The Prinovis Group, in which the Bertelsmann Printing Group (BPG) has bundled its gravure printing business, is closing its German gravure printing site in Nuremberg. The Dutch Circle Media Group is filing for insolvency for its Dutch printing plants and is selling the book printing group CPI: Bad times are dawning for large printing plants.
According to a survey conducted by the German Printing and Media Industries Federation (bvdm) about 420 companies, which represent around 24% of employees in the printing industry and account for around 23% of industry sales in 2018 (€ 4.8 billion), had sales decline slightly last year. If the 23% were to be extrapolated, industry sales in 2018 would be around € 20.8 billion, the same level as it was in 2017 (€ 20.8 billion).
It would be reassuring if industry sales did not drop. But the industry is confronted with rising prices for printing paper and rising transport costs. If 42% of the companies surveyed report losses in sales and 45% in profits, this is not exactly surprising. What is worrying, however, is that the larger the companies are, the greater the drop-in sales and profits.
What kind of companies are these? The big online printers are unlikely to be the ones – as they increased their sales again last year. It is most likely those who are in the newspaper and magazine business or with large capacities in the catalogues and advertising supplements segment. Their profits also fell disproportionately.
Years of tension
The situation in web printing – especially in publication gravure printing – has been more than tense for over a decade, despite occasional hurrah announcements. This is because demand for high-volume catalogue products typical of gravure printing has fallen sharply. In the case of smaller circulations, gravure printers (simply because of the costly production of the impression cylinders in the prepress stage) have worse prospects than that of web offset printers. This has led to overcapacity in gravure printing, fierce competition with web offset printers and price wars, which have resulted in both web and gravure printers falling in a deadly downward spiral.
In addition to this, web offset printing has lost orders to sheetfed offset printing – partly due to declining print runs and partly due to the enormous increase in the effectiveness of sheetfed presses. And to make the shift in print even clearer: Sheetfed offset is now being attacked by high-speed inkjet web presses, which are ensuring proper printing in the market – see issue 2 of beyondprint unplugged (Still pending).
But back to web offset and gravure printing. It was foreseeable that this murderous competition would sooner or later lead to a collapse. Something had been brewing for quite some time – and now the storm seems to have broken out. Closures and insolvencies such as those of Prinovis or CMG do not exactly speak of a successful course of business. And the British Walstead Group, which operates 65 web offset and gravure presses throughout Europe, has also reported a decline in profits of around 9%.
Gravure printing restructured
Just a few days ago, the Bertelsmann Printing Group announced that it would be closing its gravure printing plant in Nuremberg in 2021. By the end of last year, the print shop had produced several million copies of the Otto catalogue. The last main catalogue went into print in November 2018 (see also “I’m off then”). This was perceived by insiders as an indication of the inevitable closure of the plant at the turn of the year. This now affects around 670 employees in the printing and finishing departments as well as 250 people under loan, time and work contracts. Simultaneously, with the closure of the printing plant, Bertelsmann now intends to reorganize its printing business in terms of organization and personnel.
“Megatrends such as digitization and individualization, as well as the increasing convergence of gravure and offset printing, present printers with considerable challenges,” says Thomas Rabe, CEO of Bertelsmann, explaining that the “paper price increases have led to a restraint among many customers. We are now responding to these developments with an even stronger integration of our printing businesses”.
Prinovis has been part of the Bertelsmann Printing Group since 2015. Previously, Springer-Verlag and Gruner + Jahr were shareholders. In 2008, the Darmstadt site was shut down, and the Itzehoe printing plant was closed in 2014. After the closure of the printing plant in Nuremberg, the two German locations, Dresden and Ahrensburg near Hamburg, (not to be confused with the newspaper printing plant also located there) and the publication gravure printing plant in Liverpool will remain.
“It was foreseeable that the murderous competition between web offset and gravure would sooner or later lead to a collapse. Something had been brewing for quite some time – and now the storm seems to have broken out.” – Bernd Zipper
CMG Group Crumbles
In the wake of the structural upheavals in some neighboring countries, it has been hit even harder. In mid-April 2019, the printing group, Circle Media Group (CMG) in Amsterdam, filed for insolvency on behalf of Roto Smeets BV, the holding company of its Dutch printing company.
The CMG Group was founded in spring 2017, when Circle Printers Holding acquired all shares in the Roto Smeets Group and shortly afterwards Corelio Printing in Belgium. After the acquisition of Roto Smeets Group and before the CPI takeover, the Circle Media Group achieved annual sales of around € 550 million with a workforce of 2,700 employees. With the acquisition of CPI in July 2018, CMG grew to a turnover of approximately € 900 million, had more than 5,000 employees and 26 production sites in ten European countries as well as in the United States. At the time of the acquisition, CPI employed 2,500 people at 16 locations in five countries (France, the UK, Germany, Spain and the Czech Republic) and achieved annual sales of €360 million. CMG thus produced a total of 135 printing presses, 29 of which were digital units.
Now the Roto Smeets Deventer (four gravure presses), Roto Smeets Weert and Senefelder Misset (a total of seven 16- to 72-page web offset presses and two sheetfed offset presses) in Doetinchem with their respective subsidiaries are insolvent. The bankruptcies are the result of market conditions in the European printing industry, CMG announced. After an acceptable year in 2017, 2018 saw a sharp decline in the market. Paper prices had risen by up to 20%, while print volumes were declining twice as fast as the previous average. In addition, the company criticizes the Dutch Dismissal Act, which makes it more difficult to reduce the workforce in a socially responsible manner. According to CMG, the insolvency therefore does not affect Belgian Corelio Printing or other printing companies in Austria, Germany, Spain and Hungary.
However, in the previous weeks CMG had already sold its Helprint gravure printing plant in Finland and the book printing group CPI, which is active in several European countries. And following an insolvency of the company, the CMG gravure printing plant Helio Charleroi in Belgium was closed at the beginning of 2019.
An opaque Group
Is this the right thing to do? In connection with the insolvency of Helio Charleroi, the Uni Europa Grafik & Verpackung trade union association had already expressed criticism of the “opaque investor group”, CMG, at the end of February 2019, “Chronic liquidity problems have led to a lack of wage payments in Spain for six months. The group of investors refuse to disclose its business relationships, under the keyword “consolidation” bankruptcies are traded, even economically strong locations can quickly get into the danger zone”, warned Uni Europa Grafik & Verpackung.
“The liquidation of the Charleroi printshop is in line with the unorthodox practices of the Cypriot and Luxembourg shareholders, often outside the laws of the various countries in which the printshops are located.”
The union’s fears were apparently not unfounded. Less than 10 days after the Circle Media Group announced the closure of Roto Smeets, management announced on 25 April that it would restructure its printing business due to the sharp decline in volumes and is putting further printing plants on hold. Printing activities in Austria will be discontinued and new owners will be sought for the printing businesses in Belgium (Corelio Printing), Germany (Körner Druck and J. Fink Druckerei) and Spain.
“We wanted to play a leading role in the necessary consolidation of the European printing industry. We are now finding that we are no longer able to achieve our goals,” says Peter Andreou, Executive Chairman and CEO of Circle Media Group. That sounds like a resignation.
Out of place
Andreou also sounded similarly meek when CGM sold the CPI Group, which was only acquired in July 2018, to the private asset management office RHWO in a private transaction at the beginning of April 2019: “One of our reasons for acquiring CPI was its range of digital equipment and supply chain solutions. However, we found that CPI and our business units were not developing at the same pace in advertising printing.”
With 450 million books per year, CPI is one of the largest European book printers. CPI, which also includes Clausen & Bosse and Spiegel & Ebner in Ulm, supplies large publishers, industry groups and public administrations with science and technology. Founded in 1996, the CPI Group is the first European printing group to invest in inkjet digital printing, offering on-demand printing, automatic inventory replenishment, non-stock management, distribution and web-to-print.
This did not fit into the structure of CMG. Obviously, CMG did not dare to handle the growth potential seen in CPI itself, including the necessary investments.
My take: Whereas previously it was mainly the smaller print shops that failed because they could no longer keep pace with development, now many large companies are finding themselves in the same boat. It is possible that the big players are no longer able to keep up with the pace of change. At least not those who stick to the old structures – and because of the technology they use they may not be able to do otherwise (such as gravure printing). But millions of copies and customers’ need for more and more individuality and personal address somehow don’t fit together. But this has been known for some time.