End of the road for the middleman

End of the road for the middleman
Before leaving the firm he founded more than 13 years ago, the biggest personality in print management sat down with Steven Kiernan to talk deals, disagreements and the industry’s devil

When printers complain that trading has become all about price, some point their finger at Price. The poster boy for the Australian print management movement is well aware of criticisms about print managers, but they leave him perplexed. “I hear all this moaning but no one has ever come up to me and had a face-to-face discussion, which I’m always happy to have.

“I haven’t actually heard a logical argument that explains to me what the problem is with print management and how that has affected a printer’s business. The mid-tier printers that are complaining – if we weren’t here and they weren’t getting work from us, they wouldn’t see the work because it would go to the large groups. My business model was always about feeding work to the mid-tier and small players. That was the whole business model.”

Those printers currently choking on their coffee at hearing this alpha print manager pitching himself as a champion of the little guy might’ve been too busy spluttering to notice Price’s use of the word ‘was’. After more than 30 years in the industry and 13 at the helm of the country’s leading print management company, the founder of Stream Solutions is not just leaving the business and the industry, he’s flying the country. Price is taking a long hiatus in Europe (no doubt with an earn-out from the 2007 buyout of Stream by Toll Group burning a hole in his back pocket). 

Love him or loathe him, Price is an individual with a wealth of industry knowledge and a finger firmly on the pulse of print. He is stepping down from the head of a company that redefined print buying in Australia. Stream helped accelerate the shift from the relationship-based sell of the inky-fingered craftsman to the commercial trading of a price-driven commodity. Few would thank him for it, but Price would say the shift was destined to happen anyway. 

He actually began in the paper world, including a 14-year stint at Spicers Paper before joining with Tom Pongrass to set up Stream Solutions as a subsidiary of Websdale Printing. Back then, many print houses saw the growing power of ‘print brokers’ as an unwanted menace.

“In 1998, if you didn’t have a manufacturing capability behind you, you were seen as a fly-by-nighter,” says Price. 

“There were a lot of companies at that time where a sales executive at print company would get fired, start up a print broking company that was basically a desk in his garage, do that for a few months, go broke and start again. That’s where a lot of the stigma came from.”

Price says the keystone of his model was to get a balance sheet behind Stream. Originally it was the backing of Pongrass. Then TDG Logistics came on as a 30% shareholder in 1999. Then TDG was bought out by Patrick Corporation. Then Toll bought Patrick in 2006-07.

“My goal when I started Stream was to create a model but to have the financial backing so that large corporations could feel safe. Traditionally, large corporations dealt with printing companies because [the printer] had asset backing. [The corporations] felt safe – and if something went wrong they had someone to sue,” he smiles, only half joking.

Beyond corporate accounts, the major stakeholder in the Stream model has always been the printer. It’s interesting to note that while ProPrint has heard printers level all number of criticisms at print management in general and Stream in particular, Price himself is convinced he always went out of his way to do the right thing by print suppliers.

“The most important thing when I started Stream was that we would pay our suppliers. We were always renowned for paying them. Whatever the payment terms we agreed on, we always paid our bills.”

He adds that it wasn’t always easy and there were tough times in the early days when invoices or wages were rung up on his personal credit card, but doing right by printers remained fundamental to his approach to business. “The reason we did that was because historically, these print brokers would come and go. There were a string of them that went under.”

When he hears about printers knocking Stream, does he take it personally? “No, not at all. I always see those comments as not a failure in my business model but a lack of education.”

Price gives the impression he takes the slings and arrows amicably enough, but behind his broad grin and ready laugh, there’s a hint of annoyance. 

“I hear quite often ‘print managers are responsible for driving down margins’. Hang on, do you mean to tell me that for every other customer you have who is not a print manager, prices are going up? If not, then perhaps your anger is misdirected. Prices coming down are just a fact of life.” 

ProPrint asked some current and past Stream suppliers what they thought of this. While all agreed Stream had a big role in pushing prices down, at least one conceded this would be “to Stream’s detriment too, because I presume they also lost money”.

The suppliers ProPrint spoke to were largely negative about Stream (though, notably, all under the veil of anonymity). In terms of positives, one said: “One of the great things about Stream is the way they deliver files; they are print-ready and spot on. For a printer that is the best thing a print manager can do. There’s no need for alterations, and you can do soft proofing.” 

Comings and goings

In the past 13 years, Price says many names in print management have come and gone, and very few majors remain. The only two he can think of that date as far back as Stream are Blue Star and McMillan print management, both of which now come under the Blue Star IQ banner. They are similar in that they have stood the test of time but different in one major way. 

The print management world has split into two camps, the independent model and the hybrid model. The difference is machinery. There is no printing machinery at independents such as Stream, Foxprint, Ergo Asia and smaller broking firms. On the other side, Blue Star and Geon mix presses and PM within one company. 

Price is an understandably staunch advocate of the independent model. Although Stream was born out of a hybrid set-up at Websdale (now part of Geon), it soon left behind its manufacturing roots to become a purely service-oriented business. Speaking to ProPrint, Price chooses his words carefully when giving his verdict of the hybrid model of Stream’s competitors. 

“Over the years I was running Stream, I have had some very big investors who have asked me repeatedly if I would like the cash to go and buy printing machines. And on every occasion I have said no, because I don’t feel that owning printing machines is the best take to market. That is my opinion and I am sure that those advocates of the hybrid model have their views. Let the market decide which is correct.” 

Just recently, the industry has seen another printer push into PM with a model that could be seen as a new slant on the hybrid set-up. Finsbury Green plucked one of Stream’s largest contracts away from the print manager when it secured a $15m per year deal with the Victorian government. One crucial aspect of the deal is that Finsbury’s print manufacturing will be “completely excluded” to ensure the contract is truly independent. 

Now a free man, Price is a step removed from this, so might not feel the loss as keenly as he once would have. But surely it’s not a great result for the company he founded? He is careful not to take a stab at Finsbury. So more generally, what are his thoughts on the approach Finsbury is taking, which ProPrint has heard being called ‘a hybrid/independent model’? 

“If I was a printer and I was quoting a – what did you call it? – an ‘independent-slash-hybrid’ company, how do I know that the price I submit is not going to be used against me at a later time? At this point, this is a customer I am quoting. But in 10 minutes time and down they road to a different customer, they are going to be a competitor. So it is not just the model that is a hybrid but the relationship that becomes quite confused.

“I would have thought,” he adds.

Investors tested

New entrants aside, what about those traditional hybrid PM providers at the two big private-equity-backed groups? No conversation about Blue Star and Geon’s long-term strategy can take place without at least being framed by the recent downbeat results reported by both groups. Andrew Price is no stranger to private equity, including a period during which Wolseley Private Equity had a stake in Stream. And he should be able to speak with some authority on the position of profit-driven investors. 

“I don’t think my opinions really matters. Their results speak for themselves,” he says.

The financials of the big sheetfed print groups haven’t been pretty. “But that is not unique to private equity. If you look at the investments in capital-based printing companies – ie, that invest in printing machinery – I don’t know that anyone who has made an investment in that sector in the past five years has done particularly well. 

“At the end of the day, you can only judge a company by its profitability and you can only judge management by the profitability they deliver and return on shareholders’ funds. That’s the scorecard,” adds Price.

The past five years of Price’s career have taken place in a markedly different climate from the preceding decade. Back in 1998, he says volumes were going up and the margins in print management were much healthier. Nowadays, he says that print management is a much harder slog than it gets credit for. 

Facing challenges

Stream has also faced some of the biggest challenges to its dominance of any time in its history. There’s the aforementioned loss of the Victorian government to Finbsury Green. There’s also rival Ergo Asia, which plucked Stream’s Centrelink contract to add to a trophy chest that also contains NAB and L’Oreal. And now, of course, there’s the loss of Andrew Price, the face of the Stream brand.  

Yet for someone who can be so vocally confident about his own business acumen, Price is modest about what his departure will mean to the company he founded. 

“Stream has a great future particular being part of Toll. I look at the business, I look at the people in there and fundamentally nothing has changed. Except that now that they have the complete backing of Toll, they have one of – if not the – largest balance sheets of any company in the industry, which must give customers a lot of security, particularity in these uncertain times.”

He is adamant that when it comes to customers, they won’t even know he has gone. This is partly because he has been more focused on long-term strategy than handling specific accounts. But by its very nature, the print management model is not about relationships. It is the opposite. What gets many printers’ backs up is the fact print management drove a wedge between handshake deals and turned it into a commodity game. “Part of the growth of Stream was breaking that down,” he says.

He adds that over the past decade, major buyers have brought in professional procurement people, “who break down all the relationships and bring it down to best value”. 

Price says: “And that’s where the Stream model always did very well. Because it wasn’t about personalities. So that’s why whether I am there or not is going to make zero difference to Stream’s future growth.”

Price’s attention is now aimed on life after Stream, and that jaunt around Europe. But anyone who has spent this long in the cut and thrust of the trade can’t simply let go. Beyond the businessman, Price has long been a vocal supporter of ink on paper, most recently as a member of the steering committee of APIA’s ‘Paper – part of everyday’ campaign. 

“The biggest problem I believe we have as an industry is we have no one there driving a long-term strategy. And that’s what this industry needs, to sit there, without bitching and swiping at each other, and ask ‘where are we going and where can we be?’ 

“Sure, it is always in the spirit of competitiveness that we bitch about
each other but at the end of the day when you have print volumes falling by 15% per annum, forget about losing 2% margin to your competitor. If your customer is going to be buying 15% less than last year, that’s your real problem. I think we are chasing the wrong devil.”

ANDREW PRICE ON...

Business performance

Your EBIT and your profit is your scorecard and that’s what you are judged by. And that’s been the case for every business I have been a part of since I left school. The way you are measured was always on your results. Not on market share, because I can’t pay my power bill with market share. 

Private equity 

Some people have done exceptionally well because private equity came into this industry. Some of the people who sold are on the record saying they’ve done very well out of the sale. I’m not sure how the investors in the funds view themselves and whether they are happy with their investment but once again, the scoreboard is the profitability you deliver.  

Challenges

What we in the printing industry hear about customers demanding lower prices and technology and the impact of internet and the impact of digital products is no different to a whole plethora of other industries that face the same impacts. We as an industry have to understand we are not on our own. There’s a whole range of other industries that are under the same sort of pressure. There is no point in whingeing about it. The internet is not going to be switched off tomorrow.

Winning customers

It is fairly irrelevant what we want to sell. The first step in my business was accepting that what I want to sell is irrelevant. The only thing that matters is what my customers want to buy. 

Technology

We are in an age of technology. We need to accept that technology will come into our industry. And that technology is not always going to bring bigger profits for us. It’s great to say technology is only good when we get CTP or faster presses. Technology is a two-edged sword. Technology affects us in a lot of ways – we need to accept it, embrace it and don’t fight it. At the end of the day, the impact that print managers have had and which model is more important is irrelevant compared to what is happening to the industry in total. That’s where the focus should be.

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