Print 21 Report

Full report
A study into the competitiveness

of the UK printing industry
Print 21: coming of age?
Full report
A study into the competitiveness of the UK printing industry
Full report
A study into the competitiveness
of the UK printing industry
Cover: Swan or ugly duckling?

For years many outsiders have viewed printing as one
of the economys ugly ducklings; old fashioned and
in decline. The reality is that print markets are growing
and the industry is increasingly service-oriented, IT
intensive and innovative in fact, metamorphosing into
a new economy swan.
Contents
Executive summary
Introduction 9
Coverage of the sector 9
Industry statistics 10
Structure of the report 11
1 Industry characteristics
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
12
Demand 12
Technology 13
Industry suppliers 16
Industry organisations 16
Industry structure 17
The labour market and industrial relations 18
Management 22
Finance 23
Environment 23
2 Performance
2.1
2.2
2.3
2.4
2.5
2.6
2.7
24
Output 24
Foreign trade 24
Costs 25
Profitability 26
Capital investment 27
Productivity 27
Obstacles to achieving business goals 29
3 Foresight 30
3.1
3.2
3.3
3.4
Print markets 30
Technical trends 33
Other trends 36
Scenarios 36
4 SWOT analysis
4.1
4.2
4.3
4.4
4.5
39
Strengths 39
Weaknesses 40
Opportunities 44
Threats 45
E-business 47
5 Conclusions
48
6 Intended actions
50
Appendix 1 Steering Group membership

Appendix 2 Tables 55
Footnotes 64
54
2 print 21: coming of age? competitiveness in the UK printing industry
competitiveness in the UK printing industry executive summary 3
Executive summary
This report aims to inform policy-makers and others about the current position and future
development of the printing and printed packaging industries, and to recommend actions to
improve its competitiveness. It has been prepared by a steering group containing representatives
of employer associations, the GPMU, printers and industry suppliers.
Industry characteristics
The UK printing industry employed 189,200 people in 1997, when it was the second or third
largest in Europe.1 An additional 50,000 plus people work in printed packaging. One unusual aspect
of UK printing employment is that it is substantial in all areas of the UK. It is also one of the most
important sectors in several regions and has been designated as a priority industry in South West
England, Wales and Yorkshire and Humberside. The total paper, printing and publishing industry
cluster has a turnover of 29 billion, representing 3.5% of GDP.
The industry has changed greatly over the last decade. This has been a response to new
technologies, competition from other media and demands from customers for lower costs, higher
quality and more rapid response. A key technical transition has been from analogue processes
towards digital workflows in which content is received and processed in electronic form. One
result of this is heavy investment in information technology (IT) hardware and software and a
growing need for IT skills within the industry. Good telecommunications links are also essential.
Workflows are fully digital when outputs occur on digital printers rather than impression-based
printing presses. This creates completely new possibilities for print. Brochures, cards and other
products can be fully personalised and it is economic to print short runs or even single copies
of documents. Digital printing only accounts for a minor share of output at present but this will
grow over time. However, the impression-based technologies of flexo, gravure and litho are likely
to remain dominant for the foreseeable future, and may grow in absolute usage even while their
relative share declines.
Britain appears to have an even higher percentage of output produced by small companies, and a
smaller average size of firm, than many other developed countries. Nonetheless, market pressures,
and the entry to, and growth within the UK, of foreign companies, are creating greater
consolidation.
Technical and other changes mean that the industry needs less unskilled labour. There is also a
changing balance between physical craft skills and computer-based process control and graphics
skills. And shopfloor staff are being given greater responsibility for managing print processes.
The industry has traditionally recruited from people leaving school at the minimum age but now
requires higher average skills in its recruits. The number of new entrants to the industry has also
been relatively low in recent years so that the workforce has a high average age. The industry has
a patchy take-up of qualification-based training schemes and related initiatives.
Larger printing companies approximate to similar sized peers in other industries in their approach
to management. In general, however, printing has always been a very entrepreneurial sector. Most
companies have been founded and run by people who have risen within its ranks. There has been
little management-level recruitment into the industry until recently.
Printing processes consume resources and create VOC emissions and wastewater. Printed products
are also a major component of national waste streams. This means that the industry is directly
subject to an increasing amount of environmental regulations, notably the Packaging Waste
Regulations and the Climate Change Levy. In addition, there are voluntary or semi-voluntary (i.e.
undertaken to avoid regulation) initiatives to reduce wastage within supply chains by industry
customers, notably direct mail users and magazine and newspaper publishers.
Performance
Printing is a mature industry, the value of whose output over the last decade has grown broadly
in line with GDP, although being disproportionately hit by recession and recovering strongly
afterwards. Volume has grown more quickly than value, reflecting declining prices for many
printed outputs. Within this average some segments such as direct mail are growing rapidly
whilst others such as business forms and carton packaging have been declining or stable.
The sections of the industry which are open to international competition have been badly hit by
the high value of sterling. The trade surplus for printing and services related to printing fell from
708 million in 1996 to 458 million in 2000 and is now almost certainly lower.
Printers costs have risen by 39.7% over the period 1990-1999 compared to 31.2% in the RPI. Paper,
board and other substrates account for around a third of these costs. Their prices have been very
volatile over the last decade, causing great damage to printers planning and margins, and now
appear to be on an upward trajectory.
Average earnings in printing have risen by slightly more than the national average over the decade
from 1990-99, but by slightly less than the national average between 1995 and 1999. The UK has
higher overtime levels than most other European countries and will be affected when Britains optout from the European Commissions Working Time Directive ends in 2003. In general, UK print
earnings are thought to be in the middle of the European league table. However, lower social
security costs compared to most other European Union members mean that employers total labour
costs per individual are near the bottom of the table.
The industry faces powerful buyers and suppliers, has a product which can often be easily
substituted, and has intense competition between printers, which is exacerbated by over-capacity.
Hence, rising and unstable costs have been accompanied by continuous downward pressure on
prices, causing a fall in profitability. The median return on capital employed for respondents to the
BPIF/SPEFs business survey fell from 14.67% in 1999 to 8.63% in 2000, with a considerable
variation between individual sectors. Packaging has been particularly badly hit, largely because of
an uncompetitive exchange rate. The British Carton Association estimates that return on sales for
carton printers fell from 6.0% in 1995 to only 2.8% in 1999. However, a minority of printers in
dynamic print sub-sectors, or specialist niches, have been able to buck the general trend. Despite
falling margins and flat profitability, the industry has continued to invest in new technology.
Investment was 6.5% of turnover in the mid 1990s around the European average but at a similar
level to the German industry.
Labour productivity (value added per head) rose by almost 33% between 1994-2000 over 5%
a year. Most experts believe that the Governments 1997 Competitiveness Report is erroneous in
identifying a 30% productivity gap between the UK printing industry and that of northern Europe
with their best guess being a figure of around 10%. Packaging experts also believe that the acute
pressures for lower prices from retailers and other customers in the UK have resulted in comparable
productivity to that of Western Europe.
Capacity utilisation is an important factor in explaining productivity differences even allowing
for differences in measurement, the UK has much lower utilisation than most other developed
economies.
Foresight
Demand for print will continue to increase. Demand for print and printed packaging has
traditionally been closely linked to GDP but there are now some signs of decoupling. Demographic
trends will probably create higher volumes of printing. Prints overall share of the communications
will maintain its gradual decline but this should not preclude continuing volume growth as the
overall market continues to expand. Electronic distribution via the Internet and other means will
hit some segments such as business forms but on balance will stimulate rather than reduce print
demand by creating new opportunities. Environmental regulations may reduce volumes in
magazines and direct mail but will probably have little influence on packaging. There are
considerably opportunities for innovation in both printing and printed packaging.
Other trends include: a growing proportion of printed output will be sourced from digital and flexo
presses; automation of production processes; development of e-business; more customised and
diverse outputs and more sophisticated workflow management.
There is also likely to be further internationalisation of competition, customers, suppliers, printers
and unions.
Three scenarios have been developed for print futures decline (no growth or growth substantially
below GDP), maturity (growth in line with GDP) and rejuvenation (growth above that of GDP).
Historical trends and most industry opinion suggests that the maturity scenario is the most likely to
develop. However, a minority of those consulted believe that the others are credible futures.
SWOT analysis
Strengths
Satisfied customers most of those consulted were generally satisfied with the quality and service
of UK print and printed packaging.
Technical competence the industry has a good record of responding to technical change and has
similarly modern equipment, and technical skills, to European competitors.
High investment compared to many other UK sectors, and at a similar level to that of the German
printing industry.
Entrepreneurialism this makes printers very flexible and resilient and fosters strong personal
relationships with customers and staff.
Good industrial relations printing has a single union structure and a low level of industrial
disputes.
Good business support the industrys trade associations provide a variety of well-used advisory,
networking, training and commercial services for their members.
Weaknesses
Low margins these are a significant factor in many of the industrys other problems, such as lack
of resources for training, and are now threatening capital investment.
Variable quality of management many print companies are well managed but there is poor
management in a substantial number of companies.
Lack of performance data this is a key driver of improved productivity but there is little
comparative data on important operational measures such as downtime or make ready times.
Poor marketing the printing industry is generally seen as being good at sales but poor at marketing.
Low levels of training the industry has a poor record on apprenticeships, numbers on accredited
courses, expenditure on training, qualification levels and take-up of NVQs.
Unrepresentative workforce this is predominantly white and male whereas there are growing
numbers of women and minorities amongst customers and potential skilled recruits.
Poor image making it difficult to recruit well qualified school or college leavers, to interest
investors, to impress customers or to have high visibility in Government and the media.
Fragmentation this reduces investors interest in the sector. The industry also lacks a common
voice in projecting itself to the outside world and key industry stakeholders.
Finishing an important means of adding value to print which is handicapped by low investment
and skill levels and less technical innovation than other areas of printing.
Opportunities
Growing print markets forecasts suggest that print has a positive future in many traditional
markets, as well as new ones.
Growing demand for print-related products and services printing accounts for 5-10% of the
typical costs of communication and there are opportunities to capture additional value.
Relatively low-cost producer (excluding currency issues) UK printing is fundamentally
competitive with other EU countries and should win business if sterling depreciates.
Opportunities to strengthen existing, and develop new, clusters building on a large user base,
and pockets of expertise in higher education and some areas of hardware and software.
English language the dominance of English as an international business and cultural language
could present major opportunities to UK printers.
Threats
Currency movements in segments subject to international competition significant orders have
been lost because of the strength of sterling against the euro.
Substitution printed documents and packaging are potentially vulnerable to substitution.
Skill shortages most people consulted believe that skills shortages are already handicapping the
industry and will become worse in future.
Lack of policy support policy makers often fail to recognise the industrys importance and do not
take it into account when making decisions.
High input costs there is evidence that UK printers are paying higher prices for their (mostly
imported) equipment and raw materials inputs than equivalents in continental Europe.
Anti-competitive practices there have been proven unfair practices by some large supermarkets.
Inadequate telecommunications this is constraining innovation and opportunities for cost
reduction and improved customer service.
Financing problems the industry has a poor image on the capital markets, which hampers its
access to capital.
Poor statistics these make it difficult to make good business decisions and, by underestimating
the industrys true size and growth potential, contribute to its poor image.
Excessive/inflexible regulation there is a strong view amongst print employers (but not the
GPMU) that the industry suffers from excessive and unnecessarily complex regulation.
Conclusions and actions

The common perception of printing as a traditional, and declining, manufacturing industry is
untrue. The market for print and printed packaging and related services will grow steadily in the
UK and Europe, and rapidly in developing and emerging economies. The industry is now
embracing many of the characteristics of the new economy and has a future firmly based in the
communications sector.
The report identifies seven key aims, and actions to achieve them (sub-divided into those which are
especially high priority and those which are essential).
Aim 1 improve margins through better performance and reduced costs
High priority actions
1.
Establish a Productivity Task Force.
2.
Strengthen industry benchmarking.
3.
Analyse international productivity differences.
4.
Improve the range and quality of industry statistics.
5.
Increase the industrys awareness of e-business.
6.
Increase the availability and reduce the costs of high bandwidth telecommunications.
7.
Conduct a follow-on competitiveness study on printed packaging.
Essential actions
8.
Respond to the EUs Working Time directive and examine the relationship between long
working hours and health and productivity.
9.
Strengthen industry financing.
10. End retailers anti-competitive practices.

11. Investigate if UK input costs are excessively high.
Aim 2 achieve a stable and competitive exchange rate
12. Join the euro at a competitive rate.
Aim 3 improve the industrys quality of management
13. Enhance the strategic abilities and innovativeness of industry managers.
14. Create industry-specific management development centres.
15. Create a centre of print centre of management excellence.
Aim 4 strengthen the industrys education and training infrastructure
16. Create a statutory framework to fund industry training.
17. More Government funding for print education.
18. Increase Government funding to the PGC NTO.
Essential actions
19. Raise awareness of revised NVQs.
20. Provide more information on printing career routes.
21. Raise awareness of Individual Learning Accounts.
22. Improve opportunities for women and minorities.
23. Raise awareness of printing careers in colleges and universities.
24. Increase the prevalence of professional, engineering-based, qualifications.
25. Support retraining of older workers.
Aim 5 create a more positive external image
26. Develop a common industry voice.
27. Rebrand the industry.
Aim 6 reduce environmental impacts through cost-effective initiatives
28. Reduce unwanted print through better targeting.
29. Reduce wastage in the book and magazine supply chains.
Essential actions
30. Further reduce process waste.
31. Publicise the environmental advantages of the industrys raw materials and technologies.
32. Implement the VOC directive across Europe.
33. Avoid further changes or increases in the Climate Change Levy.
Aim 7 strengthen the industrys technical competence and domestic supplier base
34. Raise awareness of the importance of print-related clusters.
Essential actions
35. Improve print finishing.
36. Establish a print business park.
37. Strengthen R&D and postgraduate education.
competitiveness in the UK printing industry introduction 9
Introduction
This report forms part of a series of studies on leading UK industries prepared on behalf of and
part-financed by the Department of Trade and Industry (DTI). Its aim is to inform policy-makers
and others about the printing industrys current position and future development, and to
recommend actions to improve its competitiveness. The report was prepared and project managed
by the British Printing Industries Federation (BPIF), under the guidance of a steering group with
representatives from the European Flexographic Technical Association (EFTA), the Graphical Paper
and Media Union (GPMU), Pira International, the Scottish Print Employers Federation (SPEF), the
Screen Printing Association (SPA) and three companies, Cantate (formerly Battley Brothers),
Chameleon Press and httprint (see appendix 1 for membership details). The DTI also participated as
an observer and source of advice on the content and format of competitiveness studies. Nearly two
hundred individuals in all sections of the industry and its customers were consulted and/or were
asked to comment on drafts to ensure that the publication is representative of a wide range of
opinion.
Coverage of the sector

As the following pages demonstrate, printing is a complex industry. It has many discrete segments
which use unique technologies and have a distinctive customer base. The heart of the industry is
the activities which are classified under heading 22.2 of the NACE classification scheme printing
and service activities related to printing. This has the major sub-divisions of printing of
newspapers, printing, bookbinding and finishing, composition and plate making and other
activities related to printing. As newspaper printing is organisationally separate, uses distinctive
technologies, is not usually subject to international competition, and has a unique and highly
focused customer base, this study does not give it detailed attention.2
The sub-category of printing can be further divided into:
Industrial printing of products such as magazines, catalogues, weekly newspapers and
newspaper supplements. These are usually in colour and are produced in large volume, generally
on web-fed gravure or litho presses, in plants and by companies which are much larger than the
industry norm (and, if in a trade association, are typically members of the British Printing
Industries Federation or Scottish Print Employers Federation).
General printing of other products which are generally printed in low-medium volumes on
sheet-fed litho presses, although some printers in this category are starting to acquire digital
printers (and again are also represented by the BPIF and SPEF).
Quick printing of short runs, usually with very fast turnarounds, usually done on copiers in
high street premises (with companies being represented by the British Association of Print and
Communications, BPIF and SPEF).
The specialist area of screen printing, whose companies are represented by the Screen Printing
Association.
To add to the complexity, most industrial and general printing companies, and a few screen
printers and quick printers, also have in-house facilities to undertake some of the tasks which fall
under the NACE headings of bookbinding and finishing, composition and plate making, and
other activities related to printing.
Printing also occurs in the packaging industry, either in the form of:
Labels to attach to glass, metal, rigid plastic and other containers.
Direct printing onto sheets of cartonboard, paper, plastics and composite materials (such as the
layered paper/metal/plastic material used for liquid packaging) which are subsequently converted
into the final package (usually on the users production line, following score marks made by
the printers).
Printed packaging can be further sub-divided into:

Corrugated packaging layers of straight cardboard reinforced by a middle layer of corrugated
board, typically converted into cardboard boxes for shipping goods in. Because the product is
bulky and relatively low value it is usually printed as part of an integrated production process at
a board manufacturing plant. Producers therefore tend to be larger than in other segments and
are usually members of the Corrugated Packaging Association.
Folding cartons smaller cardboard or composite containers used to package individual items
which typically use higher quality print on higher quality materials than corrugated. The sector
has companies of all sizes and is represented by the British Carton Association (a section of the
BPIF).
Flexible packaging sealed plastic bags and other non-rigid containers. The sector has distinctive
raw materials, conversion processes and customers. Producers are usually members of the Flexible
Packaging Association or the BPIF.
Sheet fed packaging a residual category of independent, non-integrated companies who convert
cardboard and paper into what are generally low-value products such as cardboard and rigid
boxes and paper sacks. The sector is represented by the National Packaging Council, an umbrella
body for several smaller trade associations.
The main social partner in all these areas of printing and printed packaging is the Graphical, Paper
and Media Union.
Industry statistics
Understanding competitiveness requires accurate statistics. Despite some amendments in response
to industry requests, there is a widespread feeling that UK government data about the industry
remains incomplete because of:
The large number of small companies in the industry, some of whom are not registered for VAT
and others of whom may be wrongly classified in tax returns.
Inappropriate definitions of industry segments.
The integration of printing with other business activities for example, provision of printing as
part of an overall facilities management contract or in-house printing by commercial and
educational bodies which creates inconsistency in how they are classified by companies making
returns.
The market and production data collected by industry associations and consultancies tends to be
more accurate, because it is collected in a less impersonal way and is often subject to verification.
But it is often gathered from members and collaborators, and so may be unrepresentative, and is
usually based on organisation-specific definitions and therefore not comparable.
The difficulty of making European comparisons is further exacerbated by national differences in:
The data which is required and is actually provided from very small companies (which
dominate the printing industry).
The level of black activities which are not accounted for in tax or regulatory returns.
Interpretation of how companies should be classified.
The extent of these difficulties is illustrated by different figures on the size of the French and UK
printing industries. Data from Intergraf, a European confederation of national trade associations,
states that the UK industry has twice the turnover of that of France. By contrast, data from a
respected consultancy, Trendwatch, suggest that the French industry has a 50% higher turnover
than the UK!
There are even fewer reliable statistics available for printed packaging than is the case with printing.
As a result the report has been unable to conduct as detailed an analysis. Data has been used
competitiveness in the UK printing industry introduction 11
wherever it is available, and areas where printed packaging differs from printing have been noted in
the text.
It is important that the statistical and information deficiencies with regard to printed packaging are
filled as the sector is of considerable economic importance. Given that it also has distinctive
suppliers and technologies (for example, increasing use of flexo presses rather than gravure or
litho), concentrated customers primarily large retailers and fast moving consumer goods (FMCG)
manufacturers for carton and flexible packaging and has been particularly badly hit by the
strength of sterling, it should be the subject of an independent competitiveness report.
More generally, these statistical problems not only make it difficult to assess the true
competitiveness of UK printing but, as our consultation shows, is also harming the industry.
Poor data distorts perceptions of its scale and performance and makes it difficult for financial
stakeholders to make well-informed investment decisions.
In the interim, we have used the best available statistics to support the analysis but those from
official sources need to be interpreted with caution.
Structure of the report

The report broadly follows the DTI recommended format for studies of this kind in which:
Section 1 describes the current market, employment, technology and other characteristics of
the sector.
Section 2 assesses its performance over the last decade, particularly vis--vis other sectors in the
UK and printing industries in other developed countries.
Section 3 provides foresight about potential trends in markets, technologies and other variables.
Section 4 discusses the strengths and weaknesses which have been identified during the
consultation process.
Section 5 provides conclusions.
Section 6 formulates intended actions for the industry.
Appendix 1 gives details of the project steering group.
Appendix 2 contains the quantitative tables for the report.
1 Industry characteristics
According to Intergraf, the UK printing industry is the second largest in Europe, behind
Germany (see tables 1 and 2). However, the figures for France in table 2 are misleadingly
low because small companies are not included.
Printing is one of the largest manufacturing industries in the UK in terms of employment
(see table 3). In addition, the relevant trade associations estimate that at least 50,000 people
work in the labels and carton, corrugated, flexible and sheet-fed packaging sector. Overall
the printing and printed packaging industries:
Are a vital supplier to publishing, one of Britains most successful industries
Purchase most of the output of the UK paper and board and ink industries
Are a major purchaser of computer hardware, peripherals and software
Are a leading user of high bandwidth telecommunications
Provide a substantial market for specialty chemicals and coatings.
The combined turnover of the paper, printing and publishing industry cluster is 29 billion,
representing 3.5% of GDP.
1.1 Demand
Even in an electronic age, printed media have many distinctive and highly valued
properties. Print has a long historical tradition which continues through widely accepted
principles of graphic design, typography and other parameters to influence perceptions of
how information is best communicated. It has a physicality that is lacking in electronic
media and which, in the eyes of many people, makes it more appealing. It also has an
emotional association with many of lifes pleasures as when people curl up with a good
book, eagerly await the next issue of a magazine, or leaf through a brochure or catalogue
when making a spending decision. And, through its link with literacy, print is the
foundation of a civilised society. More prosaically, print continues to have a great
psychological impact on buyers and other users, especially when it makes use of high
quality colour and innovative substrates. Printed documents are also portable, in a way
which electronic equivalents have not yet achieved, and do not require complex
technologies and the existence of a power supply to read them. Indeed, with careful storage,
they can be more permanent than electronic files which are prone to corruption and whose
format can quickly become obsolete.
These properties mean that there are many different markets for print, as table 4 indicates.
The primary purpose of packaging is to contain, store and easily transport goods. However,
most packaging has print on it either printed directly onto the packaging substrate or onto
a label because there is a need to convey information about the contents and, for
consumer and some other kinds of packaging, to persuade people to buy it.
The paper/board packaging market which is almost entirely directly printed had a value
of 3.3 billion in 1996 and rose from 41% to 46% of the total packaging market during the
previous decade (see table 5).
Some generic trends which are occurring in almost all markets for print and printed
packaging are:
Concentration and therefore increased buying power in customer industries, such as
publishing or retailing.
competitiveness in the UK printing industry industry characteristics 13
Closer integration of supply chains to improve customer response and reduce inventory.
This requires printers especially those producing printed packaging to co-ordinate
more closely with buyers and/or customers.
Less use of professional print buyers (who usually had some experience in the printing
industry) and greater integration of print with other procurement activities.
Demands for price reduction, due to cost pressures in customer industries and the high
visibility of printing as an overhead item.
Demands for faster turnaround times in order to meet the needs of customers own
rapidly changing markets, and because of the general time urgency of modern culture.
Demands for higher performance from printed products, through high quality colour,
new substrates, personalisation or other means.
Shorter runs, resulting from reduced stockpiling, tailoring of outputs to specific
individuals or groups of customers and other drivers.
The trend towards shorter runs is particularly significant because it increases the throughput
of print jobs. This requires printers to be much quicker at preparing presses for new work,
and to be more efficient at production management and administration.
Print is a means to an end, that of communicating information. This is also an important
function of packaging. The actual cost of a printed item typically forms only 5-10% of the
total cost of achieving this communication. The costs of preparing the material to be
printed, of holding stock and disposing of that which is waste (for example, 30-40% of
books and magazines produced are unsold and returned for pulping), and of administering
the entire chain are much greater. Printers have considerable opportunities to develop new
services to capture more of the value added (or destroyed) within the process, and many are
doing so. Customers are receptive to this because:
They may wish to outsource non-core activities, such as running in-house printing
activities or storing printing material for distribution on request.
They want complete solutions to their needs rather than simply a product leading direct
mail printers, for example, often collate and mail customer packs and maintain customer
databases.
Printers may have technical expertise in non-printing areas, for example, image archiving
and retrieval or database development and management.
1.2 Technology
Historically, printing has been a very distinctive craft-based manufacturing industry, whose
technologies make it qualitatively different from other sectors. Although it is now moving
towards computer integrated manufacturing in some respects, it remains an unusually
complex production process. Printing presses operate to very fine tolerances which require
either very high levels of skill or advanced automatic control. Reproducing complex graphic
designs can also be difficult, especially when customers may not appreciate some of the
difficulties of doing so. And, whilst modern colour management software and instruments
can ensure objective consistency of outputs and inputs (which has many benefits), colour
perception is subjective so that customers and staff will not always accept that this is the
case. Printing therefore requires a great deal of checking (through printing proofs of work in
progress) and communication across the supply chain. This chain has four main stages:
Content creation usually done by customers such as advertising agencies, editorial
departments etc. but printers may be involved in specialised areas or for inexperienced
customers.
Pre-press processing the component elements of the final job (primarily images and
text) so that they suitable for outputting and then assembling them into a composite
version for outputting.
Outputs creation and finishing of printed or electronic products for distribution.

Distribution delivery of products to final customers.
The falling cost of pre-press equipment and its increasing automation which is expected to
continue has allowed many medium-sized printers to establish pre-press departments, with
adverse effects on the repro houses who have specialised in this area. This increases the
skill requirements of smaller printers and means that repro houses must diversify into other
areas, such as digital asset management or specialist digital printing.
Fundamental change has been occurring in all of these four areas, driven by a move from
analogue to digital processes. Most content is now created on computers and transferred
and processed as electronic files. It only takes physical form when it is imaged onto a plate
or screen for impression-based printing (which transfers an inked image onto paper or other
substrates through physical pressure). New digital technologies (which transfer the image by
non-contact processes such as electrostatic attraction or inkjets) even eradicate the need to
make plates or screens.
Digital printing creates completely new possibilities for print such as:
Fully-personalised brochures and information packs, containing a selection of material of
direct interest to the recipient.
The end of out of print books as it becomes economic to print in small batches or even
single copies.
Individual or small versions of products such as greeting cards, labels and carton
packaging.
Frequent reprinting and therefore opportunities to amend small quantities of
promotional materials, business cards etc., rather than having to place a substantial
single order.
Digital printing only accounts for a minor share of output at present (see table 30).
Impression-based technologies are likely to remain the dominant technology for the
foreseeable future, and may grow in absolute usage even while their relative share declines.
In the very long-term, however, digital printing is expected to become as or more important
than impression-based methods (see section 3).
The move to digital workflows is independent of these changes in output technologies and
has numerous consequences, notably:
Rapid technological obsolescence of pre-press and other equipment, with a consequent
need to depreciate it over much shorter periods (typically three years) than the industry
has been used to.
Continuous expenditure on software upgrading.
Making file errors and problems a major source of cost, which can only be eliminated by
detailed checking, IT expertise and customer education.
A need for better process understanding and management amongst staff, as mistakes in
early stages can be hidden until output, when they are very expensive to correct.
High investment in networks and data storage in order to move data around quickly, and
archive it until required.
A need for colour management and other software to ensure that all items of equipment
are calibrated to each other.
Closer electronic integration of processes within printers, and between them and other
players in the supply chain, so that inputs can be transferred and work can be sent
backwards and forwards for proofing.
A reduction in environmental impacts because it avoids the need for film processing
chemicals and wastes.
Some other important technical trends within the industry are:

Faster make ready times and/or running speeds of presses, which means that the capacity
of a new machine is much greater sometimes double that of older ones of similar size.
Increased automation of press functions such as ink settings and plate changing.
Increased costs and substitution of inputs due to environmental regulations on the
emissions of volatile organic compounds (VOCs) which arise from inks, and also the
alcohol solutions and solvents which are used to treat and clean printing presses.
Use of higher performance substrates which can achieve better results e.g. better colour
reproduction, higher gloss and/or reduce their weight and thereby reduce costs.
A growing emphasis on finishing binding, collating and other procedures as a means
of adding value to printed products.
Concentration in suppliers, which are increasingly offering a wider range of equipment
and software on a global scale. This means that it is increasingly hard to gain competitive
advantage from technology alone, as this is available anywhere in the world.
The traditional, and still probably the most widely used, method of distribution is print and
distribute in which finished print is delivered on a van or lorry. The industry is therefore
highly dependent on a good road system, especially as paper is ordered on a just in time
basis and customers are demanding quicker turnarounds of their orders. However,
alternative methods of distribution are growing especially:
Fulfillment services, in which printers stock products such as brochures and mail them to
an individual order (in some cases from customers and in others internal staff).
Distribute and print, which replaces the shipping of printed products to multiple
locations with transmission of an electronic file for local outputting in smaller quantities.
Electronic distribution, in which content is published on electronic media with no
assumption that it will be printed.
One implication of this growing complexity of distribution is that printers have be to be
adept at repurposing files into different formats so that they can be outputted and
distributed in different ways.
Modern printing is heavily dependent on information technology (IT) and becoming more
so. The large size of image files means that even a relatively small printer will often handle
more data, and process it more quickly, than a medium sized building society. As a result
printing is a key market for several major IT vendors such as Adobe or Apple. The corollary
is that much of the industrys capital expenditure is devoted to IT hardware and software,
and to IT components embedded within other equipment. Much pre-press equipment, for
example, is now essentially specialised computers. Printing is also a major, and growing,
employer of staff with IT skills, particularly in networking and graphics software.
Good telecommunications links are also essential, with even the smallest commercial
printers usually having ISDN connections. The industry is also seeing a growing interest in
Internet usage and of e-commerce. Indeed, printing has had more dot coms albeit mainly
US based than almost any other manufacturing sector. Section 3 discusses the potential
impact of e-business on printing in more detail.
One important aspect of this growing reliance on IT and telecommunications is the
extension of the potential market for individual printers. It makes it easier for local printers
to seek regional or national markets, for UK printers to seek international markets and for
overseas printers to target UK work.
Technical complexity also results in substantial capital expenditure. It is not unknown, for
example, for even a small printer with 1-2 million of turnover to make a single item
equipment purchase with a value of 500,000 or more.
1.3 Industry suppliers

The UK printing industry is very dependent on external inputs. 59% of national paper
consumption is provided by imports. Most pre-press, production printing and finishing
equipment is also imported, primarily from Germany and Japan, and graphics software is
provided by American suppliers. The only areas of printing inputs with a substantial British
production base are inks and coatings and some specialised areas of pre-press equipment.
There is a substantial British development base for pre-press software, and management
information systems (MIS). The UK printing hardware, software and non-paper consumables
industry is represented by Picon.
There is also increasing consolidation amongst print suppliers, especially with regard to
paper and board.
Supplier R&D in the UK is relatively on a lesser scale than other leading economies such as
Germany, Scandinavia and the USA. Britain does have a world class research organisation in
Pira International, which undertakes primary and secondary research in printing
technologies, especially digital and flexo, as well as in packaging, paper and publishing. It
also provides technical consultancy, market intelligence, training and other services to an
international customer base
There is also some R&D conducted in the UK by the paper and inks and coating industry,
and in some specialist areas of pre-press equipment and software. A number of printing
companies undertake development work but this is probably only a small minority of the
sector. Only a small number of universities notably the Department of Colour Chemistry
at the University of Leeds and the Welsh Centre for Printing and Coating at the University
of Swansea are known to specialise in research on the printing and printed packaging
industries and their suppliers.
1.4 Industry organisations

The largest UK trade association is the British Printing Industries Federation (BPIF), which
has around a third of the industry in membership, by employment. Its Scottish equivalent is
the Scottish Print Employers Federation (SPEF). There are also two more specialised
associations the British Association of Print and Communications, representing quick
printers, and the Screen Printing Association. The three largest general printing companies,
Polestar, Quebecor and St. Ives, and their subsidiaries, are not generally in membership of
any trade association.
Printed packaging has three independent trade associations, representing the different
market segments (see introduction). They are the Corrugated Packaging Association, the
Flexible Packaging Association and the National Packaging Council. The European
Flexographic Technical Association is a technical support and training organisation for
companies using flexo presses (the dominant printing technology in all areas of printed
packaging and labels).
Two professional associations, the Institute of Printing and the Institute of Packaging
provide personal development support and training for individual members of their
industries. The BPIF-affiliated Young Managing Printers (YMP) organisation provides similar
support to young managers.
Both printing and printed packaging have one main union, the Graphical Paper and Media
Union (GPMU). This is the largest union of its kind in the world. In early 2001 it had
201,292 members and was recognised in approximately 7000 workplaces, the great majority
of both figures being in printing and printed packaging. The unions membership fell by
25% between 1991 and 1996, stabilised thereafter but fell by 3% during 2000.
1.5 Industry structure

As table 6 indicates, printing in every country is dominated by small-medium sized
enterprises, with most printers serving local markets. Newspaper, magazine and carton and
corrugated printers tend to be much larger than others.
Britain has an even higher percentage of output produced by small companies, and a
smaller average size of firm, than other developed countries. Nonetheless, the industry has
been consolidating. This is most advanced in printed packaging. In 2000 the top three
corrugated packaging companies shared 42% of the UK market, followed by some medium
sized players and then approximately 250 smaller producers.3 The top two carton producers
shared 32%, with the remainder having market shares of 4% or less. This contrasts with
much greater concentration in metals and glass packaging in the latter five producers have
85% of the UK market. A similar process has occurred in Europe as a whole, where the top
10 carton companies increased their market share from 17% to 26% between 1989 and
1998. Printing is less consolidated but several recent mergers and takeovers means that there
are now 20 UK printers with more than 500 employees.
Consolidation has also been driven by the entry to, and growth within the UK, of foreign
companies. This reflects a general trend towards more internationalisation of printing,
which has traditionally been organised on a national basis. The main reasons for this appear
to be:
Providing a global service to multinational customers.
Expanding product opportunities by tailoring them to local markets.
Taking advantage of lower cost production locations.
To date, the national and specialised nature of most printing markets means that achieving
economies of scale does not appear to be an important driver, but this may change with the
development of a more integrated European market.
In 2000 there were said to be 31 North American companies employing 14,000 people
(around 5% of the workforce) in printing and printed packaging in the UK and Ireland.4
There are no comparable figures for continental European companies operating in the UK
but they are likely to be smaller. There is also considerable investment by Irish companies.
One reason why North American companies are attracted to Britain is the lower stock
market ratings of UK companies. This means that any takeovers are immediately earnings
enhancing.
Foreign investment by British printers is growing but is on a smaller scale to inward
investment. Until recently, this was focused on printed packaging and the specialist area of
security printing, where De La Rue has a number of international operations. The two
largest UK headquartered general printers are now expanding internationally Polestar into
Europe and St. Ives into Europe and the US (where it is now the 27th largest printer). There is
also more foreign investment by niche printers, either in autonomous operations or, as in
academic journal printing and related services, outsourcing of some back office operations.
1.6 The labour market and industrial relations

UK printing employment has been in decline during the 1990s (see table 2). This mirrors
the situation in Germany, but contrasts with rising employment in the US a result of
the high rates of GDP growth over the last decade. The main cause of falling printing
employment in the UK is automation of printing processes, which has reduced the need
for semi-skilled and unskilled labour.
Employment in carton packaging has fallen at a similar rate, from an estimated 12,000 in
1994 to 11,000 in 1999. However, there have been considerable job losses during 2000 due
to loss of export markets.
One unusual aspect of UK printing employment is its relatively even national distribution
across the country. It is a substantial employer in all areas of the UK and is one of the most
important industries in several regions (see table 7). Yorkshire and Humberside, for example,
has one of Europes largest concentrations of web offset printing. Some regions have also
increased their printing employment during the 1990s for example, South West England
had a 6.4% increase in printing employment between 1991 and 1996. This compares
to an 8.3% decline in London. The Yorkshire and Humberside and South West regional
development agencies (RDAs) and the Welsh Development Agency have all defined printing
as a priority sector in their economic plans. Yorkshire Forward is also supporting a network
for local printers, PrintNET.
The industrys workforce is mainly involved in production, although the percentage of
office-based jobs is rising with time (see table 8). Around a third of the total jobs in the
industry are in finishing. This also has the highest proportion of women, in part because
it is the area with most part-time work.
The number of new entrants to the industry has been relatively low in recent years.
One reason for this is a surplus of older workers. A second is a decline in traditional entry
methods such as apprenticeships (which are generally over-subscribed when they are
offered). A third reason is difficulties in recruiting the non-traditional skills such as IT which
are increasingly required by the industry. As a result, the workforce has a high average age
42 in the case of GPMU members.
The industry has traditionally recruited from people leaving school at the minimum age.
It has been seen as one of the most skilled, well paid and respected occupations for such
leavers and attracted many of the most able candidates. The increase in the numbers of
young people staying on for further and higher education has now reduced this pool.
Although the industry has partially compensated by employing more staff with A levels and
Highers, and a small but growing number of graduates (especially in larger companies), the
change has caused difficulties. There are now fewer people with the ability and commitment
to develop advanced skill levels amongst early school leavers. Although it remains easy to
recruit unskilled staff, there is also greater competition both for school leavers with A level
and higher qualifications and for qualified staff, especially those with the IT and customer
service/marketing skills for which the industry has a growing need.
A 1999 survey found that 40% of responding companies had experienced labour shortages
at the time of the interview and/or during the previous six months.5 Another study of
companies in the Leeds/Bradford area found that vacancies were mainly related to the
introduction of new technology and machinery, changes in production processes and the
needs of new clients. 6 The main reasons for the difficulty in filling these was lack of skills
or relevant work experience amongst applicants.
The industry has a number of UK-wide or more geographically limited national agreements
for specific segments of printing and printed packaging, which are negotiated between the
GPMU and the various trade associations. These vary in their degree of coverage of the
segment, and in their terms and conditions. The largest agreement in terms of numbers
covered is that between the BPIF and GPMU. A number of larger companies such as Polestar
and St. Ives negotiate individual agreements. There is continuing debate amongst employers
about the value of a national agreement, with a minority strongly opposed. However, the
most recent member consultation by the BPIF found that most respondents felt that it was
meeting their needs.
Many peoples perceptions of printing industrial relations is that they are contentious and
strike prone. This is largely because of lingering memories of the highly publicised labour
disputes of the early 1980s, particularly those surrounding News Internationals move of its
newspaper printing to Wapping. However, the level of disputes has been very low during
the 1990s and is well below the national average (see table 9).
Table 10 Skill requirements for modern printing

Size
Current leading edge
Future
1-9
employees
Multi-tasking in pre-press:
scanning
typesetting
pagemaking
Imagesetting/platemaking/screenmaking
Convergence of pre-press skills

Imagesetting/platemaking/CTP/screenmaking
skills
Operating computerised conventional litho and
direct digital colour presses and screen presses
Finishing skills in-house and increasingly
digitised
10-49
employees
Multi-tasking:
scanning
typesetting
pagemaking
digital proofing
Imagesetting/platemaking/CTP/
screenmaking skills
Finishing skills (in-house and increasingly digitised)
Direct to screen projection

Finishing in-house/increasingly digitised
Data management/archiving
Greater knowledge of alternative media
Increased customer relations training/advising
customers
Knowledge of JIT printing/distribute to print
50-100
employees
Internet/ISDN/Intranet
Knowledge of alternative media
Customer relations training/advising customers
Press staff with clients
Direct to screen projection
Internet/ISDN/Intranet
Knowledge of alternative media
Dedicated customer service relations
Training/advising customers
Knowledge of JIT printing/distribute to print
Press staff with clients
Adapted from D. Smallbone, R. Baldock and S. Supri, New Technology and Related Skills Needs in the Printing and Publishing Industries, London:
Centre for Enterprise and Economic Development Research, Middlesex University, 1999.
Education and training

The lead body for the sectors education and training is the Print and Graphic Communication
National Training Organisation (PGC NTO), which was established in 1999. It is a tripartite
body with representation from employers, the GPMU, educationalists and individual
employers. The majority of its funding comes from the BPIF.
There have been several sub-regional skills initiatives involving collaboration between
the BPIF, GPMU, development and training agencies and educational bodies. These include
the Birmingham and West Midlands Printing Initiative, the Nottingham Print, Media and
Graphics Network, PrintNET in Yorkshire and Humberside, the Regional Accord for Change
(REACH) in Wessex and the Welsh Printing and Coating Forum. The latter has led to a
concerted initiative by the University of Swansea, Bridgend College, GPMU and trade
associations to develop NVQ and degree level distance learning schemes.
The amount, and nature, of skills required in printing is changing. The industry has
traditionally employed large numbers of skilled and semi-skilled staff to man printing
presses and undertake pre-press activities. Increased press automation and productivity is
reducing the requirement for unskilled and, to some degree, semi-skilled staff. Those who
remain generally require less skill in manual press adjustments and more in computer-based
process control. Shopfloor staff are also being given greater responsibility for managing
print processes.
The demand for skilled staff in the press, pre-press and finishing areas is more stable
and may even be increasing. However, in pre-press the balance has shifted from manual
techniques to detailed understanding of graphics software, design skills and knowledge
of the overall print process (so that files can be prepared without errors). The rapid pace
of technical change also requires regular retraining with a consequent need for staff with
mental flexibility and a good grounding in the basic principles of print production
processes. Table 10 provides a detailed breakdown of the new skill requirements for
printing, from a study conducted in collaboration with the PGC NTO.
One difficulty for all areas of production education and training is the rapid obsolescence
of equipment. Educational bodies find it difficult to fund the costs of regular replacement,
especially when other subject areas may be faster growing and cheaper to provide. Many
employers are then reluctant to devote time and money if staff are not training on the latest
equipment. A minority of colleges have managed to overcome this difficulty by winning
support from manufacturers, as with Leeds College of Technology and Heidelberg.
The industry also has a growing need for non-production skills such as customer service,
sales and marketing, IT support (e.g. for networks and file transfer) and database preparation
and management. Some of these skills which often cross the border between technical and
management roles are industry specific but many are generic in nature and can be
provided by non-print specific courses, for example, in management.
Only a small proportion of industry staff have higher level qualifications such as A levels or
degrees table 11 provides figures from a survey of print staff in Wessex. The PGC NTOs
2001 Workforce Survey reached similar conclusions. 7
As noted, there has also been a sharp fall in the traditional route into the industry, that
of school leavers taking up apprenticeships and/or attending full- or part-time courses in
further education. In 1999 this was estimated at only 800 people, compared to 14,000 in
Germany.8 The German figure is also increasing substantially. These numbers may not be
comparing like with like, as German courses tend to be broadly based with, for example,
a large multi-media component so that many people go into publishing and other
industries once qualified. Nonetheless, most experts believe that there is a substantial
difference in the numbers of young people receiving print industry education. As a result
of falling recruitment, the number of UK colleges offering printing courses has fallen
substantially to only twelve.
The PGC NTOs 2001 Workforce Survey of printing workplaces found that only a minority
of companies were undertaking training (see table 12).9 Of those which were, machine
printers were the category of staff most likely to be receiving training (in 37% of responding
companies) and sales staff the least likely (in only 17% of respondent companies).
Companies which were relatively sophisticated in terms of IT were more likely to be training
staff than others.
Much of the training which was provided was on-the-job. Whilst this is essential and
invaluable in printing, and will always remain important, it has many limitations such as
lack of contact with outside ideas or poor training methods when not supplemented by
off-the-job approaches. The main reason given for companies not training was lack of
need. A fifth of respondents also felt that accredited training made little difference to
staff performance.
There have also been several regional surveys by cross-industry initiatives involving the
BPIF, GPMU, PGC NTO and other bodies. A survey of printers in the West Midlands found
that 22% of respondents were spending nothing on training and smaller companies were
relying on training in larger print companies (who were more likely to plan their training
than other manufacturing employers). 10 An equivalent study in South Wales reached similar
conclusions, and stimulated the establishment of the Welsh Printing and Coating Forum to
help remedy the weaknesses. 11
The 2000 Workforce Survey also revealed a patchy take-up of qualification-based training
schemes and related initiatives. It found that only:
38% of sites were employing modern apprentices, national trainees or other young people
on a structured training scheme, with medium-large companies being much more likely
to do so than smaller ones (60% in sites with over 100 staff, and 46% amongst those
employing 25-99).
31% of sites were using NVQs or SVQs, but in these a mean proportion of 10% of staff
were utilising them.
13% of sites were using Investors in People.
However, almost all the sites which were involved in such schemes found them to be useful.
When asked where they would go to get advice on training and staff development, 49%
cited a trade association and only 23% an official business advice or training organisation
such as TECs or Business Links.
Shorter-term technical training in the industry is provided by:
Colleges particularly those which have alliances with manufacturers, as with the Digital
Academy and the National Printing Skills Centre.
Suppliers increasingly significant as they are able to offer access to the latest equipment.
Professional bodies notably the Institute of Printing and Institute of Packaging.
Trade associations training is an important activity for all associations and accounts for the
bulk of the expenditure for several. It is delivered both through courses and other means,
such as the interactive CD-ROM based package Sinapse developed by the BPIF and EFTA.
The GPMU this has a number of training centres and has played a leading role in
several local skill development initiatives. Its work parallels successful union-employer
training collaborations in Scandinavia.
Pira International the main UK consultancy and research centre for the industry.
Private training providers particularly significant for software training.
There are a number of undergraduate courses in graphic design but very few which focus on
printing or printed packaging. This is also the case at postgraduate level. Leeds and Swansea
Universities have developed, with EPSRC support, a new MSc in Colour Application Technology
which is partially targeted at the printing and printing supply industries. The ESPRC has also
supported an MSc in Packaging Technology at the Universities of Brunel and Loughborough.
Many print educators believe that e-learning can overcome some of the problems of cost,
distance and inflexibility associated with attending college, and provide access for people in
remote locations. However, the 2001 Workforce Survey found that printing staff have a
preference for more traditional forms of training.
Printing has been designated as a priority area for the new University for Industry (UFI) and
the PGC NTO has been appointed as the sector hub, with responsibility for co-ordinating
activity and encouraging development. Other e-learning initiatives (which could also be
accredited as UFI courses in future) include:
Academedia, a Swedish company which is marketing English versions of on-line courses
originally developed for the Scandinavian media industries.
A multimedia package developed by the Corrugated Packaging Association.

The Institute of Printing, in association with Leeds University.
LCP Direct, which is putting many of the London College of Printings outputs into
on-line form.
Leeds College of Technology.
Verteppe, a European initiative by the BPIF and the Graphical Association of Denmark
which is developing a platform for print-related environmental training which can also
be applied to other areas.
1.7 Management
The recent consolidation of the industry has created a number of large printing companies
which approximate to similar sized peers in other industries in their approach to management.
In general, however, printing has always been a very entrepreneurial sector, with most
companies being founded and run by people who have risen within its ranks. Managers
and supervisors too have tended to follow the same route. A 1995 survey comparing British
and American print managers found that far fewer British print managers had received
further education and only 18 per cent had a degree, compared to 46 per cent of the US
respondents.12 This partially reflects the higher percentage of people undertaking higher
education in America. The survey also found that over 40 per cent of British managers had
worked in the industry for more than 25 years and very few for less than 10 years. The
PGC NTO 2001 Workforce Survey found little change in the situation, with only 28% of
responding directors/managers having higher academic qualifications. No comparable
European statistics are available.
Entrepreneurialism and movement up the ranks remains an important, and in many
respects positive, aspect of printing management. Industry-specific opportunities for
development are also provided by management and supervisory courses offered by trade
associations, as well as the Young Managing Printers (YMP) organisation. This organises
events, company visits and other activities to assist the development of potential and junior
managers. There are also some local initiatives, such as the collaboration between the BPIF
and WESTEC in the Avon region. This identified leadership development for team leaders
(also known as shift leaders and number one printers) as a priority requirement for
companies.13
There has been little management-level recruitment into the industry until recently. This
is now increasing in larger companies, and for specialist posts such as finance, IT and
marketing where there is a shortage of expertise within the sector. There is also a small but
potentially significant trend of individuals with external management experience taking full
control, or equity stakes, in printing companies which they then manage.
This lack of qualifications may explain the industrys relative disinterest in business
planning. The 2001 PGC NTO Workforce Survey found that only 63% of respondents had
formal business plan and under half of companies with less than 10 employees and less
than half had any kind of human resources plan.
The previous 2000 Workforce Survey also found that only 52% of sites surveyed were operating
to recognised or customer-devised management standards.14 Of the sites where standards
were in use 72% operated to the ISO 9000 series and 13% to Investors in People. Larger sites
were more likely to operate to quality standards than smaller ones (80% of companies with
over 100 employees were doing so compared to 40% of those with under 10 employees).
Probably a majority of commercial printers have a computerised management information
system (MIS) to track jobs and provide decision support information such as time spent and
actions performed. However, many of these are relatively old and, in the view of suppliers
and consultants, few are being used to their full potential.
1.8 Finance
Some 95% of printers have debt which, on average, finances 33% of their assets.15 46% of the
2000 printers who filed accounts increased their debt during the year 2000. About 15% of those
increasing debt were making losses, suggesting that they were in serious financial difficulty.
Although no statistics are available, it is likely that, as with UK industry generally, British printers
rely more on short-term overdrafts than continental equivalents, which make greater use of
longer-term bank loans. There has also been a trend from purchasing printing presses to using
asset-based finance such as leasing or secured loans. The traditional longevity and correspondingly
high resale value of printing presses has meant that lenders have lower risks than in some other
areas of asset-based financing and so lend on relatively generous terms. Some believe that the
ready availability of asset-based finance has contributed to the industrys over-capacity. However,
the situation has changed in recent years because of a fall in the value of second-hand presses.
Very few printing companies are quoted on the London Stock Exchange and those which
are have low price/earnings ratios. The main reason for this is a perception that they are in
a low growth sector. This makes them vulnerable to takeover. Low valuations and perceived
insecurity often mean that private companies are reluctant to consider listing and are
therefore unattractive for commercial equity providers which require this as an exit strategy.
Low valuations also mean that few such providers take an interest in the sector.
1.9 Environment
The main environmental impacts of printing are:
Consumption of resources in the form of paper, cardboard and plastic substrates, energy,
water and consumables such as inks.
Disposal of paper wasted in production or surplus to requirements, which often amount
to 5-10% of the volume purchased for printing and up to 20% for carton packaging.
Emissions of volatile organic compounds (VOCs) from solvent-based inks, cleaning fluids
and other consumables.
Waste water resulting from processing film and cleaning machines.
Printed products are also a major component of national waste streams. This includes
products which are wasted within the supply chain as with the 30-40% of printed books
and magazines which are pulped and those which are disposed of by customers.
These impacts mean that the industry is directly subject to an increasing amount of
environmental regulations, notably:
The Packaging Waste Regulations which make all printers of more than 50 tons per annum
output responsible for recovering a proportion of their output at the end of its life.
The Climate Change Levy.
Emissions controls on volatile organic compounds (VOCs) which are driving a move to
water-based inks.
Landfill tax on paper wastes.
Printing and printed packaging are also indirectly affected by environmental regulations
on the paper industr y, especially those encouraging greater use of recovered fibre, and on
downstream customers. Finally, there are voluntary or semi-voluntary (i.e. undertaken to
avoid regulation) initiatives to reduce wastage within supply chains by industry customers
such as direct mail users and magazine and newspaper publishers.
As yet very few printers have adopted ISO 14001, the standard for environmental management
systems. The main reason appears to be a concern that the standard is bureaucratic and
expensive to implement and therefore beyond the reach of smaller printers.
2 Performance
The performance of the printing and printed packaging sectors can be assessed against three
criteria:
Its potential performance (if that can be ascertained).
The performance of other comparable UK industries.
The performance of other national printing industries.
Although the information needed to make these comparisons is patchy, the following
sections consider recent trends in turnover, foreign trade, prices and costs, profitability,
investment, capacity utilisation and productivity.
2.1 Output
Printing is a mature industry. Indeed, the sector is seen as the archetypal bellweather sector
which tracks and to some degree anticipates changes in macro economic trends. Value
added in printing (code 2221) has historically grown broadly in line with GDP, although
being disproportionately hit by recession and recovering strongly afterwards (see table 13).
The value of printed output is closely linked with advertising expenditure which directly or
indirectly funds around 50-60% of printed material but that the link is weakening as prints
relative share falls. This has declined from 52% of total spend in 1990 to 47% in 2000.
Other areas have been less buoyant with value added in carton packaging having fallen
annually since 1995.
Consumption of the printing industrys main raw material writing papers, most of which
are printed on rose by 26% between 1993 and 1999, or double the rate of printing
industry turnover (see table 14). This occurred despite a reduction in the weight of papers
used for most print jobs. Much of this increase is attributable to increased desktop printing
in offices and homes but it also reflects declining prices for many printed outputs.
Within these generic categories there are several segments whose sales have been growing by
at least 10% per annum over much of the last decade, notably:
Direct mail products and related services such as mailing to customers.
Self-adhesive labels (although recently hit by the high valuation of sterling).
Specialised labels, packaging and leaflets for pharmaceuticals and personal care products
(which has also grown less quickly in the late 1990s).
Conversely, some segments have been in absolute decline, including:
Areas of carton packaging which have been displaced by other materials and/or overseas
suppliers.
Some specialised business forms which have been superceded by electronic documents.
Colour book printing which has largely moved to overseas suppliers.
2.2 Foreign trade

Printing and services related to printing makes a positive contribution to the UK balance of
payments although exports have been falling and imports increasing in recent years (see
table 15). This is primarily related to the high value of sterling. Several large printers
estimate that they have lost in excess of 25% of value added from the movement of orders
abroad during the late 1990s.
competitiveness in the UK printing industry performance 25
Table 16 shows the composition of exports and exports. The areas with the most positive
trade balance are books and brochures (the main category of both imports and exports) and
newspapers and periodicals. 16 Two notable segments with a negative trade balance are
folding cartons and catalogues, which have been especially badly hit by sterling strength.
2.3 Costs
Printers costs have risen more quickly than the RPI in most years over the last decade
by 39.7% over the period 1990-1999 compared to 31.2% in the RPI (see table 17).
Printing and printed packaging has three main cost categories:
Paper, board and other substrates
Labour
Depreciation on equipment.
Other significant cost categories are:
Purchased services (e.g. pre-press for smaller printers)
Inks, solvents, plates and other consumables
Energy
Transport.
Paper and other substrates

Paper typically accounts for around 30% of the costs of a printed document. Board can be
an even higher percentage of packaging. Paper and board production is a highly cyclical
industry, which moves from periods of substantial over-supply and downward price
movements to acute shortages, with the opposite effect. Price fluctuations are further
increased for many customers because wood pulp is priced in dollars.
Table 18 demonstrates this volatility. Although prices in 1999 were similar and in some
cases below those of 1992 there was a major price hike in 1994-95. The softer prices of the
late 1990s have been related to over-capacity. A combination of reduced investment,
consolidation and managed temporary closures of mills has now reduced this and there was
a marked rise in prices in 1999-2000 in the region of 20%.
There is also a feeling in the industry that UK customers are the first in Europe to be subject
to price increases, and the last to receive the benefit of price falls. This, it is believed, means
that prices have not fallen by as much expected given the rise in the value of sterling. In
theory, the fact that pulp is priced in dollars should mean that euro zone printers have
experienced higher paper prices than those in the UK. However, much pulp is produced
from integrated mills making both this and paper. The paper is usually priced in local
currencies and is sometimes sold relatively cheaply because pulp is the main output, and
has risen in value because of euro depreciation.
Rising oil prices have also led to increases in the price of plastics, with consequent margin
pressures on flexible packaging companies.
Labour
Average earnings in printing have risen by slightly more than the national average over the
decade from 1990-99 (see table 19). However, they have slightly lagged the national average
between 1995 and 1999. Table 20 gives average earnings in BPIF/SPEF member companies
and demonstrates the importance of overtime in those earnings. This is an important
difference between the UK and most other European countries, where overtime levels tend
to be much lower and working hours less. This situation may change in 2003, when
Britains opt-out from the European Commissions Working Time Directive ends.
In general, UK print earnings are thought to be in the middle of the European league table.
However, lower social security costs compared to most other European Union members
mean that employers total labour costs per individual are near the bottom of the table.
Print earnings differ between regions, different sizes of company and different occupations
(see table 21). Origination has been the best paid occupation within the industry and
finishing the least although experts believe that this situation has changed over the last year.
No data is available for average management earnings in general but table 22 indicates both
average salaries for particular posts and, inter alia, the wide variety of posts which are to be
found in contemporary printing.
Energy
Although energy prices are only a small proportion of total print costs, they are a variable
cost which can have a significant impact on margins. The main energy source for printing
is electricity, whose price tends to be higher than in many competitor countries. The
industrys dependence on road transport also means that it is adversely influenced by the
high cost of diesel fuel in the UK.
The UK governments Climate Change Levy puts up the cost of electricity by around 10%
but the effects have been mitigated for large users who can join the BPIFs Rebate Scheme,
negotiated with the DETR.
The energy-intensity of paper and board making energy costs are around 10% of turnover
in the UK also means that energy prices have a significant influence on paper and board
prices. The competitiveness study of the paper industry has demonstrated that the industry
faces higher costs for electricity than most other European countries. Although it has
enjoyed low gas prices in the past, these are now at risk because of the new pipeline
between the UK and continental Europe which allow British producers to take advantage
of higher European prices.
2.4 Profitability
The industry faces powerful buyers and suppliers, has a product which can often be easily
substituted and has intense competition between printers, which is exacerbated by overcapacity. Hence, there has been continuous downward pressure on prices. This has been
exacerbated since 1996 and even more since 1998 by the appreciation of sterling against
euro currencies. Although only a proportion of the industry is directly effected by this
appreciation, it has knock-on effects because printers who have lost orders to foreign
suppliers then seek to fill their capacity with domestic work. For example, when gravure
printers lose business they will target large-format web offset markets. The losers in that
battle then go for medium-format work and so on. In this way the effect spreads out to
the entire industry.
Price and cost pressures mean that average printing profitability is low, and declining (see
tables 23 and 24). The median return on capital employed for respondents to the
BPIF/SPEFs business survey fell from 14.67% in 1999 to 8.63% in 2000, with a considerable
variation between individual sectors. This compares with a net rate of return (the equivalent
measure used by the Office of National Statistics) in 2000 of 5.3% for UK manufacturing as a
whole and 14.4% for UK services. As printing has elements of both manufacturing and
services, this suggests that it is relatively unprofitable. This is especially true when the
abnormally high level of risk created by a constant need for large, lumpy investments even
in relatively small printers is considered.
Packaging has been particularly badly hit. In carton packaging, for example, return on sales
fell from 6.0% in 1995 to only 2.8% in 1999. There are no comparable figures for other
European countries but anecdotal evidence suggests that the pressures on profitability are
more severe in the UK.
Table 25 summarises a study by the industry financial analysis agency Plimsoll. This
examined the 1997-2000 report and accounts of 1181 printers and divided them into four
roughly equal categories of:
Winners which have low borrowings as a percentage of sales, and relatively high
margins and sales growth
Chancers which have high sales growth but also high borrowings and average margins
Sleepers which have low borrowings but average margins and negative sales growth
Losers which have high borrowings, negative sales growth and are barely profitable.17
Plimsoll concludes that time is running out for losers, which are almost a quarter of all the
companies examined.
2.5 Capital investment

Despite falling margins and flat profitability, the industry has continued to invest in new
technology throughout the 1990s (although anecdotal evidence suggests that there may
now be a delayed response). Investment was around 6.5% of turnover in the mid 1990s, the
latest period for which figures are available (see table 26). This was around the European
average but at a similar level to German printers a surprising fact given the generally
higher levels of capital investment in German industry as a whole. One reason for this
relatively high investment is the speed of technical and market change, which renders most
pre-press and some production equipment obsolete within a few years. The industry culture
is also very equipment-focused.
2.6 Productivity
There are a number of different ways of measuring productivity and no single measure
captures all aspects. Measures come in several broad classes: output per head (or labour
productivity); output per unit of investment (capital productivity); and total factor
productivity. Table 24 includes a range of such different measures from BPIF/SPEF surveys.
This, and chart 4, show that labour productivity (value added per head) rose by almost 33%
between 1994-2000 over 5% a year.
The statistical problems identified in the introduction are illustrated by the fact that the
BPIF/SPEF figures show sales per head in printing increasing by 27.6% between 1992
and 1998. However, Government statistics for printing, publishing and paper suggest
that output per head rose by only 0.9% per head over the same period, well below the
manufacturing average of 11.3%. One explanation of the difference is that the government
statistics include very small copy shops and printers which would not be included in the
BPIF/SPEF figures.
Sales and added value per head have risen less markedly in carton printing (see table 27).
The main reason for this is probably downward pressure on prices, as is demonstrated by
the fact that volume of output per head rose by 11% between 1995 and 1999.
The 1997 Competitiveness white paper and other Government publications state that there is
a 30% productivity gap between the UK printing industry and that of northern Europe. The
few experts with cross-national experience agree that UK printing productivity is almost
certainly lower than in other north European countries but there is less agreement as to by
how much. A large printing company with international operations, for example, estimates
a 10% productivity gap between comparable sites. It attributes around half the gap to better
management in continental Europe and the remainder to logistics problems for example,
late delivery of paper causing slowdowns in production. On the other hand, a technical
consultancy which has compared manning levels for specific presses estimates that it may
be as high as 25-30%.
Packaging experts also believe that the acute pressures for lower prices from retailers and other
customers in the UK have resulted in comparable productivity to that of western Europe.
One problem is that there are considerable differences between sectors and types of
companies so that aggregate comparisons are potentially misleading. The Governments,
and indeed all industr y, statistics therefore need to be interpreted with caution.
There are a number of theoretical explanations for any productivity differences which do
exist, including:
Investment
Labour inflexibility
Skill levels
Management
Logistics
Low capacity utilisation
Lower prices in the UK as a result of intense competition (this reduces the turnover and
value added component of productivity ratios).
The following paragraphs discuss the evidence for each of these explanations.
There is no evidence that UK printers have invested less than most other European countries.
However, it may be that investment decisions have been poor so that productivity is less.
There is inevitably some disagreement between the GPMU and employers on the precise
degree of labour flexibility in the UK (see section 4). However, few of those consulted felt
that this is less than in other European countries, and many acknowledged that considerable
progress has been made towards it over the last decade. Hence, this does not appear to be a
major explanation of productivity differences.
Comparative studies of activities such as kitchen manufacture have found that skill
differences can be a major explanation of differences in productivity. Well-trained shopfloor
staff can help to improve capacity utilisation, maintain high product quality, reduce wastage
and extend the life of equipment through good process knowledge and appropriate actions.
Many experts consulted considered that other north European countries do have higher
average skill levels than the UK. They believe this is due to the larger number of entrants
undergoing formal training, the greater length and depth of that training and more
investment in retraining.
Many of those consulted felt that poor management is a major cause of productivity
differences. This can mean that the full potential of equipment and staff is not achieved.
The move to just in time deliveries to printers, and of printed products to customers, means
that transport delays can also be a significant source of down time in printers.
The UK has one of the lowest printing capacity utilisation rates of any developed economy
(see table 28). This may be exaggerated by variations in measurement methods and
reliability but most experts believe it to be a real difference. Over-capacity has also increased
in periodicals, where relatively stable long-term orders had previously given some
protection. Web offset capacity has increased by around 10% per annum in recent years,
compared to a 3-4% increase in sales.
There are strong downward pressures on utilisation in all countries because modern presses
have much higher capacities than the equivalents that they replace. The explanations as to
why over-capacity is especially prevalent in the UK appear to be:
Over-investment in new equipment by some companies, which is related to
unsophisticated investment decision-making.
Greater seasonal fluctuations in print orders (e.g. upsurge in retail promotional activities
in the lead up to Christmas), which means that capacity must be maintained without use
for much of the year.
A common tendency amongst UK printers to retain old equipment even after new
investments have been made in order to meet possible peaks in demand and/or specialist
customer requirements probably aided by the flexibility to use such equipment which is
provided by the acceptance of overtime.
High levels of vertical integration or long-term supply contracts in many European
countries, which make it much easier to match capacity with demand.18
The large amount of surplus production capacity in the UK creates a very competitive
marketplace and a consequent downward pressure on prices and value added. This has
undoubtedly been very beneficial for customers in recent years and there is no evidence that
it has affected quality or the industrys technical competence. However, it is a major reason
for the industrys low margins.
2.7 Obstacles to achieving business goals

Printers own views on barriers to good performance were collected in the PGC NTOs 2001
Workforce Survey (see table 29). This asked them about the main obstacle, and others, to
achieving their business goals. The answers demonstrate the industrys vicious circle of fierce
competition and an uncompetitive exchange rate driving down margins and profits, which
make it difficult to justify the costs of investment in human resources and technology, so
that in aggregate there is a limited pool of skills to draw upon.
3 Foresight
3.1 Print markets
Print turnover has traditionally been closely linked to GDP in most developed countries. In
the short term it responds to fluctuations in GDP being a leading indicator for downturns
and recovering strongly when growth resumes. In the long-term it tends to rise in line with
GDP growth. Current forecasts are that this will average 2.3% per annum over the period
2000-2010.19 However, there has been some decoupling in recent years, especially in the
USA, which often provides leading indicators for developments in the UK. It may be that
other factors are becoming relatively more important in determining total demand.
The composition of GDP also influences print demand. On balance, the shift to services has
been beneficial for the industry because many service sectors particularly financial services
and retailing tend to be large purchasers of promotional print.
Demographics
The domestic demographic influences on print demand include:
The total size of the UK population which is forecast to grow from 59.4 million in 2000
to 60.1 million in 2005.
The number of households, which is the target audience for much promotional material
these are forecast to grow in the UK from 24.2 million in 2000 to 25.9-26.8 million in 2010.
The percentage of young people, who tend to have high disposal incomes which attracts
advertisers. The number of those aged 20-35 is forecast to decline from 12.4 million in
2000 to 11.4 million in 2010.
The percentage of retired people, who tend to consume less but read more their
numbers are forecast to increase markedly over coming decades.
The extent to which people adopt e-lifestyles, for example, with high use of the Internet
or digital television for shopping or information gathering.20
The UK printing industry will also be increasingly influenced by demographic trends in
other countries, which shapes export markets and the degree of import competition. A
number of European Union states, especially Germany, will differ from the UK in having a
stable or declining population and a faster decline in the percentage of young people.
Substitution
Over recent decades prints share of the overall media market has been slowly declining as
media customers have preferred to use television or radio. Many forecasts suggest that this
will continue.
There is also a widespread perception that printing will be badly hit by growing use of the
Internet. This could potentially reduce demand by:
Providing on-line content via computer screens or other devices such as e-books and
thereby reducing sales of newspapers, magazines and books.
Replacing business forms, catalogues and promotional material with on-line ordering and
data gathering facilities.
Plans for e-Government could have a particularly serious effect on the business forms sector.
Printing census documentation, for example, is one of the largest and most valuable
contracts in the industr y.
competitiveness in the UK printing industry foresight 31
On the other hand, there are many examples of the Internet creating demand for print.
These include publication of many new magazine titles dealing with the topic or getting
potential customers to fill in on-line forms which are then used to generate a personalised,
printed, marketing pack for mailing to them. Many forecasts suggests that these positive
impacts may well be greater than any negative ones (see section 3.3).
Another form of substitution is print produced outside the UK replacing that which is
domestically produced (either through greater imports or loss of export markets), or vice
versa. As noted, the high valuation of sterling has meant that there has been a substantial
loss of export business and some increase in imports in recent years. This trend could
continue if valuations remain high. Companies which have sacrificed margin in order to
retain contracts will become unable or unwilling to do so, and improved communications
make it easier to source a wider range of print internationally. Conversely, substantial export
opportunities could be opened up if the value of sterling drops against the euro and, to a
lesser extent, the dollar.
There may also be more printing on desktop printers and copiers at the expense of
commercial print. This is partially driven by electronic distribution of documents, but also
because the falling cost, greater ease of use and rising quality of both office printers and
copiers, and graphics and publishing software, is making this option more feasible. Pira
International forecasts that this area of printing will grow from 5 to 10% of total printing
paper consumption over the next decade.21
Carton packaging is also threatened by packaging made of alternative materials, particularly
aluminium and plastic (which may be more easily formable in future).
The scale of substitution will be partly determined by the performance and cost of print and
board-based packaging. More printers will be offering facilities such as ultra-high quality
colour and personalisation which will increase its impact on readers. Most experts also
believe that automation, e-business and other new technology will reduce the costs of
production in many areas. However, some of those consulted fear that this could be offset
by rising salaries and wages in response to shortages of skilled staff and/or a repeat of the
mid 1990s hike in paper and board prices.
Regulation
Until recently regulation has primarily influenced print demand through requiring the
production of particular kinds of print products. Health and safety regulation has supported
growing markets in information materials and labels. And financial regulation, for example,
has been important in shaping demand for report and accounts and business forms. The
acceptance of electronic media such as e-tax returns or on-line report and accounts as
legally valid substitutes for traditional printed products could therefore have a serious
impact on some print markets.
The area of public policy with the greatest current impact on demand for print and
packaging is environmental regulation. Anecdotal evidence suggests that activities such as
landfill tax, wastewater disposal requirements and VOC emission controls are all influencing
printing costs, and therefore prices. An even more direct influence on printing demand is
measures to reduce the volume of printed products as a means of reducing waste. This is
now occurring for packaging. A concern expressed by many consulted for this study is that
similar measures might be enacted to reduce the amount of direct mail because so much is
currently thrown away by recipients who do not wish to receive it.
Regulation can also influence the relative size of market segments. This could work to the
advantage of paper and board packaging. Because it is made from potentially renewable
resources and can have high levels of recycling, it could be seen as having significant
environmental and therefore competitive advantages over other forms of packaging.
Of course, regulation does not exist in a vacuum but is ultimately dependent on public
opinion to drive its introduction and implementation. Current packaging regulations, for
example, have been driven by a widespread public perception that goods are over-packaged
(even though many experts would argue that they are paying insufficient regard to the
positive aspects of packaging such as protection from damage and security). Given the
generally disparaging perceptions of the public and politicians today towards direct mail
there is a danger that public opinion might drive further measures if there is no response
from the industry itself.
Innovation
A final influence on print demand is that of innovation. As noted, the development of
alternative media through products such as e-books will tend to diminish markets for print.
But there is also scope for increasing demand through innovation. New printing techniques
such as lenticular printing and/or innovative substrates such as new forms of plastic can be
used to increase the impact of print and to create new markets, such as printing on
ambient media, i.e. objects used in everyday life. Intelligent paper or board can also
contain a URL which can be detected by a special scanner and connect immediately to a
web site.
In printed packaging opportunities for innovation include:
Use and formulation of materials/coatings
Creative and engineering design
Information digitisation (e.g. electronic design facilities, digital printing)
Design, supply and distribution chains (e.g. single source packaging solutions)
Production control and automation (e.g. web control).22
Current forecasts
Two recent forecasts have suggested that the resultant of all these variables will be
continued growth of print markets roughly in line with GDP overall, but with significant
changes within particular print sectors.
The most relevant printing forecasts to the UK are the European-wide ones for 2000-2010 in
The Future of Print, produced by Pira International with part sponsorship from the Paper and
Related Industries Marketing Association (PRIMA).23 As chart 6 shows, Pira Internationals
most likely scenario for printing volumes anticipates that:
overall printing demand will grow at a similar or slightly higher rate than GDP.
promotional print such as direct mail will grow at 11% per annum for much of the
decade, although there will be some slowing towards its end as simple brochures and
other materials are increasingly outputted on office printers.
magazine printing will grow at 5% per annum, with shorter run lengths and some
migration of advertising to other media being compensated by an increase in titles.
books will also grow at 5% per annum, with any loss to electronic media offset by more
titles in print because of the ability to produce single or small numbers of copies on
digital printers.
newspapers will be static during the early years of the decade and then decline slowly.
business stationery and transactional print will decline by 1-2% per annum, primarily
because of a move to electronic media and/or outputting on home or office printers.
This view of the future is reinforced by Vision 21, published in late 2000, which gives 5-year
forecasts for American print markets.24 Although these are less directly relevant than the Pira
International forecasts US trends often cross the Atlantic and may therefore give some guide
to UK futures. Vision 21 forecasts that the total value of printing will increase in line with
GDP and has broadly similar forecasts to Pira International for the main print categories. It
also believes that the Internet will have a neutral or positive impact on printing because any
migration to electronic media will be offset by its stimulation of new kinds of demand. The
main difference between the Vision 21 and Pira International forecasts is that the former
anticipates low rates of growth in direct mail printing, which is a substantial component of
Pira Internationals promotional printing category and has been the fastest growing area of
UK printing in recent years. This partly reflects saturation in the US, where direct mail per
capita is much higher than in the Europe, but also ring some warning bells about the
segments long-term future in the UK.
There are no forecasts for paper and board packaging in the public domain but most of
those consulted also believe that this will increase at or above the rate of GDP. One issue is
whether a move to Internet-based shopping would result in plainer packaging because it no
longer has to have shelf impact. In fact, the US consultancy arm of a Finnish paper
producer has predicted that the Internet will raise the growth rates of containerboard by a
quarter.25 This is because of new product requirements, notably:
Increased demand for higher performance containerboard in order to provide greater
protection of goods in outward shipping, which are currently experiencing rates of return
due to damage, and to facilitate re-use for any returns.
Use of smoother, brighter substrates in order to allow higher quality printing the
package will play a greater role in communicating with customers as there is no
opportunity for using point of sale material.
A need to minimise volume, which is a key constraint in e-commerce delivery vehicles
this will require durable and foldable corrugated packaging and new solutions such as
small flute board.
Current forecasts therefore suggest that the printing industry can look forward to growing
markets, and that these will be stimulated rather than depressed by the Internet. However,
these forecasts make assumptions about trends in cost and technical capability which bear
further examination.
3.2 Technical trends

The key changes which are predicted by studies such as The Future of Print and Vision 21 for
the next 5-10 years are:
A greater proportion of printed output being sourced from digital and flexo presses
Automation of production processes
Development of e-business
More customised and diverse outputs
More sophisticated workflow management.
Changing production technologies

There are no UK-specific forecasts of print processes but table 30 provides one for printing
(excluding printed packaging) in Europe as a whole. The UK differs from most other
European countries in having a lower proportion of its output from gravure presses, and so
litho is proportionately more important. Litho is also likely to remain the dominant UK
technology for non-packaging printing over the next decade, although it will gradually lose
ground to digital.
Many experts expect that this trend will continue for several decades as digital print costs
fall and quality increases. Some expect a step change to occur in the next few years as more
robust presses are introduced and/or ink jet technologies are adopted. Digital prints growing
market share will be based on its cost-effectiveness for short runs, and the ability to change
the content of individual pages printed and thereby customise them to user needs.
Some experts also expect the other category to be more buoyant than forecast in table 30
because of growing uses of flexo presses. These have lower capital and operating costs than
litho and, as the quality of output improves, may move from its present focus on packaging
to take low-end litho applications such as simple labels. However, flexos domination in
most areas of printed packaging (with the exception of folding cartons) may itself be eroded
by the use of digital printing (see below). This is impeded at present by problems of speed,
quality, limited colours and an inability to print on certain substrates, but many experts
believe that these will be overcome.
Automation of production processes

Printing and associated activities such as finishing have traditionally required high levels
of skill in making mechanical adjustments to processes and having a good eye for print
details and quality. These human skills are now being automated. Modern presses can make
automatic adjustments to ink and other parameters to maintain colour quality during runs.
New standards are also enabling the entire production process to be integrated through
the electronic transfer of production specifications to machinery as jobs move through
the system.
Some manufacturers and experts see this trend as continuing to the point where print
processes will become almost completely automated, and analogous to other computer
integrated manufacturing processes. However, most printers believe that there will always
be a need for some degree of human intervention to take account of the vagaries of colour
perception and equipment functioning. In either case, there will be a growing demand for
shopfloor staff with the IT skills and process understanding to monitor production and deal
with any problems which occur (which will increasingly be as much software as hardware
based). But a move to fuller automation would mean a considerable reduction
in demand for many of the print skills which are currently taught on training courses.
Automation is also likely to be accompanied by the development of fully digital workflows,
with greater use of computer-to-plate (CTP) technologies.
E-business
Despite the current shake-out amongst all dot com companies many experts continue to
believe that printing will be one of the sectors most affected by this because:
It has a good IT infrastructure and high levels of IT literacy.
Printing usually involves a large number of small and recurring transactions which could
potentially be automated through e-business.
It has a complex production and administration chain which could potentially be
simplified by e-business.
As with other sectors, many printers have been suspicious. E-business has been closely
identified with open on-line auctions, which are seen as a means of increasing competition
and further destroying margins. Concerns about the quality and reliability and supply have
also deterred buyers and it seems that only a small percentage of industry turnover will
actually migrate to open auctions. The dot coms which look best fitted to survive are those
which are becoming applications service providers (ASP). The services provided will include:
Automated, and closed, procurement systems for print buyers, who will use it to solicit
tenders from, and act as an order processing and tracking platform for, an established
circle of suppliers (with occasional benchmarking of prices by placing tenders on the
open market).
On-line ordering systems for printers to use with their clients.
Workflow management services which act as a central portal and tracking facility for all
information and files associated with specific jobs.
There are no UK specific forecasts for e-commerce but the forecasting company CAP
Ventures has found that 17% of US print is currently procured via processes that are at least
partly Internet-enabled a figure which it expects to triple within two years, and grow to
80% by the year 2005.26 Most of the 200 print providers it interviewed for the study believed
that Internet-based workflow and process automation tools will improve their margins in
excess of 20%. The US study Vision 21 also concluded that one-fourth to one-third of
American printers sales and supply purchases will be facilitated online by 2003 and
approximately two-thirds to three-fourths by 2006.27
More customised and diverse outputs

Most print is used for promotional purposes. The more relevant the printed materials are to
the needs of customers, the more likely they are to respond to the promotion. Hence,
materials are increasingly being tailored to the needs of groups of customers, or even
individuals. This leads to shorter runs and a consequent need for printers to be more adept
in producing and managing large numbers of relatively small jobs. Tailoring print to
customer needs also needs skills in databases, which hold the relevant information about
them. In fact, printed promotional materials are also increasingly likely to be integrated
with other forms of marketing communication, such as web pages. This requires greater skill
in understanding and converting file formats so that images and text can be easily
repurposed for a variety of outputs.
New and improved materials and substrates

These can have an important influence on the efficiency and technologies of print
production and the nature and therefore the size and value of markets for printed
material.
In production some key trends include:
Development of lower cost and/or more quickly imaged heat- or light-sensitive materials
for plates.
Development of ink-jet digital printers which can be used for production printing and/or
production of high quality proofs.
For the printed output itself some key trends include:
High performance coated substrates which can support ultra-high quality colour print
Smart paper or packaging which provides additional functions, for example, use of
thermochromic ink dots to indicate that a product is at the correct temperature for
serving or storage.
More sophisticated workflow management

The need to monitor digital file preparation and processing, to handle a large number of
smaller jobs, and to have better materials planning so that jobs can be dealt with quickly all
place a premium on good management of the flow of work through print companies.
Increased adoption of more sophisticated management information systems (MIS) is
therefore likely. The new generations of MIS provide sophisticated systems for collecting
(often with direct electronic interfaces with equipment) and analysing workflow
information. They also have Internet functionality to allow customers to track the progress
of jobs via web browsers and to integrate with on-line ordering systems.
3.3 Other trends

A number of developments are driving further internationalisation of competition,
customers, suppliers, printers and unions:
Global competition is being increased by factors such as cheaper telecommunications,
new transport links, the European Single Market, creation of pan-European print
e-commerce platforms and more centralised buying by multinationals.
Customers especially for printed packaging are increasingly seeking to reduce costs
and protect brands through single or limited source supply deals within continents or
even globally.
Suppliers are already very international but this is increasing further as the increasing
costs of product development and support requires a bigger customer base.
Larger printers are responding to the globalisation of competition and customer
requirements by either becoming multinationals themselves, or developing partnerships
with printers in other countries.
A few printers are also selling specialised products and services internationally and/or
undertaking some activities in countries with low cost labour.
Unions are increasingly sharing experience with each other, and also co-ordinating on
the Works Councils which are required in the larger printers with operations in several
European countries. 28
Another important trend for printed packaging is that of efficient consumer response (ECR)
and category management strategies within supply chains. The aim of ECR is to reduce or
eliminate stocks and the associated costs of financing them and risks of wastage through
obsolescence and other causes by operating on the basis of demand pull. In an ECR
chain, production and distribution is triggered not by orders and forecasts but by electronic
point of sale (EPOS) data in retail outlets, which is shared with all chain members over
an Extranet. This also means that out of stock situations can be reduced. One implication
of this for packaging printers is that they will have to make faster deliveries in smaller
quantities. ECR chains may also result in the packaging and finishing of goods occurring
nearer to the market for example, adjacent to supermarkets regional distribution centres
rather than in a central factory. Both these trends will shorten run lengths and may
therefore increase opportunities for in-line digital printing. This could reduce markets for
conventional packaging printers or, alternatively, it could create opportunities for them to
diversify into packing and filling.
Digitally printed packaging will also be encouraged by a related trend, that of category
management. This aims to stimulate demand and raise margins by creating products
which are tailored to specific market segments and/or respond very quickly to changes
in consumer requirements. The packaging for these kinds of products will be produced only
in small quantities, which is well suited to digital printing.
3.4 Scenarios
All forecasts are beguiling, so it is important to remember that many things could change
in coming years. Hence, a scenario-based approach is perhaps a better way of peering into
tomorrow than portraying a single future. In very broad terms, table 31 distinguishes three
scenarios decline, maturity and rejuvenation based on different trends in markets,
financial health, employment and skills and technology. Historical trends and most industry
opinion suggests that the maturity scenario is the most likely to develop. However, a
minority of those consulted believe that the others are credible futures. It is important to
understand their features in order to reduce complacency about the industrys potential
downside risks, and to ensure that maturity does not become a self-fulfilling prophecy
which makes it easy to decry new ideas.
Table 31 Print scenarios

Decline
Maturity
Rejuvenation
Markets
More electronic information

distribution print increasingly
seen as old fashioned medium,
with additional problem of
variable product quality.
Strong pound and insular
management limits
international opportunities.
Some traditional print markets

hit by Internet, e-books and
digital TV but balanced by new
opportunities.The larger players
created by consolidation build
their international operations.
Many smaller printers develop
service-based specialisations
and/or more personalised work.
Printers increasingly offer a

communications service,
spanning printed and electronic
formats. Innovative products
e.g. smart paper and packaging
create new markets for printed
output. Competitive costs,
English language capability and
competitive currency support
strong internationalisation.
Financial
health
High levels of over-capacity

and on-line procurement
intensify competition and
margin pressures and create
consolidation and many
closures. The industry remains
unattractive to investors and
under-invests in skills and
technology, gradually
undermining morale and
quality.
Continuing over-capacity and

on-line procurement maintains
margin pressures but many
printers compensate by cutting
costs through automation and
consolidation. Growing gap
between European-scale
players and service-oriented
specialists, which can easily
raise finance, and the rest of
the industry.
Over-capacity declines towards

the European average due
to consolidation and more
specialisation. This slight
reduction in competition,
together with continuing cost
reductions from automation,
means that added value grows
more quickly than volume.
The industry becomes very
attractive to investors.
Technology
Financial strain and lack of

understanding and/or fear of
new technologies limits
investment and UK falls behind
other countries. E-business
adopted slowly under pressure
from buyers, who capture most
of the benefits. Equipment not
utilised fully because of skill
shortages.
Considerable investment in
new technology but smaller
players handicapped by lack
of skills and standardisation.
E-business partly fulfills
expectations but confined
to medium-large companies.
Process automation continues
at steady pace, especially in
larger companies. Finishing
remains a bottleneck.
E-business fulfills expectations

and widely used to reduce
administrative costs and improve
communications, with savings
shared between customers
and printers. Common standards
reduce file problems and
underpin process automation.
Digital printing grows rapidly.
Considerable innovation in
finishing technologies.
Summary of SWOT analysis*

Strengths
Weaknesses
Satisfied customers
Technical competence
High levels of investment
Entrepreneurialism
Good industrial relations
Good business support
Low margins
Variable quality of management
Lack of performance data
Poor marketing
Low levels of training
Unrepresentative workforce
Poor image
Fragmentation
Opportunities
Threats
Growing print markets

Growing demand for print-related
services
Relatively low-cost producer (excluding
currency changes)
Develop new clusters
English language
Currency movements
Substitution
Skills shortages
Lack of policy support
High input costs
Anti-competitive practices
Inadequate telecommunications
Financing problems
Poor statistics
Excessive/inflexible regulation
* Each of the headings is discussed in the following pages.
4 SWOT analysis
It is hard to make generalisations for an industry which is as segmented by markets, size and
technology as printing. Nonetheless, the preceding analysis, and a high level of agreement
amongst many of the people consulted, suggests that there are some generic strengths and
weaknesses and opportunities and threats.
4.1 Strengths
Satisfied customers
Customers always want more from their suppliers but most of those consulted were
generally satisfied with the quality and service of UK print and printed packaging, both in
absolute terms and vis-a-vis international competitors. Price has been more of an issue for
those who have been able to source in Europe and therefore take advantage of the low value
of the euro. Most of those who have shifted to continental European suppliers have done so
with reluctance and prefer local suppliers if these are price competitive. However, some
customers believe that the performance of UK suppliers is sometimes less good in specific
areas such as customer service and finishing than elsewhere in northern Europe. A BPIF
study tour of US printers also concluded that, whilst there was little difference in
technology between the countries, customer service levels were better in America.
Technical competence
The industry has a good record of responding to technical change. Indeed, there is probably
no other UK industry which has successfully accomplished so many fundamental changes
in basic technologies in recent decades. This includes the replacement of letterpress with
litho printing during the 1970s, the introduction of photocomposition the 1980s and
electronic page make-up in the 1990s.
Most customers and experts consulted believe that a large number of UK printers have
similarly modern equipment, and technical skills, as international competitors. In some
areas for example, flexo printing and screen printing they are seen as being amongst the
technical leaders. The UK is said to have a higher adoption of digital colour than in North
America and most other European countries. And it is seen as relatively advanced in
applications of IT to printing, although still lagging the USA.
Packaging customers also appreciate the technical knowledge of their suppliers with regard
to packaging design.
High investment
Compared to most other UK sectors and many of its European equivalents printing has
had a high level of capital investment.
Entrepreneurialism
This is positive in that it makes the average print company very flexible in responding to
customer needs. It also fosters strong personal relationships with customers and staff. And
the personal commitment and drive of owner-managers is a major cause of the industrys
resilience in the face of margin and profitability pressures.
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Good industrial relations

Printing has a low level of industrial disputes. It is also one of the few UK industries to
retain national pay agreements covering pay, hours and holidays and other conditions.
The main print industry union, the GPMU, and main employers federations believe that
this provides stability to the industry.
The GPMU has repositioned itself over the last decade as supportive of the industrys
modernisation. Most print employers acknowledge the importance and value of this shift
although some still believe that there can be inflexibility and intransigence at local level.
Although acknowledging that recent agreements have encouraged more multi-skilling and
labour flexibility which the GPMU believes at least equals any such moves in other
European countries many employers would also like to see further moves in future to
address local obstacles. The union believes that with some notable exceptions the main
obstacle to further progress is poor management at many printers, who find it difficult to
form partnerships and/or share information with the workforce. It instances the small
number of partnership agreements which have been signed to date, even though these
appear to have provided benefits for both employers and workforce.
Good business support

In addition to their representative and lobbying role, the industrys trade associations
provide a variety of advisory, training and commercial services for their members, as well as
fora for networking and exchange of best practice. Membership surveys show that these are
extensively used, and highly valued. It is therefore important that the new Small Business
Service complements rather than duplicates these services. A pilot project currently being
developed by the BPIF and SBS demonstrates that this can be achieved.
4.2 Weaknesses
Low margins
These are both a cause and consequence of other weaknesses. They are an important reason
for low investment in business development and human resources and are now threatening
investment. Although low margins have been a constant in recent years there is a growing
feeling that they cannot be accepted for much longer. There are signs that much of the
printing industry may follow that of printed packaging, which has been badly hit by largescale closures and forced consolidation. The result is an erosion of the UK supplier base
which is now beginning to worry some of the industrys customers.
Variable quality of management

There are a number of print companies which are perceived as being very well managed, as
evidenced by their winning of mainstream business awards and accolades. However, many
of those consulted (including managers) see poor management in a long tail of companies
as one of the industrys greatest weaknesses. This has also been the conclusion of other
studies.29
The key influence is the large number of small and/or owner-managed companies in the
sector. While both these attributes can be beneficial, they do make it difficult to develop
management strength in depth or to develop and implement sustained business strategies.
The strongly individualistic nature of management in many small-medium sized printers
also means that there is resistance to, and lack of understanding of, the benefits of
collaboration and partnership with other companies, such as non-competing printers or
suppliers. In other industries this is seen as one of the best means for smaller companies to
offset some of the disadvantages of size.
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Another important factor in areas of the industry with low margins is an inability to offer
comparable financial packages and, perhaps more importantly, career prospects compared to
other sectors.
These problems are compounded by the pattern of internal promotion within the industry.
This means that managers have a deep fund of knowledge of the printing business and its
technologies, and that there are many opportunities for shopfloor workers to work their way
up. However, it can mean that managers have little knowledge of developments outside the
industry, or even within other print companies.
The industrys initiatives, such as courses by trade associations and the Young Managing
Printers (YMP) programme, are making a contribution but not on a sufficient scale to
remedy the weakness.
Two obvious responses are to recruit more managers from outside printing and/or to
encourage actual or potential managers to study for mainstream management qualifications
such as an MBA. Both of these are now occurring in the larger print companies and some
individuals are taking management courses on their own initiative, sometimes with and
sometimes without the blessing of their companies. Not everyone agrees that management
qualifications are appropriate to a people industry such as printing. But the UK is
increasingly out of line with other countries which are developing new institutions which
focus partially or exclusively on full-time and vocational print management training. This
includes the Rochester Institute of Technology in the US, the Heidelberg Academy in
Germany and the USA (where it offers an MBA in association with a university) and the
University of Turku in Scandinavia.
A recent PGC NTO project has also shown that there is scope to use innovative
management development approaches within the sector, either as a complement to
established schemes such as Investors in People or as an alternative for companies which do
not wish to adopt them.30
Lack of performance data

Several trade associations provide good information about productivity, profitability and wages
and salaries within their members (as demonstrated by the data within this report). However,
there is a lack of similar information about detailed operational performance measures such as
downtime or make ready times. Often the information exists within the company but is not
being used. Anecdotal evidence suggests that there is wide range of performance between
individual companies but there is also a lack of detailed benchmarking data, and accompanying
discussion, which would allow companies to formulate the measures they should be using, and
to compare their performance with others. Several Pira International client studies, and a recent
BPIF pilot project in the web offset sector, have demonstrated that benchmarking schemes can
be feasible and successful within the sector and could be extended to other areas.
Poor marketing
The printing industry is generally seen as being good at sales but poor at marketing. One reason
for this include a lack of understanding of what marketing is. Another is a frequent short-term
orientation which makes printers unwilling to devote time to understanding market conditions
and trends. And there are often poor relationships with the ultimate customers of print output
(due to lack of understanding and difficulties in getting beyond print buyers).
The marketing of print is also impeded by the industrys poor image which, for example,
makes it difficult for printers to suggest that they have expertise beyond putting ink on paper.
Low levels of training

All SMEs find it difficult to invest in training. Even taking this into account, the industry
has a poor record by any measure apprenticeships, numbers in print-related educational
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courses, expenditure on training, qualification levels and take-up of NVQs. The main
reasons for this appear to be a lack of awareness of its importance, resource and time
constraints and a justified fear that qualified staff will be poached by other companies.
The BPIF and GPMU responded to this concern in 2000 by launching a voluntary Training Skills
Charter in 2000. However, only a small number of employers have signed up to the Charter.
Other voluntary approaches have been suggested. Trade associations or other groups of
employers could:
Agree when recruiting to pay a transfer fee to the old employer to reflect any training
received (a scheme of this kind is currently being piloted in the gas installing industry).
Insert a clause in the contracts of new employees requiring training expenditures to be
repaid if they leave within a specified time period after receiving it.
However, the first of these might be difficult to enforce whilst the second is unlikely to be
popular with staff.
The alternative to voluntary initiatives is a statutory scheme requiring contributions from
all employers in the entire industry or sections of it. Although this may pose administrative
problems in an industry with so many SMEs and need not necessarily apply to all areas of
the industry (for example, newspapers might be excluded) schemes of this kind do exist in
the construction and engineering construction industries. The funding raised which would
be most obviously administered by the PGC NTO could then be used to either support
strategic training initiatives or to provide grants to companies for staff to attend approved
courses. The Government has indicated that it is willing to introduce such schemes which
would not require new legislation if social partners agree that is desirable. The issue is
controversial for employers but it would be desirable to resolve it sooner rather than later, so
that the level of training can be increased if it is endorsed or other alternatives can be
explored if it is not. (The GPMU and some others consulted believe that there are no real
alternatives except a decline in the industrys skill base and therefore its prosperity).
The NVQ system has also made a lesser contribution to increasing training than was
originally hoped. Many companies are utilising, and benefiting from, NVQs. But there has
been widespread criticism, focused on difficulties in understanding them for both employers
and employees, excessive bureaucracy in gaining accreditation, and an over-emphasis on the
detailed understanding of machines rather than understanding overall print processes. The
PGC NTO has responded to these criticisms by overhauling and simplifying the
requirements and it is important that there is a substantial publicity campaign to inform the
industry about the changes. Complementary initiatives may also be desirable to stimulate
more people to invest in their personal and vocational development.
There is also a widespread feeling that, although it has made considerable progress in a
short period of time, the PGC NTO lacks sufficient resources and independence to do its job
effectively and to properly address the issues identified in previous paragraphs.
Unrepresentative workforce
Printing has a predominantly white male workforce, with significant under-representation
of women and ethnic minorities. This is a commercial as well as an equal opportunity issue.
One reason for this is the growing numbers of women amongst print industry customers.
Many routine purchases of print are now made by administrative and secretarial staff. The
percentage of women working as managers, buyer and other key roles in the media, retailing
and other important print markets is also increasing. One reason for this is the increasing
proportion of female university graduates, and the marked improvements in girls results in
school exams. This development also means that, if printers are looking to employ more
staff with non-traditional skills such as IT or marketing which are in great demand, a
growing proportion of the talent pool will be female and/or from ethnic minorities.
competitiveness in the UK printing industry SWOT analysis 43
Poor image
Outsiders generally see printing as a dirty, unexciting, industry. This image makes it difficult
to recruit school leavers, interest investors, impress customers or to appear on the radar
screens of Government and the media. Organisations such as the PGC NTO, colleges and
GPMU branches, as well as many print companies, are beginning to address this by working
with schools and providing information. A growing number of print managers are also
starting to form relationships with local schools to the same end. However, this work is
small-scale and probably insufficient to have a major impact. It is also focused on only one
of the constituencies whose impressions need to change if they are to have an accurate
impression of the modern printing industry.
Fragmentation
There are few British equivalents of the very large, multinational, North American printers
such as Donnelly and Quebecor World, or the integrated print and publishing companies of
continental Europe such as Bertelsmann. While this is partly a function of different market
sizes, City analysts believe that it is a major reason for the limited interest of UK capital
markets in the sector. They also believe that opportunities are arising to develop such
companies, by taking advantage of the single European market, by investing in the US and
by further consolidation, which they see as inevitable. Print companies tend to grow
through acquisition of other printers (and their customer relationships) rather than organic
growth. They believe that this consolidation will reduce the number of medium-sized
printers, who will be too small to achieve the economies of scale of larger competitors but
too large for many of the available niches.
Some observers also believe that the industry is hampered by the lack of single voice in its
relationships with Government and other stakeholders. There are many trade associations,
although none contain a majority of the industry. The three largest printing companies are
also out of membership. Nor are there many opportunities to bring in the views of
customers or suppliers to industry discussions. Some possible mechanisms to achieve this
common voice might be:
More informal collaboration between the key players on specific issues.
Further development of existing informal initiatives such as the all-party Parliamentary
group on the printing industry.
A stronger co-ordinating and representative role for the PGC NTO (although there is a
danger in this body taking on too wide a remit).
Formation of a Print Industry Council, analogous to the Confederation of Paper Industries
which was established to provide a common voice and co-ordinating mechanism for
paper industry trade associations in 1999.
Finishing
Finishing has tended to be the poor relation of printing, with lower pay rates and skill levels
and proportionately less investment by printers and technical innovation by suppliers. The
PGC NTOs 2001 Workforce Survey found that 49% of companies undertaking finishing had
no staff with any kind of formal qualification in the field. Unsurprisingly, only 54% of
responding companies felt that their finishing staff were fully proficient. This is important
because finishing is becoming increasingly important as a potential bottleneck for the faster
turnarounds demanded by customers. There are also growing opportunities to add value by
making products more complex and impressive in order to increase response rates or to
increase sales for example, by selectively binding outputs for individual customers.
However, this is likely to require faster and more automated equipment, use of new
adhesives and other materials and greater use of materials handling equipment.
4.3 Opportunities
Growing print markets
As section 3 demonstrated, forecasts suggest that print has a positive future in many
traditional markets, as well as new ones.
Growing demand for print-related products and services

Printing is only one part of a complex communications process and there are many
opportunities to undertake some of the activities, and capture some of the value, associated
with other parts of the process. Printers technical skills also provide them with increasing
opportunities to diversify, for example, into other areas of media production or facilities
management services. There are also many opportunities for product and service innovation
in the printed packaging industry.
Relatively low-cost producer (excluding currency issues)

Growing competition from emerging and developing countries means that the UK will
never be a low-cost producer of printing or printed packaging. However, although the UK
appears to lag other northern European countries in printing productivity, many customers
and other experts consulted believe that it has lower labour costs and is at least comparable
in terms of quality and service. A minority of those consulted disagree with this view. One
reason may be that competitiveness varies between industry segments and types of
company. The overall balance of opinion is that the combination of relatively low labour
costs within northern Europe, and the advantages of a local supply base, could allow UK
producers to win back some of the business lost to imports in recent years, and perhaps
increase exports, if the value of sterling falls against the euro.
Many experts also believe that UK printing can further reduce its administrative costs, both
absolutely and in relation to European competitors, by making greater use of e-business.
The repro industry also has very low costs compared to most other European countries.
Develop new clusters

There is a relatively low level of print-related R&D in the UK, which is due to the high
dependence on imported equipment and the small number of large companies. The
competitiveness report on the paper industry also recommended the need for more
domestic R&D in that sector.31
Innovation theory would suggest that this lack of R&D is a handicap, because it prevents
the dynamic interplay of multiple organisations which is so important in successful clusters
such as Silicon Valley. The best example of print clustering is in west central Germany. This
hosts leading suppliers such as Heidelberg, KBA and MAN Roland, a second tier of specialist
suppliers, for example, of finishing equipment, influential customers such as the large
German printers, and educational and research centres with print specialisations. Experts
with knowledge of the German industry believe that this clustering is a significant reason
for the strength of both the countrys print supply industries and the printing sector as a
whole for example, by manufacturers offering training access and support to printers.
By contrast, the recent DTI-sponsored analysis of UK clusters distinguished only one printrelated cluster, in Eastern England. However, this is somewhat artificial in that it also
included paper equipment and publishing employment. In fact, if there are any areas of the
UK which possess genuine printing clusters they are more likely to be South West England,
Wales, and Yorkshire and Humberside, which have strong print industries, some industry
suppliers and well established educational and technical networks. The UK also has a strong
position in printers serving the financial services sector.
The size of the UK printing and printed packaging industry means that there is a substantial
user base to support the development of more dynamic clusters. The areas of weakness are
around the limited domestic supply base, limited domestic R&D (both commercial and
publicly funded) and broader management and skill weaknesses. It would be difficult
(although, some experts believe, not impossible) for the UK to develop stronger clusters
around traditional printing technologies. However, the pace of change in the industry
means that there are opportunities for non-traditional suppliers to enter and grow. The
Israel-based Indigo company, for example, has grown from a start-up to become a leading
producer of digital printers. The trend in pre-press equipment is also towards vendors
integrating components from specialist suppliers rather than manufacture themselves. There
may therefore be an opportunity to develop new clusters around a combination of inward
investment, Government pump priming of indigenous R&D and business development and
more resources for higher education bodies which focus on the sectors needs. These could
build, for example, on UK technical expertise in some specific areas of pre-press software,
MIS systems, flexo printing, on-line printing, packaging coatings and digital colour printing.
English language
The dominance of English as an international business and cultural language could present
major opportunities to UK printers. Native English language abilities and possible add-on
services such as translation are potentially attractive to customers because they minimise
the risk of linguistic mistakes in documents and packaging.
4.4 Threats
Currency movements
These have had a considerable impact on the industry. In the relatively small section which
is subject to international competition primarily packaging, books and large catalogues
and directories there is evidence that significant orders have been lost because of the
strength of sterling against the Euro. Many printers, especially those outside South East
England have also lost business because of the adverse effect of strong sterling on
manufacturing industry. The longer that sterling remains over-valued, the more serious the
effects on the industry will be. Currency instability through their effects on input prices
and the level of competition also have serious effects on the sectors ability to plan for the
future.
Substitution
As discussed in section 3, both printed documents and carton packages are vulnerable to
substitution. Whether this occurs depends upon a variety of factors such as costs, marketing
and developments in customer markets.
Even without currency movements, the areas of print and printed packaging which are
subject to international competition will come under pressure from lower cost producers in
Eastern Europe, the Middle East and South East Asia, many of whom have ambitious
expansion plans.
As discussed in section 3, although the Internet is expected to be broadly positive for print
demand it may substitute for printed products in some segments such as business forms.
Skill shortages
Most people consulted believe that skills shortages are already handicapping the industry
and will become worse in future. It is hard to identify any direct effects of this shortage at
present. The main impact is probably lower levels of quality than might otherwise have
been achieved, and perhaps a lack of confidence in many printers in taking on new areas of
business. However, there is a fear that the shortages could become more severe and serious
as the requirement for skills increases with technical change and more demanding
customers, but supply diminishes because of the large-scale retirement of many qualified
staff, the reduction in the number of printing courses and students and growing difficulties
in recruitment because of the industrys poor image.
One important question in long-term responses to these changing skill needs is the balance
between training people specifically for print, or recruiting more people with general
qualifications and experience and providing them with a print orientation. However, the
latter will be difficult until printing has a more positive public image.
Lack of policy support

Government support is vital in helping the industry to overcome the other threats and
weaknesses, and to capitalise on its strengths and opportunities. The rationale for this is not
propping up a declining manufacturing industry, but to encourage a dynamic sector. In
addition to its general economic importance, this can be a leading vehicle in bringing new
economy skills and expertise into the English regions, and Northern Ireland, Scotland and
Wales. The threat is that policy makers fail to recognise the industrys importance and do
not take its account when making decisions.
High input costs

There is evidence that UK printers are paying higher prices for their (mostly imported)
equipment and raw materials inputs than equivalents in continental Europe. (Prices have
often been maintained or come down in sterling terms, but risen on euro valuations). Some
observers also believe that printing sectors in countries which do produce these inputs have
a competitive advantage through easier access to advanced equipment and know-how.
Energy costs are important for printers, both directly and because of the high embedded energy
content of paper and board. Increases in energy prices would therefore have serious effects.
Printing is also dependent on road transport to deliver its physical inputs and outputs,
many of which are shipped on a just in time basis. It is therefore strongly influenced by
road congestion and any measures to influence it, for example, road pricing.
Anti-competitive practices
The Competition Commission ruled in 2000 that the buying power of the large
supermarkets was such that it affected the competitiveness of some suppliers and distorted
the competitiveness of supply markets. One of the practices criticised was the third party
rebate, which required suppliers to pay up to 10% of the value of contracts with own-brand
manufacturers back to retailers. Printed packaging has been particularly badly hit by this
and other anti-competitive practices. The Office of Fair Trading is now drawing up a legally
binding Code of Practice to govern relationships between supermarkets and their suppliers.
It is vital that this prevents further unfair buyer pressure in future.
Some of those consulted also feel that there is anti-competitive behaviour by pulp, paper
and board suppliers to keep prices high. This applies to all customers but many feel that UK
prices are particularly high vis--vis the rest of Europe.
Inadequate telecommunications
The industry is increasingly dependent on telecommunications, and the pace of innovation
and opportunities for cost reduction and improved customer service are already being
impeded by lack of access to low-cost bandwidth. Penetration levels of broadband are now
much lower than in many other European countries, especially Germany, and costs are
often higher. If this persists it will be a major handicap to the development of the sector.
There will also be significant regional and sub-regional competitive issues if low-cost
broadband access remains unavailable in some parts of the country.
Financing problems
One major difficulty is the poor image of the sector on the capital markets, reflected in very
low price earnings ratios. This makes it difficult for quoted companies to expand through
acquisition and makes them vulnerable to takeover. It also makes it difficult for private
companies to grow through a stock market flotation, or by investment from venture
capitalists (who are also dissuaded by the low deal size available from most printing
companies). The problem is compounded by poor financial management and control at
many printers. This creates a propensity to make investments in new equipment without
undertaking a proper investment appraisal, particularly of the sales which might be expected
from it. This is widely felt to be a contributory factor to the industrys chronic over-capacity.
These problems are already serious, and will become more so as investment needs increase
and more companies seek backing for consolidation and business development.
Poor statistics
As the introduction noted, the absence of accurate statistics is already a major problem
for printing, and an even more significant one for printed packaging. This constrains
benchmarking and because there is little available information about UK print market
structures and trends makes it difficult to make considered investment decisions. There
is also a belief that current statistics underestimate the industrys true size and growth
potential, and thereby contribute to its poor image and disinterest by the capital markets.
The vicious circle which this creates lack of data leading to poor investment decisions
and problems in raising capital are likely to become serious as investment needs increase
and more companies seek backing for consolidation and business development.
Excessive/inflexible regulation
There is a strong view amongst print employers that the industry already suffers from excessive
and unnecessarily complex regulation. Examples which are cited include employment,
environment, health and safety, as well as stealth taxes such as fuel duty and landfill tax.
However, there is less consensus about the areas where regulation could be reduced. Other
stakeholders, such as the GPMU, do not believe that regulation is excessive.
Environmental regulation was a particularly important concern for many of those consulted.
Many printers are already impacted by the Climate Change Levy, and packaging and
pollution control regulations, and more would be by any measures to reduce volumes of
printed materials such as direct mail and magazines. It is important that any such measures
are based on appropriate cost-benefit analysis and are addressed at the organisations which
are best fitted to implement them. It is also important that regulation is matched with
Government support for more positive approaches to dealing with environmental problems.
For example, the industrys replacement of many physical with electronic processes is cutting
emissions to air and water. And the best solution to unwanted direct mail is not to introduce
restrictions on personal choice, but to ensure that any material received is relevant to
peoples interests. The evidence is that customers find direct mail to be very valuable when
this is the case.
4.5 E-business
More than most topics, many people see e-business as both a threat and an opportunity.
Although printing has many attributes which are conducive to e-business, there remains a
widespread lack of understanding amongst printers about what it is and how it will affect
the industry. This contrasts with growing interest amongst print purchasers. Greater
awareness is needed so that printers can make informed choices and be responsive to
potential customer demands.
5 Conclusions
Many people see printing as a traditional manufacturing industry which, like other old
economy sectors such as mechanical engineering or textiles, is doomed to decline. This
report shows that perception to be untrue. The market for print and printed packaging will
grow steadily in the UK and Europe, and rapidly in developing and emerging economies. In
part, this is because the likely effect of the Internet in the short-medium term will be to
stimulate rather than to reduce demand. There are also growing opportunities for companies
in the sector to create new, high value, products and services.
In reality, print is a hybrid industry. It is a manufacturing activity with a mix of craft
production and computer integrated manufacturing but with a strong and growing service
orientation. It is sometimes perceived as conservative and resistant to change yet in reality is
often innovative and eager to embrace the latest technologies. Part of it is a commodity
industry with low margins, yet there are also many high-value niche markets. Some of its
segments are declining but more are growing and have great potential for the future. Above
all, although the industry was born in the old economy, it is now as table 32 shows
embracing many of the characteristics of the new economy.
Table 32 The new economy characteristics of printing

The new economy
Printing
Heavily dependent on advanced information

and communication technologies (ICT)
A large employer of staff with IT skills and a leading edge sector

for many ICT applications such as data-intensive networking
Substantial capital investment to keep pace

with technical change
Investment as a percentage of turnover ahead of most British

manufacturing sectors and comparable to German printing industry
Service-based
Many printers now derive a large proportion of their revenues

from print-related services and a large proportion of their staff
are engaged in customer service, sales, technical advisory
and other business support activities
Innovative
Printing has repeatedly changed its operating technologies

in recent decades and has introduced many advances in the
production and design of documents and printed packaging
However, this positive future could be jeopardised by:

Declining margins, which are closely associated with over-capacity.
The high valuation of sterling, which has directly influenced the level of print imports
and exports and indirectly hit customer industries, without corresponding reductions in
raw material prices.
Variable quality of management in a large part of the industry.
Growing skill shortages and the decline of printing education.
The industrys poor external image, which makes recruitment difficult and reduces the
interest of external investors.
Potential increases in cost or reductions in volume created by regulations and voluntary
initiatives to reduce waste and other environmental impacts.
A patchy scientific and technical base due to the craft and SME nature of the printing
industry, a small domestic supplier base and limited interest by higher education bodies.
competitiveness in the UK printing industry conclusions 49
This leads to seven key aims for future initiatives by industry bodies and Government:
Improve margins through better performance and reduced costs.
Achieve a stable and competitive exchange rate.
Improve the industrys quality of management.
Strengthen the industrys education and training infrastructure.
Create a more positive external image.
Reduce the industrys environmental impacts through cost-effective initiatives.
Strengthen the industrys technical competence and domestic supplier base.
The next section describes and prioritises the industrys intentions and priorities to achieve
these aims.
6 Intended actions
The following sections identify how the industry should achieve the seven key aims.* The
actions specified are all essential but those which are considered to be of especially high
priority are highlighted.
Aim 1 improve margins through better performance and reduced costs
1.
Establish a Productivity Task Force. This should contain representatives from trade
associations, the GPMU and other stakeholders and oversee the implementation of
actions 2-5. It could also make further recommendations based on the information
generated by them.
2.
Strengthen industry benchmarking. Existing initiatives should be extended into other

market segments and/or production technologies and need to be conducted on a more
frequent basis to create improvements over time.
3.
Analyse international productivity differences. This will involve a detailed study of any
differences, and the reasons for them, between comparable print enterprises in the UK
and other leading printing sectors, e.g. Germany and the USA.
4.
Improve the range and quality of industry statistics. Government and private sector industry
statistics generation need to be enhanced and co-ordinated to provide more reliable and
relevant information for policy making, benchmarking and investment and market
analysis.
5.
Increase the industrys awareness of e-business. An industry-led initiative should build on

the DTIs forthcoming e-commerce impact assessment so that printers can make a better
informed choice as to whether, and how, to adopt it.
6.
Increase the availability and reduce the costs of high bandwidth telecommunications. The
industry should lobby for the strengthening of existing Government initiatives to
achieve greater availability of, and competition in, ADSL and other high bandwidth
technologies. The Government should also ensure that they can be accessed across a
high proportion of the UK as rapidly as possible.
7.
Conduct a follow-on competitiveness study on printed packaging. The industry should lobby
the Government to commission a report on either the entire packaging industry or the
printed packaging segment (carton, corrugated and flexible) of it, involving relevant
trade bodies, the GPMU and leading companies.
Essential actions
8.
Respond to the EUs Working Time directive and examine the relationship between long working
hours and health and productivity. This involves raising awareness of the ending of the
UKs opt-out from the directive in 2003 and its implications for overtime levels,
(possibly in conjunction with action 3, the comparative study of productivity).
9.
Strengthen industry financing. In particular, by working with financial institutions and

other bodies to formulate a plan to attract more business angels and venture capital into
the sector.
10. End retailers anti-competitive practices. The industry should lobby Government to ensure
that the Code of Practice for supermarkets and their customers eradicates the anticompetitiveness practices identified in the report by the Competition Commission.
*Although the DTI participated in the study in an advisory and observational capacity, it has had no
involvement in developing and therefore does not necessarily endorse the content of the industrys
intended follow-up actions.
competitiveness in the UK printing industry intended actions 51
11. Investigate if UK input costs are excessively high. The industry should lobby, on the basis of
preliminary evidence, for a Government investigation of whether prices of paper, board,
consumables and equipment are higher for UK producers than those in continental
Europe and the reasons for any differences.
Aim 2 achieve a stable and competitive exchange rate
12. Join the euro at a competitive rate. The industry should lobby Government to campaign
positively for early entry into the euro, at a competitive rate, and to work with the
sector to demonstrate the benefits of this decision for the printing and printed
packaging sectors.
Aim 3 improve the industrys quality of management
13. Enhance the strategic abilities and innovativeness of industry managers. This involves
creation of new tools, materials and courses to ensure that current and potential
managers have appropriate skills. The PGC NTO should also work with other industry
bodies to implement the recommendations from its project on informal approaches to
management development.
14. Create industry-specific management development centres. The industry should work with
existing providers to establish one or more printing and packaging focused assessment
and development centres for shopfloor staff with managerial responsibilities,
supervisory staff and junior managers
15. Create a centre of print centre of management excellence. The industry should lobby
Government to provide limited term seed funding to enable an established business
school to develop a high profile Print Media Management Centre, with a brief of
developing a print-relevant MBA and conducting industry-relevant management
research.
Aim 4 strengthen the industrys education and training infrastructure
16. Create a statutory framework to fund industry training. Recognising that the voluntary
approach to vocational training has failed, and that training will only improve when
sufficient funding is provided, the industry should make a joint approach to
Government to introduce this as the only viable alternative.
17. More Government funding for print education. The industry should lobby for the provision
of at least one high quality printing educational body in each of the UK regions, and at
least one body with a specialisation in each of the key areas of printing and printed
packaging (e.g. flexo, litho, finishing).
18. Increase Government funding to the PGC NTO. Until a statutory funding framework is in
place, the industry should lobby Government to increase funding to the PGC NTO. This
should be based on additional work programmes to address the issues identified by this
report (and in the PGC NTOs own research), and thus ensure that it has greater
operational independence and that all stakeholders see it as a neutral body.
Essential actions
19. Raise awareness of revised NVQs. The industry should initiate a high profile campaign to
publicise recent changes to improve the relevance and user-friendliness of print-related
NVQ qualifications.
20. Provide more information on printing career routes. The industry should develop a career
map of possible progression in the industry, based on competency profiles, to assist
personal development planning for individuals and their employers and to demonstrate
the opportunities available to new recruits into the sector.
21. Raise awareness of Individual Learning Accounts. The industry should work with account
providers to promote take-up, and to develop a directory of courses to which they can
be applied.
22. Improve opportunities for women and minorities. The industry should convene a high level
working group to identify barriers to women and minorities joining, and progressing
within, the industry and means of overcoming them.
23. Raise awareness of printing careers in colleges and universities. The industry should facilitate
greater work experience by undergraduates and postgraduates on non-printing courses
(e.g. engineering) and develop print-related educational materials. The latter should
include case studies, for use in relevant undergraduate programmes such as production
engineering, software engineering and marketing.
24. Increase the prevalence of professional, engineering-based, qualifications. This will mean
developing the activities of the Institute of Printing and/or encouraging increased
membership of the IMechE or other engineering associations.
25. Support retraining of older workers. The industry should lobby Government to make
upskilling programmes which aim to comprehensively retrain experienced staff eligible
for financial support.
Aim 5 create a more positive external image
26. Develop a common industry voice. A working group of trade associations, the GPMU,
the largest companies in the industry and key stakeholders should identify ways of
co-operating on agreed key issues in order to increase external awareness of the
industrys strengths, and to provide a platform for regular cross-industry collaboration
on other issues.
27. Rebrand the industry. Either separately, or in conjunction with the previous action point,
key industry players should establish a working group to seek professional advice on how
the industrys new economy and service sector characteristics could be highlighted to
external audiences, and make recommendations as to further actions. This might include
the creation of a high profile portal web site to market the industry to customers,
investors, the media, policy makers, potential recruits and other external users.
Aim 6 reduce environmental impacts through cost-effective initiatives
28. Reduce unwanted print through better targeting. The industry should increase awareness
and usage of technologies which personalise printed materials such as direct mail
so that they are more relevant to recipients and less likely to be seen as waste.
29. Reduce wastage in the book and magazine supply chains. The industry should develop
agreed plans with industry customers to achieve this over time, and in ways which
reconcile environmental objectives with the severe business impacts of short-term
volume reductions.
Essential actions
30. Further reduce process waste. The industry should strengthen existing waste minimisation
initiatives and publicise Project Acorn, the simplified version of ISO 14001 which is
currently being developed.
competitiveness in the UK printing industry intended actions 53
31. Publicise the environmental advantages of the industrys raw materials and technologies. The
industry should establish, in collaboration with stakeholders (including paper
manufacturers and customers), a working group to publicise the environmental
advantages of sustainably produced paper and board, and of new printing technologies,
and identify appropriate methods of dissemination (publications, web site etc).
32. Implement the VOC directive across Europe. The industry should lobby the Government to
press for accelerated and more effective implementation of the European VOC directive
in other countries.
33. Avoid further changes or increases in the Climate Change Levy. The industry should lobby
the Government to ensure that these do not occur without a correlative increase in
offset benefits, particularly for smaller printers.
Aim 7 strengthen the industrys technical competence and domestic supplier base
34. Raise awareness of the importance of print-related clusters. The industry should lobby the
Government to ensure that clusters of print and packaging producers, equipment and
software producers, R&D centres and educational bodies are fully considered in the
more detailed studies which are to follow the DTIs preliminary report on the topic.
Essential actions
35. Improve print finishing. The industry should establish a working group of printers,
suppliers, customers and the GPMU to identify means of increasing investment, raising
skill levels and stimulating more innovative technologies in print finishing and any
other areas which appear to be acting as bottlenecks to the industrys progress.
36. Establish a print business park. The industry should work with a regional development
agency and other bodies to establish a focus to encourage clustering of industry
suppliers and other organisations and to attract inward investment.
37. Strengthen R&D and postgraduate education. The industry should lobby for increased
Government support of the ESPRC and other bodies to boost the level of print and
printed packaging R&D and to create more technical postgraduate courses and PhDs.
Appendix 1
Steering Group membership
British Printing Industries Federation
Andy Brown, Director, Training and Commercial Products
Mike Hopkins, Director, Corporate Affairs and project manager of the study
Cantate (formerly Battley Brothers)
Francis Davis, Managing Director
Chameleon Press
Ray Tindle, Managing Director
Department of Trade and Industry
Bradley Jones, Deputy Section Head, Business Services Section, Consumer Goods
and Services Directorate
European Flexographic Technical Association
Lesley Hide, Managing Director
Graphic Futures
Peter James, Director and content manager of the study
Graphical Paper and Media Union (GPMU)
Chris Harding, National Officer
Mike Griffiths, National Officer
httprint Europe
Barry Hibbert, Group Managing Director
Pira International
Richard Gray, Business Manager, Printing and Publishing
Scottish Print Employers Federation
Jim Raeburn, Director
Screen Printing Association
Mike Turner, Director
competitiveness in the UK printing industry appendices 55
Appendix 2
Tables
Table 1 Turnover of National Printing Industries
(in million euros)
France
Germany
Italy
Netherlands
Spain
UK
USA
1996
1997
1998
1999
6,603
16,358
10,397
3,654
4,454
14,040
106,345
7,528
15,122
10,247
3,116
4,582
18,196
128,344
7,888
15,888
10,445
3,461
4,672
8,063
16,807
10,742
3,601
5,650
127,338
Note: NACE category 22.2. Sterling appreciation against the euro in the late 1990s
means that this measure overstates the scale of British production by 20-30%.
Source: Intergraf
Table 2 Employment in National Printing Industries
France
Germany
Italy
Netherlands
Spain
UK
USA
1995
1996
1997
1998
1999
71,302
225,301
47,930
49,712
74,000
198,500
1,013,239
72,500
225,301
51,619
49,106
78,885
195,300
1,053,112
70,938
219,902
51,619
48,142
78,560
189,200
1,015,355
69,976
223,298
54,718
48,006
76,450
68,805
222,320
Note: NACE category 22.2. French and Italian figures are misleading because
they exclude smaller companies.
Source: Intergraf
Table 3 Employment in
UK Industry Sectors 1997
Total manufacturing
Metal & fabricated metal
Electrical & optical equipment
Food, beverages & tobacco
Machinery & equipment
Publishing, printing & recorded media
Textiles
Chemicals
Printing & printed packaging (estimate)
Rubber & plastics
Motor vehicles
3,980.9
522.7
502
461.1
375.9
364.9
271.4
252.7
239.2+
233.6
216.5
Note: Thousands of employees. Publishing, printing & recorded media

category is the ONS category, which excludes much printed packaging
activity. Printing & printed packaging category is not based on official
figures for printing but our estimate of printed packaging. It gives a
more accurate picture by excluding publishing and recorded media.
Source: Office of National Statistics
47,383
Table 4 UK Printing Market Segments
Printing
Newspaper printing
Other printing
of which main categories are:
Books, brochures, leaflets etc
Advertising literature
commercial catalogues
advertising material incl point of sale, direct mail
Periodicals
newspapers appearing less than four times weekly
journals and periodicals appearing as above
Security printing (stamps, cheque books, banknotes)
Programmes, tickets, business cards etc
Office supplies
Continuous business forms
Other business forms
Postcards, greetings cards
Printing onto plastic, glass, metal, wood & ceramics
Trade binding and finishing
Composition and platemaking
Graphic services
Stationery
Printed labels
Packaging
1995
1996
1997
1998
1999
264.9
8,517.9
238.3
9,371.7
207.1
9,350.5
220.7
9,191.5
229.1
9,413.3
2,310.6
1,696.6
601.5
1,095.1
1,258.4
N/A
N/A
341.2
1,383.4
598.8
225.3
177.6
169.3
S
334.9
776.4
338
310
423.1
1,251.6
2,281.7
2,209.2
798.7
1,410.5
1,212.5
N/A
N/A
391.3
1,393.6
523.5
244
207.5
177.7
410.9
415.4
723.4
409.7
335
480.3
1,328.5
1,912.1
2,719.4
1,108.4
1,611
1,195.9
451.7
744.3
284.2
1,259.3
486.2
312.6
178.9
147.5
508.1
377.4
608.3
518.7
283.9
457
1,279.1
1,570.3
3,102.4
1,275.4
1,827
1,212
413.7
798.3
279.8
1,154.7
407.2
341.9
155.3
177.3
475.9
357.9
565.6
670.9
254.4
477.5
1,209.5
1,511.4
3,363.4
1,404.6
1,958.8
1,234.8
360.9
873.9
242.4
1,348.3
372.3
330.9
137.1
168.3
523.7
385.8
537.9
704.2
N/A
450.6
1,105.7
Note: Users should be wary of drawing definitive conclusions about trends as there have been substantial revisions to pre-1997 data.
Table 5 UK Paper/Board
Packaging Market 1996
Product
Corrugated
Folding Cartons
Paper Sacks/Wrappings
Tubes/Cases
Liquid Packaging
Labels
Others
Total
Volume
Share
(000 Tonnes)
(Volume)
2,270
655
393
255
80
68
20
3,741
61%
17%
10%
7%
2%
2%
1%
100%
Source: WestLB Panmure
Table 6 Number of Firms in Selected Countries 1997
1 to 9
10 to 19
20 to 49
50 to 99
100 to 199
200 to 499
500+
France
Germany
Nethlands
Spain
UK
0
1,405
9,823
1,858
1,314
422
1,877
496
372
129
49
17
3
4,830
825
495
93
40
22
3
17,725
176
115
323
35
1,198
353
140
67
16
Note: National classifications of firm size vary. France does not collect data on companies
employing less than 10 people.
Source: Intergraf
Table 7 Printing Employment and Investment in UK Regions 1997

Total employment
Total net capex
(000)
(million)
32.4
26.6
23.3
18.1
16.8
15.5
15.4
13.7
11.9
5.6
4.8
2.8
2.4
154.50
103.00
106.00
80.60
69.60
74.10
50.90
67.30
51.20
23.50
18.60
12.70
9.10
London
South East
Eastern
Yorkshire & Humberside
East Midlands
South West
North West
West Midlands
Scotland
Wales
North East
Merseyside
Northern Ireland
Table 8 Composition of Employment

in BPIF/SPEF members
Production
Origination
Machine
Finishing
Office
Production: Office Ratio
Total
Male
Female
73.40%
13.70%
25.90%
33.80%
26.60%
2.77
81%
84%
96%
65%
62%
19%
15%
4%
35%
38%
Source: BPIF/SPEF Manpower Survey 2000
Table 9 Time Lost in Industrial Disputes

(working days lost per thousand employees)
Table 10 - Skill Requirements

for Modern Printing
All industries
and services
Paper, printing
and publishing
industries
178
1,278
299
90
164
166
182
83
34
24
30
13
19
58
10
12
10
180
276
148
116
36
7
66
8
4
11
8
2
2
10
2
1
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
Note: Unfortunately, the official statistics do not distinguish

printing from paper and publishing. Anecdotal evidence suggests
that the sector has a low level of days lost because of labour disputes.
In main report page 19
Table 11 Qualifications of Staff

in Wessex Printing Companies
School Certificate
RSA
CSE
O Level
BTEC
GCSE
GNVQ
A Level
ONC/OND
HNC/HND
Degree
City and Guilds
16.90%
7%
41.60%
37%
4%
15.00%
2.70%
9.10%
2.30%
2.30%
1.80%
2.30%
Note: Average percentage in responding companies.

Source: GPMU iNSET Project
Table 12 Levels of Training

in Printing and Printed Packaging
Directors/manager
Supervisor
Printing administrators
Machine printers
Finishers
Pre-press staff
Clerical staff
Transport
Maintenance
Sales
22%
24%
26%
37%
26%
26%
28%
18%
25%
17%
Note: Percentage who have received training in

responding companies which employ this category
of staff.
Source: PGC NTO, Workforce Survey 2001
Table 13 Indices of Production 1986 1999
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2121
2123
2125
2221
2222
2223
2224
2225
95.7
93.3
93.9
96.7
101.4
100
99.9
97.7
93.3
91
87.1
124.9
119.9
119.2
112.4
104.9
100
97.2
78.7
77.7
73.9
69.7
101.4
97.3
97
92.3
97.1
100
96.1
93.7
76.9
79.8
75.3
110.1
98.4
96.4
94.6
96.7
100
81.2
97
85.6
87.3
74.9
95
91.4
93.5
97.7
100.2
100
96
101.6
104.7
108.3
107.4
97.3
92.6
95.2
99.6
100.8
100
95
90.6
91.9
85.1
70.4
106.1
97
99.5
103.2
108.9
100
98.9
93.9
90
82.3
85
S
S
S
S
S
S
S
S
S
S
S
Note: The index of production tries to measure value added. Most of the information comes from a comprehensive system of monthly sales
inquiries to industry. The estimates of sales are adjusted by the changes in work in progress and finished goods to calculate the value of
production. All current value data are deflated to 1995 values using the appropriate producer price indices and export deflators.
S = suppressed data (re banknote printing)
Source: BPIF, Office of National Statistics
Key:
2121
2123
2125
Manufacture of corrugated paper and paperboard

and of containers of paper and paperboard
Manufacture of paper stationery
Manufacture of other articles of paper and
paperboard not elsewhere classified (nec)
Table 14 Paper Consumption

Consumption of printing
& business papers (000t)
(excluding newsprint)
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
Source: Paper Market Digest
1,765
2,028
2,189
2,407
2,725
2,966
3,152
3,149
3,059
3,248.9
3,339.9
3,893.3
3,897.6
3,944.6
4,320.5
4,459.1
4,645.3
2221
2222
2223
2224
2225
Printing of newspapers
Printing nec
Bookbinding and finishing
Composition and platemaking
Other activities related to printing
Table 15 UK Printing Exports and Imports ( million)
Exports
Imports
Balance of trade
1993
1994
1995
1996
1997
1998
1999
2000
1,519.2
1,057.3
461.9
1,732.3
1,193.1
539.2
1,890.8
1,297.2
593.6
2,040.5
1,332.2
708.3
2,136.7
1,424.6
712.1
1,988.3
1,440.3
548
1,930.9
1,503.3
427.6
2,023.5
1,568.7
454.8
Source: Customs and Excise
Table 16 Composition of UK Printing and Services to Printing Trade 2000 ( million)

Exports
Cartons, boxes etc

Registers, notebooks etc
Diaries
Exercise books
Manufactured forms
Albums
Printed labels
Stationery not elsewhere specified
Single sheets
Dictionaries and encyclopedias
Books, booklets and brochures
Newspapers and periodicals
4 a week
Other
Children's books
Music
Maps and charts
Transfers
Postcards and greetings cards
Calendars
Trade advertising
Playing cards
Security printing
Other
Total
Table 17 Annual Increases in

Printers Costs and the RPI
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
Printer
Costs
RPI
7.90%
5.80%
3.80%
3.40%
3.10%
5.40%
7.10%
1.60%
1.70%
2.30%
9.50%
5.90%
3.70%
1.60%
2.40%
3.50%
2.40%
3.10%
3.40%
1.50%
Source: BPIF, Office of National Statistics
Imports
EU
Other
Total
EU
Other
Total
45.5
6.5
5.2
0.2
1.4
4.1
38.3
10.4
26.8
8.8
410.7
15.3
4.1
3.8
1.5
0.5
5.4
19.2
5.9
58.1
11.9
608.4
60.8
10.6
9
1.7
1.9
9.5
57.5
16.3
84.9
20.7
1019.1
102.7
25.8
8.9
2.3
1.6
6.1
35.4
2.3
43.6
2.5
137.7
15.1
19
14.4
1.6
0.6
17.2
12.6
13.7
47.3
5
475.2
117.8
44.8
23.3
3.9
2.2
23.3
48
16
90.9
7.5
612.9
45.4
228.4
6.9
5.8
6.2
8.3
48.7
4.7
74.3
8.3
19.2
1.6
1,015.7
1.1
127.5
8.7
6.7
10.8
14.3
21
1.9
44.7
3.5
29.4
4.1
1,007.8
46.5
355.9
15.6
12.5
17
22.6
69.7
6.6
119
11.8
48.6
5.7
2,023.5
4
99.3
4.9
1.2
3.4
15.1
4.6
2.3
133.1
23.6.7
2.9
35.4
698.7
0.8
57.9
12.9
4.2
3
6.1
35.4
9.9
30.3
25.4
39.7
22.7
870
4.8
157.2
17.8
5.4
6.4
21.2
40
12.2
163.4
49
42.6
58.1
1,568.7
Table 18 UK Paper prices
Coated woodfree,
reels 100g/m2
Uncoated woodfree,
sheets 80g/m2
Uncoated woodfree,
reels 60g/m2
Coated mechanical,
reels 70g/m2
Uncoated mechanical,
reels 60g/m2
1993
1994
1995
1996
1997
1998
1999
2000
104.9
117.7
161.1
128.9
116.5
107
102.1
117.9
104
127.8
177.1
138.2
128.1
118.7
114.3
135.9
98.6
120
172.2
125.1
112.6
102.4
106.9
131.8
135.3
138.6
180.5
169
134.8
135.3
129.6
128.9
132.7
126.3
173.9
190
144.2
130
127.5
127
Note: Jan 1982 = 100. Prices are for 20 tonne deliveries to regular and substantial buyers.
Source: Paper Market Digest
Table 19 Annual Increase in Earnings Print Production Workers and National Average
Year
National Average
Earnings Index
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
1990-1999
National Average
Percentage Increase
79.5
85.7
90.8
93.6
97
100
103.6
108
113.6
119
N/A
UK Printing
Average Increase
Printing Average
Percentage Increase
265.56
276.78
293.10
307.00
332.76
344.06
356.63
379.02
405.09
404.50
402.83
7.80%
6.00%
3.10%
3.60%
3.10%
3.60%
4.20%
5.20%
4.80%
N/A
49.69%
8.00%
5.90%
4.74%
8.39%
3.40%
3.65%
6.28%
6.88%
-0.15%
-0.40%
51.69%
Source: BPIF/SPEF Manpower Survey 1999, Office of National Statistics
Table 20 Average Earnings of Print Production Workers
National avs
Craft/Class I avs
Class II avs
Class III avs
Standard
hours
Overtime
hours
Basic
wage
pw
Shift
payment
pw
Total
wage
pw
Overtime
payment
pw
Gross
earnings
pw
37.29
37.3
37.27
37.29
5.76
5.73
5.87
5.84
281.65
301.27
235.43
211.47
40.21
42.27
42.19
24.73
321.86
343.54
277.62
236.2
82.64
87.88
70.59
63.6
404.5
431.42
348.21
299.8
Table 21 - Earnings Differentials (compared to national average)

Area
Differential
North Eastern
North Western
Midland
Eastern
South Western
South Eastern
London
Home Counties
Scotland
0.92
0.90
0.97
1.02
1.08
1.06
1.35
1.01
0.99
Number of full time employees

0-9
10-24
25-49
50-99
100-149
150+
1.04
1.00
0.99
0.94
1.09
1.01
Product sector
General printing
Origination
Book printing and binding
Periodicals
Newspapers
Business forms
Manufactured stationery
Security
Digital printing
Cartons
Flexible packaging
Labels
Trade finishing
Differential
1.00
1.18
0.94
1.09
1.19
0.81
0.73
1.00
1.01
1.04
1.23
0.92
0.86
Table 22 Average Management Salaries (by size of company)

Title
Production director (inc. works/operations)
Production manager (inc. works/operations)
Production planner/controller
Quality manager
Manager (pre-press)
Manager (printing)
Manager (binding/finishing)
Manager (warehouse/transport)
Manager (carton cutting and creasing/gluing)
Supervisor (pre-press)
Supervisor (printing)
Supervisor (binding/finishing)
Supervisor (warehouse/transport)
Supervisor (carton cutting and creasing/gluing)
Marketing/Commercial director or manager
Sales director
Sales manager
Sales executive (2+ years in post)
Sales executive (<2 years in post)
Sales office manager
Sales account administrator
MIS/A58Computer systems director or manager
Personnel/Training director or manager
Company secretary
Finance director or controller
Company accountant
Senior estimator
Estimator
Credit controller
Buyer
Small
Medium
Large
46,363
36,747
26,431
21,370
19,564
24,930
23,172
23,069
21,949
67,618
47,755
30,751
23,373
25,833
29,957
30,815
28,186
21,710
31,019
25,840
26,029
19,280
18,598
25,910
49,295
49,951
37,577
30,769
24,154
23,101
17,634
28,746
23,781
42,791
42,302
24,134
22,348
16,645
14,698
20,526
75,319
55,052
34,584
24,624
27,201
30,074
34,689
32,766
26,578
29,700
27,969
33,782
28,400
20,996
20,225
22,179
18,366
18,176
15,499
44,057
43,079
30,027
26,177
22,131
19,249
16,604
24,512
29,016
25,737
31,889
22,104
20,328
17,062
14,429
17,982
50,364
51,918
39,763
30,002
24,602
27,525
19,556
32,809
32,050
29,288
46,936
27,529
22,054
17,952
16,596
28,503
Table 23 Printing Industry Profitability (percentage return on capital employed)
UK Printing Median
Scottish Printing Median
General Printing (> 1million pa turnover)
General Printing (1-2 million pa turnover)
General Printing (2-4 million pa turnover)
General Printing (> 4 million pa turnover)
Book Production
Periodicals and Newspapers
Cartons and Flexible Packaging
Manufactured Stationery/Business Forms
Labels
Origination
Trade Finishing
1999
2000
14.67
11.66
14.09
9.07
11.27
16.07
9.88
17
12.45
14.45
12.77
22.7
22.37
8.63
9.81
12.41
8.23
9.04
12.61
12.84
19.63
11.65
8.74
9.63
8.87
10.6
Note: 2000 is provisional data. Sample sizes are small for some individual categories.
Source: BPIF/SPEF Printing for Profit 2000; Productivity Survey 1999
Table 24 Productivity Indices for UK Printing
Sales over operating assets (ratio)

Sales per head
Value added per head
Value of output per head
Value added as a % of sales
Sales per of wages
Value added per of wages
Profit as a % of operating assets
Profit as a % of sales
Profit as a % of value added
1994
1995
1996
1997
1998
1999
2000
1.72
103.9
106.4
103.4
100.2
99.3
98.9
115
114.2
114.9
1.56
117.4
119.9
114.9
98.4
99.7
101.1
110.1
122.3
129.1
1.57
123.4
119.9
116.4
97.9
102.3
99.5
104.6
109.7
124
1.54
130.6
125.9
120.8
101.6
101
102.2
119.4
127.4
127.9
1.49
138.9
130
129.4
102.1
99.3
101.6
113.4
125.3
126.7
1.57
135
133.9
125.7
103.1
98.4
100.5
114.1
125.9
136.8
1.88
142.35
141.07
128.38
101.02
101.32
103.23
136.82
112.29
91.62
Note: 1993=100
Source: BPIF/SPEF Printing for Profit 2000
Table 25 Financial Health of UK Printers

Percentage of Market
Debt as percentage
of sales
Sales growth
Pre-tax margins
24%
27%
26%
24%
9.30%
39.80%
9.10%
42.10%
22.60%
13.40%
14.50%
-5.40%
-4.50%
3.40%
5.60%
4.10%
3.80%
0.90%
3.50%
Winners
Chancers
Sleepers
Losers
Average
Source: Plimsoll
Table 26 Capital investment in

Selected European Printing Industries
Germany (1997)
Italy (1997)
Netherlands (1996)
Spain (1997)
UK (1995)
6.50%
8.30%
10.30%
6.00%
6.50%
Source: Intergraf/Frauenhofer Institute
Table 27 Productivity in Carton Packaging

1990
Consumption
a) Tonnes '000
b) s Million
RoS%
AV/Emp ('000)
Tonnes/Emp
Sales/Emp
534
946
5.60%
35.80
33.3
59.90
1991
1992
1993
1994
1995
1996
1997
1998
1999
522
531
891 1,036.00
3.70%
3.60%
33.10
44.10
34.1
36.1
58.60
70.70
544
1,055
4.70%
52.00
38.5
75.70
563
1,094
5.30%
57.90
45.5
88.90
574
1,145
6.00%
51.40
45.7
91.60
589
1,191
6.10%
70.00
46.9
95.50
611
1,200
6.90%
65.00
51.1
101.10
604
1,188
4.40%
62.20
50.1
96.90
609
1,117
2.80%
66.10
51.2
96.60
Source: British Carton Association
Table 28 Capacity Utilisation in National Printing Industries
France
Germany
Italy
Netherlands
Spain
UK
1993
1994
1995
1996
83%
81.60%
71.60%
80.70%
62%
76%
86%
83.30%
75.70%
82.80%
68%
52%
86%
83.70%
74.80%
84.80%
65%
43%
83%
84.15%
73.30%
83.60%
68%
58%
Note: It is notoriously difficult to define over-capacity so that absolute figures are unreliable.
However, anecdotal evidence suggests that the figures reflect real differences between countries.
Source: Pira International, UK Printing Industry and its Markets, Leatherhead, 1999.
Table 29 Anticipated Obstacles to Achievement of

Goals by Printing and Printed Packaging Companies
An Obstacle
Main Obstacle
63%
53%
43%
40%
35%
30%
30%
1%
9%
29%
17%
20%
8%
2%
10%
5%
Increasing competition
Costs of new technology
Lack of people with necessary skills in market
Cost of employing new staff
Cost of necessary training
Strong pound
Lack of availability of suitable training
Difficulties in offering e-commerce
None of these
Source: PGC NTO Workforce Survey 2001
Table 30 Printing Technologies
Litho
Gravure
Digital
Desktop
Other
Total
2000
2005
2010
62
22
4
5
7
100
60
21
6
7
6
100
57
19
11
9
4
100
Source: Pira International, The Future of Print, Leatherhead, 2000.
Table 31 Print Scenarios

Table 32 - The New Economy Characteristics of Printing

Footnotes
1
Germany has the largest printing industry. It is unclear whether France or the UK is the second
largest, as the former does not collect employment information from small companies.
However, aggregate statistics for the industry as a whole do include newspaper printing.
Foresight, Report of Packaging Materials Task Force, London: HMSO, 2000 (also
www.foresight.gov.uk).
J. Gennard, H. Ramsay, C. Baldry and K. Newsome, Strengthening Social Dialogue and Cross-Border
Trade Union Networks in the Graphical Industry, Glasgow: Centre for European Employment
research, University of Strathclyde, 2000.
KBA Research, Labour Shortages, Recruitment Difficulties and Skills Gaps in the Print and Graphic
Communication Sector, Birmingham: Print and Graphic Communication National Training
Organisation, 1999.
Cited in KBA Research op cit.
Print and Graphic Communication National Training Organisation, Workforce Survey 2001,
Birmingham, 2000.
J. Gennard, H. Ramsay, C. Baldry and K. Newsome, Strengthening Social Dialogue and Cross-Border
Trade Union Networks in the Graphical Industry, Glasgow: Centre for European Employment
Research, University of Strathclyde, 2000.
Birmingham, 2000.
10
A. Martin, Anticipating Skills Needs in the Printing Industry, Birmingham: Birmingham and West
Midlands Printing Initiative, 2000.
11
D. Simpson, Training in the Printing Industry: Analysis of Demand and Provision in South Wales,
Cardiff: GPMU, BPIF, South East Wales TEC, TUC Wales/Cymru and PGC NTO, 1999.
12
Lack of Training is Holding Printers Back, British Printer, October 1995, pp.7-8.
13
S. Morris, Print and Packaging Sector: Local Training Analysis , Bristol: WESTEC, 2000.
14
Birmingham, 2000.
15
Plimsoll, Portfolio Analysis, February 2001, London: Plimsoll Press.
16
Note that trade figures count the total value of printed goods imported, of which the cost of
printing will often be only a small proportion.
17
Plimsoll, Portfolio Analysis, February 2001, London: Plimsoll Press.
18
One German printer contacted for the study observed that they had no spare capacity in one of
their plants for 18 months ahead.
19
J. Birkenshaw and P. Hart, The Future of Print, Leatherhead: Pira International/PRIMA, 2000.
20
21
22
Foresight, Report of Packaging Materials Task Force, London: HMSO, 2000 (also www.foresight.gov.uk).
23
24
Printing Industries of America, Vision 21, Washington DC, 2000.
25
Heikki Malinen, Paper presented to 9th International Containerboard Conference, Miami, 13-15
September, Jaakko Poyry Management Consulting-North America
26
CAP Ventures, Print e-Procurement: Changing the Face of the Printing Industry, Norwood, Mass., 2000
27
Printing Industries of America, Vision 21, Executive Summary p.7.
28
W. Engelbacj, K-P. Fahnrich and A. van Hoof, Sustaining Development and Competitiveness for the
European Printing Industry, Stuttgart: Fraunhofer Institute IAO, 1999.
29
For example, Managing Technology, BPIF, 1997.
30
Print and Graphic Communication National Training Organisation, Creating More Effective Print
Companies, Birmingham, 2000.
31
Confederation of Paper Industries, Competitiveness Study for Paper Related Industries in the UK,
Swindon, 2000.
Full report
A study into the competitiveness of the UK printing industry
British Printing Industries Federation

Farringdon Point
29-35 Farringdon Road
London EC1M 3JF
Tel (020) 7915 8300
Fax (020) 7405 7784
Email info@bpif.org.uk
Web site www.bpif.org.uk
BPIF Regional Business Centres
Eastern Tel (01638) 667153
Midland Tel (0121) 789 7222
North Eastern Tel (01924) 363813
North Western Tel (0161) 886 8400
South Eastern Tel (020) 7915 8400
South Western Tel (0117) 942 8794

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Full report

A study into the competitiveness

Print 21: coming of age?

Print 21: coming of age?

Print 21: coming of age?

Cover: Swan or ugly duckling?

Appendix 1 Steering Group membership

2 print 21: coming of age? competitiveness in the UK printing industry

competitiveness in the UK printing industry executive summary 3

4 print 21: coming of age? competitiveness in the UK printing industry

competitiveness in the UK printing industry executive summary 5

6 print 21: coming of age? competitiveness in the UK printing industry

competitiveness in the UK printing industry executive summary 7

Conclusions and actions

Establish a Productivity Task Force.

Strengthen industry benchmarking.

Analyse international productivity differences.

Improve the range and quality of industry statistics.

Increase the industrys awareness of e-business.

Conduct a follow-on competitiveness study on printed packaging.

Strengthen industry financing.

10. End retailers anti-competitive practices.

8 print 21: coming of age? competitiveness in the UK printing industry

competitiveness in the UK printing industry introduction 9

Coverage of the sector

10 print 21: coming of age? competitiveness in the UK printing industry

Printed packaging can be further sub-divided into:

competitiveness in the UK printing industry introduction 11

Structure of the report

12 print 21: coming of age? competitiveness in the UK printing industry

competitiveness in the UK printing industry industry characteristics 13

14 print 21: coming of age? competitiveness in the UK printing industry

Outputs creation and finishing of printed or electronic products for distribution.

competitiveness in the UK printing industry industry characteristics 15

Some other important technical trends within the industry are:

16 print 21: coming of age? competitiveness in the UK printing industry

1.3 Industry suppliers

1.4 Industry organisations

competitiveness in the UK printing industry industry characteristics 17

1.5 Industry structure

18 print 21: coming of age? competitiveness in the UK printing industry

1.6 The labour market and industrial relations

competitiveness in the UK printing industry industry characteristics 19

Table 10 Skill requirements for modern printing

Current leading edge

Convergence of pre-press skills

Convergence of pre-press skills

Education and training

20 print 21: coming of age? competitiveness in the UK printing industry

competitiveness in the UK printing industry industry characteristics 21

22 print 21: coming of age? competitiveness in the UK printing industry

A multimedia package developed by the Corrugated Packaging Association.

competitiveness in the UK printing industry industry characteristics 23

24 print 21: coming of age? competitiveness in the UK printing industry

2.2 Foreign trade

competitiveness in the UK printing industry performance 25

Paper and other substrates

26 print 21: coming of age? competitiveness in the UK printing industry

competitiveness in the UK printing industry performance 27

2.5 Capital investment

28 print 21: coming of age? competitiveness in the UK printing industry

competitiveness in the UK printing industry performance 29

2.7 Obstacles to achieving business goals

30 print 21: coming of age? competitiveness in the UK printing industry