News
Printers gloomy over economy despite HSBC's brighter forecast
The BPIF has said most printing companies are pessimistic about the economy, despite banking giant HSBC saying the UK is unlikely to plunge into a recession.
HSBC said it expects companies to experience more pain in the short term, but says that the UK economy is likely to avoid a recession long-term.
In its July commentary on the state of the UK economy, HSBC's chief economist Dennis Turner said "activity this year has weakened significantly" and "all the recent trends have been negative".
Nevertheless, he expects that as belt-tightening by the Monetary Policy Committee (MPC) and the effects of policy changes make their presence felt over the next 18 months they "should help get the economy back on track in a gradual and very measured way".
Yet the BPIF said its latest research showed printing companies were more pessimistic than ever.
"Hopes of weathering the storm have been cruelly dashed," said Andrew Brown, director of corporate affairs for the BPIF.
"The big problems are rising costs in paper, consumables, energy and labour, with more increases forecast in the coming months."
And while HSBC's report acknowledges that many commentators have called for interest rate rises to combat inflation, the BPIF argued that this would be bad news for printers.
"For rates to go up at this point in time would be extremely unhelpful," said Brown.
However, it's not all doom and gloom, as the BPIF believes that the credit crunch has had minimal impact on the print industry.
"The good news is that the credit crunch doesn't appear to have affected printers when it comes to accessing finance," said Brown.
However, he also sees the trend of consolidation in the sector continuing as companies look for ways to help to stay afloat in the choppy economic waters.
"Consolidation will continue apace and for many companies it might be the best survival strategy," he said. "All businesses need to plan whether they are going to buy, are going to sell, or are going to merge."
Brown: the big problem printers face is rising costs
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Comments
Colin Thompson - 21 July 2008
The real world is the first sectors to enter a recession are construction and printing! Construction was in recession from October 2007! We are in a recession so please wake up to the facts that printing and advertising have been `hit` big time!
US Federal Reserve and European Central Bank pump an extra $82bn into banking system.
The US Federal Reserve and the European Central Bank united yesterday to open a new front in their battle to quell the persistent money market strains that are fuelling the global credit crunch.
The Fed and the ECB lined up with the Swiss National Bank (SNB) to mount a third phase of joint operations to curb the transatlantic credit squeeze endangering the world economy. The central banks said that they would again raise sharply, by as much as $82 billion (£42 billion), the amount of funds they were pumping into the US and European banking systems in their effort to rein in elevated market interest rates.
The latest concerted action by the central banks comes as the continuing hoarding of funds by institutions in Europe and America has kept interest rates for lending between commercial banks high – despite an easing of conditions in broader credit markets. Steep money market rates are aggravating the squeeze on lending to companies and households, jeopardising economic prospects.
Friday the Fed increased by half, to $150 billion, the value of its Term Auction Facility, a monthly operation set up in December that makes one-month loans to US banks against collateral including devalued mortgage-backed securities.
Some analysts called the Fed move an act of "obvious panic" after Monday's global share slide. The developed world has grown by credit, so when the people with money do not lend we have the crisis we have now. If you wish to know the future, read history!
Plan for your future by listening to people who are successful and then you will win!
Colin Thompson
Cavendish
www.cavendish-mr.org.uk
Colin Thompson - 21 July 2008
Andrew, if you wish to know the present position please read below;
Central bankers around the world continued to find themselves between a rock (slower growth) and a hard place (higher inflation) last week. But with oil falling on St. Swithin’s Day, central bankers will be hoping we are about to see 40 days of price declines.
That would provide some much-needed help to keep price pressures under control.
• In the UK, consumer price inflation (CPI) jumped to 3.8% in June - another record high, up from 3.3% in May. Policymakers are bracing themselves for inflation rising well above 4% in the months ahead, and it is increasingly likely that the peak will be above 5%, given the impact of higher energy prices on utility bills.
Thankfully, there is still scant evidence that higher inflation is sparking a wage-price spiral. In May, employment also reached a record high of 29.6m, but wage growth remained subdued at 3.8%, down from 3.9% in April. (Readings below 4% are consistent with meeting the Bank of England’s 2% inflation target). The headlines concentrated on the 20k rise in unemployment over the past three months, but the labour market is standing firmer than we might have expected, but watch this space I will up date you.
• Mounting price pressures was a recurring theme last week. In the US, inflation jumped to 5% - its highest reading since 1991, with increases in food and energy prices the key drivers once again. Eurozone CPI moved up to 4.0% in June, twice the European Central Bank’s target rate of 2%. Among the Big-4 major continental economies, Spain is experiencing the sharpest run up in prices with CPI at 5.1% in June, followed closely by Italy and France (4%) and Germany (3.4%). In China, inflation actually eased a little, but at 7.1% remains elevated. The outlook for inflation is also unfavourable, given that pipeline pressures are clearly evident - factory gate inflation is continuing to rise. In its latest World Economic Outlook, the IMF singled out inflation as a key threat to emerging economies and highlighted the rise in the price of goods other than food and energy as a sign that inflation is taking root.
Policymakers in the Philippines, Thailand and Turkey were clearly of a similar opinion, all raising rates last week.
• Compounding the misery, there were also signs of slower growth. After defying gravity for months, US retail sales showed a significant loss of momentum in June. Discretionary spending (on items like furniture, electronics and restaurants) all declined compared to the same period a year ago.
These are the types of items we would expect to benefit from the one-off tax windfalls which households have been receiving in recent months.
This shows just how much pressure household budgets are under - tax rebates are being used for essentials like food and energy, or paying down debt. In Germany, the ZEW survey, a measure of investor sentiment, fell to its lowest level on record in July due to ongoing concerns over higher inflation. Across the Eurozone as a whole, industrial output fell by 2% in June compared with May, while car registrations across the region fell by 8% y/y.
• Even in China, growth slipped. Weaker export growth resulted in the Chinese economy slowing to ‘only’ 10.1% y/y in Q2, half a percentage point slower than the Q1 outturn. This is the fourth successive quarter of slower economic growth. While China's star is still burning bright, power shortages are triggering intermittent blackouts. Government-set electricity tariffs and rising fuel costs (coal, not oil) are forcing many smaller power plants out of business. Indonesia is experiencing similar problems.
• Central bankers around the world will have sighed with relief last week as they watched oil prices fall back. Despite a slight rebound on Friday, oil was sharply down on the week. Having topped $147 per barrel recently, crude oil ended the week closer to $130. Why? Two reasons. Firstly, demand is weakening in developed economies. In the US, inventories recorded the strongest build up since June 2007 as petrol consumption fell 2% compared to a year ago. Secondly, there is hope of easing geopolitical tensions between the US and Iran.
• Volatility was not restricted to oil prices. It was choppy time in equity markets last week. The VIX index (a measure of equity market volatility) reached 28, well above the 18 level which marks ‘normal’ trading conditions. It’s already been a tough year in the markets (and it’s only July). At the close last week the FTSE100 was 25% below its May peak, but the sell off has been even more pronounced elsewhere. China's Shanghai Composite took over from Vietnam's Ho Chi Minh index as Asia’s worst performing market in local currency terms. Shanghai is now down 49% from its peak compared with 47% for Ho Chi Minh.
Keep looking at the real world activity and you will then be able to plan your future!
Colin Thompson
Cavendish
www.cavendish-mr.org.uk
Simon Biltcliffe- Webmart - 21 July 2008
I'll be a little more succinct.
1. It was feeling good 3 months ago and
2. it now is very much not but
3. in another month when presses usually fill up it will again but
4. January will come around all too soon with it's cyclical doldrums.
Glum but predictable.
Simon Biltcliffe
MD
WEBMART
www.FreePrintSales.com
more common sense for free
John Grogan - 21 July 2008
"The credit crunch is having little impact on the printing industry" What planet are they on?
Jon Fennell - 21 July 2008
well just like the BPIF not ours, maybe I missed something, ........No, there's pigs flying past the window as usual!!!! All must be well..
Colin Thompson - 23 July 2008
The BPIF have there own problems;
What do the BPIF members think about there continuous loss making federation?.
The BPIF have just issued there latest accounts to the members and they now appear on there website. They are financial and operational catastrophe.
What another disaster year in a continuous every year of losses and selling off further assets. What do there members think? How can the BPIF give advise to there members when they cannot operate there own ship in the right direction? The BPIF are heading for a shipwreck with no survivors!
BPIF Accounts for 2007/2008
Turnover - £7.2m
Net Loss - £1.016m
Net Loss as a percentage - 14.12%
Net Loss breakdown - BPIF General £896k and VIP - £120K. With SIG, a deficit of £140k and BPIF Training, unprofitable
Plus, current Overdraft of £600k, but could this have been £1m - were creditors paid on time!
DEFICIT IN MEMBERS FUNDS - £465K
The BPIF have the following Directors;
One CEO
Four Managing Directors
Two Other Directors
Six Non-Executive Directors
If the BPIF was a commercial operating organisation it probably would not survive. With so many Directors for a low turnover business, high overheads, salary increases for the few, together with the past and present issues ( what was the issues with the previous Financail Director), how are they looking after the best interests of the members by operating a business in this
fashion.
The BPIF Directors need I believe `management training` on how to operate a business correctly to make a profit, work with an excellent cash flow and practice what what they preach.
Colin Thompson
Cavendish
www.cavendish-mr.org.uk
Steve Jay - 23 July 2008
I was rather late in adding my comments to a previous conversation string, so whilst this one is still hot, I'll add my thoughts again. If we look back over the years during past recessions, I recollect very much the same type of comments I'm reading now. Recession seems to be something we have all been through before; survived and lived to tell the tale. Admittedly some failed, and many fingers were burnt, but in all a good deal survived. This being because our industry was lead by qualified print people working in print factories, here in the UK. What's more, we traded with the end user and there was plenty of money to spread about the industry. What's different now, is that this is no longer the case, we as manufacturers are at thebeck and call of these huge print management conglomerates who have swallowed up all the value we enjoyed as manufacturers and kept it all to themselves, thus leaving us to fight amongst each other hence we are driving each other out of business. We would submit a fair price which more often than not be in-line with others quoting on the same project, but we had this thing called "loyalty" so customers had built up a relationship with the manufacturer and so not everything was about price. Loyalty is now a thing of the past, if someone is a fiver cheaper than you, no matter how long you've been dealing with them, they'll go elsewhere. My point in all of this, is this recession is going to be very different regarding our industry, whereby good quality print factories will go down the tubes because with such tight margins currently priced, there is simply no capital left to fight with. We are all in the firing line. Look back over the past few years, Carlton Barclay; Bovince; not to mention some of the big web houses. Why is this??? well it's simple, all the high value business has gone overseas (using cheap labour I hasten to add) and who reaps the profits...oh yes our ever greedy print management companies. We as manufacturers do their work and many of the people employed by these big organisations are inexperienced in print. They simply push the paper through to us, we get them out of the **** and they earn the bucks and we go out of business!! Please forgive my cynicism, but after being in this industry for nearly 30 years, I'm looking at joining many others and leaving it for good
Mike Norris - 23 July 2008
Speaking as a loyal (inhouse and PM) print buyer of over a decade...would you not agree broadly that it may also simply be a case of declining print work due to new media coming into the marketing mix, a huge overcapacity in the UK market, ineffiencies highlighted by a downturn in work coming in? With numerous companies producing the same quality work with the same quality kit? What would you as a buyer base your decision on? Price? Relationships?Accreditations? The PM company I work for has a small print supplier base in order for relationships to be built and maintained, but expects lower prices purely because of the volume of work we can channel through these suppliers...plus print production has become more efficient over the last few years...so improved workflows (quicker mark readies, less wastage etc) should lead to a lower cost base...I have never held a gun to supplier's head, or attempted the "dutch auction" mentality in order to drive the prices down, because of the reliance we have on our supplier base, it wouldn't be very sensible to drive them out of business demanding unsustainable pricing?!
Steve Jay - 25 July 2008
As a person who has studied a bit about marketing I do think the marketing mix has changed somewhat, but a marketing mix is never constant..well at least it shouldn't be, it should be governed by market share, audience and various methods of communication and the infamous 4 p's. However this being the case, there is always going to be demand for print, it speaks volumes about a company and people I feel, like to have something tangible to read. There are many inefficiencies in many companies and yes there are a lot of printers around all hungry for a piece of the pie. But if I were a buyer, my criteria would be to have a range of suppliers that suit my needs ie B1, B2 or digital, screen ect and use them as an extention of my own business. Obviously I think it necessary to get comparison prices to ensure you're getting the best value, but above all, trust is a big issue. Working with someone you can trust and who will have your interests at heart I feel is sometimes more important than price alone. I also don't condone dutch auctions, but I do believe feedback is necessary in order find out where you stand pricewise and maybe given a second chance to look at the price and certainly look at the added value to see whether it's worth doing at all. It sounds to me that you share a similar credo to myself
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