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Paper
Investment injection
Spicers, Australia’s other big corporate paper merchant, has
also recently been snapped up by a Japanese buyer: Kokusai Pulp and Paper, or KPP. The takeover was formally celebrated at PrintEx in August with the traditional opening of a sake barrel (see our story on page 32 of this issue).
According to David Martin, CEO of Spicers, the deal is not just a one-way street but a symbiotic relationship between Spicers and KPP.
“The immediate focus for us is keeping our eyes on the market and our integration with KPP is in the background – we know there are new supply opportunities for us, but there are also opportunities for KPP in other parts of the world with our current relationships,” he says.
Martin says that, with KPP’s money and clout behind it, Spicers is now able to make headway on a number of long-term projects.
“We’re focused on opportunities delivering both growth and productivity as our next investment – so with KPP’s help, we’re able now to get on with projects we’ve had on the boil.
“Capital is a big advantage for us now – both with investment, and also with the prospect of expanding our operational capabilities. We’re prioritising the capital to projects which deliver quickly, for us and for KPP,” he says.
Talking to printers about what they are looking for, Martin and Spicers have found plenty of interest in cash and terms.
“The industry has had a few notable players cease to exist, with no real impact to us given our conservative controls, but this does lead to an industry-wide scepticism. Printers don’t necessarily want deliveries faster – two deliveries
a day is world class. I’m not sure service to the industry
could be any better than
it is today, and printers
generally aren’t asking us
to improve on service.
“We want to become more innovative so customers can grow
with their own customer base or expand into new markets, and we believe new packaging materials is one area where there are broad opportunities with limited capital required at customer level,” he says.
Though supply is safe, Spicers has also had to raise its prices over the past few years in response to pressure from mills – pressure which Martin says is largely due to a drop in demand. “There’s been a couple of phases. Mill closures in China due to environmental forced shutdowns impacted prices, and with the two big closures in Europe there is no
“There is an inevitable structural change occurring within paper manufacturing.” – Craig Brown, Ball & Doggett
excess supply to drive prices down. I think the market is responding to reduced demand, and it is a matter of whether you see demand coming back to the old levels – I don’t see a driver that would do that,” he says.
Strong backing
Despite the turmoil of the past few years, the big paper players in the Australian market look set to prosper under their new owners.
“Our current financial position has helped us stand on our own
two feet, and the size of KPP means there’s no question about the future sustainability of our business. It will only expand from here,” says Martin.
For his part, Brown sees Ovol’s investment as a vote of confidence in the industry.
“This is a long-term commitment to the markets in both Australian and New Zealand that ensures stability and future reinvestment in the necessary supplier distributor space,” he says. “For
us it’s about continuing to provide printers with better solutions, better products. That goes on irrespective of our ownership.”
It is a new era for the paper merchants alright – and for the customers they serve. 21
Main
Paper: a changing business
Sharpening supply:
Craig Brown, Ball & Doggett
Symbiotic: David Martin, Spicers
Below left
Below
Family-owned for two decades
Direct Paper, Australia’s third- largest paper supplier, is an independent merchant that
primarily serves the east coast, with limited business in the Northern Territory and South Australia.
According to Dale O’Neill, director, the company has been around for 23 years and, though it is independently owned, is big enough that range and supply are not issues.
“With us, the business owner, being the printer, is also dealing with the business owner of
the paper supplier. We all have
the same challenges, being family-owned and independent businesses. It’s the service offering that sets us apart,” he says.
Direct Paper has sourced its stock from Asia and Europe for 15 years and has good relationships with its suppliers, says O’Neill.
“I don’t know that we have
the buying power of the big corporates, but we end up with
a competitive product in the market, which is most important for us. The reality is that buying power is all pretty even.
“At this point in time,
mill closures haven’t had an impact. Our channels have
been unaffected. We sell a lot
of packaging board, so in some cases that’s opened up as foreign mills have converted to packaging grades, but we’ve not noticed any significant change in our fine paper range,” he says.
Aside from just paperstock, Direct Paper also offers converting, with sheeters running 24 hours a day to supply just-in-time paper and packaging grades. According to O’Neill, both the fine paper and packaging arms of the business are booming.
“It’s been business as usual, we’ve been successful for a long time so nothing’s really changed. There’s been some consolidation at the printer level and there’s probably more to come, but that work goes out to other printers and we’ll supply those printers.
“It’s going to be business as usual for us – keep our range fully stocked and continue to operate as we have for the past 20 years,” he says.
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