The nervousness afflicting the country this autumn in the run up to what proved to be an aborted Brexit put the severe dampers on the printing industry. It amounts to the worst Q3 performance in three years – immediately after the Brexit referendum.
Both orders and output fell short of expectations in what is a period that starts to show a seasonal improvement in trade. And few expect the current three months to show any great pick up. However, as the survey was taken three weeks before the announcement of a general election, the pessimism may prove misplaced.
The concerns over Brexit propelled the issue to the leading problem that printers face with 69% identifying it as the major concern that they have. This is ahead of competitor pricing (49%) and late payment by customers (24%).
There was a pick up for the quarter, 22% saying that things had improved since the summer months and double that saying that business levels were about the same. However, one third reported that the state of the trade had worsened giving an overall -12 score compared to the anticipated -3 that respondents had predicted when asked three months earlier.
Sentiment towards Brexit is very much against a no deal departure. And like the country, printers are split: 46% want to leave with a deal, 44% would rather there was no Brexit. This has provoked a lack of confidence for UK economy with a -66 net score as delays at the departure gate are affecting how customers react. Unlike in the weeks leading up to a 29 March departure when businesses seemed to have been ordering for stock ‘just in case’, there has been no repeat in recent weeks.
The concerns around Brexit centre on supply chain problems, as almost all consumables, ink, plates, paper, must be imported. Cost inflation as a result and non tariff barriers follow on. Extra tariff barriers, restricted investment and shortage of unskilled labour fill the next places. Low on the list of concerns were delays at passport control, shortages of skilled labour and VAT application.
The survey also picked up statistics about industry paper consumption, albeit three months in arrears. This showed that according to year on year comparisons for Q2, paper volumes fell 2.3%, with just coated papers, boards and speciality grades marking any kind of increase. Low value uncoated mechanical and coated mechanical papers, newsprint, and corrugated grades showed declines.
Ink consumption levels showed a similar decline, though the loss of high volume magazine, catalogue and newsprint will have a disproportionate impact of ink consumption.
By Gareth Ward
The referendum result is continuing to exert negative pressure on the printing industry, with the BPIIF"s Printing Outlook survey finding that Q3 was the worst for print since the referendum itself. And things don't look much better for Q4.