Capacity Rationalisation and Exit Barriers in the Irish Printing Industry

Decisions regarding capacity and capital investment are among the most critical for firms, as reflected in the extensive literature devoted to this subject. However, substantially less work has been carried out on the decision to disinvest. This is unfortunate as in some situations, such as recessionary times, the main competitive moves pertain to disinvestment, rather than investment. This study aims to contribute to this subject, in particular it aims to identify why industries with a concentrated structure can when proactively rationalise when required, while fragmented ones cannot. Research methodology a case study approach, comprising in-depth interviews with six industry experts from the Irish printing industry. This aimed to explore the reasons for the excess capacity in this industry, the impediments to rationalising, and to explore whether any potential solutions to the capacity issues in the industry could be identified. The findings support the theoretical models of a maturing and fragmented industry with rising capacity (Porter, 1980, Bower, 1986, and Woods, 2009). Causes of excess capacity identified in prior studies such as new substitutes, improvements in technology, recession and the pursuit of more (Collins, 2009). This last cause can lead to over-investment, and create barriers to exit. A number of themes emerged in relation to internal and external failings, in a time of industry change. Proactive approaches to rationalising were identified from the literature and examined with a view to their potential in this contextual situation. These were then explored with the respondents, possible solutions and recommendations for this struggling industry were then developed.