Ovato’s partial closure a ‘perfect storm’ to hit magazine industry

The decision by one of New Zealand’s largest print and distribution companies to close a large section of its production is a reflection of a “perfect storm” to hit the print industry, says a media commentator.

Ovato announced last week that it would close its heatset printing operation at its Auckland plant, plunging the magazine industry into turmoil.

John Baker, media commentator and founder of consultancy Conductor, said the writing has been on the wall.

“I think it’s a reflection of a perfect storm that’s hit the print industry … supply chain challenges, the reduction in consumption of print, the costs associated with distributing content via print,” he said.

“The forces of nature a sort of really working against physical media really significantly these days.

“I think what we are seeing is an event that could have easily been predicted and its just probably happened sooner than maybe otherwise might have been expected as a result of what we are seeing with supply chain challenges etc.”

Ovato, which prints items such as commercial catalogues and magazines, closed its Christchurch branch in September.

Its latest move will see the Auckland plant keep a smaller sheet-fed production line at its Wiri plant.

The company did offer both web (heatset) and sheet-fed (offset) printing.

Ovato blamed the shortage of paper – a result of increasing costs of importing paper caused by the closure of Norse Skog’s Tasman mill in Kawerau last year – for its abrupt exit from heatset printing.

Ovato managing director Paul Gardiner said the New Zealand market was experiencing “unprecedented paper supply chain issues”.

“We simply cannot run a sustainable heatset business without paper.”

About 150 workers are set to lose their jobs as a result.

“It’s really sad for all the people who work in that industry. I know from experience over many years how passionate people are in the print industry around the products they create,” Baker said.

Baker said there was fundamentally two types of ways magazines get printed – web printing and sheet-fed.

“Web printing has been historically dominated by Webstar and Ovato, so there’s been effectively a duopoly in the web printing space, which has at least provided some competition and access to resource,” Baker said.

“It does take some competition out of the market but doesn’t mean there isn’t still going to be competition.

“There are many sheet-fed, which is the alternative technology to web printing, which are very capable of printing magazines. It isn’t like there is one player in town.”

Baker said smaller circulations were more economically viable for sheet-fed.

While sheet-fed machines aren’t as fast as web printing, they don’t require the same manpower and are not as costly. Sheet-fed machines also involve individual pages being fed into a press, while web printing utilises one continuous roll of paper.

Coldset printing – often used on uncoated papers like newsprint – is a form of offset printing where the ink dries by being absorbed into the paper. In contrast, heatset printing requires printed pages to be run through dryers to evaporate the solvents and set the inks.

Among the magazines scrambling to find new printers are North & South.

North & South editor Kirsty Cameron told BusinessDesk she was “completely blindsided” by the move and there was no consultation.

NZME, the owner of BusinessDesk and the NZ Herald, is also impacted by the closure.

Matt Wilson, chief operations officer of NZME, told BusinessDesk the company had “contingency plans in place”.

“We are confident the closure won’t affect NZME’s ability to publish our newspapers and service our audiences nationwide,” he said.

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