The past 12 months have been unique in terms of the economy, so it's only fitting that these historic times have resulted in our unprecedented decision to choose a supplier as the most powerful individual in print. Opting for a paper merchant seems at first to be radical, but on closer inspection entirely logical.
The Credit Crunch in all its guises has been behind the vast majority of business failures in the print sector in the past year, and of those guises the effect on printers' ability to secure trade credit has been the most damaging. And while not being able to buy a piece of equipment may be inconvenient, not being able to buy paper is terminal. So in many ways, as head of the largest merchanting group in the UK, responsible for supplying the industry with almost £1bn worth of paper, Paperlinx UK, Ireland and South Africa regional president Allen was selected by the greedy bankers that got us into this economic mess.
Nearly a year into the job, he has had the unenviable task of steering the group through the choppiest of economic waters, but, having found his sea legs during his five years with Paperlinx, he has proven himself to be an ideal safe pair of hands more than up to the task. Under his reign the company has revised its working arrangements across operating merchants Howard Smith, PaperCo and Robert Horne, a move that doesn't rule out offering staff a four-day week as opposed to job cuts, something that won him a raft of plaudits in the public vote.
Allen has also led the company in accelerated development in new and expanding markets. Making such progress and in such difficult times, makes him a worthy Power 100 number one, even if his tenure only lasts as long as the recession.
He says "The availability of trade credit insurance is one of the most important issues for printers"
They say "Allen's open and energetic style guarantees further innovation"
Q&A WITH DAVID ALLEN
The availability of credit is clearly a major problem, how are paper companies helping printers overcome it?
I agree, it is one of the most important issues at the moment. In recent years it has got significantly more difficult to get credit insurance on printers, and this has accelerated over the past 12 months. Certain credit insurers just don’t like the print sector, pure and simple. A significant part of our credit expenditure is actually uninsured and we have our own tools for accessing risk and we calculate it on that. Basing decisions on our own info, expertise and knowledge is key.
What can merchants do to help printers through the current crisis?
Continuing to offer printers credit is the key way we can help. Clearly the other is to ensure we have the right product mix.
Obviously keeping paper prices low is another way to help, are there any dreaded increases on the horizon?
The vast majority of printing papers are imported and most are from the Euro-zone economies and therefore exchange rates will have a huge affect on what happens to UK prices. It’s worth noting that paper prices in the UK are among the lowest in Europe as the devaluation of the pound has not been offset by price increases. However, we expect ongoing mill consolidation in Europe and this will result in further price increases in the medium term, not the short term.
What ‘shape’ will the industry be in when we come out of the recession?
Things will improve from autumn 2009, but any real recovery will take place in 2010. The recession will accelerate the consolidation process and I expect to see fewer smaller printers. However, nobody is safe regardless of the size. Further consolidation is inevitable, but what buys security is a good business model. Printers that are purely commodity, whether small, medium-sized or large, will struggle.
What are the keys to survival for printers?
Be relevant to your customers and add value in a way that other printers can’t. Decide what your business model is and make sure it’s the best, that’s critical. Those with a stronger balance sheet will clearly come out of this on the right side.
