News

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.

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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.

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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