BPIF survey details virus devastation
Thursday, April 9, 2020
Results from the BPIF’s Impact Survey have revealed the devastating effects of the virus crisis and subsequent economic lockdown on large swathes of the UK printing industry.
The survey was carried out jointly with stationery and office supplies federation Boss, and ran from 23 March to 6 April.
Some parts of the printing industry, such as food and pharma packaging and those supplying the NHS and public services, remain as busy or busier than usual. But the government-mandated shutdown of general retailers, pubs, restaurants, leisure facilities and the property market has had a huge impact on printers.
A staggering 74% of respondents to the survey reported a “considerable downturn” in order levels, while the average change in order levels from the usual monthly level was down 65%.
One print boss told Printweek that his company’s sales were currently running at just 15% of normal levels.
BPIF chief executive Charles Jarrold said the report reflected the "unprecedented pressure" being experienced by the industry: “It is bleak and it reflects the fact that the economy has been shut down and the sectors that have been instructed to close represent a significant part of the [print] client base.”
He added: “It’s a great shame because a lot of people were looking forward to having a good year, and the whole thing has been knocked off course.”
The survey encompassed member and non-member companies representing turnover of £3.1bn and more than 22,000 employees. There were just under 600 respondents.
More than one third – 34% – were “extremely concerned” about the short-term survival of their own businesses, while 40% were similarly extremely concerned about the survival of client companies over the next three months.
Bad debts and late payments were also major concerns, alongside supply chain security.
More than a quarter of companies had already made redundancies, with further lay-offs expected. Although this could be mitigated by the Coronavirus Job Retention Scheme.
“Some of these numbers will have come in from people reacting very quickly before the Job Retention Scheme came in,” Jarrold explained. “Overall the Job Retention Scheme is having a clear impact in avoiding lay-offs and redundancies.”
The BPIF is planning a follow-up survey specifically about the scheme.
“The furlough scheme has been very widely taken up, and the great majority of companies have furloughed people,” he said. “There are some issues around it that we would like to see tweaked, but the government reacted very quickly. One of the areas that a lot of us would like to see is greater flexibility.”
Jarrold said there were concerns from larger companies that the furlough scheme could “bump into” consultation periods over lay-offs. The BPIF also wants clarity on how the scheme will end, and this will form part of the next stage of consultation.
“The other concern is what happens when the scheme ends. Will it be a taper, and how will it work? Because otherwise the potential impact is that it will just delay redundancies – if there is a cliff edge to the support schemes it will just bite everyone further down the line.”
By and large respondents reacted positively to the range of government support measures around Covid-19. However, access to the support received a negative rating with more than 40% of respondents describing it as either “poor” or “very poor”.
“What the survey shows is that although the government has moved quickly, people can’t access it. I read a report in the FT that said there had been 130,000 applications to the CBILS [Coronavirus Business Interruption Loan] scheme, but only 1,000 had been approved,” Jarrold added.
“Asking SMEs to take on more debt is not great for our sector. Rather than taking on more debt, we would like to see those support schemes widen.”
There are also concerns that some print companies will struggle to pay April’s wage bill if they cannot access additional funding in time.
More than three quarters (77%) said they would require some degree of emergency assistance to maintain cashflow, cover costs and survive, with 38% stating that this assistance would be needed either immediately or within a couple of weeks.
The BPIF will use the findings of the survey in its future lobbying of the Department for Business, Energy & Industrial Strategy.
A large majority (78%) of printers would like to see additional support in the shape of grant support and business rates relief, with 77% calling for the deferment of VAT, PAYE and National Insurance payments.
The executive summary of the Impact Survey can be downloaded here.
More than 1m people applied for Universal Credit in the last two weeks of March according to DWP figures, and the Financial Times has reported that “many leading forecasters expect an economic contraction greater than 6% this year, compared with 4.2% in 2009,” which would make the coronavirus crisis “possibly a deeper contraction than during the Great Depression”.
It was confirmed today (9 April) that the government will borrow billions of pounds from its emergency overdraft with the Bank of England.
However, Jarrold said he was “reasonably optimistic” that the economy would bounce back “quite strongly” once the crisis passed.
“Everyone will be champing at the bit to get out and do all the things they’ve been prevented from doing,” he said.
Separately the BPIF and IPIA have been asked to share a letter from Alok Sharma, secretary of state at BEIS with their members.
The 'letter to those working manufacturing in the UK' pays tribute "to the work you are doing to keep the economy going". The full text of the letter can be found here.