The latest BPIF Printing Outlook survey reveals a cautiously optimistic yet challenging landscape for the UK printing and printed packaging industry in Q1 2024. While output levels slightly exceeded forecasts, order numbers fell marginally below expectations. Confidence in the general state of trade remained fragile, though it avoided the severe decline anticipated earlier. The outlook for Q2 is more positive, with forecasts suggesting improved output and order performance, but confidence remains subdued due to persistent economic and political uncertainties.
Key Findings:
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Output and Orders:
- Q1 output balance was +4, slightly above the forecast. A balance of +18 is projected for Q2, indicating potential recovery.
- Order numbers were marginally negative in Q1, underperforming forecasts.
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Business Concerns:
- Competitors pricing below cost has reemerged as the top concern, followed by wage pressures, insufficient sales, taxation, and regulatory burdens.
- Wage pressures and economic uncertainties have hindered recruitment and investment.
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Sustainability Initiatives:
- 77% of companies are now measuring carbon emissions, with 83% actively working to reduce their carbon footprint.
- Waste reduction is the most popular area for sustainability investments, selected by 73% of respondents, ahead of solar panels and electric vehicles.
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Cost Pressures:
- Labour costs continued to rise, while other costs remained relatively stable.
- Paper, board, and other substrates accounted for 34% of total costs, up from 31% in January.
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Profitability and Pay Reviews:
- Controlling costs has become the top priority for improving profitability.
- 35% of respondents conducted pay reviews in Q1, with an average pay increase of 4.1%. 55% plan to review pay in Q2.
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Employment and Capacity:
- More companies decreased than increased employment levels in Q1, with negative intentions for Q2.
- Capacity utilisation remained stable, with most companies operating at 60-99% capacity.
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International Trade:
- Export orders exceeded 5% of turnover for 21% of respondents, performing slightly better in Q1 than in Q4 2023 but remaining subdued overall.
- Paper and Ink Consumption:
- UK consumption of printing papers and boards increased significantly in Q4 2024 compared to the same period in 2023, with annual totals also showing improvement.
Industry Sentiment and Strategic Challenges:
The industry is grappling with a combination of internal and external pressures. Wage pressures, rising costs, and regulatory burdens are significant hurdles, while competitors’ aggressive pricing strategies are squeezing margins. Despite these challenges, companies are making strides in sustainability, with a growing focus on carbon reduction and waste management.
However, the broader economic and political environment continues to dampen confidence. Businesses are urging the government to reduce the cost and regulatory burden, making it easier to invest in skills and technology. The unveiling of the government’s industrial strategy is awaited with keen interest, as it could provide much-needed support for the sector.
Expert Insights:
- Kyle Jardine, BPIF Economist, highlighted the slow recovery in industry activity and the growing burdens imposed by government policies, which have stifled investment and recruitment.
- Charles Jarrold, BPIF Chief Executive, emphasized the need for government action to support businesses and reduce compliance costs.
- Wayne Kershaw, Canon UK and Ireland, praised the BPIF’s Printing Outlook report for providing valuable insights that help businesses navigate the evolving landscape.
Looking Ahead:
The Q2 2024 forecast offers a glimmer of hope, with expected improvements in output and orders. However, confidence remains fragile, and the industry’s ability to recover will depend on addressing key concerns such as cost pressures, wage inflation, and regulatory challenges. Sustainability continues to be a priority, with companies investing in initiatives to reduce their environmental impact.
Detailed Coverage in Printing Outlook:
The report provides comprehensive analysis across various aspects of the industry, including:
- Output and order performance.
- Business confidence and concerns.
- Turnover and capacity utilisation.
- Cost structures and profitability benchmarks.
- Employment trends and pay reviews.
- International trade and sustainability initiatives.
- Consumption of paper, board, and printing inks.
- Energy sector updates.
For more detailed insights, visit www.britishprint.com/printingoutlook.
In summary, while the UK printing and printed packaging industry faces significant challenges, there are signs of resilience and recovery. The sector’s commitment to sustainability and cost control, coupled with strategic investments, could pave the way for a more stable and prosperous future, provided that external economic and political conditions improve.
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