Seven of the industry's finest came together in November to discuss all things wide-format in the inaugural Image Reports Widthwise Round Table. The idea was to open debate on the real-life issues that affect printers in the sector. The participants did not hold back...
Equipment service and development issues, threats to business, opportunities for growth, predications for 2009 - all of these topics and more became a hot-bed of debate among key industry players at the first Image Reports Round Table held in London in November.
Motorway traffic in Britain actually fell 12% in the first six months
The purpose of this inaugural event was to discuss the points raised in the WidthWise Report, commissioned by this magazine as the first ever survey of the UK wide-format market and published at the beginning of the year, and to provide a backdrop to the next Widthwise Report which will be published in 2009. As anticipated, first-hand knowledge of running companies in the wide-format sector meant there was no shortage of thought-provoking feedback from panel members who, perhaps surprisingly given these straightened economic times, were rather upbeat about levels of business.
To ensure that no stone was left unturned, the discussion was broken down into various sections. Here's how things played out...
"Macro Art moved three years ago behind a row of trees and the credit crunch zoomed down the road and didn't see us," said a bullish John Walker. "Our volumes are up 20%, our net profit is up 75% and we may be in for our best year ever. All our areas of business are growing strongly."
In particular, Walker pointed to the successful introduction to its portfolio of anti-graffiti lacquer, saying that 23% of Macro Art's turnover now demands its use. He also highlighted an outdoor display that with one switch can turn it from a day to a night-time product.
Grabbing a slice of the EU export market has also helped the company along. "We have a growing export market - the Euro/Pound exchange rate has been a gift to us," he enthused. The company also recently made the bold move of raising prices, and added a flat-rate delivery charge as a disguised recovery fee for the price hikes it has seen in inks and substrates costs.
"I seem to live in two different worlds: during the day I inhabit a world where things are going OK, and then I go home to this world full of media coverage about how we're all going into recession. Things may be harder that they should be for some, but we're not facing the desperate scenario much talked about."
This was a feeling echoed around the table, but with words of caution about times ahead from some. "I think the doom and gloom has been overhyped, but if you look at the financial fundamentals they have been shaken and the shockwaves are still coming. I haven't seen a general slowdown in work, but a stuttering, spluttering effect and I think we're going to get more heart attack moments as the world faces more economic shocks. My fear is that we'll get irrational finance based decisions on cutting marketing budgets that will impact on us down the line," said Stephen Hood.
For now, things aren't looking as bleak as generally suggested. A number of people said they too had managed to raise prices during the year. And Justin Murray pointed out that he's noticed an increase in the number of companies coming to him for quote. But, this is largely because companies, especially retailers, are having to seek out better prices and want to do comparative costings. "Obviously that kind of work can reduce your margins, but it may get you new clients for the longer haul," he said.
The comment opened up many a wound on the topic of tight margins and price cutting. "Our sales have dropped in the last year but our margins have improved," said Darren Marsh. "I'm only interested in work bringing in good margin. I've got rid of the rest." Richard Clark agreed: "I take pride in the fact that we're probably the most expensive [vehicle wrapping company]. I'd rather profit over turnover any day of the week."
"As an industry we're renowned for cutting prices to get volume," added Graham Clark. "We must stop selling print as a commodity and treat it as a service." On the whole the panel agreed, with various members quoting ludicrously low figures that they've heard of across the sector.
"It's about creating an interdependence between you and your customers," added Walker. "If you pull your finger out to help them they won't go to someone who's charging ?2 a square metre less."
Finding finance naturally came to the fore in this part of the debate. Most have found it increasingly difficult to raise finance through the bank, which they joked would perhaps prevent more start-ups adding to the competition! "We have a fixed rate three year credit deal with the bank and I make sure we trade within that limit. It makes you more disciplined, especially in getting paid up front," said Richard Clark.
That took the panel onto the issue of increasing bad debt, with a 90 day cut-off period becoming the norm. Putting customers on stop credit has also proved problematic, with Murray saying he's had so many companies on stop that he's been force to look for new clients. Credit ratings were slammed for being out of date and therefore pretty useless, and late payment charges, while added by some, were found difficult to enforce in reality.
Mark Simpson said his group is not suffering from bad debt because it insures against all such losses. Some said they do likewise, but others, such as Murray and Marsh, find the insurance costs more than the bad debt!
The need to diversify was a key finding in the Widthwise Report but there were mixed feelings among the panel as to what that would actually mean for them.
"Going into new markets is risky, especially where it means investing in new equipment," said Simpson. "We try to introduce new products within the markets we know. Retailers are being bought up and we're becoming very involved in helping with rebrands - we have a brand development company and the production group works closely with them."
"We've actually taken on sales people specifically to look into new areas for us, for instance we're talking to morgues," said Graham Clark. Murray said Pyramid Visuals has also taken on extra sales staff to look into markets new to the company, mainly in POS. "About five percent of our clients have gone into administration this year so we're having to look further afield," he pointed out. "We do a lot of vehicle graphics, which has been healthy over the last six months but I think that is going to start falling away." Richard Clark agreed:
"Potentially, vehicle graphics is a shrinking market because vehicles are being sold in lower volumes."
Walker said he can see one new market sector emerging, though he was unprepared, understandably, to enlighten the rest of the panel as to what that might be.
Service was the hot potato when it came to kit and suppliers, with many of the panel extremely dismayed at the treatment they receive.
"We spend ?100,000 a year on service contracts with a certain company, and yet we have had to wait weeks for someone to sort out a problem machine," said one panellist. "We sometimes end up having our own engineer on the phone - a bill I'm paying for - to talk to the manufacturer so they can talk him through the service required to a machine."
Hood said: "We've got a supplier who said it would charge us ?5,000 for a maintenance manual for one of our machines if we were fed up with their service and wanted to handle it ourselves."
Marsh got so fed up with waiting for a supplier to come and fix one of his printers that he told his bank that he was not going to pay the ?7,000+ he had outstanding on the machine and that the bank could have it because it was not fit for purpose. "As far as the supplier was concerned I was just some piddly little outfit that they didn't want to listen to - I thought the bank may have more clout. Some manufacturers just care that if you have a machine down you're stuffed."
"Lack of stock in the UK is another problem," added Walker, to which there was much agreement.
It wasn't all bad: Richard Clark said service isn't really an issue as far as he's concerned as his machines run fine and he's only had to call out an engineer once in four years.
Outside of service issues, the technology part of the programme dwelt on kit living up to expectation, an issue almost everyone found was a problem. Hood summed up the mood: "Part of the problem is that manufacturers create disillusionment. They say a printer can do this and that but practical terms it just can't. We need a more realistic and practical approach. We are the suppliers' customers, but how well we mesh together? Well, we don't."
"The thing that annoys me is this talk of a machine running at X speed in quality mode, and X speed in production mode - is that just more crap than quality mode?" asked Simpson.
"We recently bought a machine and found if ran 30% slower than the quoted speed," added Murray. "Buying on quoted speed is stupid - you need to do your homework."
Difficulties in colour matching and profiling came under the microscope too, the consensus being that there is never going to be an easy solution. "I still see this as a nightmare area," continued Hood, a point of view echoed by most of the panellists. "We have an issue with profiling so the kit supplier blames the materials manufacturer and vice-versa. We go around in circles."
"Even the experts can't get it right," said Richard Clark. "I get all these specialists to come in and they know less than me - so we have no option but to try and deal with it ourselves. The problem is you have to profile each material you're going to use with every machine you're going to use it on. It's unrealistic for the suppliers to do that." Marsh admits that when he buys a new machine he throws the manufacturer's profiles away and sets up his own.
"You're never going to get an industry standard in profiling/colour management. There's no standardisation across software, so if customers are using different software and profiles you're still going to have problems," added Simpson.
This was a topic of real contention, with stridently different views. "There's a real commercial benefit to having various accreditations - not just in using them as a sales tool but because they make you get your house in order," said Simpson. Graham Clark echoed the feeling, adding: "The environment is a great sales tool. We find very few clients who won't sit down and talk about what you can do in these terms, because they need help too."
Though this was a widely accepted view, there were those who feel the environment is a bit of a red herring. "We do see 'green' as a sales tool, and if you're involved in anything to with the likes of print for the Olympics in 2012 then you have to be pretty on hot on being able to show environmental responsibility, but I did a customer analysis and found 70% don't care about the environment. We're having a major drive to get our collect and recycle print initiative moving so we'll see," said Walker. This prompted Murray to add: "We offer a recycling facility and no-one has taken us up on it: customers just won't pay to get their waste back to us." Hood further added: "I've been surprised by the number of customers saying they're really not interested in the 'green' argument."
"There's so much hypocrisy," stressed Marsh. "On EU tenders there's a big section on the environment but when we went to talk to about how we could use a substrate that wasn't vinyl we were told they were duty bound to take the lowest quote, so out suggestion was out of the window. Yet if I put the wrong bit of rubbish in the wrong bin outside my house the same council would fine me."
There was an overall acceptance that the use of PVC in the sector needs to be addressed and alternatives found as customers shy away from its use. And the issue of landfill continues to create problems, with the likes of Richard Clark saying he can find no good way of getting rid of waste vinyl and release liners. Graham Clark offered up that he has found companies that will incinerate such waste, which then produces power so proves a 'greener' alternative to landfill.
"The problem is that it's often about perception rather that realities," said Murray.
Many of those around the table initially focussed on production skills training, with difficulties in pre-press becoming apparent, especially in terms of the need to educate designers on how to provide print-ready files. As to whether that is the printers' job was an arguable point.
"I think we are talking too much about technical training and not enough about training in general," came the call from Simpson. "I see the real training gaps as being in general business areas, such as management leadership, marketing, better negotiation skills. We find that when we try to find good managers/sales within the industry there just isn't enough talent out there. We went on a course last year to improve our recruitment process we that we can find better talented young people - this industry can be too myopic."
Here's a pr?cis off the predictions the panelists offered for the next three years:
- Total market spend in wide-format will grow
- Our POS work will develop
- Green issues will become more important
- Latex inks will make inroads
Stephen Hood - Irrational budget cutting due to general economic fears
- POS will grow
- Dye-sub will prove the new technology
- Vehicle branding and building wrapping will be static
- Olympic effect will boost wide-format
- More investment in UV and dye sub
- Olympics will help wide-format
- Swinging cuts to media budgets in 2009
- More consolidation due to overcapcity
- Vehicle wrapping will grow longer term but 2009 difficult
- Anticipates a UV vinyl for vehicle wrapping