The Widthwise Discussions

At the start of this year Image Reports conducted its 15th annual Widthwise Survey of domestic PSPs operating in the wide-format print space. 201 companies responded to that, allowing us to produce a Widthwise Report that provided a real grassroots snapshot of how the sector was performing and feeling. And at that time things were looking quite positive.

Almost three quarters of those polled said they were optimistic about their businesses over the next couple of years - even though half had seen a drop in turnover in 2021 and 40% had suffered a drop in margin. Maybe the optimism had something to do with the fact that two-thirds said they expected the UK’s wide-format print market to grow in 2022/23.

But time has marched on, and I’m really pleased that we managed to get a good cross section of print providers to discuss whether much has changed, what it’s like doing business in today’s landscape, and how they think the sector will fare as we move forward. Here’s a taste of what they had to say - the full video interviews can be found on the Image Reports website.

Firstly, have things changed for better or worse in your own business since the start of 2022?  And what have been the most major impacts?

Spencer: We’ve had a lot of change within the business because we replaced one of our 5m printers which meant we couldn’t do as much work as the switchover was going on. It also impacted us costwise - having to find the deposit, put new electrics in etc. We had a better turnover last year too because we were involved in a big roll-out last year. As we’re a trade company we don’t always know what’s coming up, which can be very difficult, so we just have to plan for best and worse case scenarios and hope we’ll fall somewhere in-between.

Pitts: Since the start of 2022 business has boomed considerably. About 80% of our clients are retailers and having no Covid restrictions has been positive as footfall has increased. Customer surveys and our own indicate there’s still a desire to spend in physical retail, so while the cost of living crisis is a concern, you could argue that some retailers might actually spend more to gain market share in difficult times. As many of them trust to look after their flagship stores we think the spend with us will stay relatively stable.

Rider: Obviously 2021 was Covid affected as was Q1 of 2022. Since then we’ve found the taps have been turned on again. Events that had been cancelled have been brought into this year etc., so last year and this has been like night and day for us. Also coming out of furlough has meant bringing in more staff, and we’re thinking of investment as well having sorted out repayment of Covid-related Government grants etc., so it’s really been a year of restabilisation. With the political and economic landscape as it is we’re just being very cautious.

Baker: We feel quite fortunate. We got quite a lot of work during Covid and since then we’ve found a lot of our customers are being very positive. Our markets are very spread so that’s helped - we’ve seen a huge influx of work for vehicle graphics and from retailers too who are taking over other stores. We didn’t expect 2022 to be as buoyant as it has. We have a few storms ahead I feel, but 2022 has been the biggest since our incorporation.

Wheeler: I think any business that’s come through Covid is a bit stronger than before. We’ve certainly learned how to be a bit tighter in what we’re producing. Power and energy is obviously currently a big topic and it will affect margin, but on a positive note, we’ve moved into new areas and are looking at services to boost the more profitable parts of the business. I think that generally the outlook is good, though somewhat tainted by what’s going on in the world.

What needs to happen/change to increase your profitability? What are your biggest worries going forward - and can anything be done on an individual or industry-wide level to improve things?

Wheeler: Well, we can’t have much of an impact on politics, but canvassing our MP is good option and we use that. In terms of what’s going on in business day-to-day we just look for where margin is best and invest in that area.

Rider: Traditionally, the market we’re in is very time and service driven - price almost tends to be secondary. We garner clients that are loyal to us and will almost give us a pipeline of work. So we are looking at things like machine efficiency. Fortunately, we’ve capped our energy costs for the next three years so I don’t have to worry on that front. But what is worrying is that practically every week we’re getting price increases on media, so there is pressure on being able to deliver the levels of output and service clients demand at a price that’s justifiable. You don’t want to get caught into competitive tender situations where it’s all about price cutting. We don’t want to be busy fools. It’s about growing business with those that are becoming increasingly reliant on us.

Pitts: I suppose it’s about being more picky in regards to the jobs you take on - and not chasing turnover is really important. For us, our full-service offering is where our clients see the real benefit as their own teams have been shrunk. We’re finding more are touching every part of our business so we don’t have to focus on one specific area to earn the money, so sometimes we can be a bit more competitive.

Mark: What Graham and Antony have said is exactly what we’re about too. We’ve built our reputation on being able to deliver and with a lot of the work we have we don’t even price it until we’ve done it! But I do feel that now we’re getting a bit more nipped - the overheads are larger and when it comes to staffing we have to be aware that there are a lot of other opportunities out there. We have the work coming in, but the sign industry isn’t known for being particularly well paid so we have to look at that to retain good staff.

Spencer: We’ve definitely taken a hit on margins due to rising materials costs. They keep going up all the time, and we can’t keep changing our pricing to reflect that - a lot have already put tenders in etc. So we’ve been looking internally at how we can improve things and cut costs. One of the reasons we’ve replaced our 5m printer is that the old one was using a lot of electricity. The new one uses less, the service contract is cheaper, plus the inks are a bit cheaper and you don’t waste so much material. It’s 4-colour rather than 8-colour but because the technology has moved on the print quality is actually better than that we were getting before, while we’re saving money. Also, we’re putting in new offices, and we had a cool design with high ceilings etc but we’ve changed that to one with a suspended ceiling that will make heating a lot cheaper. Even small things like only emptying the waste bins twice day rather than keep opening the shutters and letting in cold air makes a difference.

Do you think the UK wide-format print market as a whole is expanding or contracting?

Spencer: A lot of our trade customers have put in their own wide-format printers now and we have a couple that used to spend a lot of money with us and don’t any longer. It’s most noticeable at the smaller end of the scale - we find our 1.6m machines aren’t as busy as they used to be. Also, a lot of non-specialist wide-format print companies have now invested in the bigger machines, and I think that’s because the market is growing.

Pitts: I definitely think the market is growing. It’s still recovering from the pandemic so it’s hard to gauge as many of us are still getting back to where we were, and in the retail sector there is still the threat from digital marketing, but I’m convinced there will always be a need for large-format printed graphics.

Rider: Post Covid we saw a market contraction because companies that had been around weren’t any more, and other companies have been buying their own machines as Nicole said. But I think that generally there is growth in the sector with people spending again, but then we’re hearing of things slowing up again for Q1 and Q2 of 2023 so it’s a wait and see situation I think.

Wheeler: At this point in time we’re very busy but I don’t think we’ve really felt the pinch yet. I think next year traditional wide-format print areas such as retail, exhibitions and display will contract a bit, but saying that there are other areas that are growing, so it’s about finding those and adjusting your business accordingly to service them.

Baker: Yes, I think it’s all about keeping your eyes open. There are certainly opportunities out there if you’re prepared to flex and bend.

So where do you see potential for growth within your own business?

Baker: For us it’s about creating relationships with those working with bigger companies and offering new solutions that aren’t bland. We’re making a real effort to get them to come in so we can show them possibilities they may not realise are available, such as printing onto glass - jobs that are a bit more profitable for us.

Wheeler: We’ve established that looking after clients is key so they stay with us, then it’s about growing our offering - not just graphics - to those clients via all of our business areas.

Rider: Well, clients for whom sustainability is coming very much to the fore is increasing. It’s ironic that a lot of ‘eco’ products that are recyclable not as usable as others so they need replacing more often so there’s opportunity there! Also, where people are reusing stands and things like that they made need services which we can bolt on that make us more margin. So I think the whole eco-landscape focus will important as we go forward.

Pitts: In the past we’ve grown through acquisition, and that’s proven a good investment. Though growing rapidly in times of uncertainty can be a bit of a risky strategy we are looking at other new relationships - the reality is that there are decent businesses up for sale for good prices most certainly.

Spencer: I echo much of what’s already been said - it’s about looking after clients and constantly seeing if there’s anything else we can offer them. For years now we’ve not really been out to see people because of Covid so we’re focussing on really getting to see them face-to-face and having deeper chats with them. It’s important to sometimes take a break from the day-to-day stresses and focus on the longer-term.

What about investment - are you making any? If so, where are you making it and why?

Spencer: As I’ve said, we’ve replaced one of our 5m machines due to efficiencies. And as I also mentioned, we’re putting in new offices, something we’ve been talking about for years. It’s not just about space for kit, but about retaining staff - you can’t expect people to want to come and work in the ones we have now! We’ve also spent some money on things like a bailer to help us recycle more - our own and maybe some from customers as well.

Baker: Out biggest issue is space. When we moved into our unit there where eight or nine of us and now there are 24, so we need to increase the space then we’ll add a 3.2m Zund as our current finishing table is running eight to ten hours a day. But the questions is how much more work do you have to turn around to pay for the extra space and machinery? But the buzz around the place is great when people can see you’re in growth mode.

Pitts: This year we took delivery of the EFI Vutek h5 because it made sense to make use of the government’s super tax incentive, plus it’s great in terms of productivity and energy efficiency. And it made sense from a space saving point of view. We took out two machines and replaced them with the h5 - which was faster and better. But there aren’t really any further investment plans through the next year.

Rider: We too are looking at replacing a 5m machine due to quality, speed and economies. We need to make sure we have enough work to feed it or it’s no improvement.

Wheeler: Our number one investment is always in our staff, and it’s not always financial, but time and effort. We have been heavily investing in bringing on a younger team and have brought down the company’s average age considerably. You always have to look at your production kit though too and we’ve made a modest investment to keep work in-house that we previously subbed-out. And you have to think about opening new doors - we bought a large-format 3D printer about six years ago that took us into areas we knew little about and now it’s a thriving part of the business.

What’s your take on staffing issues as that’s been mentioned quite a bit? How big an issue is the cost of living crisis and pay rise expectations.

Baker: Two weeks before this meeting I’d have said it wasn’t an issue but you’re always only one conversation away from that changing. Bullying is the long and short of it and some tough decisions have had to be made. Trying to keep everyone happy and onboard without always dangling carrots can be difficult. To be honest I am giving 10% pay rises to some of the seniors who have seen the company through thick and thin but you can’t do that with everybody. It’s tough to absorb but you need to keep your good people on board. What is the industry standard for pay? It’s something we don’t discuss enough.

Rider: A lot of people disappeared in the industry in Covid and didn’t come back so that pushed wages up. The flip side, is that perhaps companies had dead wood that they could get rid of. We are finding the jobs market more fluid now and more people are available and less wage pressure.

Wheeler: I don’t see staff retention is a problem here. We did do a cost of living payment to all our staff though. And we do things that that are fun too - it won’t stop them leaving for an extra ten grand, but it does help if you’re working with people that you’re actually friends with.

Pitts: We run an apprenticeship scheme to help futureproof the business but I think recruiting at the higher level is still difficult at the moment.

Spencer: We have a history of taking on apprentices too but we’re also looking for people with a bit of background experience in signage or graphics as a whole because while we’ve had some really good apprentices, to have them out of the business for a day a week is not always that great for us. We’d rather have someone not on an apprenticeship and learning on the job full time.

Overall, are you optimistic about the future? What are your key concerns going into 2023?

Spencer: Given we’re a trade printer, for us it’s about more customers taking wide-format print in-house. Also, increased prices are of course impacting our customers as well as us, and we do wonder if they are all still going to be around once the full force of the economic situations hits them. We have already seen a couple of really well established companies going bust on us this year so there is a worry there’s more of that to come - just because they’re busy doesn’t necessarily mean they’re making money by being busy.

Pitts: Rising costs and inflation are always going to be a concern. The production staff tend to be the ones towards the lower end of the pay scale so making sure they can actually afford to come to work is an issue because wage rises add to the cost of the business, but we need those people. There’s a lot happening outside of our control, and not being in control is not something I feel comfortable with.

Rider: Yes, business needs certainty and we haven’t got that. We can plan for certain things - we know what events are coming up next year etc. - and we can make efficiencies, such as via a new MIS we have installed, but we can’t control the economic situation.

Baker: For us the biggest issue is just making sure we get paid. It’s great having nice work coming in but we need to make sure customers pay their bills, and pay them on time as some have been stretching their luck a little bit. We could sink at the hands of others who have been overspending.

Wheeler: Ensuring the supply chain is a big issue for us. Yes, our suppliers have got to increase their prices, they’re suffering as we all are, but more important than price is ensuring we have materials. We are having to explore new avenues to ensure we have what we need.  And we are also pushing our suppliers for more information on things like carbon footprint because that’s another concern.

What do you think needs to happen to ‘green-up’ this sector as the focus falls increasingly on sustainability?

Spencer: I think it’s about what happens to print once it’s gone to the end user. It’s all well and good printing onto more recyclable materials, but if it’s all going into mainstream waste what’s the point? But it’s very difficult to change that. We’re giving the print we produce to someone else, who’s giving it to someone else etc. There’s been a lot of investment into recyclable product, and we’ve invested a lot into recycling our own waste, but better information needs to be fed down the chain to end of life. It’s not about just our industry, it’s about educating everybody and it’s a massive project.

Pitts: There’s a lack of infrastructure in the UK in terms of recycling. A lot of those PVC-free materials that are taken for recycling can’t be recycled in the UK and have to go to mainland Europe. If you’re talking about self-adhesive materials for instance which tend to volume up but don’t weight a lot, the eco-footprint and economics of sending it to somewhere like Spain to be recycled just don’t make sense. I think cardboard and paper-based products are key to our offering, because everyone knows how to handle those. It would also help to print in a corner of the graphic produced whether or not it can be recycled, and if so, where it needs to go.

Baker: Doing a lot of vehicle wrap a lot of our material waste is for landfill and though we’d like to put it somewhere else we just don’t have the mass. We need a couple of things: one is education so people know what to put where, then we need some clever people to come up with ways of reusing that product and make a business of doing that, but what that could be I don’t know.

Wheeler: I agree that communication is key - from supplier down through all the groups print materials impact. We recently had a client who wanted to close loop recycling on some graphics - they are collected after the promotion at a modest cost to, which the client pays for indirectly.

Rider: We talk a lot about how we can get end-users on board with recycling. Hopefully, we’ve just recently got to cracking how we recycle PVC-based products in the UK and we hope that will be commercially viable very soon. It will need us to invest and it will change how we manage our waste internally but, also as others have said, there’s all that print which we never see again and how do we control the recycling of that? And if there’s a cost to the printer regarding recycling, will the client pay for it as that affects our margin and we can’t just absorb that at the moment. Businesses aren’t charities. We have a line in our quotations now that say, if you want to recycle it will cost you £X.

This is a difficult ask, but where do you think the sector will be in five years’ time? Will you still be in the sector?

Spencer. It’s difficult to know where we’ll be next week! But yes, I think it is a sustainable sector. I do think digital advertising is something we need to look at, especially in the signage market. I have seen supermarkets close to us putting in digital frames for instance, but they are still alongside regularly changing printed campaigns.

Pitts: I agree with Nicole, and I’d also like to think we will all be better at recycling.

Rider: I think as long as we keep pace with the environmental demands of clients there’ll always be wide-format print requirement. It’s just about staying relevant.

Baker: I’m going to be hopeful and say yes, we’ll still be here and doing well.

Wheeler: There are far too many invested in this industry for it to disappear. We as businesses need to be agile and maneouvre to meet changing circumstance, and in Covid the sector on a whole proved it could.

Views of sponsoring vendors

Having heard from PSPs we held a second discussion, this time with two of the Widthwise sponsors, for their take on the state of the market.

Firstly, how would you describe the state of the wide-format printing market in the UK over the past year? And how do you see the year ahead shaping up?

Argent: I’ve sold a lot of lower-end equipment [1.6m wide printers] and I’d say that over the last year that has slowed down massively as the situation for one- and two-man bands has become more challenging. At the top end it’s still very buoyant.

Rixon: I agree with James. We have seen consolidation in the market and people are sweating their assets as finance gets tighter. I think the mid- to high-end market is much more buoyant than the low-volume. The secondhand machine market also seems to be buoyant. On the whole I’d say the larger wide-format companies are doing better than commercial print companies.

The 2022 Widthwise survey shows that the cost of supplies is a prime concern for print service providers. What have the cost pressures been like for you? Have you raised prices? And do you expect the pressures on supply chains, costs and prices to ease in the year ahead?

Rixon: I think supply chain challenges are going to be present everywhere for some time to come. We don’t discuss pricing for competitive reasons, but in my area of the business we haven’t raised our prices in the last two years. We’re trying to help customers with their current struggles, and with HP being so large and diverse it’s perhaps a bit easier than for some others to try and absorb some of the rising costs. But who knows what the future holds?

Argent: We have pretty good supplies coming through - I think we’ve been able to get on top of that. We too wouldn’t discuss pricing too much, but we’ve only had one consumables rise in the last year because we’re aware of how difficult it is for printers to pass that on to their customers.

With more organisations making net zero pledges, sustainability remains a critical issue. How are you ‘greening-up’ your own business? Where do you think the sector as a whole needs to be making bigger, quicker ecological advances?

Rixon: I could speak all day on this from a HP perspective - it had a social responsibility charter back in 1956. It’s not just about ‘greening-up’ in terms of water-based inks or whatever, it’s a much, much bigger issue and commitment. For instance, it’s pledged to become the world’s most sustainable and just technology company - and we align our goals to the UN’s sustainable development goals. I suppose the elephant in the room is ‘Is print sustainable?’. There are things companies can do at no cost to them. We run a free-of-charge recycling scheme but it’s amazing how many of our customers don’t use it. We also do eco-audits for printers to help them become more sustainable but again, it’s probably under-utilised. Maybe it’s because these are free so they don’t see the value in them! Because we’re so careful not to greenwash, and don’t want to come across as sanctimonious, perhaps we don’t flag-up all we’re doing but we’re now making sure our channel partners pass on the information.

Argent: We’re trying to work more closely with our larger customers to reduce the carbon footprint as much as we can. For instance, we’re always working on our ink technologies to reduce the amount used/wasted etc. In terms of recycling programmes we’re working very closely with media manufacturers. And as Jane said, there are a lot of programmes already out there and I don’t think printers use them enough. But also, we have to look at the end-user. At the end of the day many of them are not willing to pay the higher price for a product to be recycled and that’s a mindset that has to change.

The consensus among PSPs is that the major technological shifts in wide-format are behind us. Do you envisage any transformational technologies emerging in the next five to ten years - and if so, where?

Rixon: It’s 14 years since we first introduced Latex ink and we’ve recently launched new Latex printers of course with a new generation of those inks. And we’ll continue to see everybody continue to develop new inks. In terms of the wider picture I think we need to pay attention to how we manager print fleets, so I think we’ll see more in terms of automation and in terms of printers being able to see remotely what’s going on across their whole production process. We have printOS already that does this, but a lot of people aren’t using it, again, probably because it’s free.

Argent: We have things we’re working on that we can’t talk about, but what I can say is that with the acquisition of Inca we have single-pass technology coming for packaging.

With a more hybrid world of work, do you see Industry 4.0 playing a greater role in the wide-format sector?

Rixon: Obviously HP provides technology across many industries, and I’d say the wide-format print sector is the slowest to adopt I4.0. We have JDF capability built into all of our printers - it’s been there for many years - but when you talk to a lot of companies they don’t even know what it is. I think that perhaps as more young people come through these businesses that will change. I think the technologies are out there, but adoption is very slow.

How optimistic do you feel about the large-format print market in the UK?

Argent: Talking to our customers I’d say we’re certainly on our way back to pre-Covid levels of business, but there are still a lot of end users not spending like they used to. But we’re finding that where that’s the case, print companies have replaced lost or reduced business with something else through diversification. Looking at the next 12-18 months, given the UK economy, I think requirements will actually grow because people will need to advertise more.

Rixon: The companies we’re talking to are currently busy. I think it’s a shorter term market now, with PSPs operating more on a month-to-month basis rather than having a longer term work pipeline. Everyone I talk to seems to be confident about the lead up to Christmas, but 2023 is more of a concern.

Videos of the Widthwise Round Tables in full can be found at: www.imagereportsmag.co.uk/image-reports-videos

In spring 2023 we’ll be doing the Widthwise survey all over again - but in the meantime, if you haven’t already done so, you can download the 2022 report from the Image Reports website at: www.imagereportsmag.co.uk/widthwise