13 April 2020 Business

Covid-19: BPIF study confirms industry crash

The full and ongoing impact of the coronavirus pandemic is laid out in the BPIF's coronavirus impact study. And it is a story of widespread devastation.

The BPIF’s coronavirus impact survey has confirmed anecdotal reports that pandemic has cut the industry’s capacity by half. And there could be worse to come as the actions to mitigate the spread of the disease hit supply chains and further orders.

Already, three quarters of those responding to the survey (non members as well as members of the BPIF and Boss) report “a considerable downturn in order levels" with a fall of almost two thirds compared to expected orders for the time of year.

This translates to 34% commenting that they are “extremely concerned about the future of their business and 40% about the short term survival of their clients’ business. This means an increase in bad debt exposure and reports that debtors are withholding payments.

Consequently, 77% say they will need some kind of emergency assistance in order to survive through maintaining cashflow and to cover other costs. Staff have been laid off – the survey was taken before announcement of the emergency furlough scheme – amounting to 41% of staff immediately and up to 37% more in coming weeks.

There are no figures to show how many staff have been placed into furlough rather than being made redundant, even if this is a three month furlough before a redundancy notice is issued. “The vast majority of companies have furloughed at least some employees,” says Kyle Jardine, BPIF’s economist and Northern Ireland manager, who compiled the results of the survey.

The exceptions are those working in food packaging or for essential services like the NHS. Around 27% of the industry count some of these essential services in the customer base. “The impact has not been as bad in the labels and packaging sector, though those serving the fast food sector have been hit as outlets have closed,” Jardine says. Entertainment, retail and hospitality are the worst hit sectors, he adds.

Some businesses have gone to the opposite extreme of furloughing all but a handful of directors to answer phones and to handle orders by outsourcing to trade suppliers or neighbouring businesses that have remained open.

Now there are suggestions that supply chain issues are going to bite. Paper suppliers are warning of protracted supply chains and urging customers to order early; industry manufacturers have made similar warnings, adding that installations are currently difficult. For Mimaki, this can mean the additional cost of flying in equipment to countries in lock down rather than using road freight. For those with equipment installations underway, the requirement to maintain social distancing is resulting in extended installation and training periods.

Now transport companies are beginning to suffer from a lack of work and absenteeism through illness. This is affecting their ability to deliver into and from print businesses.

The federation plans further impact surveys with a focus on specific areas, such as experience of the emergency funding schemes, for example. “We know that companies are struggling to get cash though the CBIL scheme and want to understand what is happening and what can be done,” Jardine says.

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The severe impact of coronavirus on the printing industry, first reported by the IPIA, has been confirmed by an impact survey organised by the BPIF. Almost all companies have reduced staff levels in order to reduce the exodus of cash.

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