PRINTING INDUSTRY AND THE INNOVATION
Why does it matter whether Australia has a printing industry?
No one here needs compelling of the sector's economic consequence. It accounts for a tenth of developing industry value added and a tenth of manufacturing employment. It is geographically dispersed and contains a large amount of SMEs - a high percentage of them in regional centers. I'll let others decide whether Canberra belongs in that class, but it's hard not to observe that this industry accounts for 35 percent of manufacturing value added in the ACT - which must make it one of the most print-intensive manufacturing locations anywhere.
These considerations are important – especially to the 100,000-plus Australians who work in the sector, their families, and the communities they help sustain.
But they aren’t the whole story.
Can we build a knowledge economy without a strong printing and publishing sector? I don’t think so.
Can we maintain a lively culture without them? I doubt it very much.
This is an enabling industry, important not only in its own right, but also for what it makes possible in other areas of our economy and society.
It is also an industry undergoing rapid change.
Industry Structure and Consolidation
The proportion of the printing industry workforce in firms with 200 or more employees is increasing. So is the proportion in firms with less than twenty employees.
It is the middle that’s shrinking, with the proportion of the workforce in firms with twenty to 199 employees in steady decline.
It seems there is still room for the small operator primarily serving local business and community needs – although they may be doing less conventional offset printing and more digital and copy-shop work.
That brings them into competition with franchises and other small businesses that have moved into this space from retail and business services rather than from printing.
At the very low end, there is even competition from DIY – which many people seem to find acceptable, however much the results might make professionals weep. The other end of the market is dominated by large, full-service printing houses offering everything from graphic design to prepress to high-volume printing – web and sheet-fed – to in-line binding and finishing. Operations on this scale are incredibly capital-intensive.
It is far too early to declare the mid-sized printer dead, but it does seem the structure of the industry will become increasingly polarised over time, with a large number of small players at one end, a small number of large ones at the other, and less and less in between.
The future of the mid-sized printers now competing in a pretty cut-throat market for medium-volume, high-quality sheet-fed work will often depend on their ability to scale up, including through mergers and acquisitions.
With that in mind, many in the industry have expressed concern about the ACCC’s decision last year to block the proposed joint venture between PMP’s Griffin Press in Adelaide and McPherson’s in Maryborough (Victoria).
I understand that concern, and I expect the industry’s need to rationalise and consolidate will figure prominently in my discussions with you over the coming months. Consolidation is a matter of life and death for many firms, and I am keen to work with you on this.
Living with Change
There is much we can do to smooth the path of change, but we can’t stop change happening – in this industry or any other.
The old English King Canute gets a very bad press these days. He was the dill – or so we’re told – who parked himself at the water’s edge and commanded the tide to turn.
In fact he got his feet wet for a very good reason – he was trying to remind people that no one can stop the tide, not even a king.
Instead of wasting our energy trying to resist the tide of globalisation and technological change, we should be thinking about how we can use it to our advantage.
If we get smart and position ourselves strategically, we might even be able to ride it to a safer shore.
Innovation and New Technologies
I’m old enough to remember my younger self setting out to change the world armed only with a layout sheet, some galleys and a glue gun. Once upon a time, I even knew what a moiré pattern was.
The photo-typesetting technology I was using – with more radical passion than skill, I have to say – was state-of-the-art back then.
With hindsight we can now see that it was a blind-alley off the broad highway leading back to five centuries of metal type and forward to the digital revolution.
This is a reminder that the future of technology is not always easy to predict.
There are two ways to manage this.
One is to be nimble, open-minded and ready to adopt and adapt new ideas as soon as they emerge.
The other is to take matters into our own hands by committing to innovation and developing our own ways of doing things.
The printing industry was part of the knowledge economy long before that term was invented. Today it is part of the digital economy as well.
As Printing Industries itself points out, many printers these days are less like manufacturers and more like service providers.
Many spend less time applying ink to paper than assembling and integrating information for delivery through a host of different communication channels.
Instead of seeing multimedia and the internet as rivals to the printed page, they recognise all three as potential destinations for content which they can have a hand in generating.
The Cooperative Research Centre for Functional Communication Surfaces – better known as CRC Smartprint – is extending our understanding of what printers can do in a different direction.
It sees printing as just one of many industrial processes that involve applying marks and coatings to surfaces – all of which can draw on the same advances in science and technology.
Innovation is not only about dramatic scientific and technological breakthroughs. It is also about incremental improvements to everyday products, services, processes and organisational arrangements.
It’s not only about creating new knowledge. It’s also about using existing capabilities and know-how in new ways.
The Australian printing industry has everything to gain and nothing to lose from this kind of innovation.
The need for fresh ideas is especially pressing given the growing intensity of international competition.
It is a fact of life that the artwork for even the most complex job can be reduced to an email attachment. It has never been easier to take printing work off-shore.
While printing and publishing tend to be bracketed together as a single industry, and both are represented within Printing Industries, their interests don’t always coincide.
In 1994, Australian book publishers spent 68 per cent of their printing dollars in this country. A decade later, the figure was down to 45 per cent. The other 55 per cent was spent overseas. (ABS 1994 and 2003-04).
But the traffic isn’t all one way. The Australian industry can and does export.
Yes, we do have a substantial trade deficit in printing and publishing, but at least it has remained relatively constant.
The ratio of imports to exports was three and a half to one a decade ago, and with both growing at 1.6 per cent a year since then, the ratio is the same today. (DFAT)
This isn’t the sort of result you shout about from the rooftops, but it is something. A lot of industries have done worse.
However, the pressure of international competition isn’t going to ease any time soon, so we need to do a lot more.
China’s emergence as an economic superpower is changing the landscape for this industry, just as it is for every other industry around the world.
Australia sold just over $4 million worth of printed products into China in 2005-06. China sold $335 million worth into Australia.
That’s a ratio of seventy-eight to one.
I don’t have any pat answers on this.
I do know we can’t compete with China on price. We have to compete on originality, quality, design and service – including timeliness.
For countries like Australia, with first-world cost structures and living standards, innovation is the key to international competitiveness.
The two go hand in hand. More innovation leads to more export capability and more international exposure leads to more innovation.
One of our main initiatives for turbo-charging innovation – specifically among the kind of small and medium enterprises that dominate this industry – is the $200 million Enterprise Connect.
Enterprise Connect will create a network of sites around the country where SMEs can access new ideas, know-how and technologies.
There will befive new manufacturing centres, with Queensland’s QMI Solutions also tied in. There will also be five new innovation centres – one each for remote enterprise, creative industries, innovative regions, clean energy and mining.
We have so far determined locations for eight of the ten new centres, and half of them are outside capital cities (Burnie, Geelong, Mackay and Alice Springs).
Enterprise Connect will bring SMEs together with advisers who have access to a national knowledge bank, tools and training.
It will serve as a gateway to the resources of universities, research organisations and private companies engaged in the creation and dissemination of new knowledge.
It also includes Researchers in Business, a program to fund the placement of public-sector researchers – whether from universities or organisations like CSIRO – in SMEs with ideas that stand a good chance of reaching the market with a bit of expert help.
As with every other component of Enterprise Connect, the idea is to accelerate knowledge transfer and the adoption of new ideas and new technologies.
It’s hard to innovate without the right infrastructure and the right support, but it’s impossible to innovate without the right people.
Skills shortages are as much a problem in the printing industry as they are in every other sector of the economy.
The government has made tackling these shortages a priority.
We are creating an additional 450,000 skilled training places over the next four years – with 20,000 to start this month. Most of these places will lead to higher-level qualifications (Certificate III or above), and 65,000 will be for traditional trade apprenticeships.
We are also spending $2.5 billion over ten years to build trades training centres in each of Australia’s secondary schools.
At the same time we are increasing technological literacy by spending $1 billion to supply computers and broadband to schools – this is especially important to ICT-based industries like printing.
We are fast-tracking the establishment of Skills Australia to give us a clearer picture of what skills we need and how best we can develop them.
And Julia Gillard is taking steps to boost the number of students studying languages other than English – not least by encouraging the states and territories to match our $68 million commitment to Asian languages.
That might sound a little remote from the day-to-day concerns of the jobbing printer.
But if we’re serious about boosting exports, we need to look beyond the familiar world of English-speakers to markets – including those in our own region – where skills in languages other than English are absolutely critical.
Having said all that, I can’t let the industry itself entirely off the hook.
The number of young people starting printing apprenticeships plummeted from 1,024 in 1994 to 409 in 2003. (NCVER)
Many printers are trying to get around skills shortages by making short-term investments in technology rather than long-term investments in people.
As Victor Callan pointed out in his report for the National VET Research and Evaluation Program last year, the industry is simply not thinking strategically about its future workforce needs. (NCVER)
Perhaps this is a job for Printing Industries – taking up where its 2004 study of training and education needs left off.
Printing Industry Dialogue
Please don’t take that as a reproach. Think of it more as tough love.
Australia now has a government that believes in manufacturing, that recognises its economic and social importance, and that is determined to see it prosper.
We are on your side, but we need you to meet us half way. What we’re looking for is an equal partnership.
I will be establishing a series of industry innovation councils in the second half of this year. It is still an open question where printing will fit in – would it be better in ICT, pulp and paper, or manufacturing? I’d welcome your views on this.
In the meantime, I will establish a printing industry working group based in my department to address immediate concerns and maintain an ongoing dialogue on matters of mutual interest.
My ultimate goal is to secure the future of this industry – to ensure, with apologies to Kevin Rudd, that Australia remains “a country that actually prints things”.
You can help by making a submission to the review of the national innovation system. This is a great opportunity to have your say on what we should be doing in innovation and industry not just this year or next year, but for the next decade.
Submissions close on the 30th of April. The review panel wants to hear from anyone with good ideas – be they individuals, companies or associations.
Australian printing will evolve. It will embrace new methods and assume new forms.
But it will always be about communication. And it will always have a great story to tell.