It was a huge shock. No-one seemed to expect it, not even those in the Leave camp. In the days since, there has been a relentless cascade of terrifying headlines, preachings of doom and gloom, both culturally and economically, and even a petition with nearly four million outraged signatories stamping their feet and demanding a new referendum.
A re-run was, of course, never on the cards, as David Cameron confirmed shortly after his resignation as Prime Minister. So now the dust is starting to settle on our political, business and financial landscapes, and the nation is collectively getting its head down and to do what it does best. Keep calm and carry on.
Businesses, many who rely on free migration to supply their workforces and on access to the single market for their import and export partners, are meeting to try to identify anticipated impact.
Federation of Small Businesses chairman Mike Cherry said he would be pushing the government for immediate action to reassure small businesses. “Smaller firms need
simple access to the single market, the ability to hire the right people, continued EU funding for key schemes and clarity on the future regulatory framework. This is crucial to ensure economic growth and job creation.”
And what of the print industry? How do the suppliers, the manufacturers and the printers themselves envisage the road ahead?
Some have voiced disappointment at the referendum outcome and many are concerned for the future, including Walstead Investments chairman Mark Scanlon, who has just completed the firm’s second largest acquisition on the continent with the purchase of Austria-headquartered Leykam Let’s Print.
He says: “Too many votes [were cast] based on emotion rather than the harsh economic reality which we’re going to be faced with. I believe the UK will eventually regret this decision.”
Peter Gunning, chief executive of web-to-print PLC Grafenia, also highlights the uncertainty issue. “If there’s one thing markets hate, it’s uncertainty. Now we face two years of uncertainty while the country figures out how to disentangle itself from the EU. Will businesses be inclined to delay spending decisions until they know more? I hope not. But looks like we are all in for a bumpy ride.”
We are now in a state of flux, plunging into a great unknown and uncertainty obviously abounds in print as in all business, but perhaps having just ridden out the worst recession in living memory has given the industry strength and with that a healthy dose of optimism for the future.
Andy Cook, managing director of UK-based digital imaging technology manufacturer FFEI, says that despite the current uncertainty and the feeling that the country’s leaders had “all run for the hills” the result was a boost to business. “Most of our business is export to North America and Asia, so it is highly beneficial at the moment because our product pricing is a lot more competitive with the weakening of the pound.”
Heidelberg UK managing director Gerard Heanue says he expects short-term volatility in the market due to the weakened pound with the potential slowing of capital investments for imported goods. “I expect imported paper will increase in price, pushing up the cost of production, however, imported print, which we estimate to be at least 10% into the UK, will also increase in price and that may make it more beneficial to have the print done in the UK. I’d also expect packaging houses to increase UK production in the short-term, so there may be some positives,” he adds.
On Heidelberg UK’s business Heanue says that even if there is a lull, a lot of the deals for the year were signed and sealed already with many hedged at exchange rates above €1.25. “It won’t really impact us,” he says.
Printers too, are optimistic with Miles Linney, managing director of family-owned Linney Group, saying he is “fine” with the outcome and proud with the democratic process. “At Linneys we don’t like to be told what to do and what’s best for us. We move on and look forward to the opportunities,” he says.
Meanwhile Tony Bates, managing director of Nottingham-based SME Fast Graphics, calls it an interesting time for business and that he anticipates some short-term pain for long-term gain.
On whether the mergers and acquisitions climate in the print industry will be impacted, chief executive of Richmond Capital Partners, Paul Hollohan says appetite for acquisitions among printers had not dimmed despite the prolonged run-up to the referendum.
“Mergers and acquisitions activity will continue apace,” he says. “The buyers are there, the sellers are there and so is the finance.
“Forward thinking print bosses have already prepared for this situation and considered their options with mergers and acquisitions, amongst their thoughts, to fill opportunity gaps which they foresee as offering a stronger future both in the UK and further afield.
“Brexit is not doom and gloom unless we let it be. I think it’s a great opportunity for UK print to thrive. Drupa was very positive and I don’t see Brexit changing this optimism. Let’s all make sure Brexit works for the print industry.
OPINION
We should use Brexit to forge a rebalanced economy
Charles Jarrold
Chief executive, BPIF
From an industry perspective, we are looking at this in three stages: short-term; medium-term; and longer-term.
In the short-term the immediate impact is obviously through exchange rates - this will lead to upward pressure on inputs sourced from abroad - paper, ink, and so on. Competitive pressure may mitigate this to some extent, but, the decrease in value of sterling is an issue. On the other hand, this ought to make UK print more competitive against the eurozone - perhaps some of the work that’s been placed abroad will come back, and, where possible, it’s worth companies exploring export opportunties.
In the medium-term, we want to see much stronger support for manufacturing, and for entrepreneurial, technologically-led, skills-focused businesses such as are typical of our sector. It’s the grass-roots businesses that our sector exemplifies that underpin a productive, prosperous and progressive economy, and while the service sector is important to the UK, much more can be done to support investment in skills and productivity. We will be working with our contacts, and other trade bodies to seek a rebalancing to better support manufacturing.
In the longer-term we will be fully engaged in the negotiation process triggered by Article 50, to ensure that the new arrangement with the EU allows access to the EU’s markets.
The political uncertainty is not ideal, so the faster that this can be resolved, and the more quickly that the shape of a likely negotiating position can be identified, the better for the economy and for our industry. The BPIF will continue to promote the interests of both our members, and the sector. In the meantime, whatever one’s view, the day to day and medium term opportunities remain key to business success, so we’d urge print companies not to get distracted, while also keeping us informed of any impact, positive or negative of Brexit on business.
Printer reactions
Leading printers’ views on the vote to leave the EU
Mark Cowin
Managing director, Sign Build
I was a Leave voter and I think what a lot of people are doing at the moment is concentrating on the fact that they have lost rather than concentrating on the fact that we’re actually going to leave. The most important thing is to understand the opportunities available and concentrate on those. We run a deficit in trade with the EU of £68bn, so there are negotiations to be done, but if you go to a German or French or Polish printer, all they want to do is trade and trade on the best possible terms.
Patrick Headley
Chief executive, GI Solutions Group
We have a number of concerns. The aftermath could hit the order books while people sit on campaigns until they know what’s happening. Secondly we have great workers from the EU who now feel like the UK is not a permanent place of residence. That’s really concerning, because they’re really reliable and we’re doing everything we can to reassure them. The third concern is rising costs. In the long term, it may not be the end of the world and maybe we will be stronger once we emerge from the turmoil.
Ian Simkins
Managing director, Infinity Partnership
Keep calm and carry on! When the ‘out’ vote came through on Friday morning, it was something nobody thought would happen. I think it could be very positive for our industry, with new legislations coming through and new campaigns for all the major political parties. With the pound falling against the Euro and more expensive transport costs from Europe – maybe the publications that have gone to the Europe will come back. The industry has shrunk over the past eight years, any extra capacity will be eagerly consumed.
Supplier reactions
How suppliers see the future and its uncertainties
Grant Penfield
Managing director, Druckfarben
We should never have had a referendum in the first place, it was the government’s responsibility. The stock market and currency is the big issue here. Our strategy is going
to be to look at ways that we can deal with these currency problems and very carefully consider what we do. We are certainly not going to rush into doing something in a week but we certainly need, in the next two or three months, a clear indication from Europe and our government of what stability we have ahead.
Peter Jolly
Managing director, Duplo UK
We are fairly relaxed about it. We buy and sell in yen so the impact is fairly controlled for us. In the UK market the risk of selling domestically is a bit uncertain, similar to the general election time where we don’t know what will happen next. We have enough stock and finance in place for impact to be minimal for short- to medium-term and by the term we get to longer-term we will know truly what Brexit will mean for our business and we can plan accordingly. It’s business as usual and we are continuing as we are.
David Hunter
Managing director, Antalis
We don’t know what we will be facing over the coming months and years so all we can do is focus on the basics like customer service, keeping the right team. Being a French-owned company gives a different dimension to it for us and our parent company are of a mind that we will find a way through this and that it changes nothing for our customers and we will look after our employees. Our parent company is committed to the UK business, that won’t change, it’s a significant part of the Antalis business worldwide.
