'Alarming' decision for printers to absorb carbon tax price rises

The industry's peak trade body finds it "alarming" that many printers are planning to absorb price rises caused by the carbon tax.

Price pressure in the market has become so intense that "a significant number" of companies will refrain from passing on costs, said Hagop Tchamkertenian, national manager of policy and government affairs at Printing Industries Association of Australia (PIAA).

"If printing businesses have an ability to pass on the cost increases that are related to the carbon tax then they should do so because industry margins have fallen to a level that's not commercially sustainable," he said.

PMP told ProPrint that it planned to pass on costs, while Mystique, Active Display Group, PrintBound, Finsbury Green and Focus Press said they probably wouldn't.

Mystique environmental manager Mat Eldred said declining margins and an "extremely competitive" market made passing on costs unrealistic.

"We have had experience with this from the early stages with our involvement with the voluntary carbon market," he said.

[Our National Carbon Offset Standard] certification does cost money and the current business environment doesn’t allow Mystique to pass these costs on. Customers will not pay a premium even if they are getting a carbon neutral product and knowing that their money is going towards reducing carbon emissions."

Active Display marketing manager Zita Watkin said the company didn't expect to pass on costs as it had been forced to lower margins in order to win jobs.

"Not at this stage because to win tenders and orders we need to stay pretty stable on the prices, which means our bottom line will be affected," she said.

"We know there will be some price increases from suppliers and that will be very hard to pass on to customers – in fact, we probably won't."

PrintBound managing director Mauro Mattarucco agreed that both lack of volume and oversupply meant it was more likely that prices would go down than up.

Franklin Web director Phil Taylor wouldn't be drawn on whether or not the Melbourne printer would pass on costs, although he did concede "it might prove difficult".

PMP's general manager of procurement and sustainability, Adam Crowe, said the company would be passing on costs as that was how the carbon tax was designed.

"If we do not pass this down, then the printers' customers simply reap the benefit and printers' margins further decrease."

All the companies ProPrint spoke to said they expected the cost of their electricity to rise.

Focus Press managing director David Fuller said his power bill would be $30,000 higher. PrintBound's Mattarucco predicted a 30% increase. Watkin said Active Display's price rise would "definitely be a sizeable amount of money".

Tchamkertenian said although it was difficult to accurately gauge the mood of the industry, the general feeling appeared to be that the carbon tax represented a threat.

He advised concerned companies to order a copy of its Managing the Carbon Tax guide and join the PIAA's buying group – something Eldred said Mystique had done.

"To alleviate our increased energy costs we are participating in the PIAA's buying group," he said.

"We hope to save as much as 20% on our current energy spend and a small percentage on our fuel costs."

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ProPrint will investigate the carbon tax in more detail in next month's magazine.