He left the company he founded, Stream Solutions, in 2011. Some wondered whether that would be the last the industry would see of Andrew Price, one of the men credited with establishing print management in Australia. But after months of sipping mojitos on the Riviera, Price reappeared with a bang, attempting to oust the Paperlinx board. After agitating for a board position during tense months, he won a place in September 2012.

More change was announced last month when Price was appointed managing director and chief executive. He’s currently based in London, where he’s leading the restructuring of Paperlinx’s troubled European business. The transformation plan has involved difficult decisions, including laying off large numbers of staff – but Price says the company may not have survived otherwise. 

So, a year after he secured his place atop the world’s biggest paper merchant, Price sat down with ProPrint and its UK partner title PrintWeek to find out if the turnaround plan was working.

You’ve recently moved from executive director to managing director and chief executive. What’s the difference between your old role and new role?

Andrew Price: It’s more day-to-day. My previous role involved building the strategy and assisting the chief executive, whereas now it’s a full-time day-to-day role. I’m going from working 12 hours a day to working 16 hours a day. I’m still involved on the strategic side, but over the past 12 months we’ve really developed the strategy, we know where we’re going and we have a clear plan for our businesses. We’re now in the implementation phase. 

What prompted the change of roles?

AP: There was an element of the previous role becoming out-dated and also an element of [former chief executive] Dave Allen having done his part. He just saw it as the right time to make the move. It was really driven by Dave. 

Is it fair to say the board felt you were more likely to turn around the company than Dave Allen? 

AP: I don’t think that was in the board’s mind. The decision itself came from Dave. Dave came to me and said, ‘Look, all of this is done and ready, so it’s time to implement the strategy’. You can tell from the way he’s leaving that there’s no animosity. He’s been given three months for the handover and you don’t do that if someone’s not well-thought-of in the business.

Are more top-level changes planned? 

AP: As of today, no. But this is an ever-changing company and an ever-evolving market, so you can never say never.

How does the future look for Paperlinx’s Australian and New Zealand business?

AP: The Australian business has been through all of the hard times. If you look at where it is from a profitability and costs viewpoint, it’s actually the model that we want to take to Europe. The business here has gone through what Europe still has to go through, so it’s been through the hard parts. It’s probably got another year or so of transformation, but it’s on its path. The business in Australia is diversification – looking at packaging, sign and display – those sorts of areas – growing there.

Why is the Australian business in better shape than Europe? 

AP: I don’t think it is market conditions, because the market conditions in Australia are no different to the market conditions in Europe. The numbers are all the same. It’s all about people. I think the people we’ve got in Australia have been very quick to adapt, they’ve embraced change a lot quicker and so they’ve been ahead of the curve and have been able to embrace the fact that the industry is going through some very serious change.

How is selling paper different in different countries?

AP: Fundamentally, selling paper is the same across the world – just like business is business and the fundamentals don’t change. We have the same issues in every country, we have the same challenges, we have the same type of business model.

You retired in 2010, aged 47, when you left Stream. How did you wind up at Paperlinx?

AP: I was sitting on a beach in the French Riviera, quietly drinking a mojito, when a friend emailed me and said I should have a look at Paperlinx; I replied ‘Are you mad?’

You had no interest in it at that point? No shares?

AP: I had a few shares, not many. But I had a look at the business and it just gnawed away at me, because I’d come from Spicers and I knew what a great business it was.

Was it at that stage that you started openly criticising the board?

AP: I hadn’t even started at that point.

You were just warming up?

AP: I could see a whole heap of things that Paperlinx’s previous board and management were doing wrong. They were wasting money left, right and centre.

It does seem that the company has bounced from one calamity to another over the past few years.

AP: The various crises that Paperlinx has faced in the past were all largely of its own making. Yes, we are in a tough market; yes, we are in tough times; and yes, we do have to work very hard to make a dollar. But if I look back at some of the decisions that were made, I’m not surprised. There were so many inefficiencies within the business. 

So what did you do?

AP: Well, I ran the numbers and it was obvious that there was a lot of value in
the business, so I decided that it would be a great project to try and turn it around.

Did you still have a tiny stake in the business at that stage?

AP: Well, not tiny exactly, I had been buying shares for a while by then, but I certainly wasn’t in the top 20. So I got together with a few friends and associates and we nutted out a broad plan to turn the business around.

When was this?

AP: December 2011. So we decided that we were going to go for the business, so I started buying stock and my friends started buying stock.

Were the shares good value?

AP: It was still a massive risk, they were only around $0.07, [from a high of $5.37 in 2003] but they were still going down. Then I tried to engage the chairman again, unsuccessfully again, so I launched an extraordinary general meeting (EGM).

Why didn’t you just buy the company?

AP: It wasn’t an option because the number of shareholders [around 47,000] and the complexity of the share register makes it very difficult.

Is it something you would have liked to do, though?

AP: Look, if you play poker you get dealt five cards, there’s no point whinging about them – that’s what you’ve got to play with. So anyway, by this stage we could muster more than 5% of the share capital, so we could trigger an EGM and away we went. We lost that EGM by 1.8%.

Lost in what sense?

AP: I proposed to remove the chairman and be elected to the board. After that, I decided I needed to go away and get some more shares and have another go. I was then invited to join the board.

Invited?

AP: Well, I think they knew that I was going to do it again, so they thought it would be less disruptive to just invite me to join the board. Before I took up my
role, though, I asked for some time to go through the business in detail and put together a plan on how to fix it.

So you spent time at all the international businesses?

AP: Well, Europe. The rest of the business is doing very well; it was continental Europe and the UK that needed the most attention. So I did that and then flew back to Australia for my first board meeting, and at that meeting all of the directors,
bar one, resigned effective immediately. The other director resigned, but stayed until the next board meeting.

Did you know that was going to happen?

AP: I wasn’t sure what was going to happen at that meeting. But I did have very strong views on where the business needed to go. Anyway, at that same board meeting two new board members were appointed, Michael Barker and Robert Kaye.

So what is the new strategy?

AP: I look at the business as having three children: we have a commercial print division, which sells paper; a packaging division, which sells packaging funnily enough; and VTS, Visual Technology Solutions, which is the old sign and display division. We love all of them the same, but they need to be managed differently.

Which one is the problem child?

AP: Without doubt it’s the paper business, because it’s in deep decline.

But it’s about volume being in decline, not the value, right?

AP: We say it’s in decline because of the number of tonnes going out the door. I don’t care about that, I care about profit. But to manage that properly, we need to have the most efficient supply chain possible. That means the lowest cost in all aspects of the business – purchasing, warehousing, logistics – and to be the most competitive. The strategy of a paper business can be summed up in a joke: two guys are in the jungle and suddenly a man-eating lion starts running towards them and the first guy starts to run, but the other stops and takes his shoes off and puts running shoes on. The first guy says, ‘What are you doing? You’re never going to outrun a lion.’ The second guy replies, ‘I don’t have to outrun the lion, I just need to outrun you’. Our strategy has to focus on being more efficient than our competitors, to make the hard decisions and to pull costs out of business faster than them.

So it’s a last-man-standing strategy?

AP: That’s part of it. We’re the largest independent merchant in the world; by that I mean we’re not owned by a mill. So we have huge value to the mills, because we’re completely supplier agnostic. Over time, that will give us a real competitive advantage. Also, we have to get our cost base under control. The most important thing for our business, though, is to save the print industry by coming up with ideas to help.

Saving the industry or saving Paperlinx?

AP: It’s one and the same. We can’t survive without our customers. It’s our responsibility to give added-value options. Our customers have been saying for years that we need to add value to their business, and we haven’t. The market is about us trying to sell purely on price, or saying our paper is whiter than the other guy’s, or greener than the other guy’s – that must stop.

What is important then?

AP: There are three things we have to think about: how do we get a product
to our customer that is better, faster, cheaper? It also gets back to us saving
the industry – how do we really add
value for our printers? If people just
want to buy paper from us, that’s fine,
we’ll be better, faster, cheaper. However, we want to add value in other ways. One is the Car Wrap Club and another was printers’ webstores.

Are they just European things?

AP: They will be coming to Australia and the guys have got a range of things that they’re working on. The Australian management came to Europe in September and they looked at some of those initiatives to work out how to bring them back to Australia. Everything that we do will be global; it’s just that we won’t release everything across the globe at the same time.

Can you give examples of how you’re currently adding value for Australian and New Zealand customers?

AP: We’re adding value in a number of ways, but in particular it’s about understanding the changing business models. If we look at New Zealand, for example, we’ve got our Spicers Xpress van. Even things like our sourcing office in China are going to add serious value. We’re the only paper merchant in Australia and New Zealand that has that Asian sourcing capability, and so having people on the ground in Asia who are able to bring in specialised products adds real value as well. In addition – particularly around the product area and some of our machinery areas – we’re coming up with some pretty interesting offerings.

Anything you can talk about?

AP: There are a lot of things we’d like to talk about, but the marketing people would kill me if I spoke out too soon. 

How easy is that for the staff to embrace? Because there’s always a reluctance to change, isn’t there?

AP: There is, but if they understand that change is the constant, they become a lot more accustomed to it. It’s really a culture thing, and one of the areas where the Australian and New Zealand business is ahead of some of our European businesses is the culture, because they’re used to change and they’ve got that culture of ‘What are we going to do next?’

Are any senior managers from Australia going over to relocate in Europe?

AP: I would love to relocate some of our managers to Europe, but that comes with two issues. Firstly, they have to want to move. Secondly, we do have a lot of good people in Europe, they just need to embrace a new culture. So, we’ve got a number of senior managers in Australia who are going to Europe for two-week stints. We’re using Australia, New Zealand and Canada as a real knowledge base.

What about staff concerns about the other changes to the business. You’ve maybe laid off around 10% of the workforce since you became a director, haven’t you?

AP: It’s probably a little more than that. If there’s one part of the job that stops you from wanting to get out of bed in the morning, that’s it.

Do you think that some people see you as the hatchet man who’s come to take chunks out of the business?

AP: I’m sure some do. There’s a balance – making those big cuts is not easy. It’s all about mathematics; running a business has to be about the maths – numbers don’t lie. Looking from the bottom up, we’ve got some fantastic staff at Paperlinx who are engaged, passionate and are driven about this business. And considering what they’ve been though, that’s pretty amazing. We’ve got to get the business right and make it sustainable, though. Losing people hurts; it’s not something I wanted to do, but it had to be done and it had to be done quickly because, frankly, the business was heading for disaster.

How long do you think the business would have had if things had carried on as they were?

AP: My belief is that if we hadn’t made these changes, I’m not sure we would be talking today. But we’re on the right road now, and I’m as confident as anyone can be about a business.

Will you still be in the UK next year, or are you heading back to Australia after your 12-month visa expires?

AP: I’m in the UK for a minimum of 12 months, and at this stage I can’t see me being in the UK for less than two years, because there’s a lot to do. There’s a huge gap in this market for where we’re taking this business. We have got enormous opportunities coming up, and we just need to mobilise.

Paperlinx has bought and sold assets in the past year. Will there be more?

AP: You can never say never, but at this point there are no businesses that we’re looking at selling. We think we’ve got the right business mix, however, there are a couple of acquisition opportunities that we’re looking at. They’re not in the core paper business; they’re sign and display or packaging businesses. 

Is that the easiest way to drive diversification – to buy businesses?

AP: It’s the easiest way to kick-start it. For example, in New Zealand, we could have started a greenfield packaging business, and started from scratch. Buying a business [Canterbury Packaging] accelerates that by a couple of years, so you still have the same outcome; you just take a couple of years out of the cycle. You’ve got to add up what we’re going to pay in goodwill versus what the losses are going to be from a start-up. In packaging, it makes sense in countries where we don’t have a presence to look at opportunistic acquisitions where they fit.

Is that the logic behind those potential acquisitions you’re looking at?

AP: Absolutely, and we’ve got a number of those right across Europe and Australia.

When will you step back from an executive role and get back to enjoying your retirement, mojito in hand?

AP: When we start making sustainable profits, with the right cost base, the right customer base and the right market positioning, then I can step back. 

ANDREW PRICE ON…

His proper paper background

I first joined the paper industry when I was 17; I started in the warehouse and then worked my way up to sales. I worked at a couple of merchants in the early years, but most of my time, around 14 years, was at Spicers Paper, which became part of Paperlinx. 

Being social and sustainable

In Australia and Canada, our main supplies come out of Asia, purely because of lead times. We’re very cautious that we deal with properly accredited mills, environmentally I mean, but also those that adhere to things like the ISO 26000 social responsibility standard. We’re a global company and we should be able to offer our customers the best possible deal, and having a sourcing office in China is critical, to ensure quality control. There are a lot of complexities, but we’re exploring all supply options – we have to.

In-built competition

Every market has competition. There’s no market where you can sit back and say, ‘Wow, here’s a feeding frenzy’. The market has its built-in competitiveness, because of the decline in paper consumption and print consumption, leading to inherent competition. 

Europe embracing change

They’re starting to realise that our industry is seriously changing and we need to go with it, whereas in Australia they’ve had that for a couple of years.

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