The BPIF’s latest Printing Outlook, a quarterly published study of the health of the industry, found that while Q3 had exhibited a recovery, of sorts, after Q2 bore the brunt of the impact of the coronavirus pandemic, Q4 experienced a halt on that recovery path.
Forecasts for Q1 suggest that the Covid-19 resurgence and resulting mix of lockdown measures and post-Brexit disruption will be a drag on recovery for many businesses.
The survey found that 29% of printers managed to increase their output levels in the final quarter of 2020. One third (33%) were able to hold their output steady, while the remaining 38% reported a decline in output.
In Q1 output growth is forecast to increase for 21% of companies, while 34% predict that they will be able to hold their output levels steady. However, 45% expect their output levels to decline.
Restraints on demand as a result of the Covid-enforced slowdown continues to be the most voiced challenge blocking the road to recovery.
The BPIF noted that the downturn is not entirely related to Brexit and Covid-19 with, for example, many packaging companies that have been operating at a generally high level of capacity set to experience a normal seasonal downturn in Q1.
BPIF economist Kyle Jardine told Printweek: “You can see how things have been improving in the second half of last year but when the lockdown was enforced again things did tighten up and the survey does pick that up.
“It does look like Q1 will be slightly worse due to a combination of things. But from speaking to people as well, there is hope beyond the first quarter of this year and an expectation that things will pick up quite strongly in Q2 and Q3.”
Jardine said the vaccine rollout is one of the reasons that a number of businesses said they are hopeful the economic recovery will gather steam during 2021.
Dealing with the economic impact of Covid-19 remains the most important business concern for respondents and was selected by 62%. There is also a growing concern about the survival of major customers, selected by 44% of respondents, and competitors pricing below cost, also with 44%.
Companies continued to express a range of concerns regarding the impact Brexit may have on their business. However, there are now three clear priorities; supplies, barriers and costs.
Supply chain security was selected by 60% of respondents. Now that Brexit has occurred, non-tariff barriers have attracted more attention and this was respondents’ second biggest Brexit concern, selected by 55%, ahead of general cost inflation, which was selected by 49%.
Some companies reported delays to the movement of goods through customs, difficulty finding hauliers and couriers, confusion over new paperwork, rules or origin and disputes over trading arrangements and VAT responsibilities with clients.
The number one ranked opportunity following Brexit, as selected by 48% of respondents, was that there would be a boost to business from reshoring. The second ranked opportunity, selected by 47%, was that there would be a general swelling of home-grown support for British business.
The survey also found that investment intentions for plant and machinery in 2021 are broadly flat, having been radically altered last year due to the pandemic.
Training and retraining investment plans are only a little more positive, while investment towards product and process innovation is set to attract the most attention this year.
“A lot of people just want to wait until the uncertainty dies down a bit more before making those kinds of decisions [to invest in machinery],” said Jardine.
“Where there are expectations, it’s more around automation, product process innovation and software development. Those are maybe more realistic areas for companies to invest in in the immediate future.”
The report also found that extensions and flexibility in the government’s furlough scheme has had the effect of filtering redundancy decisions by companies over a period of time.
While many redundancy decisions have already been made and actioned, some have been put on hold until there is more certainty around the future details on the job retention scheme.
Jardine added that while the number of printing and packaging companies experiencing ‘critical’ financial distress has stayed low for the time being, the number of companies under ‘significant’ financial distress spiked further in Q4, following an increase in the last quarter.
The Printing Outlook survey was carried out between 4-19 January 2021 and received responses from 149 companies employing 10,491 people with a combined turnover of over £1.6bn.
