18 July 2016 Analogue Printing Technologies

Polestar collapse eases pressure on UK web offset sector

What remains of the UK’s web offset sector is relieved that Polestar has finally closed down, raising the prospect of better returns for hard pressed printers.

The wreckage of Polestar has been picked over by the UK’s remaining large print groups while work and contracts have been scattered across Europe. After the loss of capacity when Woodford, Westdale and Artisan closed web printing operations in 2015, Polestar's demise represents a further slice of web offset capacity removed from the market.

While two of the main sites are now under new ownership, the closure of Sheffield has taken both gravure and web offset presses from the UK high volume commercial print sector. This has forced some contract customers with long run weekly publications to seek new homes in Holland and Germany, at least in the short term.

Whether the extended supply lines can cope with time sensitive products against a combination of weather and industrial action, let alone increasing prices as the pound remains at a low level and the prospect of Brexit might add a layer of complexity to cross the English Channel.

Meanwhile other magazine publishers have endured some nervous weeks as administrators worked to sell what assets they could.

YM Group stepped in to buy the Chantry site, traditionally home to quality perfect bound monthlies. This is a first substantial step into magazine printing for the group which comprises Pindar, York Mailing and The Lettershop Group. It has recruited the sales and marketing people to maintain relationships with and reassure somewhat nervous customers. It is early days and full details of the deal have not emerged.

The Bicester site is now under the control of Wyndeham, which has negotiated a deal where the purchase has been underwritten by the print contract from Time Inc. Wyndeham had lost the titles it printed for the owner of the old IPC group when the publisher clinched an attractive single supplier deal with Polestar. It has now discovered why that price was possible.

When Wyndeham bought the business, it made it plain it was not purchasing the customers. The message was clear: if you want us to continue printing your titles, it will not be at the same price you were paying Polestar. It was a clear indication that what has been a buyers’ market is swinging around.

Again it is too soon to know whether there will be further capacity reductions from these sites. The deal leaves Wyndeham in control of the lion’s share of the UK’s magazine printing capacity with Peterborough, Southernprint and St Austell its triumvirate of magazine print plants.

Neither of the large companies can retain all the work that Polestar controlled. Some drops to the next tier of web offset printers, with stronger pricing inevitable.

“Yes, we have picked up a reasonable amount of business from Polestar,” says Precision Colour Printing managing director Alex Evans. The Telford print company has no wish to unsettle customers that have been loyal, but says Evans, the landscape has changed. “Over the next 12-18 months a new landscape will emerge. Some of the work that has gone abroad will surely return.

“We were not surprised by the collapse, it was always a matter of time; Polestar could not carry on doing what they had been doing. It’s not before time.”

For PCPa> there will certainly be a strong back end to this year with customers striving to secure web offset capacity as demand climbs in the run up to Christmas. The company can tender for this work confident that it will not be fighting suicidal prices. Some will continue to be lower than needed, but in the medium term more disciplined pricing will emerge.

“We have needed to get back to a position of stability with pricing that allows us to reinvest. It has been a buyer’s market for too long where prices have been so low it is simply unsustainable,” says Evans.

That has shocked many publishers who had initially supported the prepack of Polestar. Had Polestar been able to deliver a consistent quality of product, publishers might have been more forgiving. But the list of creditors shows too many publishers owed money after excessive paper use.

In the proposal, endorsed by the prepack panel, for a revitalised Polestar, much was made of promised improved efficiencies. But it never had the chance to find out – this had been a prepack too far for Associated Newspapers which began the rush for the door precipitating the final collapse.

Evans now hopes that the rebalancing of supply and demand will usher in a new healthier relationships between printers and buyers. “If we can work in a more open and honest way, we should all see some benefits. It’s a chance to redefine the landscape,” he explains.

The opportunity for reinvestment is necessary. There has been relatively little new investment in web offset capacity in the UK in recent years: a couple of 16pp machines for specialist applications and a 32pp press for Warners. This was one of the driving forces behind Polestar's investment in the 96pp Goss presses. It would become much more efficient than its rivals and be able to compete on the prices it had negotiated.

Behind YM Group and Wyndeham there are a number of single site independent web printers, for the most part family owned and in business for several generations.

Like Headleys and William Gibbons, Warners is a business that keeps its head down while continuing to invest. In a blog last year, managing director Philip Warner recommended that publishers have a disaster recovery plan in case their current print supplier closes. It is not saying if any publishers took that advice.

Charles Jarrold, chief executive of the BPIF and with extensive knowledge of the web offset sector, comments that “fewer stronger web offset players will be good for the sector”.

“They will be able to reinvest rather than just cutting prices to retain or bring in work, which is where the industry has been for a while. Shutting web offset capacity is expensive so cutting prices to retain a job may be the right thing for an individual business to do, but the effect adds up and the sector is not providing a return on its assets.”

GD Print in Rotherham is not a major magazine printer. Its sister company Acorn Web is doing “really well” in magazines, while group chief executive Nick Alexander says that focus is crucial.

He bought the former Garnett Dickinson business 18 months ago and has implemented new systems, changing the way that the business operates. “It has been a technical restructure,” he calls it. “We have wanted to keep our heads down and deal with what we needed to do.”

It is paying off. “We are focusing on the core product mix and markets that we have identified. We have been working in isolation; what we are doing has no bearing on what Polestar has done.

“We have won a batch of work following Polestar's demise, but it is not work that we would not have won any way.”

That focusing of the business has now led to investment. A 48pp Sunday Press, previously part of the Artisan line up, will be up and running by the end of the month. It joins a 48pp Lithoman at the site and 16pp Rotoman.

“It is a very well maintained press. We have needed two 48pp presses to give customers the confidence they are seeking to know that we can produce to the quality and the time scales that they want,” says Alexander.

“This has been a relatively modest investment that gives us the flexibility to cope with peak periods. For example the second week of each month is never as busy, so why would we want to carry large overheads at that point?”

It is a different approach to that which led to trouble for Polestar where the urge was to fill every hour of capacity at every point. As soon as the technology or the systems do not function as they should, the result is a disappointed customer base.

GD Print is avoiding that. The sort of work it is looking for is produced for well known brands. “It’s high quality, looks really nice and is delivered on time: it’s as basic as that,” says Alexander.

“And we have orders in hand that are running through to next year. We want to be specialist at the type of work we do. If as a print business you are not clear about what your market is, you will not survive. And you still have to work really hard to survive.”

The market for web offset in the UK is swinging around. The problem is that the long period of low pricing has left web offset printers with ageing capacity. Will they be able to reinvest to keep the sector afloat in the years ahead?

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