When it comes to the print and paper sectors it is survival of the fittest. As leading commentators told The Drum, the need to continually invest in new technology, meet environmental standards and still remain competive on price makes life very challenging
Printing companies on the front-line during this transitional time are having to adapt to this pace of change, or risk going out of business – but tough trading conditions and a lack of capital to instigate change means many have fallen already.
Steve Johnson, director of Imageco, says contributing to some print companies’ demise has been the need to invest heavily in digital without realising that the lifespan of this type of equipment tends to be dramatically shorter than with traditional equipment, with high service contracts and frequent upgrades required. “The payback needs to match this and with increased competition in the domestic market, print being sourced abroad even for relatively short runs and the increase in print brokers and reverse auctions who cherry pick the cheapest prices with scant regard to quality and good service, it’s small wonder that some companies have not weathered the storm.”
In an industry as fast-paced and technologically reliant as printing, investment in technology is imperative – but also the standard. Just as it is crucial not to get left behind with advances in equipment, SPD Print Solutions director David Winter says it is essential not to stand still when promoting your business and remain rooted in once trusty markets. “The print sector has suffered from over-capacity and a lack of differentiation between printers,” Winter says. “Everyone has similar machinery and is offering and competing for the same products. Many printers have failed to diversify and continue to compete in and stick to the same old markets.”
To avoid plateau – or worse: collapse – appropriately marketing your services rather than just selling what you have and shouting about price becomes vital for a printer, according to Barry Denny, managing director of Denny Bros. “The vast majority of printers sell simply on price, and have no real marketing policy,” he says. “These are the firms that go under when things get tight.”
Given the pressures of balancing price, services, technology and so on, the recession has pushed print companies struggling to find the right mix over the edge, according to DXG Media’s Wayne Platt. He says trends among those companies which have closed include “bad investments, unsustainable prices, no debt insurance, bad debts and quite frankly offering services that don’t live up to clients’ high expectations.” He says his company has had to adapt to the difficult trading conditions by “streamlining the staff levels, buying more keenly from suppliers and maintaining a level of service that we can still be proud of”.
The recession has toppled print companies which were already teetering on the brink, agrees Proco’s Jon Bailey, but he says the print industry was already finding it tough before the downturn. While watching the landscape of print companies change as peers evolve or die, he believes the recession will leave a lasting impression on the way consumers buy print as much as on the print businesses themselves.
“I don’t think people will ever buy print in the same way again,” Bailey says. “This recession has made people so aware of their spending that everything will have to be justified. For us, it’s about offering solutions that not only work harder and increase return on investment but also provide the client with the results ensuring that they can have all the information to make a justified decision about whether the campaign or indeed the cost was good value – not just cheaper.”
Winter agrees, saying consumers now expect a holistic package, where once they might have prioritised price. “It is my opinion that, for some time now customers of all sizes have come to expect good prices, good service and good quality,” he says. “Gone are the days when you could talk them round trading one off for the other.”
At Evolutionprint, Graham Congreve has certainly seen a change in print buying habits. Consumers’ businesses have been affected by the recession, and therefore, he says, “levels of services and client knowledge become even more vital. We’re dealing with different types of people, and we’ve had to reflect that.
“Environmental responsibility is a given now,” he continues, “and our approach reflects this standard. We’ve seen more and more customers working with us in a sustainable agenda. And I’d also say we’ve had more open and honest conversations; the downturn has generally seen a positive development of relationships.”
In principle, you’d expect those print companies still standing to benefit from competitors’ closures. But it is not that simple according to Angus MacDonald, MD of CCB.
“Companies going out of business certainly creates an opportunity for those of us who are left to pick up some new print work, but at what price?” he asks. “It comes as a shock to the customer when he cannot get the price matched that he was offered from the unfortunate printer who is no longer in business.”
MacDonald believes this predicament – the imbalance between prices promised to customers by desperate print companies compared to what they will be offered elsewhere – will take “some months” to level out. But he believes the recession, and the changing demands of consumers, will have lasting benefits to how print businesses are run and conduct themselves.
“Hopefully when things do return to normal the printers who are left will be better run organisations than before and will be much fitter,” MacDonald says, “with one eye on the environment as well as the bottom line.”
In the sixties, Britain was the fourth largest producer of paper in the world. Yet, in an attempt to maintain its competitiveness against the increasing penetration of paper from Scandinavia, the British paper industry was forced into operating on low profit margins, preventing major investment in new plants and machinery.
Since then, the UK paper industry has been on the back foot. The creative market is one of the most demanding of sectors as it continues to fashion new trends and push boundaries in its use of paper. As such, the paper merchants attempt to respond to the wants and needs of the market. But how does that market respond when the biggest trend seems to be away from paper products completely, as the digital revolution continues unabated?
“The paper market isn’t shaping up well,” says Justin Hobson of Fenner Paper. “UK paper manufacturing has all but ceased in any sort of meaningful quantities. The merchant market is dominated by two large groups [Paperlinx, who own Robert Horne and Howard Smith, and PaperCo Antalis who own Antalis and McNaughton Paper] who between them control about 80% of the merchant market.
“Clearly this is an unhealthy situation. The market is over-supplied and over-serviced. Sadly jobs will continue to be lost and prices will inevitably be increased.
“Because Fenner Paper works in the creative market, we have to constantly innovate or designers would stop calling us. Cost is becoming increasingly important and we have addressed this by introducing cheaper ranges such as Colorset, which is a more cost effective option than many other coloured text and cover papers.
“But one of the biggest problems is that the price of volume “commodity” products has decreased dramatically over the last decade, whilst at the same time improving in quality, especially coated paper products,” continues Hobson. “At the same time prices of the more specialised products have remained stable. The effect is that the difference between using a commodity coated paper and something a little different has grown enormously, but only because the price of the commodity coated papers has gone down.”
Garry Colyer, MD, Arctic Paper UK, believes that design agencies are looking at cost saving alternatives when specifying paper these days. “This can come in two ways – the downgrading of specified products or by selecting products that can offer an overall saving whilst still offering unique characteristics.
“Customers are looking for value for money offers that can maintain their environmental stance but not impact on the quality of the finished product. Arctic’s environmental situation and high quality is well known and with the volumetric opportunities – and our new stockist arrangement with Robert Horne – we expect more designers and corporate users to ensure that they meet their criteria by using Munken.
“At the opposite end of the market we also expect some customers to drop down their quality aspirations, this is where our volume products can help them from dropping too far.”
As Colyer suggests, the creative industry’s current push when commissioning paper is towards those more environmentally sourced stocks, be it through a deep-rooted ethos to safeguard the natural world, or simply because their client demands a “recycled” credential to add to their latest brochure.
“There is still a big drive towards recycled and environmentally friendly papers,” says Hobson. “In my opinion some of this is misguided. If clients are asking for a recycled paper, it is the designer’s job to educate themselves and the client about the issues.
“Paper is a great product – it’s made from a totally natural source, it’s totally sustainable, it’s also totally bio-degradable, and it’s recyclable. How many manufactured products on the planet can you say that about?”
While Hobson and Colyer agree that the internet’s explosion has had a “major impact” on the paper trade, they also agree that there is still a demand for premium papers. In fact, Hobson adds, the digital sector has, at times, been an unexpected source of inspiration.
“Digital communications has undoubtedly affected paper usage in certain sectors. But print is still a great medium and shouldn’t be written off. The blog www.itsnicethat.com has a massive following with graphic designers but to take it to another level, they printed a book! It is printed on Colorset Ash and Redeem 100% Recycled. Selling on-line only, it sold out within two months!
“Keeping in touch with customers (in our case with designers) is now even more important. Staying in contact with people isn’t always about trying to “flog” something. I recently wrote a brochure called Size Format Stock which I produced in association with Studio8. It’s informative, educational and isn’t a hard sell – most importantly it’s useful!”
But as outlined at the start of this piece, it’s not just in recent years that the paper industry in the UK has had a fight on its hands. It has been battling, morphing and developing since it lost its seat of power in the early sixties. Over these decades, it has successfully maintained its relevance to the industries that it supplies, changing to meet the needs. But what lessons have really been learned? Well, we will have to wait and see.