Industry Insider: Don’t make the mistake of overcapitalising

A long-term customer recently asked me to take over the printing of their business cards. After a takeover, they wanted a new partner in the marketing department and I was happy to oblige.

But there was a problem. The new owners wanted all their business cards supplied by me – worldwide. That meant multiple sites in Europe, Asia and North America. Dollar-wise, I have bigger things but this was a first for me in terms of dealing with so many international offices.

The first batch I did myself, but thanks to the outrageously uncompetitive cost of freight from Australia, I quickly realised I would have to get an overseas partner. And in case you think me unpatriotic, the freight alone to Singapore for the first batch of cards was about $400, yet I found a firm in the US who charged less than that to print  and send cards for 13 people to three locations in the US and two in Europe overnight. No contest.

I wondered how they could do it. Sure they have cheaper wages and cheaper freight, but it is more than that. In America, they think differently to us.

My US partner is a good example. They are a very forward-thinking trade printer, much like CMYKhub or Whirlwind in their product range and marketing, except they also offer mailing. They were on the internet early and although they operate in a small state with a population of less than a million, they are ambitious enough to service the whole of the US and Europe.

But the thing I find most remarkable is the size of their turnover compared to their press room. Last year, they turned over around $30 million. That would make them a big Sydney printer. But they do it all on three five-colour Speedmaster 52 presses. That’s right – $10 million in turnover per straight A3 press.

In Sydney, the progression seems to be a secondhand A2 as soon as you can, a new one once you crack $2 million to $4 million and your first A1 somewhere between $4 million and $6 million. If you don’t have two A1s at $10 million, you’re not trying and if you get to $12 million, you’d better have a perfector if you want to hold your head up. More than $15 million? Prove it with an interstate office, design studio, a 12-colour and a couple of iGens or Indigos.

Compared to the Americans I know, it is extravagant overcapitalisation.

The overcapitalisation of the Australian market isn’t a secret. We’re all hoping that with all those Geon presses going overseas things might even out a bit. And I’m not suggesting having a room full of A1s for $10 million turnover is wrong – it’s always horses for courses and if A1 is your market, fair enough.

But the way I figure it, post-Geon we’ve got the chance to reshape the whole industry, business by business, and an Australia with fewer printing presses and more profit is one I’d like to see.

[Related: More Industry Insider columns]

Baden Kirgan is the MD of Jeffries Printing Services and Black House Comics

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