BPIF chief executive Charles Jarrold kicked off proceedings by giving a state of the union address on the UK print industry, highlighting not only the challenges facing the sector after the Brexit vote and the subsequent political and economic chaos, but also the opportunities.
Darryl Danielli Charles’ overview finished on the opportunities for print, but are these overshadowed by post-Brexit fears, at least in the short term?
Fraser Church We’re fairly buoyant at the moment. Our business has two faces: operational and transactional, and that means compliant, so it has to be done. And the other side is direct marketing and that really is quite buoyant. It’s getting cut-through and we’re seeing increased demand - volumes are up, 17% in the past couple of years. It’s busy, people are interested in it, but it’s part of that broader multi-channel mix.
Patrick Headley It’s the same for us. Can I ask though, if business is that good, why are you up for sale?
Church We’re owned by a US corporate and they have decided to focus on their financial and healthcare back office systems businesses.
Headley I think the industry is feeling the pain though, as you try and fill your order books in preparation for sale. But I that’s part of a larger problem that we, as an industry, have lost the ability to sell value and get customers to pay a sensible price for a job. We all go into bat with very expensive machinery, big workforces, and secure factories and yet too often we drive our prices down and don’t sell value.
Tim Taylor You’ve clearly moved your proposition upstream to selling that value, the creation, but is that still a price-driven discussion?
Headley It is, because the biggest problem with being a bloody printer is that you’ve got machines to fill. You’re out there, you’ve made this promise, you’ve employed all these people and bought all this kit and now you have to keep them busy – and people can take advantage of that. I think there is a change coming though.
Neil Lovell Do you think the race for digital, or TV and radio and social media is starting to slow then?
Church My background is ex-agency. There was a definite move to digital, and the world got very giddy. But now I think the [marketing] industry has got a bit more mature, so we’re seeing a swing back to print. I think marketers realise that there isn’t just one silver bullet, digital or otherwise, it’s about getting the different streams working together. It’s all about return on investment, about getting clients using multiple channels; it has to be about customer experience. My personal view is that clients’ marketing used to be split into silos: there were teams or agencies looking after direct marketing, PR, above-the-line, below-the-line and digital. But we’re starting to see clients restructuring to focus on complete customer experiences or journeys. I think as a result we’ll see the print industry mature too to embrace the new opportunities.
Do you think printers need to become agnostic and just work with clients to identify the objectives and come up with something that is based on the customer needs rather than just their comfort zone?
Headley I think that’s a realistic scenario. If a brand wants to launch a product, then they will use an agency, because they want those smart brains who understand what’s out there, but once they’ve set the colour palette and rules of the campaign, then every time the brand wants an iteration of that around a text message, and HTML, email, or printed communication then that’s just about output and we as printers can do that across all those channels. So agencies would be focused on strategy and branding, and we would take care of the output.
So what skills do we need as an industry then to seize that opportunity?
Church I thought this might come up. If you look at some of the new job functions we’ve added in the past decade, it’s people like business analysts, project managers, planning teams, governance, risk and compliance officers, developers, web designers, and that’s on top of all the print functions. All of us, people like DST and GI are all very good at handling data, and we’re not alone in the industry, so in the world that is multi-channel, or omni-channel, using one action to trigger another, and then another all in real time – then if we can do that in a secure environment, then why can’t we supply all of that? It’s a great opportunity to take a headache away from clients or agencies.
Headley I think there is a need to change, and those that don’t either aren’t around anymore or won’t be around in the future.
But your businesses have scale and so do your clients. How does all this translate to an SME printer, do they have similar opportunities?
Jarrold I think you’re both [GI and DST] quite a lot further down the multi-channel road, moving up the value chain, than most businesses out there. But there is a strong sense of direction in this industry and it’s around targeting and data and getting the right piece of print to the right people at the right time, but most printers are SMEs and they’re often too busy just staying alive to have time to think about those massive issues, and we as an organisation ought to try to help.
Headley The digital services supplier base is so fragmented compared with print, which says to me that our position is so robust that for us, as an industry, to bolt those services on is a fairly sensible progression. All of us around here send emails, it’s not hard, but it’s pretty hard buying a printing press.
Taylor It’s actually very easy, Patrick.
Headley [Laughs] Okay, well it’s pretty expensive then, compared to setting yourself up to send emails anyway. The rest of the ‘why’, the strategy around sending an email – there are a lot of pretty bright people who can help with that, and all organisations need to recruit bright people.
Taylor Is attracting the right calibre of people to the print industry a challenge, though?
Headley We’ve been quite lucky in recruiting some extremely bright people, and we found that they see print as being a very relevant part of the media mix.
Church We’ve just taken on six or seven apprentices fresh out of college etc, and I spoke to them recently about how they use communications and what they thought about DM. They loved it, because they felt special when they got a piece of targeted mail – because they’re of an age group that’s not used to receiving it.
How’s that going to help a typical SME printer though?
Jarrold The strength of a typical SME printer is the strength of their connections to other local SMEs, who want to use them. The printers need to understand how to go and have a conversation with that customer about things beyond print.
Headley Can I ask you though Stephen, as a supplier, how are you finding things?
Stephen Palmer The biggest challenge we have is that we are a manufacturer and the needs of the market are changing very quickly. We’re having to become a consultant, services provider, solutions provider, software developer and not just a manufacturer. When it comes to companies like GI and DST, there’s a limit to how many of those added-value services you might need as you have your own experts, but when it comes to the SME space we have to be available to help them to become marketing services providers.
What about equipment sales though, the exchange rates must be hurting you?
Palmer If you look at the numbers [in terms of sales], we’re in really good shape in the UK. The challenge is pressure on margins because of the exchange rates.
I’m sure you’re not alone, but if kit has to get more expensive is that going to restrict the UK industry’s ability to reinvest?
Palmer We’re still seeing confidence in the market across the board, from SMEs up to large businesses.
Jarrold Can I ask about the strategic thinking behind product development, is it cost, is it quality – what are the drivers?
Palmer If I put my manufacturing hat on, throughout the portfolio our ethos has always been to provide quality products at a competitive price, with stunning output – that’s what you have to do be in the print industry. But development is now going much further than that and we look at ways we can add value in the space, through workflow, software, cloud-based business solutions.
Jarrold Is that because going into digital isn’t as simple as replacing a litho press with a digital one, it’s about a fundamental change in the business model?
Palmer Absolutely right, and the biggest challenge for all of us, and the reason we’re not getting into the litho space faster, is the cost of ink. There are two reasons for that: it’s more expensive to produce and we don’t yet have the volumes needed for it to come down to the level where it can compete with litho [in all areas].
Taylor There are also still some fundamental challenges with inkjet relating to getting a water-based fluid to stay on substrate that is designed to repel water.
Headley I think inkjet will probably be the one that wins through, we’ve got pre-coaters and post-coaters and goodness knows what to get a decent result on an offset sheet because we see our latest inkjet investment as being a genuine litho replacement. It’s come a long way, it’s not ideal yet, and there’s no way you would print a million [static] leaflets digitally, but if it was a million leaflets that needed 28 plate changes then it could probably see most webs off.
Charles, you started the discussion by highlighting some of the challenges facing the industry, and we’ve covered some of those, but we’ve also talked about the opportunities – do you think that now is the time for optimism?
Jarrold As long as we do our best to avoid an accident with Brexit, I think hopefully we will and common sense will prevail, then there is more room for optimism now than there was a few years ago. There is a lot more entrepreneurial opportunity now, because there is the potential for more conversations with our customers and their customers about creating value and solving problems.
Is that getting back to our original conversation about ROI and that the uncertainty around things like Brexit, because at the end of the day clients still need to sell things?
Church People still buy food; people still need to heat their houses. The world hasn’t stopped, it took a little bit of a breath, but we’re getting on with life – people still need to sell stuff, so it’s about how is the best way to do it, what channel to use and at the moment print is doing all right. If we can provide clients with a service and proven ROI, print can stop being a commodity. We’re in a positive place and have lots of great conversations ahead.
Headley We’ve done around £6m in capex this year, so we must be feeling fairly optimistic. I think as Charles said, we’ve had a ‘bad winter’, but the strong have survived – so I think there’s a strong case for cautious optimism.
And from a manufacturer perspective?
Palmer We have an optimistic outlook. I share Patrick’s view on Brexit, [now the decision has been made] and I don’t think it will make much difference other than the impact on exchange rates. The UK economy moves on and we’re in a strong position economically.
Taylor I think with the long-term roadmap we have then we can only say we’re optimistic about the future and print.
And Neil, your final thoughts?
Lovell As the industry charity, we’re here for the tough times when the welfare is needed, like when Polestar collapsed. But we have to be there on the other side too; when it comes to education. So if we hear that smaller businesses don’t have the structure or resources to survive and thrive by bringing young people in or developing their people then we can help there, so hearing everyone say there are positive signs for the sector is encouraging – we just need to pull together so that we can capitalise on the opportunities.