- 1 -

Report on the Hearing in Berlinheld on 8 March 2010

"Towards an EU policy

to rationalise the heavy printing industry

in Europe"

The Consultative Commission on Industrial Change (CCMI) of the European Economic and Social Committee (EESC) held a hearing on 8 March 2010,"Towards an EU policy to rationalise the heavy printing industry in Europe". The technological innovations of recent years and a series of industry concentrations that have led to restructuring and closures provided the backdrop to the hearing. Representatives of sectors closely associated with the offset printing and rotogravure industry, such as suppliers and clients, were invited to take part in the hearing so that the entire value chain could be placed under the spotlight.

The following figures help to outline the situation in the European printing industry. 850000 people are employed in the sector. There are 130000 companies of which 95% have fewer than 50 employees. Nonetheless, the industry is dominated by large companies. Around five million tonnes of paperare used to print magazines, catalogues and advertising leaflets each yearin Europe on machines that continue to become faster and broader. The European printing industry has, like other sectors, been badly affected by the financial and economic crisis, but in addition to this it also suffers from a structural crisis which is in partthe result of overcapacities in both the offset and rotogravure industries.Trade unions and employers' associations agree on this point.

The following contributions were made by the speakers:

Mr Joost van Iersel, Chairman of the Consultative Commission on Industrial Change (CCMI), opened the hearing and briefly outlined the role of the Committee and the purpose of the hearing. He called on the speakers and participants to discuss the subject as openly as possible.

Ms Helene Juhola, President of IARIGAI, first gave a description of IARIGARI, whichspecialised in the organisation of research conferences, as well as of Finnmedia, an association representing the Finnish media industry. She emphasised that printed products were increasingly loosing in market share and that advertising over the internet now played a greater role. Even the giants of the industry were beginning to sway. She called on publishers to play their leading role in the sector instead ofceding it to companies such as Amazon, as well as to develop new areas of business. Ms Juhola suggested commissioning an independent study on the perspectives for the printing industry, fostering cooperation between the various areas of research, development and industry,and setting in motion national training and development programmes.

John Caris, CEO of the Roto Smeets Group, spoke in his capacity as aMember of the board of ERA (European Rotogravure Association).

Already a couple of years ago he had predicted that the printing industry in Europe would turn into a "battlefield". The main problem he believed were the overcapacities which he estimated stoodat around 35 %. The perspectives were rather bleak. The low point had not yet been reached, he believed. He saw no solution to the problem other than to reduce capacities and the number of employees and retrain them. Without support from the EU the printing industry would not be able to achieve this. Dutch companies had been amongst those who had drawn on funds from the European Globalisation Fund. It was important to provide employees with retraining and further training at a much earlier stage so that they could be employed in other industries. He regretted, however, that it was no longer possible to use EU funds to train employees who remained in the industry.

Dietrich Firnhaber, Head of Corporate Development atHeidelberger Druckmaschinen AG outlined the situation in the printing industry from the point of view of a printing machine producer. Heidelberger Druckmaschinen considered the current crisis to be more severe than those in 1997/1998 and 2000/2001. The company expected a slow recovery of growth, but not a full recovery. In a best case scenario, it might be possible to return to 80% of the previous production levels by 2013.

Summary of the discussion which ensued:

Beatrice Klose, Secretary-General of Intergraf welcomed the initiative but criticised the title of the present document, as well as the term 'heavy printing industry'. This sounded rather negative. Better terms were'large-scale printing industry', 'offset printing' and 'rotogravure'. She regretted the fact that Intergraf had not been involved in the preparation of the document. The document reflected the trade union point of view more strongly than it did the employer's view. Ms Klose referred to a project on the same subject whichIntergraf had launched. She proposed delaying the publication of the present document until the results of its study were available. Martina Hardt from Bvdmshared Ms Klose's view and also referred to the pan-European study project mentioned by Ms Klose. She criticised the fact that the document presented at the hearing gave a negative picture of printing companies, insofar as it portrayed them as having acted irresponsibly. Like Ms Klose, she believed wage negotiations at European level were not a solution. These should take place at national level.

Siegfried Heim of ver.di stressed that employees had been, and still were,left to bear the brunt of the crisis almost on their own.

A representative of Polestar suggested that the problems could only be solved at European level. The social impact of the crisis affectedmore people than just the inner circle of employeesdirectly concerned. He called for a reduction in capacities which should be coordinated at European level.

Mr Joost van Iersel just wished to clarify thatthere had been no suggestion of holding wage negotiations at European level. These had to be held at national level.

Vernon Robson of the trade union Unite picked up on the term "battlefield" used by Mr Caris, which he believed was a very appropriate description of the situation in the UK, where cost-cutting and job-losses were underway.

A Belgian representative pointed out that costs as well as capacities needed to be reduced, and stressed that 80% of the companies in the printing industry were small-sized businesses.

Andreas Fröhlich of ver.di pointed out that jobs were being cut in all companies with a presence across Europe. There was no company in the rotogravure industry in Germany that had not already cut wages and jobs. The large-scale threat lay with large companies.

In response to a question by Mr Joost van Iersel, Mr Firnhaber explained that at Heidelberger Druckmaschinen costs were being cut and that 20% of staff had had to be laid off.

Mr van Iersel: What are the prospects for the industry to keeppace with future developments? Mr Caris believed that a healthy industry would emerge, but one that was much smaller than the present one. Mr Firnhaber believed that an alternative value chain to the current one was a possible outcome.

Wim Visser, Secretary General of EGINpresented his organisation and then outlined the cut-back in jobs in the printing industry as reflected in the figures for the Netherlands. Smaller companies were able to adapt to modern service requirements better. He believed that the demand for printers would rise again, but that the industry would see more freelancers and fewer permanent employees. The printing industry was changing and these changes also affected social aspects. He highlighted the approach adopted in the Netherlands where employers and trade unions had set up job centres.

Andreas Fröhlich from the federal departmentMedia, Art and Industryof the trade union Vereinte Dienstleistungsgewerkschaft (ver.di)welcomed the willingness of European employers – especially against the backdrop of the economic and structural crisis – to seek cooperation with trade unions.

Mr Fröhlich gave an outline of the situation facing the printing industry in Germany emphasising that 50000 jobs had been cut in the past ten years, especially in larger companies. Germany, with its 36% share of the rotogravure market and 25% share of the offset printing market, was particularly hard-hit by the crisis. In his trade union'sview the term crisis was associated with two major problem issues: Firstly, the printing industry was affected by the financial and economic crisis, and secondly the impact of the crisis was worsening the "massive structural crisis" which affected the European printing industry. The overcapacities in the offset printing and rotogravure industries were a hallmark of the structural crisis and had led to a major price war between printing companies, which in turn had led to pressure on labour costs. In ver.di's view, employers had responded to this by reducing wages, offering less favourable working conditions for newly employed workers and employing temporary labour as a way of obviating collective agreements.

Ver.di was in favour of a coordinated reduction in capacities which should be carried out within a pre-determined timescale and with firmly established goals avoiding job-cuts.

This could only happen within a European framework, but it also required a switch in paradigms within European industrial policy. The current policyhad financially supported the building-up of additional industrial capacities.

Instead, funding should be allocated to companies that decided to carry out socially sustainable reductions in overcapacities whilst avoiding job cuts. Moreover, Ver.di called for a designated structural fund to be established to overcome the crisis, as well as for support for various forms of short-time working and retraining and qualification schemes not least also in the form of transfer companies. However, funds should be made dependent on companies' adherence to wage setting standards.

Alfred Köbe, Emota (European E-commerce and Mail Order Trade Association)

explained how e-commerce functioned. The effectiveness of advertising expenses was diminishing. Each month requirements on the printing side of things needed to be checked afresh. The Internet was the main means of communication and the main means of commercial transaction. However, the printing industry was an important partner in the supply chain. The paper and printing industries would always remain part of the business model, but they would not be the only feature. Catalogues would always form part of the media mix. Overcapacities needed to be reduced.

Max von Abendroth, Executive Director atFAEPcriticised EU legislation which hampered the FAEP's work. Advertising restrictions had led to profit losses. Publishers needed to respond to the consumption patterns of young people which relied less on traditional mediain favour of more modern ones.

Summary of the discussion

Martina Hardt agreed that overcapacities were a problem. She criticised once again the fact that employers had been portrayed negatively. It was not true that employees were being made to bear the brunt of the crisis. Lay-offs should be avoided and the problem of overcapacities solved. Measures such as short-time working were not a matter for the European level.

John Caris underlined that the focus should not just be on reducing costs, but also on training employees. He referred to short-time working measures, which had been heavily relied on in Germany during the crisis. He considered this to be unfair competition.

Nikolaus Broschek, ERA, explained the cause of the overcapacities. New machines had been bought in the hope that in this way costs could be brought under control.

The rapporteur, Pierre Gendre, summarised the discussion and emphasised once again that the printing industry would not disappear, but that a resumption of past demand and production volumes was unlikely. Nobody doubted the existence of overcapacities. These needed to be reduced. However, the reductions should be carried out in a socially sustainable way, and job losses, if possible, avoided. Transitions needed to be softened in order to avoid social upheaval. New business models needed to be found for the printing industry. Further training and retraining of employees were needed. The proposals put forward did not envisage wage negotiations, short-time working and arrangements on working conditions at European level. It was important to engage in a dialogue.

______