BPIF Printing Outlook Survey reports worst state of trade for eighteen years

The general state of trade in the printing industry over the winter period (December to February) was the worst for 18 years, according to the BPIF’s latest quarterly Printing Outlook survey, published this week.

With all printers having operated below capacity over the past three months, tough conditions have led many respondents to believe that there will be either no change or indeed a worsening through the spring (March to May). Favourable exchange rates mean that export demand is expected to continue to buck the downward trend, although exporters’ optimism is tempered by poor trading conditions experienced by overseas customers.

Worryingly, printers are being forced to cut prices to attract new business, at the same time as they face upward price pressures, particularly for paper. As a consequence, margins being continually squeezed with profit levels falling. Almost 10% of firms are currently running at a loss.

Printers’ lead times continue to contract as activity slows: with 77% now at three weeks or less. Lack of demand has resulted in much mothballing of capacity, as well as job cuts: staffing levels are set to fall at more than a third of firms as printers look to downsize.

Investments have suffered and where this is taking place it continues to be targeted at efficiency improvements, added services and plant replacement.

Corporate Affairs Director Andrew Brown says "The results this quarter are the fifth in succession to show a negative balance between those companies highlighting improvement versus those seeing deterioration in trading conditions. It was also the worst reading since spring 1991 when the UK economy was last in recession.

The troubled economy is uppermost in printers’ minds and it is with little surprise that the vast majority of firms surveyed believe that conditions will either remain the same (44%) or indeed worsen (42%). You have to go back to 1999 for the last time that more printers predicted deterioration than improvement during the spring. Now is the time to focus on cash management and cost reduction, although it is vital to maintain spending in essential areas such as skills development and marketing for example. Actions taken now need to focus not only on surviving the downturn but also on preparing for the upturn."