Industry chiefs come together to discuss the findings of this annual wide-format survey and chew over the state of the sector.
It was to be expected; the state of the economy and its impact on business was bound to be one of the more hotly debated topics when Image Reports brought together players from across the wide-format print spectrum to discuss the findings of its Widthwise 2011 poll. This annual survey, now in its fourth year, collected data from more than 200 print companies involved in wide-format from across the UK and Ireland, to provide a clear picture of the current state of the market and to highlight issues that impact upon those within it. At the time of the survey, which was undertaken this spring, 59% ranked the economy as their most major concern. By the time of the Round Table in the autumn, the economy was still giving rise for concern for the panel, but it wasn’t all bad news.
“Two years ago the business climate was much worse than it is now,” said Augustus Martin chief Lascelle Barrow, to a certain amount of agreement from the others around the table. “Yes, the six months just after the 2008 banks debacle were the worst in terms of bad debt etc.” added Steve Phythian of CPS.
“The point is the general state of the economy is a worry though because you just don’t know what’s around the corner. Customers don’t know what’s coming so they’re making last minute decisions on jobs which plays havoc with schedules,” argued Peter Barham of Graphics Works, with Cestrian’s Phill Reynolds adding, “You don’t know what’s going to come out of left field”.
“The economy is certainly by biggest problem,” added Duncan Armstrong from Kingfisher Graphics. “We are seeing the work come in at reasonable levels but when someone wants a job they want it the next day because it’s a last minute decision. Confidence is the real issue.”
“Another very real issue relating to the economy is the viability of our clients. There are companies that you think are safe bets and they turn out not to be,” said Barham, leading to a discussion on the merits of credit checks, though some, like Phythian, admitted that they’ve “had bad debt problems because we’ve ignored the signals.”
“The upside of the bad debt situation means there’s more acceptance now from clients if you say you want some money up-front,” added Armstrong.
But getting clients to accept that you have technical and time guidelines and restrictions for good reason is something of an uphill climb according to most panellists. David Nicholas of Foscos, said “educating customers is another real big concern. We need them to understand what we can deliver, but also what we can’t. We’ve had open days, where they can actually see what we can produce and they have been quite beneficial. What’s not been so successful is giving them templates and guidelines for file formats – they just don’t bother using them.”
“We bring in key customers to show them where there are quicker/better ways of doing things. It’s effort that has paid off. We’ve seen a shift from 13% to 70% accuracy in the files from one client over the course of a year,” enthused Reynolds, a point of view shared by Barrow. “You have to educate your clients. We arrange open days and explain the processes and we find they come and take what we say on board.”
Barrow added: “Look, there are always challenges in business – you lose clients, you win clients, you lose staff, you gain staff. You just have to be resilient and the people who make the fewest mistakes make the most money. My biggest concern is that I don’t live log enough to spend all the money I’ve made” he laughed to much shuffling of chairs and sighs from the other panellists, who nevertheless seem to be doing OK given their various concerns.
Though a couple of those sitting around the table said they had seen margins fall, the others had seen an improvement and the general air was one of cautious optimism, with investment in extra kit and staff on the cards for the majority, mirroring the Widthwise poll findings. The survey data showed that 48% said margins in wide-format were better than in other parts of their print business, with 56% planning to buy new large-format printers and 54% planning to recruit staff across the next two years.
“There’s always good margin on new processes and that applies to inkjet large-format – at the moment there’s a lead there,” said Barrow. “And the thing with digital too, is that it gives you a high degree of flexibility – that is key.”
“We are 100% digital and we’ve been through a massive growth period where we’ve invested heavily and been on a recruitment drive. That has enabled us to add a couple of million pounds to our turnover over the last couple of years” said Reynolds. “But that’s also got something to do with the fact that we’re always on the look out for new things to produce, and new ways to produce them. For instance, we bought a TurboJet which we then re-engineered to make it super-fast. We took a £450,000 punt and it paid off. You’ve got to take chances.”
“We’ve grown year on year, largely thanks to investment in kit that has allowed to take in longer run work,” added Nicholas. “When you have the capacity to do a certain type of work you move up a notch.”
“We’ve grown in terms of profit though last year our turnover was actually down. That’s because we’ve actively focussed on niche markets, like wallcoverings, rather that volume. But, we’ve also kept decent margin because of how we’ve acted with our suppliers. We’ve certainly bought materials more keenly.”
So what about over-capacity in the wide-format sector given the amount of new entrants it has attracted - and continues to attract - because of its relatively low-cost entry price and potential?
“More people have certainly moved into wide-format because there are better margins here – or that’s the perception. The result is that there is price competition across the board, but it’s no worse than it was two or three years ago,” argued Phythian, while raising the trend of customers buying machines to handle their own wide-format print in-house. “In retail in particular, customers are buying wide-format printers because they see it as a cost saving.”
“We’ve also seen customers deciding to buy their own kit,” added Armstrong. “Machines are so cheap now and some so easy to operate that they can afford to stick one in a corner and get the office junior to churn out a poster when they need it. Back in the day, machines cost £1m and now you can get a baby latex printer for under £12,000. So it’s little surprise that you’re also going to get guys setting up shop in their garage. You need to be able to do the type of work they can’t do. We want to put a roll on a big machine and let it run then just cut it up.”
For Barham it’s all about taking on work where you need more skill than the new entrants can muster, especially considering the skill background of some of those coming from the litho, screen, photography and sign making sectors. “I think the threat is that the litho guys will start where they’ve left off and do work for no margin!”
“The thing is, certain suppliers are throwing out really cheap kit deals because they are chasing the ink sales. So people think it’s cheap and easy to get into wide-format. But if you have the right peripherals and skill you should be OK because they simply can’t compete,” added Reynolds.
Barrow takes the view that when there are too many players the worse will go to the wall. “I don’t think we should worry about people setting up a wide-format business. The thing is, the best will survive, so concentrate on being the best. Those who are slow to invest in the next generation technology simply won’t be the best so make sure you’re ahead of the technology.
“I think of it this way – those buying cheap kit are broadening the wide-format marketplace. But perhaps they can’t deliver in two days. We can – so they’re actually doing some of us a favour!”
So what technologies did the panellists have on their 2012 wish lists? For Nicholas it was the ability to print white at very high speeds to compete with screenprint. For Barham is was the development of thinner, more flexible inks that need less heat that existing UV inks to that he can print on more delicate materials. Also for a greater range of fire-retardant rated printable textiles. Phythian went as far as to say “in truth I don’t have a piece of dream kit – I just want something that will make clients give us their artwork on time.”
But the fairly unanimous comment was that whatever technologies come along, the print companies that buy them can’t afford to take a risk
with machines that are not really ready for market. It is a gripe that has raised its head at previous Round Tables, and this year tempers were no less frayed when it came to the topic.
“If we take a risk on technology and it’s not right it could kill us. We are sending back a machine that has cost us contracts. Now we buy machines that we know work and are established,” said a concerned Armstrong, with Barrow wading in with the commonly backed comment that “a lot of manufacturers sell machines that aren’t ready.”
“Also, you have to think about the skills set you need when it comes to machine operators. People talk about deskilling and push-button kit operation, but in my mind the different between having a good and bad operator is that when something goes wrong, can they sort it out?” This comment by Armstrong had the panel swiftly moving on to recruitment, not just in the production areas, but across the board.
In this year’s Widthwise poll, over half of those who responded said they would be recruiting for growth in the next two years, the priority being print production, sales/marketing, design, finishing, business development personnel.
“We have recruited heavily in the last 18 months and right across the business,” said Nicholas. From a strategic point of view we’ve recruited someone specifically to get us into 3D markets where we do a great deal of the design ourselves, especially for POS jobs – so it means a higher margin.”
So where does the new blood come from? “It’s a long and costly process finding new staff. We’ve tried apprenticeships, agencies etc. It’s not so much that the difficulty lies with finding skilled people – in fact in production we’re looking for people to train up ourselves. It’s more about reliability and commitment,” said Reynolds, a comment that certainly had a resonance with others around the table.
“You have to be extremely careful in the people you take on. Because we are quite a young part of the industry we have the opportunity to train people up, but if the newcomers don’t fully understand what you want from them and how they fit into the business it can be difficult. We are only six people and every member of staff can operate every machine and deal with every customers. We like to be light on our feet so we can be flexible – but all the staff know and understand how key they are to the business,” added Barham.
“Yes, it’s more about attitude these days. The advantage that ‘time-served’ printers could bring to the party in terms of understanding colour etc, has been levelled by the digital equipment now available,” said Phythian, only to have Barrow disagree. “If I drove the same car as a Formula 1 driver I’m not going to get the same out of it. I think ‘time-served’ printers do handle materials better and therefore output is better.”
“I think passion has a lot to do it”, added Reynolds while explaining that Cestrian’s biggest move over the last few years has been its entrance into fabric printing. “We’ve not employed any salespeople specifically to sell fabric print but we identified people we know would be passionate about it and they’ve brought in the business.”
At this point the discussion moved towards new markets and diversification tactics. “We are always looking for something new” was as far as Barrow would be drawn, but other panellists were more forthcoming. “I’m interested in doing anything that isn’t on a print machine’s spec sheet – because then I can charge more for it,” said Barham.
“For us fitting has become a very profitable add-on” said Armstrong, to general nods of agreement around the table.
“Aerospace is a new market for us,” admitted Phythian. “We’re printing directly onto the aluminium composite wings for Airbuses and getting good money for doing it”
“We keep our eye on the markets and technologies and tinker with our machines where we can to get more out of them and do what others can’t do,” added Reynolds.
“We have staff saying, ‘When are we going to have a rest?’ We’re not going to get a rest. We have to accept that it’s go, go, go all the time now.”
Image Reports will be conducting its fifth annual Widthwise survey in the new year. If there are specific topics/issues you would like to see included please contact the editor Lesley Simpson. Email Lesley.Simpson@imagereportsmag.co.uk
The 2011 Widthwise Report is available for download at www.imagereportsmag.co.uk/widthwise2011