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Sat, Sep

Widthwise 2011: the key findings

This is the fourth consecutive year that Image Reports has conducted the Widthwise Survey, asking printers of all sizes about business, market and technology issues. During the last four-year period, the large-format industry has been revolutionised by technology and economic turmoil. Since that shake-out, the pace of change hasn’t slowed but that change is typically now more incremental than transformational.

The 2010 Widthwise Report explored what wide-format players needed to do to be at the leading competitive edge, by looking at the need for diversification and the growth of vertical markets. The 2011 survey/report goes a step further and takes a more nitty-gritty look at the state of a still unpredictable market from the perspective of small (turnover up to £500,000), medium (up to £2m) and large (£2m+) print companies so that you can better judge your levels of success with like-sized competition and develop your strategies accordingly. This full analysis can be found in the Widthwise Report 2011 (downloadable for free at www.imagereportsmag.co.uk), but the following is an overview of what came out of the collated survey data.
In terms of turnover, number of employees and company location, the overall demographics of the 2011 survey sample was much the same as in 2010 – but slightly more respondents this time around said wide-format print accounts for 80 – 100% of their business (23% opposed to 15% in 2010). Of those that said it is not 100% of their business a whopping 71% expect to see the ratio of such work to increase in the next two years. And that’s because, as the survey makes clear, there’s still good money in wide-format.
A quarter of all those polled said overall margins have improved in 2010/11. Less encouragingly, 45% said they had got tighter (the other 30% said no change). Of those with turnovers of £2m+ only 15% saw margins increase in the period while the figure jumped to 27% and 28% respectively in the small and medium turnover segments. So, are the smaller companies better positioned in terms of flexibility and readier to try alternative, higher margin work?
Almost half of those polled (48%) said margins in wide-format are better than in other parts of their print business. This encouraging news was pretty consistent whatever the size of turnover. Yet one in five large and small companies reported that margins were not so strong as in other parts of the business. Only a tenth of those in the middle turnover bracket said that.
By far the biggest concern was the state of the general economy, with 59.1% ranking that as their top worry while 28% ranked price competition as their biggest concern. Fewer than a fifth of respondents placed the availability/cost of finance as the most serious challenge they faced and foreign competition didn’t seem to particularly worry respondents.
Despite the still shaky general economic situation, over half of those polled (54%) said they plan to recruit in the next two years, a figure that jumps to 64% for medium-sized businesses. Print production comes top of the new blood wish list, with 62% of those looking to recruit citing this as a priority, followed by sales and marketing (36%), design (30%) and finishing (26%). Only 7% flagged up the need for more people to handle business development.
The industry is clearly still adjusting to the seismic changes wreaked by technology and recession. Almost half (46%) of the respondents said they are having to make strategic changes within their operation to win business from new applications/niches – but this is considerably less than the 70% who said the same thing in 2010, suggesting that much strategic change has already taken place.
A key strategic focus remains finding new markets and offering new services: 66% of respondents said this was a high or very high priority, with only 6% saying it wasn’t a focus at all.
Unsurprisingly, almost three quarters (72.7%) of companies are involved in poster printing, with exhibition and display graphics (69.9%), general banners/flags/signage (65.7%) following close behind. But there are areas where the percentage of printers involved is still relatively low: in textile printing for garments (8.3%), packaging (14.8%), industrial speciality (15.7%), textiles for home/interiors (17.7%) and cardboard engineering (16.7%).
Perhaps that’s because there’s still enough perceived growth in some of the mainstream markets. Over 22% said exhibition and display graphics is the fastest growing sector for their businesses, with almost 20% saying the same about general banners/flags/signage. With architects becoming more central to print purchasing, it will be interesting to see how their demands play out. In the 2010 Widthwise Report only 2% of work was said to come from architects. This time around it is nearer 8%.
Getting more involved with clients at an early stage in graphics projects is certainly a growing trend. Almost half (49%) of those surveyed now offer a creative design service, and over a quarter (25.5%) have a total project management capability.
To maintain the search for new business, especially from new applications and niche markets, print companies are involving creative teams earlier in projects, but the survey clearly shows that the restructuring/refocusing of sales and marketing teams is by far the most urgent priority. Many companies were also researching potential new markets and working more closely with suppliers to identify new opportunities.
Textiles must certainly be one of those opportunities. Only 6% of respondents said they own a textile printer and a mere 8% said they intend to buy one anytime soon even though 56% of respondents having said they intend to buy a new large-format printer of some sort in the next two years.
Over half (55.1%) of the companies surveyed said they own a solvent (inc. eco-solvent) printer and 27% of those investing in a new large format printer expect to buy one of these machines. But UV is where it’s at. Almost half (48.2%) of those polled said they now own a UV curable printer of some description. 49% of those investing in new kit said they will buy a UV machine – 33% plumping for a flatbed.
Latex printers are also enjoying a surge in demand. In a relatively short time they have made a significant impact, with 6.5% of surveyed companies owning a latex printer and 15% of those planning printer investment over the next two years having earmarked a latex unit.
Asked if they were expecting to invest more across their businesses in 2011/12 than in 2010/11, 41% of respondents said they were - pretty much on par with the percentage that said they would be spending about the same (only 17% said less). In terms of large-format investment, 38% said they would be spending less that £20,000 while 4% plan to pump in more that £25,000.
Apart from spending on new printing machines, design software was the most commonly identified large-format investment area with 44.6% saying they will be buying such packages. Laminators (18.8%) and contour cutters (16.1%) came in next. Only a tiny minority plan to buy into VDP (0.9%) or W2P (1.8%) software, so there is still plenty of potential there. Asked what they wanted their suppliers to focus their R&D on, printers said reducing machine running costs was the top priority.
On the issue of the environment the picture remains confused. While a walloping 59% of those polled said offering ‘green’ options is more important that it was two years ago, a significant 18% thought it not important to do so at all and 9% thought it less important that it was two years ago!
A much bigger percentage of print companies in the top turnover bracket of £2m+ (more likely to work with the bigger, more environmentally savvy retail clients) thought it increasingly important than their smaller counterparts. 26% of those companies with a turnover of less than £500,000 actually felt green issues were unimportant. Customers seem equally confused: only 4% of printers said that ‘most’ of their clients asked for environmental accreditation, while 63% said the question has not arisen.
On the evidence of this survey, the large-format industry is still in transition. Yet given the shocks it has experienced since 2007, the most striking aspect of the results in the 2011 Widthwise survey is the industry’s sheer, bloody-minded resilience. In the middle of great economic uncertainty, most printers – small medium and large – seem to be making the strategic adjustments, planning the investments and exploring the valuable new niches that will help them flourish in the long run.

Boxout:
10 bites of data
71% of those for whom large-format is not 100% of their business expect to see the ratio of large-format work increase in the next two years.

48% said margins in wide-format are better than in other parts of their print business.

25% said overall margins have improved in 2010/11, while 45% said they had deteriorated

51% ranked the general economy as their most major concern

54% plan to recruit in the next two years.

66% said entering new markets/offering new services was a high or very high priority

46% are making strategic change to win business from new applications/niches

56% expect to buy a new large-format printer in the next two years

44% will invest in design software in the next two years

59% think it is more important to offer ‘green’ solutions than it was two years ago, while 18% think it’s not important at all

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