The BPIF’s latest Printing Outlook, a quarterly published study of the health of the industry, has highlighted the devastating impact on print caused by the coronavirus pandemic on the same day (12 August) that it has been revealed the UK has fallen into recession for the first time since 2009 after the economy shrank by 20.4% between April and June 2020, compared with the first three months of the year.

While the Covid-19 outbreak hit at the end of Q1, the BPIF report found that Q2 has taken the brunt of the impact, with both output and orders at the lowest level ever recorded by the survey, albeit in line with the forecasts provided in Q1.

The survey found that just 15% of printers increased their output levels in the second quarter of 2020, with 11% holding their output steady and the remaining 74% reporting that they were adversely affected by a decline in output.

However, expectations for Q3 reveal that some improvements are likely, at least in comparison to Q2, but that there will be no return to pre-coronavirus normality. Output growth in Q3 is forecast to increase for 36% of companies, with 35% expecting to hold their output levels steady and 29% expecting them to fall.

The study found that the government’s coronavirus support schemes, particularly the Job Retention Scheme, have been key for many that have accessed them, but a real concern for those that are still waiting for their loan applications to be approved.

Many respondents to the survey referred to the lingering uncertainty and the struggle to get sales and orders into their businesses, though there were also some positive comments where clients’ sectors have picked up or where clients have been reshoring.

Dealing with the economic impact of the pandemic remains, by far, the most important business concern, as selected by 75% of respondents. 'Survival of major customers’ (37%) and ‘late payment by customers’ (35%), were the second and third most selected concerns, respectively.

One respondent commented: “The biggest issue is that the predictability of business has disappeared. Everything that we have learnt, all the knowledge is now gone as retail trends, workload cycles and the security of business has been completely disrupted. Running your business on best guess is an uncomfortable place to be.”

Overall capacity utilisation was much higher in July, in comparison with May, with 30% of companies now operating at less than 50% capacity, down from 51% of companies who reported this in May. The most common capacity level in July was 60-69%, selected by 24% of respondents.

Elsewhere, 43% of respondents said they would like to see the government extend the Coronavirus Job Retention Scheme (CJRS) while 39% said they were not seeking any further measure to help deal with the financial challenges facing business.

BPIF chief executive Charles Jarrold told Printweek: “We are seeing demand come back quite strongly [following the lifting of the lockdown], but from an extremely low base, and whilst it will come back quickly to a certain point, the longer recovery process is clearly going to take time.

“I think the more that government can recognise and support businesses – although it's very difficult because of their financial situation – the lower the level of impact on restructuring and on the industry as a whole.

“I think the furlough scheme has been the most effective scheme. Around 65% of our sector see retail and leisure as absolutely key parts of their support network, so support into that sector and into businesses into our sector that supply that sector would be really welcome, but we do recognise that that is difficult for government actually.”

He added: “The companies that increased their output levels in Q2 are typically in the packaging sector, where large and small companies have actually been very busy.
“On the commercial side we have seen some really innovative changes by companies, for example moving over to use their equipment on PPE, which has definitely helped them, but commercial print is the area that has seen the really significant drops in demand.”

The number of printing and packaging companies experiencing ‘critical’ financial distress increased very slightly in Q2, while those experiencing ‘significant’ financial distress also increased. Employment, meanwhile, decreased on balance in Q2 as fewer companies recruited and more companies decreased their employment levels.

The Printing Outlook survey was carried out between 2-15 July 2020 and received responses from 152 companies employing 8,763 people with a combined turnover of £1.3bn.