Will business as usual return when the lockdown is lifted?


Industry leaders give their views on the impact of the virus and life after lockdown.

Alok Sharma, appointed Secretary of State for Business, Energy & Industrial Strategy in February
Alok Sharma, appointed Secretary of State for Business, Energy & Industrial Strategy in February

"It’s been intriguing in a way to understand your business when things suddenly stop.”

This observation comes from the long-standing CEO of a large printing company who has furloughed 70% of his staff – amounting to hundreds of people – after seeing much of his usual business simply fall away, due to the curbs on everyday activities as the government attempts to control the Covid-19 pandemic here in the UK.

While demand for some, but not all, packaging and labels print has held up reasonably well – understandable due to the spike in demand for certain products, for commercial printers the picture is of a more or less universal collapse in demand.

The BPIF’s first industry impact survey on the effects of the economic lockdown, carried out from 23 March to 6 April, found that a staggering 74% of respondents had reported a “considerable downturn” in order levels, while the average change in order levels from the usual monthly level was a reduction of 65%.

Performance data gathered by Heidelberg from thousands of presses worldwide also details that during April, activity at UK commercial printers crashed to the most serious impact level, classified as “severe impact: multiple print shops stop production completely” and with productivity expected to drop to below 40% of normal levels.

At the first of its new weekly webinar series, BPIF regional director Dawn Reid pointed out that every crisis has a beginning, a middle and an end. She says the federation has defined three phases of the situation for the industry as: “Survive, Recover, Revive.”

Many business leaders will understandably consider their companies to be in survival mode at present, although some are reporting signs of life as customers start thinking about post-lockdown plans. “Clients are starting to wake up a bit,” reports one boss.

It’s no surprise that much effort is currently going into scenario planning for business life post-lockdown.

“I’ve been thinking about what I am going to need to bring back into production in terms of equipment, and also what I will need in terms of people to run it,” muses one boss. “I’m also wondering what the competitive landscape is going to look like on the other side of this. Who will still be standing?”

Bishops Printers managing director Gareth Roberts says he realised how serious the corona-virus situation was becoming in early March. “I was on a boys’ ski trip to St Anton and on the second day, the resort closed and we were all ejected.”

Business levels are now about 70% down at the Portsmouth printer, with a corresponding number of staff furloughed.

“People know us for our football programmes, but so much of the other work we print is also related to events or public gatherings,” he says.

“I’ve been warning staff not to expect things can be switched back on and for business to return to 100%.”

Roberts says he is now anticipating a more gradual recovery spanning “probably something close to 12 months”.

“It would not surprise me if we are heading towards Christmas with 70% of the turnover we might have otherwise expected,” he adds.

“We are navigating scenarios where all the normal ratios are different and shifting at the same time. All I want to do is make sure the business is positioned to cope with the gentler slope of recovery.”

The government was poised to release a series of papers in the week beginning 4 May that will outline its approach on how to safely and gradually restart the economy, which will be crucial to how the printing industry recovers – also crucial will be how the government manages to end business support measures, particularly the Coronavirus Job Retention Scheme (JRS) without a “hard stop”.

Some sort of tapering arrangement is widely expected to be announced during May.

BPIF chief executive Charles Jarrold says the federation held a roundtable with officials from the Department for Business, Energy & Industrial Strategy (BEIS) toward the end of April, as part of its regular discussions and communications with the department.

“Attendees highlighted their experiences and concerns across a number of topics: the Job Retention Scheme need for flexibility, this would make it more useful to many companies. The challenges in getting approvals for CBILS loans. Credit insurance – tightening coverage, which may present a particular problem as activity levels recover,” he says.

“What we especially wanted to highlight is the need to ensure the support schemes, especially the Job Retention Scheme, aren’t brought to a sudden halt. Activity levels will take time to recover, so the support schemes need to be phased in lockstep with this. Companies want to retain staff, but if the support schemes end too early, they will not be able to do this,” Jarrold adds.

“The JRS has definitely avoided mass job losses. But companies are under really intense pressure and using up their cash reserves. If the scheme is ended too quickly, firms may not be able to pay for redundancies, so there would be business failures.”

As this issue of Printweek went to press, the BPIF had just finished gathering responses to a follow-up survey that will detail the industry’s response to the package of government measures designed to help companies ride out the crisis.

And, as the old adage goes, never let a good crisis go to waste. As our print CEO said at the beginning of this piece, company directors will now know the ins and outs of their businesses in minute detail.

All of those “what if” disaster planning scenarios have become an actuality for many companies. How businesses are coping, and how they plot a course out of the other side of the crisis, when it comes, is likely to be pivotal to the future for many firms.

And the ability to actually “pivot”, as seen at the many firms that have switched operations into manufacturing PPE materials such as visors and aprons, has also proved notable.

Decisions that would usually take weeks or months have been made in days or hours. And we’ve all been forced into new ways of working that will have implications for how companies of all shapes and sizes are run in the future.

Smart print bosses are already thinking about the potential new business sentiments and opportunities that will emerge post-coronavirus crisis, with some print work reportedly already being re-shored because of the pandemic.
Supply chains and customer bases have been subject to intense scrutiny. Just as the crisis has given us all a fresh appreciation about who the “key workers” in society really are, it’s also given business leaders an opportunity to see where the value lies in their own operations.

With so many client businesses shuttered, and entire marketing teams furloughed, it’s also provided an opportunity to assess which customers will be worth targeting in future, as well. And by the sounds of it, customers will not be having things all their own way.

“I’m deciding now who I want to work with as some companies are having credit insurance withdrawn, especially in the private equity world and restaurants,” our CEO notes. Ian Carrotte, owner of credit specialist ICSM, says simply: “Jettison any clients who waste your time and either pay too little or too late.”

This global pandemic has shone a very bright light on our interconnected world, exposing the dirty corners and cracks in the old way of doing things.

As the Confederation of Paper Industries director general Andrew Large notes: “Our own corporate health is only going to be as good as the corporate health of the network in which we operate. We are all players in the network.”

Business as usual will never be the same again.

Coronavirus timeline
31 Dec 2019 In China, Wuhan Municipal Health Commission reports a cluster of cases of
pneumonia
5 Jan 2020 World Health Organisation (WHO) reports its first Disease Outbreak News on the new virus, which has been identified as a novel coronavirus
12 Jan China publicly shares genetic sequence of the virus
13 Jan First case officially reported outside of China – in Thailand
14 Jan WHO warns of possibility of wider outbreak
20 Jan First case in US
29 Jan First cases in UK – two Chinese nationals staying at a hotel in York
30 Jan WHO reports 7,818 confirmed cases worldwide
31 Jan President Trump bans foreign nationals from entering US if they had been in China in the previous fortnight
2 Feb First death outside China recorded – in the Philippines
9 Feb Confirmed deaths in China recorded at 811, more than in the previous SARS epidemic
11 Feb Virus is named Covid-19
29 Feb First case of a patient being infected in the UK
3 March Sharp increase of Covid-19 cases in Spain
5 March First death from virus
confirmed in UK
9 March Italy takes drastic action, putting all 60m residents on lockdown, the first country to implement a national quarantine
11 March WHO declares that Covid-19 can be characterised as a pandemic
23 March UK lockdown: Prime Minister Boris Johnson announces strict curbs on life in the UK
31 March More than a third of the worldwide population is subject to some form of lockdown
2 April Number of cases worldwide passes 1m
15 April Number of cases worldwide passes 2m
28 April Number of cases worldwide passes 3m
30 April UK has 165,225 reported cases, and 26,097 confirmed deaths – the third highest worldwide. US has highest death toll, with more than 60,000 fatalities. It is also reported that 1m people worldwide have recovered from the virus
1 May John Hopkins University reports 3,257,660 total cases worldwide and 233,416 confirmed deaths

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