BPIF Printing Outlook: UK Printing Recovery Gains Pace in Q2 as Cost and Material Shortages Intensify

The latest BPIF Printing Outlook, a quarterly barometer of industry health, traces the pandemic’s uneven impact: COVID-19 emerged late in Q1 2020, Q2 2020 delivered the hardest blow, Q3 brought partial recovery, and Q4 lost momentum on the recovery path.

Conditions improved only slightly in Q1 2021; it was Q2 2021, as lockdown measures were relaxed, that brought a clear upturn in workloads. BPIF expects further growth in Q3, with production activity moving higher.

In Q2 2021, 58% of printers raised output, 29% held output steady, and 13% recorded a decline.

With many printers optimistic about summer output, production activity looks set to expand again in Q3. Half of companies expect output growth, 37% forecast stable output, and only 13% anticipate a drop.

BPIF cautions that Q3 is often shaped by staff holidays. In the survey, 41% of respondents were forced to take time off due to COVID-related illness or mandatory quarantine after close contact, while 15% also flagged school closures as a difficult source of absence.

Raw material supply shortages have now become the toughest obstacle to recovery. “Insufficient demand,” the top business challenge in Q1, has slipped to second place.

On the business issues front,

Printing substrate costs—covering paper, paperboard and plastics—now rank first, followed by competitors pricing below cost.

Managing the pandemic’s economic fallout now ranks third, after being the leading concern in the Q1 survey, while access to skilled labour remains another worry.

Average costs kept climbing and came in slightly above expectations, with upward pressure expected to build in Q3.

While inflation was reported across all cost categories, rising paper and paperboard costs created the strongest inflationary pressure in Q2.

BPIF economist Kyle Jardine noted that the survey contains many positive signals: vaccination and easing restrictions have supported a strong economic rebound, with orders, output, confidence and capacity all rising firmly. Even so, he said, printing has not returned to pre-pandemic levels; cost pressures are intensifying, some material supplies are under threat, recruitment is constrained, and the sector has not yet shaken off the pandemic. Despite these hurdles, expectations for further recovery remain optimistic, furlough schemes are winding down, and more employees are becoming economically active. He added that many companies in the industry are in sound and secure financial shape and ready for new challenges ahead.

The survey also found that industry capacity utilisation kept rising, with July above April. It remains below pre-pandemic levels but is closer than ever. Overall employment increased in Q2, as more companies hired than in Q1 and slightly fewer cut jobs.

98% of surveyed businesses expect that by the end of September, at least 50% of employees currently working from home will be back in the office to some degree. Hybrid arrangements, however, will remain standard for many companies for some time.

Lastly, Q2 saw only a marginal rise in printing and packaging companies facing “severe” financial distress. The count of those in “significant” distress dropped sharply, yet stayed historically high.

—Reprinted from China Packaging Network (pack.cn); original link: http://news.pack.cn/show-378167.html