Project Hero, the ambitious plan between
the distribution arm of ACP Magazines and PMP’s Gordon & Gotch to
slash the cost of magazine distribution is dying and about to be wound
At the end of this week the two partners will walk away from
the project that tried to reduce costs by handing magazine distribution
in the two most important markets, Victoria and NSW, to one company.
The privately-owned 1st Fleet won the contract with a low ball tender
price that has come back to haunt the company – around $1 million
cheaper than other tenders. 1st Fleet installed a warehouse and a
magazine sorting and wrapping machine at Villawood in Sydney but, month
after month, magazines were either delivered out of order, missed
completely, or just failed to arrive in time to meet the major sales
times of Monday morning.
While newsagents were upset, the plans
to deliver straight to sub-agents (cutting out newsagents) was
undermined by the problems, which upset Network and ACP. Supermarkets
and other non-agent outlets were also hit. Coles Myer, in particular,
complained a number of times about the late or non-delivery of
magazines to its supermarkets in parts of Melbourne and Sydney. Network
and Gordon & Gotch have been working with 1st Fleet for months to
try to make the deal work. The sharp rise in fuel prices over the past
year has also hurt the contract and its viability for 1st Fleet, whose
monthly losses on this contract have been put at $100,000.
July, Network will run the warehouse and Gordon & Gotch will lose
many third party titles and will become the junior partner. NDD, owned
by the Hannan family’s IPMG group, will be brought into the deal,
picking up the titles G&G loses.