Page 20 - Print21 March-April 2020

People in print
Where and why it all began
Few printing companies grew as large or as fast as Hannan’s family-owned IPMG. Beginning in the early 1970s it was a wild ride through a turbulent time.
In the 1970s, the Hannan family were community publishers competing with others such as Murdoch and Fairfax, who owned their own presses. When Michael Hannan joined as a fresh-faced youngster, he realised it was a hopeless position, getting lousy print from his competitors that was never on time. So he bought a second-hand Goss community newspaper press.
“We started with a Goss Community
in the 1970s in Belmore Road, Randwick, printing local newspapers. At the end of 1979 we moved to Joynton Ave, Waterloo, where I wondered how we’d ever fill the five-acre site. By 1985 it was bursting at the seams, so we moved to the 22-acre site at Alexandria. Again, I wondered how I was going to fill it,” Hannan says.
“It was a fabulous period of growth, uncontrollable almost. The driver was that the big publishers, Packer and Fairfax, were getting out of their own print operations. They saw them as capital intensive, tying up too much cash, and thought they could contract out print at lower rates than it
was costing to produce it themselves. They closed the two big gravure plants in Sydney, Sun Gravure and Conpress Printing. We
won the lion’s share of it for Fairfax initially and then a fair share of the Packer work too. In 1987 Packer bought out the Fairfax mags and added them to his stable.
“We won so much work we didn’t have the capacity to produce it. We ordered another eight-unit M1000 press from the Harris corporation in the US, which we
had to ‘steal from another printer’ off the production line. The entire press was flown out on two chartered aircraft, a 747-cargo jet and a DC10 cargo flight. That press was commissioned and ran its first copies of Good Weekend and Readers Digest just six weeks after the aircraft landed and only twenty weeks from when it was ordered. It was a gut-churning period, more so than anything I have experienced since.
“There were setbacks too, Fairfax went into receivership in 1987, which saw our biggest customer in the hands of a receiver. The negotiation and outcome were helped enormously by the fact we had 10,000 tonnes of Fairfax paper in family-owned warehouses.
“In the early 90s we made two public company takeovers: InPrint with plants in Parramatta, Brisbane and Cairns, shortly
followed by the takeover of Offset Alpine at Lidcombe. Partly funded by cash, but with a $100m bank facility, the step change in our business was huge.
“By the turn of the century we were
in magazine publishing too with Federal Publishing, which I sold in 2007. I just didn’t believe the market could continue to grow the way it was. It was a gut feeling. But we only set out to sell the magazine business. Not the newspapers.
“We had three bidders for the magazines, including BBC Worldwide. The offers
from Fairfax and News were only if the newspapers were included. BBC almost
got there but they needed FIRB [Foreign Investment Review Board] approval. News made a compelling offer of just under $500m for the lot and we took that.
“Do I regret that decision? No, because of what happened in 2008. But structurally the group was never better than when it was an integrated publisher, printer and distributor. Murdoch, Fairfax and Packer were never stronger than when they also had publishing, printing and distribution. Now, we’ve an open mind on everything. We have to be careful, cautious. But I rule nothing out.”
The business of print
The business foundation of Ovato, accounting for some half of its $600m revenue, comes from 30 top contract clients. These are some
of the largest corporations in the country that operate on two- to three-year printing contracts. According to Hannan, by and large they live up to the volumes they’ve contracted for while Ovato lives up to maintaining its prices where possible.
“It’s a very competitive market, a bit more sensible now than it was by necessity. If the printing customers want price competition, then the printers need to survive. There’s room for sensible pricing in this market.
It’s helped by the fact that we’ve taken out a lot of capacity. We’ve led the charge on that, taken out seven heatset presses, closed two printing plants with one new heatset press gone in. The effect overall is with better levels of staff we’re achieving a much lower cost of manufacture. That
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has to happen if we’re going to be competitive in the future.”
Industrial relations are an ongoing challenge to any business and Hannan doesn’t step back
from acknowledging they could
be better. Some aspects of the current enterprise agreements hark back to a different era of larger print volumes and less stringent production deadlines. He feels Ovato labours under a disadvantage compared to its rivals.
“It’s important that the unions recognise the need for a level playing field amongst industry competitors. For survival this industry needs
to have a flexible workforce. That doesn’t mean taking advantage of them, it means sensible flexibility
in the way you man presses, and the shift structures.
“It’s a fine line between your responsibilities to our 1600 employees and the shareholders. I think about them both all the time. You have to find a balance.”
As a listed company, Ovato is under constant investor scrutiny. Hannan is confident that when the market realises the structural benefits from the past two years, new investors will come on board.
“If you look at the heatset web side, we are the only printer with a national coverage. Plants in Sydney, Brisbane, Melbourne, a small plant in Cairns, and a strategic plant in Western Australia. We can deliver a national catalogue better and more effectively than anybody with lower freight cost.
“Our competitors can get there
but they can’t do it as efficiently,
and they certainly haven’t got the contingency plan to get the client out of trouble.
“It’s been full steam ahead for the past two years, but it’s been all uphill. Now we’ve got to the point where we see the light at the end of tunnel.
“We’ve got ourselves on to a much more efficient platform.”21