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Unsound financing hurts industry recovery, MAN Roland COO tells NAPL conference

Press release from the issuing company

April 6, 2004 -- Naples, Florida — Press manufacturers’ predatory practice of providing so-called creative financing to financially unstable printing facilities is hurting the industry’s recovery by adding to overcapacity and damaging healthy printers. That was the gist of a special presentation to NAPL’s Top Management Conference last month by Eric Belcher, COO of MAN Roland Inc. in a panel on “Financing Capital Investments.” Belcher’s views were shared by a number of printers at the annual event, one of whom challenged the sheetfed press manufacturers present to stop the practice for the good of the industry. “Today, too much print capacity is chasing too little work,” Belcher said, explaining that manufacturers can either change the situation or make it worse, depending upon their future lending policies. Sound financing and capital investment planning can help healthy printers upgrade their technology and lower their operating costs, according to Belcher, who noted that the financing of non-creditworthy printers drives press capacity up, which can harm healthy printing facilities. “As an industry, we need to think long-term and practice common sense if we are going to compete in the global marketplace and attract capital and talent to our printing establishments,” Belcher declared. Belcher’s comments were supported by Jack Jenc, President of McArdle Printing Company in Upper Marlboro, Maryland. He pointed out that the printers who attend the Top Management Conference are among the most successful in the industry, yet they get substantially worse financing terms than marginal printing firms. “I really resent the fact that someone who can’t afford to make a press payment would get a better deal than the successful printers who are attending this conference,” he said. “The capital markets should determine who gets a loan and who might have to pay a higher percentage rate because they don’t have the wherewithal. You guys are giving those people better terms than you’re giving your best customers.” During his presentation, Belcher outlined his company’s policy on press financing. “MAN Roland has taken a long-term approach to this situation,” he said. “And we have received appreciation from leaders in the printing industry for doing so. The partnership we have with our customers extends to our business practices outside of their sight.” In his comments, Jack Jenc applauded MAN Roland for its stand on creative financing, but noted that the other press manufacturers present refused to reject the practice. “One of them even responded that a $3 million print shop has a right to be in business too,” he noted. “But that’s missing the point. I’m not challenging anyone’s right to be in business. However, it’s counter intuitive for press manufacturers to subsidize failing shops of any size just to install more presses, especially when hurts successful facilities.” Both Belcher and Jenc suggested that the industry’s trade associations could help their members by exploring the issue in more detail. “Creative financing is not the magic solution for the long-term success of North American printers,” Belcher declared. “Rather, sound investments in automation and computerization will ensure their prosperity.”