Paperlinx cost saving drive bites chunk from Robert Horne

Written by Gareth Ward | 05 December 2011

Robert Horne is shaking up its network as parent company Paperlinx strives to reduce costs and overheads. The idea is to create a more flexible cost base the company says while introducing key performance indicators to help improve performance in margins, costs and working capital.

The group put its UK staff on notice that the Australian owned paper merchant was reviewing its entire operations in July. At that time the moves affected back office staff as administrative tasks across the three UK merchants, Robert Horne, Howard Smith Paper Group and PaperCo.

This time the change has affected sales staff attached to the Robert Horne branch network. It is to close its seven regional commercial print sales offices and transfer operations to a national customer service centre for the commercial print division in Northampton. This will take place by February next year and will mean the loss of 48 front line staff and an additional 18 jobs at the head office.

There are no plans at this stage to close the distribution locations, though as more deliveries are made direct from Northampton, such changes cannot be ruled out.
The ongoing structural problems across the merchanting sector lie behind the changes along with the need for Paperlinx to reduce its debts. The company reported a loss of A$108 million after tax for 2011. “The biggest factor influencing this result was the further global deterioration in paper volumes, which were down 5.6% on last year,” chairman Harry Boon told the company’s annual general meeting in Australia. Selling prices in the year were up 8%, but the company knows it cannot rely on paper sales for its future growth. It is building up its print consumables division, its sign and display and its packaging arms, while also not ruling out “the possible divestment of certain assets” in order to generate additional funds.
There was a £20.0 million impairment charge in the UK due to declining volumes and the difficult market conditions during the financial year. UK volumes were 10% down Paperlinx said.

The UK is the largest part of Paperlinx and with Europe comprises 70% of revenues. A further 20% comes from North America, prompting the company to move its headquarters to Milton Keynes.

Group CEO Toby Marchant told the same meeting “We are not simply taking out cost, but rather creating a more streamlined and flexible business that is better able to flex costs to match future conditions. We are progressing with major reorganisation programmes in Australia, the UK and Benelux that will change our business model for the long term to positively impact both our customers’ experience and our profitability.”

There will be investment in the growing Sign & display, industrial packaging, graphics and digital operations which already account for 40% of UK revenue for Robert Horne.
The changes announced apply only to Robert Horne; any equivalent cost reduction measures for PaperCo and Howard Smith Paper Group have yet to be declared.

The question now is how the move will be perceived. Robert Horne is stressing that the phone lines will be open until 8pm during the week and that customers can expect more regular contact with access to expertise based in Northampton. However, the personal relationships built up with locally based staff will go. In today’s conditions, the way of selling paper and managing customer contacts that has developed over many years, is simply too expensive for the market.

www.roberthorne.co.uk