-based platform to do everything.”
It would be simplistic to say modern print management, especially for global clients, is only about bottom line price. It is about global standards. It is about risk management. It is about worldwide marketing strategies. But price is still the most important criteria. Global clients are moving toward single source supplier deals to save money. Print managers don’t just offer a one-off price cut; they promise continual reductions. For a printer, it doesn’t matter whether they are supplying a locally owned broker or a worldwide procurement specialist – they know to expect ever-decreasing margins. Although, of course, that’s not exactly how a print manager would phrase it.
Flior says: “With a lot of the global deals, we will go out there and benchmark [clients’] prior spend and then we track how we purchase and procure against those benchmarks. Most of the time, we are offering savings against that and we are guaranteeing that.”
Local printers are required to toe the line.
“We are expecting those printers to sign to our terms and conditions and agree to function in a standardised auditable fashion because we guarantee that we audit and get our suppliers to hold an agreement to us,” says Flior.
“Our suppliers know they are measured on quality and in certain circumstances we are forced to get multiple quotes for certain clients because that’s the agreement so they know they have to price appropriately on a regular basis to get the work, depending on the type of work and activity we’re quoting on. We’re not going to deal with people on a regular basis if they can’t price themselves appropriately,” adds Flior.
Logical extension
One noticeable trend within Australia is the appearance of overseas stationery companies moving into print manage-ment. US-based Staples bought Corporate Express Australia in 2010. In February this year, US-based OfficeMax, which has been operating in Australia for 40 years, also pushed into the sector when it took over all contracts held by held by CPS and Foxprint Solutions. OfficeMax director of marketing and merchandise Paul Munkley says print management is a logical extension for the company.
“While we are well known for stationery, we also do literally millions of dollars in technology, in furniture, in janitorial, in break-room, in print, in ink and toner,” Munkley says. “Historically, the business has done anything that’s consumable from a workplace supply perspective. We have a client base across government, corporate, education and SMB that knows us very well for office products. They already see the link.
“When we look at it from a corporate perspective, we say, ‘What enables us to broaden our service to our existing clients and make ourselves more appealing to those clients and continue to grow ourselves?’ One of the most natural is print management.”
The strategy for OfficeMax is simple: print management is simply one solution offered as part of an end-to-end package for a broad client base.
“We would have contracts with state governments, we would have contracts with some of the largest utility, retail, telco, professional service clients in Australia. We would also have relation-ships with individual schools, with SMBs, with some of the smaller but still very well-known Australian businesses. We would go across the board from the very largest to the middle of the SMB market.
“The strategy is to offer an end-to-end marketing services capability. A marketing campaign may involve direct mail, it may involve outdoor, it may involve digital, it may involve elements of retail activation. Within that retail activation, they might require promotional goods to go with the printed goods. It’s about far more than print. It’s about design, it could be about the warehousing of those goods until required, it could be about the fulfilment. It might be about design service, it might be about mail. Print management is a logical extension,” says Munkley.
“But we offer far more than print management to an organisation. If you think about the way print management is heading in general, procurement people are not necessarily looking at categories in isolation any more, they are looking across their entire business and looking at how they can consolidate their business.”
Despite the shrinking market, Australia remains attractive for overseas print management companies, he adds.
“While the market is challenging, the opportunity for us is being able to offer our customers more than just print,” he says. “Regardless of the fact that it’s shrinking, it’s still an incredible market… the opportunity and scope is huge.”
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