The survey revealed that while 35% of printers maintained output levels in Q2, 34% suffered a fall in output, while 31% managed to increase output.
However, it’s the predictions for Q3 that make for a more worrying read. While just over one-fifth still expected to bump up output in the third quarter and 44% reckoned levels would remain the same, some 35% expected output to decline, with fears a drop from recent performance would lead to the lowest output since the pit of the financial crisis in 2009.
Despite the woes the BPIF is quick to point out that it’s not all doom and gloom, with almost two-thirds of respondents remaining confident in Q2. And the hope is that despite the “pessimistic” forecast for Q3, once people come to terms with Brexit and the government reveals its strategy, stability and, ultimately, confidence will start to return – after all, exactly half of respondents believed the general state of trade in the industry would remain unchanged.
Interestingly though, Brexit failed to make an appearance in the top five business concerns, with the usual suspects – including competitors underpricing and narrow margins – dominating instead.
Clearly Brexit had an impact on some responses, for example the increase in respondents highlighting private-sector cutbacks as a concern, up from 5% in Q1 to 21% in Q2, with a spike in concerns over paper price rises, from 10% to 24%, possibly a result of the Brexit vote and fears of over regulation and red tape, up from 4% to 22%, perhaps due to campaigning pre-vote.
“I’m hoping the forecasts are overly negative and there will be a quicker return to balance than was feared at the time of the survey. As always, there will be winners and losers, for example, exporters might do well once confidence returns and exchange rates make them more competitive,” says Kyle Jardine, BPIF research and information manager.
Alongside Brexit, he also notes that print is in the middle of its traditional summer slowdown. However, he admits the negative recorded output and forecast is following the pattern of other industries.
He says: “I think this is fairly reflective of what is going on. The PMI report was downbeat and engineering heavily cited Brexit in a downturn. Traditionally, print is described as quite a bellwether industry because it does reflect these kinds of things.”
This is echoed by David Bland, director of marketing and sales at commercial printer Blackmore, who says the firm’s performance mirrored the survey findings. New sales had been “sluggish” since around February with many clients cautious and delaying orders.
He added: “We are still seeing ridiculous pricing from some competitors as well as cost cutting by quietly dropping, for example, some of their environmental accreditations and their attendant costs.
“Meanwhile there are whispers paper prices may rise due to Brexit and the volatility of the pound.”
Abbey Printing managing director David Butcher says: “Fears of paper price increases are very real: I’ve just been told by a big supplier prices will go up 8%.
“Hardship is not so much Brexit driven but because paper companies and others continually supply to phoenix companies, which depresses the rest of the industry. Meanwhile great, huge companies are going bust with hundreds of job losses. If it does get difficult, smaller companies can adapt quicker to ride the economic waves better than bigger companies.”
FE Burman managing director Michael Burman says: “In the run-up to last Christmas we all felt quite optimistic. That feeling hasn’t gone away, but the market hasn’t worked out quite how we wanted it to and since the Brexit vote it certainly hasn’t got any better. It hasn’t been a great six months.
“But even in the last few days, it is starting to feel a bit better; people are no longer sitting on their hands and the message is getting across we have to get on with life. Most paper suppliers are trying to put up prices and I can understand why: we all have to stay in business.
“And yes, in some cases competitors still price below cost. The B2 sheetfed market is very tight, but the offset market has opened up since the Polestar situation and prices in general commercial are still tight.
“I would argue the future for our industry depends on making price only part of the conversation because once it becomes the only game in town, you are left with little more than a commodity market and that is not a great place to be.”
Back in the trenches, David Bland is stoic: “Will it get better? Who knows? But I do think the time for navel gazing has passed. It’s tin helmets on, head down and push on – Tally ho!”
