There is no question that in 2018 the printing industry in the UK continued to shrink. Equally there is very little doubt that the coming 12 months will continue to be just as challenging, with or without the additional complexities of Brexit. While the number of establishments will continue to decline, that shrinkage will not be fast enough to match the fall in demand for traditional areas of print, nor how print is purchased.
Overcapacity will go on. The issue of pricing below cost that continues to be the biggest issue that the printing industry faces, according to the BPIF’s Printing Outlook survey, will not go away.
The same quarterly report charts the decline in demand for paper from UK printers. This above all is the best measure for the rate of decline of the industry, greater efficiency not withstanding.
This does not, however, distinguish between the uses that the paper is being put to, whether the decline in coated woodfree papers is mitigated by an increase in demand for uncoated papers for example. The impact shows best in the actions of the paper producers. Coated woodfree capacity is being idled, as with the shutdown on a machine at the Gryksbo mill in Sweden or the threatened closure of the 1 million tpa capacity Oulu mill in Finland owned by StoraEnso.
Stora has been focusing investments of late on packaging grades and would convert this mill to create packaging if an assessment currently underway recommends this. The only downside might be that so many paper companies are focusing on corrugated materials that there is risk of creating overcapacity and undermining the business case.
The collapse of a sale of the ArjoWiggins Creative Paper mills due to concerns about rising price of pulp is equally indicative of the precarious nature of papermaking. Other consolidations will take place in the coming 12 months. Paper is a European, if not a worldwide business, so demand in one country is not going to outweigh different trends across other countries.
A better indicator of the state of UK Print comes from government statistics, reporting on different product types within the overall printing industry.
This gives a more detailed view over the industry: how some sectors are in steep decline while others are either steady or perhaps growing even while digital substitution bites an ever larger chunk of marketing budgets.
The most recent data of this kind relates to 2017. And by looking back over ten years the changing landscape for print in the past decade becomes clear and perhaps informs what may happen over next 12 months to the sector.
At first glance, print is relatively healthy with sales around £12.5 billion, almost unchanged from 2008. However, the overall figures are not comparing like for like. Figures for printing textiles and for printing on solid objects, ceramics and glass were included for the first time in 2016 and this has brought the overall industry sales to the £12.5 billion.
This helps obscure some of the declines in other sectors. The biggest sufferers are not surprisingly newspapers, magazines and catalogues, with books, security print and packaging showing an upward trend.
The value for printed newspapers continues to fall. In 2017 print returned sales of £85.3 million compared to £102.9 million in 2016. In 2008, printed newspapers accounted for sales of £445.8 million. Reorganisation in the sector has continued this year, with no more than a couple of dozen newspaper printing plants in operation in the UK compared to more than 150 in 2008.
And, as has been seen by consolidation among the manufacturers of newspaper and web offset presses, there is little appetitive to replace existing presses with new machines. There is currently little pressure on publishers to invest in digital presses to cope with declining print runs as they can outsource production to another publisher, thus keeping a set of machines in operation for a few more years while the pressure builds again.
In the last 12 months the merger between the Express sites and Mirror newspapers under the group name Reach points for further capacity consolidation and the Guardian switched from printing on its own machines to outsourcing to Newsprinters at the start of 2018. In the regional press, CN was absorbed into Gannett subsidiary Newsquest. And its print site was a casualty, moving production into the five print sites that Newsquest operates.
Declining circulations are blamed on the one hand, hit by increased use of the internet as a first source of news, and on the other, on declining paginations as advertisers are drawn by the costs and the instant feedback that digital advertising seems to provide. Newspaper publishers are beginning to gather the data and analytics to show that whatever the product being advertised to consumers, there will be some role at least for newspapers.
Hand in hand with the decline in newsprint comes a fall in the numbers of supplements inserted into those newspapers. In 2008 with beefier circulations and the worldwide web just a decade old, demand for supplements created £313.8 million of print. In 2016 this had fallen to £74.1 million and again to £46.0 million in 2017. The World Cup may have helped slow this rate of decline last year, but nobody should count on it.
Magazine printing in the UK has also suffered a sharp decline over the decade, though remains one of the biggest sectors for print. The fall is steepest for large circulation general interest magazines. The closure of ShortList, the largest free to read men’s interest title, at the end of last year is typical. Women’s magazines have also been hit as the ABC figures demonstrate. These do not show the decline in paginations which result in fewer sections and can be just as devastating to print volumes.
The loss of magazine titles is more of a cyclical trend than structural. Large general purpose titles and their publishers are losing out; smaller specialist titles continue, either because the subject matter is too specialist for the internet, because reading a magazine remains a pleasurable experience, or possession of a magazine is something of a status symbol. In B2B weekly magazines that grew fat on classified, especially recruitment advertising, consolidation has largely happened.
Well produced magazines are being used as high impact marketing tools by the tech giants that have been responsible for swallowing the advertising revenue that has holed magazines and forced the closure of a number of printers. A market that was valued at £934.6 million in 2008 produced revenues of £406.7 million in 2017, a drop from £423.2 million in 2016.
Facebook, Google and others are using magazines to reach the desks of the executives who make the real decisions. Print achieves the cut through that email, SMS or a website banner cannot. Nor is print restricted in display size. These magazines are not A4, but definitely plus sized the better to make a bigger impact.
Magazines continue to be launched at the boutique end of the market, addressing specialist interests, well designed and with high production values as a contrast to the digital hubbub.
The size of the market means that investment continues. In the last year this has meant high speed perfecting sheetfed presses, in the coming year there will be investment in at least two web offset presses for magazine printing, Acorn Print is already installing a new press and Warners (Midlands) has a press hall under construction though has not yet announced what will go inside. Those that are successful are investing in automation to reduce the touch points from submitted files to packed or mail sorted magazines.
The cloud continues to be the frailty of the customers. If there is a recession in the UK, Brexit or not, the rate of magazine closures will accelerate.
The internet is clearly responsible for the fall in the spend on advertising materials and catalogues. Catalogues brought in £559.1 million in 2008, but at £199.9 million, less than £200 million for the first time and a further 6% lower than in 2016 £213.9 million).
This type of advertising collateral remains a major market for UK printers. However, despite straws in the wind to indicate that door drops are becoming more popular or that direct mail is on a surge, this will not be enough to return to the spending seen a decade ago. Instead where print is used, it will be in a more targeted, more sophisticated way. Data gathering is much more robust and its use is better understood so that when print is used, there is far less waste.
The Prodcom figures do not show any impact from GDPR as the period covered did not include the vesting day for the regulation. Any impact will show up in the statistics in 12 months from now. Anecdotally printers reported a hiatus in business between the end of May when the regulation came into force until the autumn. Volumes picked up thereafter, but uncertainty around GDPR remains and will continue to do so until the first high profile prosecution takes place and hefty fines are levied.
The decline in general advertising material matched that of printed catalogues. What was once worth more than £2 billion to the UK’s printers (£2,040 million in 2008) is down more than 25% in the decade, bringing in £1,413 million in 2017, falling from £1,452 million the year before.
There is no question that this has been lost to the internet, now the world’s largest advertising channel, with most of that passing through Google or Facebook. Pressure is building on both, but in particular on Facebook around false claims and thus fraudulent claims about the numbers of people viewing and interacting with the online ads. If this can be shown to be true, print may enjoy something of a renaissance as the medium that can be trusted.
But to date the spotlight that has been directed towards Facebook seems to have little impact. In short printers should argue that money spent on these social media channels is likely to be money well wasted, but do not expect to be greeted with open arms by marketers that have leapt on digital as the ideal medium for brand building and sales. It isn’t.
There is good news among the steady decline. Picture printing and photo products are rising, certainly since 2008, if the 2016-2017 comparison shows a flat market. In 2008 the sector was worth a relatively paltry £19.0 million, but was up more than 300% to £67.5 million in 2017. In 2016 personalised photo products pulled in £67.8 million. This kind of print can only increase, though the boundaries between product types are going to be blurred. Is a T-shirt printed with a photo from a phone a photo product or printed textile?
The printed textiles category is relatively fresh to the Prodcom data, being introduced for the first time in 2016. At that point, the market was valued at £101.2 million for UK producers, rising to £109.3 million in 2017. This is a strongly emerging market and will continue to grow, even if it is too soon to draw conclusions about long term growth rates.
Likewise what the government describes as “printing on materials other than fabric and paper, including ceramics, glass, plastics” is shown to be a substantial sector already. It too was introduced only in 2016 when it was measured at £1,336 million. There was a dip in 2017 to £1,299 million. It is too soon to decide if this is growing or shrinking. What is clear is that it is big.
Packaging is also big and is growing. The value of corrugated packaging produced in the UK has risen from £3,885 million to £4,448 million in 2016 and to £4,668 in 2017. Carton sales were up from £875.4 million in 2008 to £976.3 million in 2017, this down from £1,007 million the previous year.
The government also collects volume by weight in this sector, reckoning that 19,489 tonnes were converted in 2016, rising to 41,810 tones in 2016 but dropping to an estimated 33,250 tonnes in 2016. This is likely to be an underestimate as commercial printers take on carton work and lighter weight boards or stiffer papers are used for light carton printing.
The big good news story is about books. At one point the printed book was being written off as out of date, to be superseded by a digital version. As has been well reported this is very far from being the case. Book sales in the UK have been on a steady rise according to Nielsen BookScan. It reckons that the market for printed books grew 2.1% by value to reach £1.63 billion through sales of 190.9 million books. Bookstores are also booming, with a number of independent outlets rising through the year.
This does not say where books are produced and a scan of titles entered in the British Book Design & Production Awards each year demonstrates that many are still printed in China and other Asian and European countries. But more are being produced in the UK.
The Prodcom figures put the value of books in 2008 at £581.9 million. By 2017 this has grown to £1,041 million. The transformation of book printing to a just in time process, thanks to publishers looking for savings along the distribution chain, and the investment in digital print technology to enable this, has kept more books in the UK. The supply chain from China suits longer run production of trade illustrated books, but domestic printing cannot be beaten for producing best selling novels in a very short response time.
The next phase that is starting to kick in now brings greater automation between publisher and book printer, both in taking orders from sales data and shipping direct to consumer or to a shop.
To date colour books have been somewhat apart from the digital print trend because of questionable quality and flexibility to deliver the variety of formats that are needed to achieve a shelf impact. This is of lesser importance when books are purchased through the likes of Amazon, but the quality issue remains a barrier, though less of one than it used to be.
The flourishing of the printed book has also been noted by the marketing industry which is using the printed book to sell high value property and cars, to celebrate a sponsorship of a high profile event and to commemorate anniversary dates. Price is less important than quality and impact and points a way for printers to engage with customers to mutual benefit.
Many self publishers are contacting printers to work directly with them on celebratory titles. And as part of this, the popularity of hardcover titles is increasing.
The coming year will continue to see the books sector increase. It is where the printing industry began 500 years ago. Half a millennium on, the printed book continues to be the standard bearer for the printing industry.
From starting the printing industry 500 years ago, the printed book continues to be its standard bearer. According to Nielsen BookScan, book sales in the UK have been on a steady rise.
The Office of National Statistics Prodcom figures put the value of books in 2008 at £581.9 million, growing to £1,041 million in 2017. In addition to the flourishing of the printed book, bookstores are also booming, with a number of independent outlets rising.
Story 1 of 9
The decline in demand for paper from UK printers is charted in the BPIF’s Printing Outlook survey. This survey does not distinguish between the uses that paper is being put to, or whether the decline in coated woodfree papers is mitigated by an increase in demand for uncoated papers. The impact is more tellingly told by the actions of the paper producers themselves.
Story 2 of 9
The Office of National Statistics Prodcom figures which register the value of goods sold report on different product types within the overall printing industry give a solid indicator of the state of UK Print.
By looking back to a period between 2008 and 2017, the changing landscape of print becomes clear. Good news stories among the general steady decline includes the rise of printed photo products, up more than 300% in the examined timeframe.
Story 3 of 9
According to the Prodcom figures, the value for printed newspapers continues to fall. In 2017 print returned sales of £85.3 million compared to £102.9 million in 2016. In 2008, printed newspapers accounted for sales of £445.8 million.
The internet as a first news source and digital advertising destination are two reasons for declining circulations and paginations. Newspaper publishers are starting to gather data to show whatever the product being advertised to consumers, there will be some role for newspapers.
Story 4 of 9
Magazines remain one of the biggest sectors for print, even though it has also suffered a sharp decline in the UK over the decade. Large circulation general interest magazines suffered the biggest fall, and women's titles have also been hit.
Tech giants' well produced magazines used as high impact marketing tools have been responsible for swallowing the advertising revenue that has holed magazines. A market that was valued at £934.6 million in 2008 produced revenues of £406.7 million in 2017, a drop from £423.2 million in 2016.
Story 5 of 9
The fall in the spend on advertising materials and catalogues has been caused by the internet. Catalogues brought in £559.1 million in 2008, but at £199.9 million, less than £200 million for the first time and a further 6% lower than in 2016 £213.9 million.
Story 6 of 9
Story 7 of 9
Story 8 of 9
The value of books was £581.9 million in 2008 according to the Prodcom figures. By 2017 this has grown to £1,041 million. The transformation of book printing to a just in time process has kept more books in the UK. The supply chain from China suits longer run production of trade illustrated books, but domestic printing cannot be beaten for producing best selling novels in a very short response time.
Story 9 of 9