Foreign media: Printing industry moved closer to pre-pandemic levels in Q3

The UK printing and printed packaging industry continues to rebound. Although it has been significantly affected by supply chain challenges and rising costs, most companies saw improved performance in the third quarter, and many expect further improvement in the fourth quarter.

The latest edition of Printing Outlook published by BPIF is a quarterly research report on the health of the industry. The report found that after the COVID-19 outbreak in the first quarter of 2020, and as lockdown restrictions were lifted and the economy opened up further, workloads did not improve significantly until the second quarter of this year.

As expected, the third quarter saw continued growth and higher activity levels, and despite supply chain challenges and sharply rising input prices, this trend is expected to continue in the fourth quarter.

The survey found that 59% of printers managed to increase output levels in the third quarter of 2021. A further 33% of printers were able to maintain stable output, while the remaining 8% saw output decline.

BPIF economist Kyle Jardine noted: "Furlough has ended, employees of printing companies are returning to their posts one after another, the economy is picking up again, and more work is being generated and approved."

Many printers are positive about output growth at the end of the year, especially with the help of marketing campaigns around Halloween and Christmas, and strong activity levels are expected to continue into the fourth quarter.

48% of companies expect output growth to increase, 42% of companies predict they will be able to maintain stable output levels in the fourth quarter, and only 10% say they expect their output levels to decline.

85% of respondents cited substrate costs as the business issue of greatest concern to printing companies for the second consecutive quarter, 61% of companies ranked access to skilled labor as their second-biggest concern, and 55% of companies listed energy costs as their third-biggest concern. Dealing with the economic impact of Covid-19 fell far down the ranking, chosen by only 14% of companies.

Shortages in the supply of raw materials are now the most challenging issue affecting companies' ability to recover from the impact of Covid-19. "Insufficient demand" was previously the top operational challenge selected in the first quarter, when 60% of respondents chose it. However, this figure fell to 44% in the second quarter and to 23% in the third quarter, and it is now only the fifth-ranked challenge.

68% of respondents said that concern over shortages in the supply of imported inputs and raw materials had increased, making it the most frequently selected challenge, slightly ahead of the supply of domestic inputs. 41% of respondents ranked "other cost pressures" third.

Businesses across the industry have experienced unprecedented significant cost increases in all major cost areas of their operations, and upward pressure is expected to increase in the fourth quarter.

BPIF said that in the third quarter, increases in paper and board costs continued to bring the greatest inflationary pressure, but cost inflation remains exceptionally strong across all areas at present.

Jardine said: "The industry has historically not been very good at passing on cost increases, but in the current environment we find that customers are aware of the reasons for the increases. That is why this time, companies appear to be able to pass on more costs than before. But there is only so much you can do, and if costs keep rising, then going back to customers to keep raising costs becomes more difficult. Clearly, at some point there is concern that work levels will be held back as a result."

The survey also found that, after the end of the furlough scheme, the vast majority (91%) of companies do not expect to make redundancies before the end of December.

100% of businesses said they expect at least 50% of employees currently working from home to return to the office by the end of December, at least to some extent. Moreover, industry capacity utilization continued to rise strongly, with capacity utilization in October higher than in July.

Finally, the number of printing and packaging companies experiencing "severe" financial distress declined in the third quarter. Those experiencing "significant" financial distress will also fall back to more "normal" third-quarter levels.

The third-quarter Printing Outlook survey was conducted from October 1 to 18, 2021, and received responses from 114 companies.

——This article is reprinted from China Packaging Network (pack.cn). Original link: http://news.pack.cn/show-378696.html