Printers have been suffering the consequences as their customers suffer from the uncertainty over Brexit and the crisis in the high street.
The BPIF Printing Outlook quarterly report bears this out. It finds that in the second three months of the year, utilisation rates polarised between businesses, that runs were markedly shorter and decisions delayed. All are indicative of a lack of confidence among those buying print.
The report points to the continuing reshaping of high street retailers and the shift to online shopping. Ad spend according to the Advertising Association has also continued to shift to online channels. GDPR provided a reason for direct mail buyers to pause their activity, though there are expectations that activity will resume this quarter and next.
The federation’s own Brexit barometer remains steadfastly in negative sentiment territory. While not at its lowest, a -38 rating indicates that printers are not sure of what lies beyond 29 March next year. BPIF research manager Kyle Jardine notes: “Brexit was noted to be lurking in the background during last quarter’s report. It’s fair to say that Brexit is now commanding more attention.
“The consensus is clearly fearful of what lies ahead and concern over how business might contend with the potential shocks and disruptions.”
Nevertheless expectations for the current quarter show a distinct improvement over the downbeat projections there months ago. These proved to be accurate with 35% of those participating reporting a decline in trade while 33% increased output. For the current quarter 41% are expecting growth with just 18% anticipating a fall in trade.
Nobody is expecting boom times around the corner however. Price competition remains the major concern, albeit easing slightly over preceding quarters, while paper prices remains close to this, well ahead of lack of profitability and falling prices.
Figures from the paper industry and ink suppliers shed further light on the industry’s overall shrinkage. In the first three months of the year, the UK consumed 1.9% less paper by tonne than it had in 2017. Within this coated woodfree sector had failed by 9,000 tonnes while grades linked to packaging noted an increase of 3%. In the same Q1 2018 to Q1 2017 comparison, ink volumes fell 3.3%, led by falling demand for news and publication inks.
This has had an impact on the viability of some business. Begbies Traynor recorded 20 Red Flag alerts on print businesses in the second three months of the year. These come from CCJs, administration orders and so on. This was up on preceding quarters and one third higher than at the same stage last year. During the quarter there were 27 insolvency related to print companies.
The tough times are not going to end soon. This prompts BPIF chief executive Charles Jarrold to comment: “Capacity, pricing, costs and margins are interconnected and causing pain for many companies in the industry. What can you do? Invest, innovate, improve productivity, limit and flex your costs – by flex can you make fixed costs in any way variable?
“Really focus on pricing, look after and value your customers, how can you develop your businesses? Not just adding work but focusing on what jobs you are making money on, what type of business you need to grow and how might you help your clients’ businesses. Unfortunately this is easier to say than do.”
Business conditions are likely to remain uncertain in the run up to Brexit and beyond says the BPIF after Printing Outlook report finds lack of confidence among customers. Printers should take action to both prepare and protect they businesses says chief executive Charles Jarrold.
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