The UK printing and packaging industry continued to rebound. Despite the significant impact of supply chain challenges and increased costs, the performance of most companies improved in the third quarter, and many companies expect further improvement in the fourth quarter.
BPIF’s latest printing outlook is a quarterly industry health research report. The report found that after the outbreak of COVID-19 in the first quarter of 2020, with the lifting of the blockade restrictions and further opening up of the economy, the volume of work was improved significantly until the second quarter of this year.
As expected, the third quarter experienced sustained growth and improved activity levels. Although the supply chain faced challenges and input prices rose sharply, this trend is expected to continue in the fourth quarter.
The survey found that 59% of printers managed to increase production levels in the third quarter of 2021. In addition, 33% of the printers were able to maintain stable output, and the output of the remaining 8% decreased.
Kyle Jardine, an economist at BPIF, pointed out: “the home has ended, the employees of printing enterprises have come to work one after another, the economy has begun to recover, and more jobs are being generated and approved.”
Many printers are positive about the output growth at the end of the year, especially with the help of marketing activities around Halloween and Christmas, and the strong activity level is expected to continue into the fourth quarter.
It is expected that 48% of companies will increase their output growth, 42% of companies predict that they will be able to maintain a stable output level in the fourth quarter, and only 10% say they expect their output level to decline.
85% of the respondents believed that the cost of printing materials was the business issue that printing companies were most concerned about for the second consecutive quarter, 61% listed the acquisition of skilled labor as the second biggest concern, and 55% listed the energy cost as the third biggest concern. In dealing with the economic impact of covid-19, the ranking has dropped a lot, and only 14% of companies chose it.
The shortage of raw material supply is now the most challenging problem affecting the company’s ability to recover from the impact of covid-19. “Insufficient demand” was previously the highest operational challenge selected in the first quarter, when 60% of respondents chose this. However, this figure fell to 44% in the second quarter and 23% in the third quarter. Now it is only the fifth challenge.
68% of the respondents believe that concerns about the shortage of imported inputs and raw material supply have increased and become the most selective challenge, slightly higher than the supply of domestic inputs. 41% of respondents believed that “other cost pressures” ranked third.
Enterprises in the whole industry have experienced unprecedented significant cost growth in all major cost areas of their business, and the upward pressure is expected to increase in the fourth quarter.
BPIF said that in the third quarter, the increase in the cost of paper and paperboard continued to bring the greatest inflationary pressure, but at present, the cost inflation in various fields is still exceptionally strong.
Jardine said: “The industry has never been very good at passing on cost increases, but in the current environment, we find that customers are aware of the reasons for cost increases. That is why this time, the company seems to be able to pass on more costs than ever before. But there is only so much you can do. If the costs continue to rise, it will be more difficult to go back to customers to continue to increase costs. Obviously However, at some point, people worry that the level of work will be hindered. “
The survey also found that after the end of the home leave plan, the vast majority (91%) of companies do not expect to lay off staff before the end of December.
100% of enterprises said that they expected 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, the industry capacity utilization continued to improve strongly, and the capacity utilization rate in October was higher than that in July.
Finally, the number of printing and packaging companies experiencing “serious” financial difficulties decreased in the third quarter. Those experiencing “significant” financial difficulties will also fall back to a more “normal” level in the third quarter.
The third quarter printing Outlook Survey was conducted from October 1 to 18, 2021, and 114 responses were received.
Post time: Nov-26-2021