The impact of expected paper and board price rises on profitability was also cited as a key concern, despite these prices flat lining in the last quarter. However, top of the list of concerns was still unsustainable competitor pricing.
“We’re in a vicious cycle of everybody still demanding lower prices,” explained BPIF chief executive Kathy Woodward.
“Anecdotally we’ve heard of customers even coming back asking for retros once the order’s already been place, so saying ‘we’re doing a certain amount of work with you, we think you should give us a 2% discount.' So the whole focus is still on margin and margin effectiveness.”
In spite of this, confidence was cited as being at its highest for five years, with 55% of those polled believing the market had improved in the final quarter of 2013. Optimism for Q1 of 2014 was also strong compared to last year, with 38% believing this quarter would be better than this traditionally quieter time a year earlier.
Additionally, the number of printers who saw a rise in production (58%) was the highest for six years, with levels of new business increasing for 52%.
However, seeming to temper these positive results was the finding that the output balance of +47 was slightly lower than had been anticipated. Utilisation of capacity was also not as positive as expected. Where almost half of firms had been operating at between 80-89% capacity in Q3, Q4 saw this fall back to a third, with only 3% reporting full utilisation.
These capacity findings reflected an industry still adapting to an evolving print landscape, said Woodward.
“You’ve got a situation where people are looking at their productivity and looking at how to improve that productivity whether it be equipment, workflows or skilling, but also looking at how they can reengineer their operations,” said Woodward.
“A lot of equipment has come to the end of its life cycle and people are looking at what the configuration will be going forwards.”
Woodward also pointed out that a less positive output balance and capacity utilisation than expected could reflect the changing nature of print jobs.
“You do have reports that marketers are looking for a higher quality spend. So they’re looking for more targeted, more effective print and asking printers to make greater contributions which actually ought to lead to greater added value,” said Woodward.
She added: “With pricing still on everybody’s agenda, the more you can combine what you offer the greater your profitability will be. If you’re in a commodity sector then you’re just going to be hostage to commodity pricing and whenever there’s capacity out there that’s going to be the situation.”
The survey also concluded that changes to employment levels were the most positive since Q2 2005 and that investment intentions were also positive for 2014. It also found that the export market remained stable with prospects for growth improving, and that input costs generally remained stable, with the exception of energy.
The BPIF Outlook survey polled 103 companies representing more than 9,596 staff and £1.1 bn in turnover.
