The BPIF has released its latest Printing Outlook study of the health of the industry, highlighting that output and orders exceeded expectations in Q4 2015 and there is a positive forecast for Q1 2016 as some confidence returns.
Both printing output and orders surpassed their forecasts in Q4 due to a better-than-expected seasonal boost. More than half (56%) of printers increased their output levels in the final quarter of 2015, while 29% managed to keep orders at a steady level and 15% suffered from falling orders.
46% of printers are expecting to increase their output levels in Q1 2016, 41% predict their output levels to stay the same and 13% expect output to decline.
Confidence in the general state of trade in the printing industry bounced back in the seasonally busy Q4, after dropping in Q3 2015.
40% of printers surveyed believed the general state of trade in the industry improved in Q4 while 45% reported no change and 15% reported deterioration.
Printers remain cautiously optimistic for Q1 2016, with nearly two thirds (63%) believing that the general state of trade in the industry will remain unchanged. 24% believe it will improve and 14% think it will deteriorate.
BPIF research manager Kyle Jardine said: “Business is very tough but there’s still optimism as there is still work out there and there are still companies doing exciting things and growing.
“The forecast for orders into Q1 2016 is not bad and printers are relatively hopeful that they can continue on a positive trend.”
Once again, by far the main business concern among printers – with 84% of respondents noting it as one of their top three business concerns – is competitors pricing below cost.
The second ranked concern, selected by 44% – up from 43% last quarter and 36% prior to that – regards access to skilled labour. The third ranked concern was profit levels being insufficient to encourage investment, which was selected by 22% of respondents.
“Prior to the last few quarters a lot of companies had perhaps made some staff redundant but still had a bit of capacity there in terms of employees,” said Jardine.
“Now, as some companies have got a bit busier, that spare capacity has shrunk a bit so those that have perhaps been looking to invest and grow have maybe struggled to find the staff to help them do that in terms of skills.”
He added: “I can’t see competitive pricing changing any time soon as it has been there for so long, and is a major factor that companies are faced with every day. Some companies know that they’re selling too cheaply but it’s difficult to change that.”
According to the BPIF, early analysis of Q1 2016 showed that capacity was lower in January than in the first month of Q4 2015 (October), though many firms were operating in the 80%-89% ranges.
Export demand experienced a significant downturn in Q4, with more pressure expected in Q1, and the period also saw a return to decreasing margins.
More positively, employment levels continued to show a positive recruitment balance in Q4, and the industry is continuing to make strong capital investment plans.
“It’s a Drupa year and companies are looking to invest in kit but they are also paying attention to other areas, such as training staff and looking at the way they do things. I would expect that to still be fairly prominent,” said Jardine.
A quarter of respondents conducted pay reviews in Q4; awarding increases averaging 2.2%.
“Labour costs will also be a focus for many companies in Q1 and Q2 as pressure on wage increases mount and the introduction of the National Living Wage draws closer,” said Jardine.
The BPIF Outlook survey polled 98 companies representing 4,111 staff and £470m in turnover.