This year will be dominated by Drupa in terms of technology that printers can invest in; the US presidential election will spur a 0.5% rise in the US economy; in the UK the debate over continued membership of the EU will drive plenty of propaganda and the Rio Olympics will drive demand for promotional packaging over the summer.
These are the known events for the year. Everything else is speculation: the impact of the Chinese economy; the war in Syria, sparking vast migrations of people into Europe and related threat of terrorist attacks; war on the borders of Russia. These are events about which there can be no certainty but which will weigh on the fortunes of the industry.
Heidelberg and KBA repeatedly point out that the level of uncertainty has an impact on business confidence, particularly in regions where the press manufacturers had hoped to grow sales. Without sales, funding for R&D slows and that impacts the flow of new products.
If there is doubt about investment in this direction, there is no doubt about investment by paper companies: it is all directed towards packaging, hygiene products or bio materials.
There is almost no new investment in paper mills or machines for newsprint, for web offset papers or woodfree coated papers for commercial printing. The gradual reduction of capacity in these sectors across Europe is the canary in the mine for the industry. Forest product companies are not investing in printing papers.
The exception is for inkjet suited papers, though even here the current volumes do not justify wholesale conversion of paper machines used for SC or LWC into producing inkjet papers. This may change as high productivity machines reach the market, but few will be consuming the 100 tonnes a day that a web offset press can use.
However, despite this the figures show that many sectors of the industry are experiencing growth, either as a result of recession coming to an end or because buyers are realising that digital does not solve all marketing and communication issues. In some instances there is a steep cost to using email, SMS or a dependency on digital. That cost is disgruntled customers.
The introduction of Mailmark by Royal Mail this year will increase the amount of information coming from the printed direct mail channel, increasing its accountability which has always been a vulnerability of the channel.
The latest figures for the British printing industry relate to 2014, having been released just before the end of last year. They refer to print sales across a number of key sectors using definitions drawn up many years ago. They do not capture every nuance of the industry, but because they measure consistent areas in a consistent way, the government figures are among the most accurate around.
They record a little lower than figures used by the BPIF which include non print revenues, which are becoming a crucial aspect for many in print. The BPIF puts the turnover of UK printers at £13.5 billion with 122,000 employees spread across 8,600 companies.
The government’s official data is a little different: In a sector by sector analysis it identified £8 billion in turnover in 2014, with 74,000 employees. This has returned the industry to the same level it achieved in 2008 when turnover stood at £8.5 billion. This was 4% higher than a year before and as the industry has been on an upward course during 2015, print in the UK has finally returned to its pre recession levels.
Elsewhere in the ONS data, there are more than 9,600 enterprises associated in some way with printing (some of these multiple names trading for essentially the same business), generating revenue of £9.4 billion in 2014. This is down on the £11.4 billion the equivalent companies (11,500 of them) earned in 2008.
The capital expenditure had fallen steadily from £640 million in 2008 to £397 million in 2013, but bounced back in 2014 to reach £610 million.
This is one of the sectors that appears to be in terminal decline. Circulations are falling across the board as the internet draws more and more readers though not necessarily the revenues to match.
This also has an impact on printers producing supplements and even inserts as titles close or reduce frequency. Titles continue to change hands, Local World was acquired by Trinity Mirror last year and the full impact of this on production arrangements has still to be felt.
Revenue from printing newspapers has fallen from £446 million in 2008 to £159 million in 2013 and then £137 million in 2014, amounting to a 69.1% decline in the period. The knock on effect continues to be felt with closure of newsprint production, notably the closure of the Aylesford mill last year.
While the rate of decline may slow, there is no expectation of any increase in circulations in the near or medium term. Local newspapers in particular are locked in a downward spiral of trying to cut costs faster than revenues are falling, which impacts quality and drives circulations still lower.
Book printing has been a stand out in recent years, counter intuitively to those who predicted that the printed book must disappear into a library of reading that might be contained within an e-reader.
Publishers and book printers have responded to this threat by helping streamline supply chains through print on demand, short run printing and stock level maintenance.
Revenues for printing books were £582 million in 2008, rising to £892.5 million in 2013 and then to £952.6 million in 2014. Assuming that the growth path continued, books will have broken though the £1 billion barrier in 2015.
The lead title last year was the fourth title in the Fifty Shades of Grey series, selling more than 1 million copies to be the country’s best selling book. There were more than 90 books with sales in excess of 100,000 each in 2015. Another Fifty Shades title could appear this year, but equally an unexpected title might make the breakthrough in the manner of JK Rowling.
What is clear now is that books are not going to disappear. UK book printers are continuing to invest in technology to deliver the speed of response that publishers want.
The gap remains colour book printing which continues to be produced outside the UK, much of it in China. Bell & Bain is increasing its colour print capacity with a second eight-unit perfecting KBA, but it is not aiming at coffee table illustrated books. The market for such titles is too seasonal to build a business in this country. However, digital printing will continue to eat away at the edges.
The introduction of B2 format and larger digital presses has had an impact on colour book printing for exhibition and art catalogues and for photographic books with a limited circulation. If publishers can find a way to publish such titles, the printing industry is ready.
There is a noticeable trend for higher quality books that will continue into next year. This has included sewn bindings with ribbons and headers in case bindings. It is a reaction to the ephemeral nature of digital reading, and will continue to be good news for printers.
Smarter companies are also tapping into a demand for local books, whether local histories, memoirs or perhaps local interest photographic titles because more powerful home computers have made it easier to compile self published or kitchen table published titles. It is the equivalent of artisan beer or food, where the physicality of the printed object is a strong part of the appeal.
The sector as defined by the Prodcomm figures from the Office of National Statistics is like newspapers, in decline. The bald figures describe a sector with revenues of £934.5 million in 2008 falling to £582 million in 2014.
The drift of display advertising to other digital media has had an impact on paginations, reducing the number of sections printed. On top of this, circulations have been falling for many general purpose magazines.
The current issue of FHM, a relatively thin publication, proudly declares itself to be the last ever issue, while Zoo has already closed. Others have closed in the last year without this level or attention, while the former Emap business to business magazine empire has declared a wholesale shift from paper to online. The editor of Shortlist has declared: “There will be no more paid for men’s magazines in the UK”.
On the positive side there have been launches in the freemium area, magazines supported by advertising that are distributed in city centres, Coach being the most recent launch. It has revived the fortunes of Time Out and latterly the NME. There is also growth in high cover but specialist interest magazines using papers in an innovative way and perhaps foiling, embossing and other finishes.
Women’s fashion magazines continue to perform well despite predictions by Pira that by 2013, internet and streaming video technology would have replaced print. As with books, people have an attachment to the physicality of print and walking around with the printed version acts as badge to show membership of a club of people with a shared interest.
Tablets have failed to replace the printed magazine, though there are continuing efforts to find the silver bullet that will mean publishers can shed the expense of print and distribution. However, the Periodical Publishers’ Association reckons that more magazines will place their emphasis on digital.
Circulations in general are down 5.3% year on year, but it is not across all sectors or titles. “The average reader no longer exists” it says.
In business to business and some academic areas, print is slipping away. But it is by no means a universal movement and it is difficult to disentangle the impact of technology change on readers from the impact of information carrying websites. Industries are becoming smaller, so fewer copies are needed to achieve blanket coverage.
These trends will continue for the next year with more retailers turning to print to engage shoppers through magazines as much as printed catalogues, whether high street or internet retailers.
As with books, production values can increase with shorter production runs and, while the age of the discardable cover mount is at an end, publishers still seek ways to make publications stand out.
This is the largest sector in the government’s figures, with a value of £1.6 billion in 2014. This is up from £1.3 billion in 2013, the result on an improving economy, but still down on the £2 billion it achieved in revenues in 2008. Flyer printing dropped from £650 million in that year to £472 million by 2013, rising to £545 million in 2014.
Catalogue printing has not recovered falling from sales of £559 million in 2008 to £355 million in 2014. This is the impact of changing purchasing habits, catalogues for online retailers being substantially smaller than old style mail order catalogues.
Direct mail is a brighter spot, showing growth of 4.5% in the last year according to the Advertising Association. This is, however, an increase from a low point and is not a return to the volumes of old. Marketers are looking for more targeted campaigns, using data to identify and profile prospects and so cut the waste from a campaign.
Again there are indications that production values are increasing. Certainly the indications are that consumers receiving a communication in print have a higher regard for a brand than consumers receiving the same message as an email.
The DMA identifies trends in the coming year as the search for “exceptional customer experiences”, whether in print that is highly relevant to the recipient or through engagement via mobile, video and connected customer experiences.
There will be a drive for emotional responses that increase retention of the message, and print’s appeal to touch and smell as well as to sight is in a strong position if this trend develops.
This will continue for the foreseeable future and the impact will remain high provided that householders are not swamped with direct mail with the result that welcome communications become junk mail again.
Stationery print, locked together with programme printing, has continued to grow during recession. It increased from £1.2 billion in 2008 to £1.4 billion in 2014.
Recession has helped spawn myriad start up businesses, each requiring print for letterheads, business cards, brochures and so on. The government reckons that between April 2012 and November 2015 there were 773,043 new business registered to bring the UK total to 3.63 million businesses of some kind.
These will require marketing material of some kind, though the rise of online print businesses will be attracting a large amount of this type of work for a company that has no existing relationships with a printer.
Corporate report and accounts have fallen steeply from £78.2 million in 2008 to £24.1 million in 2014; security printing is up at £494.6 million compared to £441 million in 2008. Label printing has grown from £553 million o £872.5 million, the result of higher quality, shorter production runs and new customers.
Digital photography has been good for printers. The value of printed photographs and pictures has increased from £19 million to more than £39 million.
In the same period online and digital production has increased the value of printed greetings cards from £79.6 million in 2008 to £81.8 million in 2014. This may be its ceiling as this was a slip back from £84.9 million the sector was worth in 2013.
One growth area not covered by the statistics is the adult colouring book. Colouring books, described as for children, earned £2.8 million in 2008, but had disappeared from view in 2013 and 2014.
The arrival of adult colouring books last year is proof that there is life even in the most traditional of formats.
Circulations in general are down 5.3% year on year, but it is not across all sectors or titles.
“The average reader no longer exists,” says the Periodical Publishers’ Association
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The numbers are taken from the Office of National Statistics Prodcom figures which register the value of goods sold.
This is different to the figures that the BPIF, for example, uses which looks at the revenue of businesses across the country. This includes revenue that is not directly related to printed products, perhaps mailing services, data management and so on.
The Prodcomm data creates some strange definitions, a hangover from pre-litho let alone pre-digital days, and is agreed across members of the EU to enable comparisons of business groups across member states.
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Business numbers deliver a higher figure for the size of the industry, both in terms of revenue, employee counts and the numbers of businesses.
This can also be inflated by companies which share the same ownership and premises and which are considered to be one company by customers, but which for accounting purposes may represent more than one business.
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The government’s official data is a little different: in a sector by sector analysis it identified £8 billion in turnover in 2014, with 74,000 employees.
This has returned the industry to the same level it achieved in 2008 when turnover stood at £8.5 billion.
This was 4% higher than a year before and as the industry has been on an upward course during 2015, print in the UK has finally returned to its pre recession levels.
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Label printing has grown from £553 million o £872.5 million, the result of higher quality, shorter production runs and new customers.
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The introduction of B2 format and larger digital presses has had an impact on colour book printing for exhibition and art catalogues and for photographic books with a limited circulation.
If publishers can find a way to publish such titles, the printing industry is ready.
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Security printing is up at £494.6 million compared to £441 million in 2008.
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