APPENDIX 8
Memorandum submitted by the British Printing
Industries Federation
INTRODUCTION: THE
UK PRINT INDUSTRY
1. The UK printing industry employs around
167,000 employees in more than 12,000 companies.
2. The total turnover for the UK Printing
Industry in 2004 was £15.2 billion.
3. The industry is part of the UKs fourth
largest manufacturing industry by turnover and second largest
by value added.
4. It makes a positive contribution to the
UK trade balance. In 2005 the printing sector's contribution was
£542.9 million.
Print: an SME industry
5. Approximately 90% of firms in the industry
employ fewer than 20 employees. Only about 550 firms employ more
than 50 people. In these small companies, management time is at
a premium, with individual managers thin on the ground and having
a multitude of roles to perform. In many cases this will include
production tasks, undertaken alongside employees, and administration
to demonstrate compliance with employment and health and safety
regulation.
Print: across the UK
6. Printing companies can be found in practically
every town throughout the UK. Although London and the south-east
of England has the greatest concentration Glasgow, Leeds, Manchester,
Nottingham, Birmingham and Bristol are all home to a significant
amount of printers.
The BPIF: representing the industry
7. The British Printing Industries Federation
is the trade association for the UK printing industry. It has
1,915 member companies with 77,000 employees, covering approximately
45-55% of the industry by turnover.
SUMMARY OF
EVIDENCE
8. In summary, this evidence will argue
that:
(a) The printing industry has significant
overcapacity, resulting in declining prices as costs increase.
Rationalisation, company failure and redundancies are a common
result of this squeeze on margins.
(b) The Regional Development Agencies' self-promotion
should be coordinated to bring in overseas investment rather than
competing with other regions to no net gain to UK plc.
(c) Reform of public sector buying practices
would make the sector more attractive to innovative suppliers,
who currently find that the sectors onerous information requirements
erode any possible profit from any work secured. Proposals for
reform are suggested below.
(d) Skills needs in the industry are affecting
companies' abilities to develop new products and services. Proskills,
the industry's Sector Skills Council, is currently developing
its Sector Skills Agreement and initial survey findings point
to the necessity of in-house, flexible training provision.
(e) Training provision in the industry is
limited by the absence of large companies with the resources to
become training providers, and the decline in local college provision
of print training. The BPIF's role as the industry's main training
provider is hampered by inequitable funding and uneven recognition
across the UK.
STATE OF
TRADE
9. The latest BPIF survey of trading trends
(published in October 2006) was among the most depressing of recent
times, as the print industry has failed to keep pace with either
manufacturing or the economy as a whole.
10. The summer months (June-August) were
ones of almost unremitting disappointment for the majority of
the industry.
11. That three-fifths of respondents cannot
see the industry improving year on year is worrying, particularly
against a background of an economy growing at an above-trend rate.
12. Printers have always been used to some
degree of volatility, but the current level of unpredictability
is a new problem to cope with. Periods of idleness can quickly
be followed by periods of considerable overtime.
13. "Running faster to stand still"
and the need to "rationalise" remain strands common
to many respondents. Headcount will continue to be reduced in
response to cost pressures, but those with access to the necessary
funds are buying more efficient equipment.
14. The fact that private equity firms are
interested in buying print companies and that there is a high
level of merger and acquisition activity are signs of both weakness
and strength.
MARKETING UK PLC
Focus on a national, not regional, strategy
15. The printing industry is a widely dispersed
industry without notable geographic clusters. We have not benefited
from the Government's regional approach to business support. Our
members are victims of a postcode lottery, where those in London
or Yorkshire benefit from industry specific support projects,
while those outside those areas are excluded from all but generic
support.
16. Within the areas where print is recognised
by RDAs, the BPIF has been able to set up valuable business support
organisations to promote the industry. For example, Print Yorkshire,
the business support organ for the Yorkshire printing industry
part funded by Yorkshire Forward, has organised two successful
Showcase events that has allowed Yorkshire printers to market
themselves to print buyers. An LDA-funded business support programme
will shortly be commencing in the capital.
17. Regional Development Agencies' inter-regional
competition for business brings no net gain to UK plc. Regional
Development Agencies should—within a national plan—focus
on attracting inward investment from overseas rather than from
other regions.
PUBLIC PROCUREMENT
Make public procurement more straightforward
18. There is considerable political consensus
that the spending power of the public sector should be used to
identify and invest in innovative manufacturers. If the Government
is serious about its commitment to encouraging innovation, particularly
in SMEs, it needs to ensure that they are able to access and apply
for contracts easily.
19. However, conversations with printers
suggest that many high-quality companies do not market to the
public sector because it is insufficiently dynamic, the tender
process is too time-consuming and the return on investment insufficient.
20. The following section argues that effective
public sector buying is hampered by divergent policy aims and
burdensome procurement rules. These result in costly application
forms for suppliers and an increase in costs from intermediary
assessment providers and from the buyers themselves. The system
therefore deters the very companies that the public sector should
invest in. We will put forward proposals to make public sector
buying more straightforward in order to make it more attractive
to innovative companies.
Case study 1: a successful digital printer
employing 24 people in the North East withdrew from supplying
the public sector after analysing the contribution its public
sector work made to its profit margins. While public sector work
formed a significant part of the company's turnover, its contribution
to the company's profits was insignificant and did not justify
the time required to complete the necessary paperwork.
Political pressure on buyers results in costly
application processes
21. Public procurement is being directed
to promote a wide range of policy aims: environment, training,
social clauses, small businesses. These aims are not prioritised
and as a result there is a significant lack of clarity about the
process by which applicants are assessed. A common comment from
our members is that lengthy tender application forms are simply
"box-ticking' exercises which have little or no relevance
to the final selection.
22. Political pressure on buyers to comply
with these policy requirements means that suppliers must fill
in lengthy application forms. Providing information for these
application forms is a time-consuming and therefore costly process,
the burden of which falls disproportionately on SMEs.
23. The information requirements of these
application forms are such that an industry of intermediary assessment
providers has developed. These companies carry out the initial
assessment of companies on behalf of a public sector buyer. They
provide the service free to the buyer but charge suppliers an
annual fee of between £200 and £500. They are not publicly
accountable and do not work to common independently-approved standards.
An Office of Government Commerce investigation concluded in December
2005 that they presented a barrier to SMEs wishing to trade with
the public sector.
Ease of trade impeded by procurement regulations
24. Evidence is emerging from a number of
sources that procurement regulations, designed to ensure competition
between companies and easy access to public sector business, are
having a counterproductive effect on the public sector's procurement
strategies.
Case study 2: OGC Pan-Government Print Framework
The Office of Government Commerce was tasked
to examine how the public sector buys print and develop an efficient
method to do so. Print was selected because it is purchased by
all Government departments. The OGC found that one of the costliest
aspects of public sector print buying was running OJEU-level tenders,
which typically took twelve months to complete. It subsequently
developed a framework list of approved print suppliers, put out
to tender through the EU open procedure. The purpose of the framework
is to develop a list of suppliers, divided into "lots",
which then compete in "mini-competitions" which do not
go through the EU procedure. The framework is available for any
public sector body to use.
The disadvantage of this is that each "lot'
has only a dozen companies for a framework list that will be used
for four years. There are over 12,000 printing companies in the
UK; the OGC's solution will use fewer than 200 of them.
25. The EU procurement regulations, designed
to ensure that all EU companies can freely compete for public
sector business, have therefore resulted in a system that prevents
the vast majority of UK printers from trading with Government.
Case study 3: the BPIF Government Print Portal
The BPIF is developing an online print portal
to allow public sector buyers to buy print as efficiently as possible.
The proposal would eliminate pre-qualification processes (suppliers
having pre-qualified on entry to the system), minimise the cost
of seeking quotations and allow buyers to select particular company
characteristics, such as high environmental standards or a commitment
to training staff. This proposal would benefit the printing industry
by significantly reducing the costs of doing business with the
public sector, while benefiting buyers who would have a huge number
of companies competing for their business.
Conversations with public sector buyers in the
preparation of this portal has found that, although there is enthusiasm
for the system, buyers are not confident that it can be developed
to comply with EU procurement regulations.
Case study 4: charges for tender documents
BPIF members have complained that a number of
universities and councils require buyers to pay a fee before they
are able to access application forms to tender for work. This
discriminates against small firms who find it hard to pay repeatedly
for documentation to secure new business. The sums charged so
far range between £30 and £118. Thus far, the BPIF has
persuaded two such public bodies to refund the charges. The other
six have so far declared their intention to continue to use these
charges on OJEU-level tenders. They justify this decision either
on the perverse grounds that suppliers benefit from the EU procedures
so should share their huge cost, or on the grounds that the fee
acts as a filter to "unrealistic" applications.
Our proposed solutions
26. Better prepared tenders with clear capability
requirements: printers report that contract specifications do
not clarify the requirements of the buyer, making it difficult
to assess their competitiveness for the contract. This results
in applications "on spec", which increases the administrative
cost to the buyer and supplier.
27. Standardised assessment template: we
were pleased that the Office of Government Commerce recently agreed
to develop a standard simplified template for public sector buyers
to use. This will reduce significant duplication of effort for
suppliers and provide a standard to which third-party accreditation
providers will be held.
28. Sharing information between third-party
accreditation suppliers: suppliers do not benefit from the development
of third-party accreditation providers because the accreditation
providers do not have to compete for their business. If a supplier
wants to do business with a public body that uses an accreditation
provider, it has no choice but to pay the administration fee.
Were the providers to share information then they would have to
compete for suppliers' business, which would introduce much-needed
transparency and service competition into the market.
29. Re-examine UK implementation of the
EU procurement directives: there is a widespread belief among
UK public sector print buyers that all tender applications under
the EU procedures must be exhaustively processed, which is extremely
time-consuming. It would be helpful to explore the scope within
the EU procurement directives for quick elimination of applicants
lacking the capacity to carry out the work. The alternative is
the current system, where applicants are not informed of their
success for months due to the time needed to fully process all
applications, and buyers set fees for tender paperwork as a clumsy
filter to reduce the number of applicants.
SKILLS SHORTAGES
Flexible training provision required to fill skills
gaps
30. In February 2005 the Print Education
and Training Forum, published a report, "Recruitment and
skills in printing and graphic communication", which analysed
the results of 260 questionnaires from print companies. Results
relevant to the prevalence and impact of skills shortages identified
by the report are summarised below.
31. More than half of all establishments
(57%) said they had carried out training (excluding health and
safety training, induction training or training for union representatives)
in the past year.
32. Skill-shortage vacancies are defined
as occurring when vacancies are hard to fill for skill-related
reasons. Of the 52 establishments with hard-to-fill vacancies,
34 reported skill-shortage vacancies. This figure represents 13%
of all 260 establishments, 48% of the 71 with vacancies, and 65%
of the 52 with hard-to-fill vacancies.
Skills gaps
33. Just over half of the 260 establishments
(51%) said that they had skills gaps. The qualitative research
provided a useful insight into this area. There was a universal
view that, in a period of accelerating technological change, there
could be skills gaps of one sort or another at virtually any time
as people sought to keep up to date with change. In this context,
people thought that the survey findings might be understating
rather than overstating the extent of gaps.
34. The occupation with most skills gaps
was management. For production management and control, a third
of establishments (33%) said they had skills gaps; for other management
and supervision, just over a quarter (26%) said they had gaps.
35. Nature of skills gaps: In addition to
IT, some of the most important gaps, by occupation, were as follows:
— Management and supervision generally.
— Management skills, communication
skills, teamwork, problem solving and customer handling.
— Sales and marketing Management, communication,
teamwork, customer handling.
— Print administration Customer handling,
communication, teamwork, problem solving.
— Pre-press Communication, teamwork.
— Machine printing Teamwork, problem
solving, communication, flexibility, management, ability to operate
new equipment.
— Finishing Ability to operate new
equipment, basic computer literacy, teamwork, flexibility, problem
solving.
36. Almost a third (32%) of those with skills
gaps said that, as a result, they had completed work late, badly
or below the required standard. 26% said they had been unable
to develop existing products and services as much as they would
have liked; 22% said they had been unable to develop new products
and services as much as they would have liked. 22% said they had
had to put work out to sub-contractors. Just over a quarter of
establishments (26%) said that their skills gaps had had no significant
effect on performance.
37. Increasing training and development
was by far the most common action taken to deal with gaps. It
was mentioned by 56% of the establishments with gaps. The corresponding
figure in the 2003 research was 60%. Use of more temporary staff
and/or sub-contractors was mentioned by 25%, and changes in working
practices by 13%.
38. 30% of establishments said they expected
to need new skills over the ensuing 12 months. Exactly half the
establishments said they did not; 18% were unsure and 2% did not
reply. The largest establishments, in particular, said they expected
to need new skills. These figures are almost identical to those
reported in 2003.
39. These findings, particularly the lack
of management skills, concurs with the CBI's recent skills profile
of the UK. In response to this recognised need, the BPIF developed
a Professional Certificate in print Management. London College
of Communication has also developed an MBA for printers in conjunction
with the Heidleberg Academy, an internationally prestigious print
academy. However, despite employers' acknowledged need of such
training, both courses struggle every year to recruit trainees
onto the scheme. Anecdotal evidence suggests that management time
is at such a premium within the small firms that make up the overwhelming
majority of the industry that firms simply cannot release such
staff.
Employers express need for flexibility in training
provision
40. Early reviews of Proskills' Sector Skills
Agreement survey, which collated responses from 909 print companies,
found that a striking 64% of employers rated in-house, uncertified
training as a "very important" type of training. The
only other type of training rated "very important" by
more than 10% of employers was training from equipment/produce/service
suppliers. Even then, only 22.6% of employers rated this as "very
important".
41. Qualitative evidence from employers
suggests that in-house, uncertified training was rated highly
because it allows employers flexibility to adapt training around
production needs. Training can be called off if there is a production
crisis.
EFFECTIVENESS OF
DIALOGUE BETWEEN
INDUSTRY, TRAINING
PROVIDERS AND
SECTOR SKILLS
COUNCILS
Industry's main training provider hampered by
uneven funding and recognition
42. This section will summarise the current
state of the development of Proskills, our Sector Skills Council,
and provide examples of some of the difficulties faced by the
BPIF as a the industry's main national private training provider.
Proskills: a work in progress
43. The printing industry comes under Proskills,
the Sector Skills Council for the Process and Manufacturing Industries.
Proskills comprises the building products, coatings, extractives,
glass and printing sectors. Print is the largest industry within
Proskills' industry footprint. Proskills was established in November
2005.
44. The introduction of Proskills has led
to an understandable lull in the dialogue between industry and
training bodies, while the new organisation established its physical
offices and merged the existing employers' fora. The BPIF is keen
that employers engage with the new body to ensure that it fulfils
its purpose as the means by which employers shape qualifications
to their needs. In the absence of this engagement, there is a
risk that Proskills will be limited to delivering Government policy
which does not meet the priorities of the printing industry.
Print training provision across the UK
45. The industry has one National Training
Provider in the form of the Training department of the British
Printing Industries Federation, BPIF Training.
46. In 2005 there remain only seven colleges
in the country providing training in print. This is in contrast
to the twenty-seven offering courses in print in 2002. This means
employers can only access local training provision in Leicestershire,
Nottingham, Birmingham, South Yorkshire and Cornwall. The BPIF
is the only provider covering the whole of the country, using
a network of mobile training coordinators who visit trainees in
their workplaces.
47. There is no employer in the industry
that has the resources to take on the financial risk and bureaucratic
burden of becoming a National Training Provider. The largest company
in the UK, the Polestar Group, which employs just over 3,500 people,
has a employer provider contract to deliver training for its own
staff.
48. BPIF Training is the only sector training
provider, existing to offset this market failure. In June 2006
it was awarded a grade 2 from the Adult Learning Inspectorate
and has a 60% completion rate—far above the national average
of 31%. It works in partnership with Amicus's Union Learner Representatives
to develop a culture of learning within workplaces but takeup
of training remains patchy.
National providers face LSC postcode lottery
49. BPIF Training, as a private work-based
national training provider, encounters great inconsistencies in
local LSC's policies towards national providers.
Case study 5: a printer in Manchester
seeking print training was told that it had to access a local
provider despite none being available delivering the required
training. It refused to allow BPIF Training to carry out the training
despite it being provided in the Manchester workplace, suggesting
instead that BPIF Training sub-contract through a local college,
which would have resulted in a proportion of the funding going
towards two levels of administration. Five metres across the road
from the company in question, Lancashire LSC was happy to fund
BPIF Training directly.
Private providers penalised
50. There remains a disparity between the
funding provided to colleges and that provided to private sector
providers.
51. Colleges, as FE providers, can access
capital funding to invest in equipment and property. Private training
providers are not able to access this funding and therefore cannot
invest in their training provision.
52. We support the CBI's calls for a level
playing field for training providers. As BPIF Training is the
only provider across most of the UK—the result of the market
failure of college and employer training provision—it should
be able to access funding as an FE provider. This will increase
its ability to develop training to meet the urgent skills needs
of employers.
CONCLUSION
53. Focus on a national, not regional, strategy
to market UK plc.
54. Make public procurement more straightforward.
Proposed solutions:
(a) Better prepared tenders with clear capability
requirements.
(b) Standardised assessment for applicants
for public-sector work.
(c) Sharing information between third-party
accreditation suppliers.
(d) Re-examine UK implementation of the EU
procurement directives.
55. Allow private training providers to
access funding as FE providers, particularly in cases—such
as the printing industry—where there is little or no employer
or college training provision.
September 2006
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