BPIF Survey: UK Printing Industry Posts Strong Second-Quarter Recovery

BPIF's latest Printing Outlook is a quarterly industry health research report. The report found that although the COVID-19 pandemic first broke out at the end of the first quarter of 2020, the second quarter suffered the greatest impact, while the third quarter showed some degree of recovery, and the fourth quarter stalled on the road to that economic recovery.

The first quarter of 2021 saw some modest improvement, but it was not until the second quarter of this year, as lockdown restrictions were eased, that a significant improvement in workloads was achieved. BPIF said it expects continued growth in the third quarter, with increasingly higher levels of production activity.

58% of printers managed to increase their output levels in the second quarter of 2021, while another 29% maintained stable output, and the remaining 13% saw output decline.

As many printers remain positive about output growth over the summer, production activity levels appear set to continue growing in the third quarter. 50% of companies expect their output growth to increase, and another 37% predict they will be able to maintain stable output levels in the third quarter. Only 13% expect their output levels to decline.

However, BPIF noted that the third quarter is usually affected by employee holidays. In fact, 41% of survey respondents reported being forced to take absence due to COVID-related illness or mandatory quarantine requirements resulting from close contact, while 15% also said that absences caused by school closures were challenging.

However, shortages in raw material supply are now the most challenging issue affecting companies' ability to recover. "Insufficient demand", previously the biggest business challenge selected in the first quarter, now ranks second.

As far as business issues are concerned,

the cost of printing substrates (including paper, paperboard and plastics) now ranks first, while competitors pricing below cost ranks second.

Dealing with the economic impact of the pandemic now ranks third, having been the issue of greatest concern in the first-quarter survey, while obtaining skilled labour is another area of concern.

Average costs continued to surge, slightly above expectations, with upward pressure expected to intensify in the third quarter.

Although significant inflation was reported across all cost areas, increased paper and paperboard costs provided the greatest inflationary pressure in the second quarter.

BPIF economist Kyle Jardine said: "There are many positive factors in the survey, such as the strong economic recovery stimulated by vaccination and the easing of restrictions. Orders, output, confidence and capacity all grew strongly. However, the printing industry has not yet returned to pre-pandemic levels, cost pressures have intensified, supplies of some materials are under threat, recruitment is hampered, and the printing industry has not shaken off the pandemic. Despite the challenges, expectations for further recovery in the period ahead remain optimistic. Furlough schemes are gradually coming to an end, and more and more employees are becoming economically active. In addition, many companies in the industry are in sound and secure financial health; ready to meet the new challenges ahead."

The survey also found that industry capacity utilization continued to rise, with capacity utilization in July higher than in April. Although capacity utilization has not yet returned to pre-pandemic levels, it is now closer than it has ever been. In addition, overall employment levels increased in the second quarter, as more companies hired than in the first quarter, while slightly fewer companies reduced employment levels.

98% of the surveyed businesses said they expect that by the end of September, at least 50% of employees currently working from home will have returned to the office to some extent. However, hybrid models will remain the norm for many companies for some time.

Finally, the number of printing and packaging companies experiencing "severe" financial distress increased only slightly in the second quarter. Those experiencing "significant" financial distress fell sharply, but remain at historically high levels.

——This article is reprinted from China Packaging Network (pack.cn). Original link: http://news.pack.cn/show-378167.html