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Average business growth of 1.4 per cent per year is being forecast for firms in the printing and allied industries despite mixed or quite tough experiences having recently been reported by many. |
Such are among key findings of the 2015 Review of Printing and Allied Industries report produced for PrintNZ by Infometrics.
Available free to PrintNZ members who participated or for purchase by non-participating members, the survey observed that the sector presents a combination of new technology industries with strong growth prospects and more mature technologies with static or contracting prospects.
Overall, the survey report forecasts that trading conditions will improve over the next few years, but longer-term challenges will persist in certain areas.
It states: “Our modelling suggests that the printing industry will have a modest recovery in activity over the next two years followed by two years of stalling growth.
“Overall the forecast 1.4 per cent average annual growth represents a strong outlook compared with the past decade when the industry contracted by an average of 3.8 per cent a year.
“The volatile nature of growth in the paper production industry is likely to continue. But with bad years cancelling out the good years, the overall trend outlook is essentially flat.
“Continued expansion of non-traditional activities are expected to increasingly dominate the outlook for the publishing industry. As the stagnant traditional aspects become a smaller component of the industry, the more dynamic components begin to dominate the industry’s overall performance.
“Distribution, data services, and advertising are expected to share fully in the economic growth expected over the next five years, with growth rates expected to average around three per cent per annum.”
Financial Performance
IN the printing sector specifically, sales activities were noted to have fallen comparably by 1.7 per cent to $1.673bn in the financial year under review.
However, and seemingly contradicitng this dip, the profitability of printing activities actually increased — with the surplus before income tax of $69m more than offsetting the $19m loss reported the previous year.
Non-operating expenses fell to $11m having jumped from $20m to $147m in the previous year. Such expenses were typically described as being one-off in nature and relating to issues such as bad debts or foreign exchange losses.
The printing sector’s wage bill increased from $440m to $466m, with analysis indicating this increase came from a small rise in employment numbers (from 8448 to 8500) and a lift in the average annual wage from $52,083 to $54,857. Although, despite this increase, the wage bill was lower than its pre-2012 levels at 27.9 per cent of income and still below the 2008-2009 peak of 28.3 per cent of income.
This industry-wide data is supported by those businesses that provided financial information in their returns for the PrintNZ 2015 survey. Larger companies have performed better than smaller companies across all indicators and there is a broader gap between the best-performing and worst-performing companies.
Wage rates were received for just over 1000 positions and while these showed a small overall increase, there were some interesting “ups and downs” that contributed to this movement. Correspondingly, charge-out rates remained relatively static in the traditional areas while some of the digital categories reported increases.
Opportunity
AS per the previous year, the most commonly-mentioned areas of potential opportunity focused on the use of new technologies to produce different products so as to widen the offering for customers.
Respondents also saw new technology delivering opportunities to change business practices to increase profit margins.
Comments included:
n “Finance new technology to streamline production and turnaround times”
n “Technology which allows a value to be added to customers’ print requirements”
n “More diversification into other media types”
n “Changing technology and applying it to reduce cost of maintenance”
n “The continuous improvement of digital printing and development of more advanced machinery”
n “Using new technology to produce new products”
n “Technical advances to make printing more eco-friendly”
Business sectors and products identified for growth included variable data, short-run work, convenience packaging, wide format, point-of-sale and three-dimensional printing.
As well as respondents identifying the need for and benefit of industry promotion, there were a number of comments broadly around the structure of the industry and noting opportunities for specialisation, diversification, consolidation and moving into new products.
Additionally, opportunities were seen in such growing markets as tourism; the Trans Pacific Partnership; and promotion of buying local, with optimism expressed that ‘people will go back to print, as the results are better than digital marketing.’
Threats
THREATS highlighted from returns for the PrintNZ 2015 survey remained similar to previous years and included such issues as capacity of the industry, digital substitution, cost of inputs and the general economic climate — with the most notable being pricing.
Among comments received by respondents were:
n “Continued low pricing of product, even though costs are increasing”
n “Competition undercutting quotes — cheap pricing”
n “Companies not willing to increase prices, too many companies willing to drop prices in order to secure work”
n “Silly pricing still going on and print being seen as a commodity”
n “Unintelligent and unsustainable pricing from suppliers”
Perceptions of the industry as being old, low-tech and environmentally harmful were raised as was the advancement of digital technology, online purchasing and paperless policies lessening the need for printed material.
It was noted that shortages in highly-skilled staff were expected to increase as experienced personnel retired or left the industry and that more training was needed to convince “the young ones” that print is “not a dirty job — it’s a rewarding job”.
Qualified print tradespeople across all sectors of the industry were identified as being difficult to source. Just over 44 per cent of businesses reported that they consider there is a skills shortage, with 18 per cent stating this shortage is restricting their business growth and 18 per cent reporting they have vacancies they are unable to fill.
These figures reiterate the importance of continuing to train qualified staff.
The future
DATA about the outlook includes:
n 66 per cent of respondents expect their business to grow in the next 12 months and 78 per cent expect growth in the next three years, but only 22 per cent expect the industry itself to grow in the next 12 months and 30 per cent in the next three years
n There was a drop from 40 per cent to 32 per cent of businesses expecting staff numbers to grow in the next 12 months and a similar number to last year’s survey of 59 per cent expecting staff numbers to grow in the next three years
n 44 per cent of respondents expected to train more staff in the next 12 months, which was similar to previous years
