The UK printing industry provides products and services to every business sector of the UK and makes a net contribution to the UK balance of payments, according to Research and Markets, based in Dublin, Ireland (www.researchandmarkets.com). Its report estimates that the UK market for printed products in 2005 was £13 billion ($23 billion), an increase of 1.6 percent from 2004. This confirms the fact that 2005 was a difficult year. Demand for printed products grew very slowly and in some sectors it actually fell. Printers’ costs continue to rise, especially for energy, paper and inks — but many are passing on these higher costs by charging customers higher prices. Meanwhile, severe competition within the industry is another constant factor that printers have to contend with. Therefore, profitability is weak even among the top tier of printers.
The UK printing industry is highly fragmented, with thousands of small and medium-sized firms. Out of nearly 12,095 companies, only 3.1 percent have sales of more than £5 million ($8.75 million). Only four UK companies have a turnover of £400 million ($700 million) or more. Indeed, 96.9 percent of the industry’s companies have a turnover of less than £5 million.
The issues affecting the industry remain pricing, skills shortage and keeping abreast of new technology. Given the low profitability, the level of investment in the industry is high. Another feature of the industry is its success in export markets in the face of strong competition from abroad.
Last year saw a large number of mergers and acquisitions and many more are expected this year. The report says some in the industry feel that 2006 is likely to prove a watershed, with some major restructuring taking place. The future of two of the UK’s industry leaders, Polestar and Communisis, is unclear. The first may well merge with another, while the second is up for sale. The advent of two mega-sized print factories — one of which began production in summer 2005 and the other due to open in April/May 2006 — is thought likely to trigger large-scale change in the industry.
The report forecasts that by the end of 2006 the printing market will have increased by around 2.1 percent to £13.27 billion ($23.23 billion) and by a further 1.9 percent in 2007. Thereafter, the market is likely to rise by around 2.2 to 3 percent a year until 2010.