And with these day-to-day operational costs showing little sign of reversing the capital’s printing population is expected to reduce even further over the next few years. The situation is so dire that there is a real prospect that in the not too distant future the number of printers in central London will have dwindled to virtually nothing.
So what have been the main contributory factors behind this exodus, and given the ability to send files and information much more rapidly thanks to advances in technology, do printers really need to have a central London postcode these days?
The major problem that all businesses – not just printers – located in London have had to come to grips with over the last few years is escalating property costs. Rents in the capital have hit all-time highs in some areas, which means many printers have been forced out of their homes.
“We were originally in Houndsditch EC3, but by the end of the lease we really had to move as the overheads were literally over our heads,” says Tony Bailey, director at Cityprint.
“In December 2010, we moved from the City to Tower Hamlets just two streets away – and only a five minute walk – and we almost halved our rent and rates, this transformed our business immediately.”
Cityprint’s property move may have paid off handsomely and reduced its rental overheads, but the company might not be immune to the business rates increases that come into force in April. Updating business rates to bring them in line with property price rises means that thousands of businesses across the capital will pay more in rates – and some will pay a lot more.
Hard times
The fallout from this has yet to be fully realised, but it’s already creating issues, judging by the experience of Michael Burman, managing director at FE Burman. The firm is currently querying the rateable value of its site in Bermondsey, which it owns and has occupied for around 50 years, after it received a higher than expected bill, calculated under a new formula.
“Unlike with previous rent reviews, what they’ve done this time is they’ve arrived at the final number by charging different rates per square metre for different areas of the building, whereas in the past we’ve been charged an average rate for the whole building,” says Burman. “The office areas are being charged at about £119/m2 and storage areas about £50-£60/m2, so depending on how you define usage it can make a huge difference.
“We’ve sent in our own interpretation and we’re currently waiting to see if they agree with our numbers. In our case it won’t cost us a great deal more money because the increase is marginal, but we haven’t got the multiplier yet so I don’t know what actual rates we will be paying.”
Another major expense that’s been rising recently is the cost of employing people. It’s an issue that Geoff Neal Group managing director Sam Neal constantly battles with.
“One of the biggest problems for printers in London is [other printers’] internet prices or capacity-based pricing models, where people are comparing somebody on the outskirts of Manchester with somebody manufacturing in Heathrow,” says Neal. “Paying people is the biggest cost to most businesses and anyone who lives and works around London expects to be paid higher wages, so even if I’m manufacturing as efficiently as possible, compared with places like Newcastle there is still a big pay gap, which has an impact on pricing.”
When you chuck in extra costs like congestion charges and the sheer amount of congestion in the capital, which makes delivering orders a logistical nightmare, it begs the question do printers really need all of this hassle and extra expense just to have a London postcode? Despite the associated problems, the unequivocal response from printers interviewed for this article is a resounding “yes”.
Rapidity, in EC1, reckons it is the last commercial printer in central London. “We used to be surrounded by plate makers, typesetters and paper companies,” recalls managing director Paul Manning. “We joke that we’ve been planning to leave central London for 25 years but ironically we’re on the cusp of being the last one. For all the challenges we face we always want to have a manufacturing presence in central London as it is what sets us apart from the general trade and we just love London Town too much to leave just yet!”
Burman says that although companies that produce fairly standardised products are able to service companies inside the capital from a manufacturing base outside “if you’re in the area we’re in – short-run, bespoke projects, that have a very high value and require lots of conversations about finishes and stocks – we need to be where we are because people come in to see us every day [from central London] to discuss projects, which wouldn’t work if we were even five miles further out”.
It’s a benefit that Neal also recognises even though he concedes that proximity is probably less of a factor than it used to be.
“Us being located close to London was a huge advantage for many years because we could get in and out of the West End on a good day in 45 minutes, which means we could be picking up and dropping off hard copy artwork, transparencies and disks, but the advent of more digital transfers has negated the speed advantage that we had,” says Neal. “Having said that our clients love us being local because they can get to us easily and it’s only a couple of hours out of the office, so it still has an advantage.”
One option that some companies have recently started to explore to get around the cost of running a business from the capital is establishing an office presence in the heart of London and then having a manufacturing base outside, but this approach is fraught with difficulties says Alex Cain, sales director at Mount Street Printers, a high-end stationers in Mayfair that runs its printing kit on the floors under the shop.
“It’s a nice idea on paper, but in practice two sets of rents and overheads can mean that it’s a more expensive one,” says Cain. “Let’s not forget that most smaller printers are owner-operators and you can’t underestimate the value of being on top – literally in our case – of your operation, being able to oversee all elements and having complete control. This can be invaluable.”
Any companies adopting this approach would also have to accommodate the cost of moving the business, which would be too prohibitive for many printers to contemplate. This was just one of the problems that Octink encountered when it explored moving away from its current site in Brentford. The firm owns its own factory on an industrial estate in the area, but due to rapid expansion it has also taken short-term leases on adjacent industrial units to deal with additional capacity.
“We looked at travelling down the road to set up shop in Cardiff where we would have a lovely brand new factory with loads of space and everything we could ever wish for. However, we wouldn’t be adjacent to our market and for us that’s absolutely crucial,” says managing director Mike Freely.
“Also if we moved the production guys to Cardiff once the stuff is made we would still then have to ship it back to a west London depot for our installers to grab it and put it up. Additionally, our project managers want to see their jobs going through on the press so that they can check them and make sure they’re on time. So in the end we found those aspects were critical things for us and it played against us being able to split up the operation.”
Great expectations
Although the relocation plans have been shelved Freely admits that the lets on those adjacent industrial units are only a temporary solution to the company’s problem, which shows no signs of letting up.
“We’re a growing business and we need more capacity and to be able to do that, regardless of whether we decide to rent or buy, it’s increasingly difficult in London,” he says. “In terms of a brand new industrial unit that gave us all the capacity and space we need it would be fantastic, but we would struggle to afford it in London and also commercial property developers are not developing industrial schemes in west London – it’s all flats and apartments.”
London-based printers like Rapidity, Octink, FE Burman, Geoff Neal Group, Mount Street Printers and Cityprint readily admit that sometimes it isn’t easy to run a business from the capital thanks to the extra overheads, but they’re living proof that if you run an efficient operation you can make it pay – just ask Andy Davis, managing director at Tangent On Demand.
“It is my belief that a well run business can survive in London, but you have to keep moving forward and importantly control your clients so cashflow is continuous,” he says.
The company has secured a 10-year
lease on its current site which still has
eight years left to run, so costs are manageable. Davis adds that he still sees a prosperous future for printing companies like his in London because of the rigorous demands of clients such as advertising agencies and financial companies who still require last-minute presentations, tenders and proposals.
However, the harsh reality is that it’s much more likely that costs like property rents, business rates and the expense of employing staff in London will continue to increase over the coming years rather than decrease, so the sad truth of the matter is the printing industry’s rich history and association with London could be reduced to a small number of specialists.
