A Large-scale Energy Crisis Broke Out in Europe, And The Current Situation Of Packaging Printers in The UK?

A large-scale energy crisis broke out in Europe, and the current situation of packaging printers in the UK?

Soaring energy prices have led to another increase in overhead costs for printers in the European region, but for those whose contracts are coming to an end, the price hike is just as huge. Some printing companies have seen their electricity bills quadruple when they renew their electricity contracts. For example, Charlesworth, a printer in the Wakefield area, was recently forced to sign a three-month contract at 275% more than before.

IPIA managing director Brendan Palin warned that for some companies, rising prices could present insurmountable challenges. “The printing industry is an energy-intensive industry. It’s unavoidable, and if your overhead and utility bills go up substantially, that’s just another straw that breaks the camel’s back. The last few years have meant a great deal for printers. series of crises."

According to IPIA research, the impact of Brexit legislation on logistics, and the fact that commercial printing has lost around 60% of its total revenue during the pandemic, has now been combined with a series of increases in the price of printing press consumables, while for printing Businesses are now in the "recovery phase".

Paul Manning, managing director of London-based Rapidity, said he was "spooked" recently when looking at available contracts. "I don't think everyone really realizes the importance of rising energy costs. What's coming is very distressing."

While Rapidity's own contract has one year left, Manning fears their power contract may be cancelled and need to be re-signed. "Every company in the manufacturing printing industry should be watching when their deal closes and plan what they're going to do after that. Barring a major change next year, if a new contract needs to be signed, the amount of money that needs to be paid for a new contract The fee will be 3-4 times what is currently paid.”

Even carbon neutrality is making printers feel the pinch. Zoe Deadman, managing director of Launceston-based KCS Print, changed the electricity contract in August 2021, before the worst of the crisis. Even so, she saw a 35% increase in KCS daytime rates and a 75% increase in nighttime rates. Although the company has reduced electricity use by 23% between 2020 and 2021, it is still feeling the impact of another increase in overhead costs.

Deadman said: “We are an industry that relies on significant capital expenditures, and rising costs have a significant impact on the profitability of the industry. All avenues for improving efficiency in all forms of waste, including energy, must be harnessed to Make the most of it. Ultimately as printers we have to work efficiently, but one day, the rising costs have to be passed on.”

Julian Hawking, managing director of St Austell-based Nationwide Print, agrees: "You have to pass the cost on or survival is a problem."

However, BPIF chief executive Charles Jarrod said printers may have to act when customers don't understand. “In some cases, long-term contracts are already in place, reflecting different cost histories, and this is where things are particularly challenging. Contracts and legal advice may need to be read in detail. Clients need strong suppliers, suppliers need supportive of customers: There are good reasons to demonstrate a shared interest in flexibility.”

However, Manning worries that if printers continue to pass the cost on, the printing industry will suffer, if not irreparably. "It's not as easy as just passing the price. Print has been competing with alternatives like digital media and we're in a very dangerous area right now. If you're just trying to pass the cost on, what you have to do is reduce the workload and reduce demand, but it's a very vicious circle."

However, according to Palin, there may be some help for struggling printers. "We meet weekly with the Department of Business, Energy and Industrial Strategy (BEIS) and we've been making the case very strongly to them, not just printing, but all energy-intensive industries desperately need the government to protect manufacturing in this country. "

Earlier this year, policy support looked unlikely due to continued uncertainty over the war in Ukraine, Palin said. “But now, the Ministry of Finance and the Home Office seem to be more willing to do something. While IPIA has not heard anything concrete, it is hopeful that the government will provide subsidies in the coming months. However, what is the printer’s advice on how the government can help? Not optimistic."

"I don't think it matters, because they're not going to do anything," Hawking said. "They're not doing anything for printing companies during the pandemic, no grants, business rate relief, nothing. I'm not expecting anything."

For Manning, however, the government will have no choice but to act when it realises the magnitude of the problem - not just for printers but for all UK manufacturing. "They have to do something or you're just going to see massive business closures, but at the moment a lot of printers don't seem to realize the magnitude of the problem. I was at an industry event the other day and I reckon the Half of the people know nothing about it. They don't know there is no price cap on energy prices in the commercial sector."

If reports of an energy crisis that could last up to three years are true, it would mean serious consequences for energy-intensive industries such as printing. "If we have three years, then honestly we're just talking about reducing how many printers will eventually be forced out of business," he said.