Risk and Reward: sustaining a higher value-added economy - Business and Enterprise Committee Contents

Memorandum submitted by the British Printing Industries Federation (BPIF)


  1.  The British printing industry—as part of the printing and publishing, pulp, paper and paper products—is part of the fourth largest manufacturing industry in the UK with a turnover of £44.1 billion.

2.  The printing industry has a turnover of £15.1 billion and employs approximately 160,000 employees in around 12,000 companies across the UK.

A leading Gross Value Added sector

3.  The printing industry is a vital manufacturing sector, which is of strategic importance to the UK economy. As an integral part of the print and publishing, pulp and paper industry, it has the second largest Gross Value Added (£18.6 billion) of all the UK manufacturing sectors. It has harnessed technological innovation to make an increasingly positive contribution to the UK balance of trade, and it supplies every sector of the UK economy.

An SME industry

4.  Only 60 of the 12,000 printing companies in the UK employ over 250 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, alongside their responsibilities to ensure compliance with employment and health and safety legislation, as well as meeting international standards such as ISO 9001 and ISO 14001.

The BPIF: representing the industry

5.  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.

6.  BPIF has developed a range of business services critical to developing and growing healthy, sustainable businesses. Through a team of around 50 advisors and consultants, all industry experts, the BPIF is able to provide high quality, bespoke advice and support to printing companies, where, when and how they need it.

  We offer a full range of business support, advice and development services and short courses essential to developing businesses and making a real difference to the profitability of companies. These include:

  Health, Safety & Environment


  Business Development

  Human Resources Management

  Legal Support

  Improvement projects

  Lean Manufacturing

  Production training and management development

  Management Accounting and financial restructuring

What is meant by a high value-added economy? Which business activities qualify as such?

  The printing industry is "everything you've ever read". The printed word is such a vital component to our society, to our culture, but most crucially, to our economy. Printed goods support every element of business, from packaging to media, from advertising to signage. It is an essential part of trading and one that has added billions of pounds to the UK economy since printing came to Britain in the late 15th century. Today's printing industry has moved beyond "ink on paper" to total print solutions, with a strong focus on helping companies increase sales volume and reach new markets.

Seen from the point of view of the customers, printing is essentially a service industry, facing increasing demands from customers for innovation in the development of products and services that create new value and benefits for them. While the optimisation of efficiency in the use of complex technologies is still a prerequisite for a successful and entrepreneurial printing company, this is still insufficient in itself to afford any company with long-term viability. It is also essential to create additional customer value, and to do so in an environment where specialized equipment (for example, electronic image processing systems) is relatively inexpensive and routinely installed in the premises of customers themselves, and where technical know-how is increasingly being incorporated into intelligent software that is readily available to customers.

  Printing companies increasingly add value to their customers by providing a wide range of services all of which enhance the ability of those customers to market their products to reach their own end-customers more effectively, These services include:

    —  Help in developing and bringing to market innovative products and print solutions that will enable customers to access new markets.

    —  Assisting companies to develop effective sales and marketing strategies.

    —  Help with image and brand enhancement and the development of effective communications and public relations.

    —  Advice on how to improve understanding of customers' markets and pre-empt customer requirements.

    —  Advice on assistance with information and facilities management services for customers.

    —  Advice on developing service agreements and strategic partnerships with customers based on a shared knowledge base and agreed performance, quality and delivery targets.

    —  Support in developing the customer base through the assessment of customer value, effective retention of key clients and the use of management information systems to improve communications with customers.

    —  Advice on the use of e-commerce for marketing, procurement and payment.

    —  Assisting companies to improve use of digital workflows.

    —  Support in implementing on-demand production and the use of variable data to produce personalised print.

    —  Assisting companies to become multi media information providers, including digital asset management, website design and hosting, CD Rom production and print management.

  The future success of the printing industry thus revolves around far more than how well it manages the process of putting ink in paper. In addition to the optimisation of productivity and manufacturing performance, the industry must address the challenge of product innovation and the provision of integrated solutions to customer needs.

  Government needs to recognise the versatility of the modern printing industry and support this trend in widening the scope for innovation across the UK. The success of the printing industry in rising to the challenge of customer needs should be documented, supported, transferred and taught by Government across the regions. UK competitiveness depends on this approach.

How UK business compares internationally in areas such as research and development, creativity and design

  Print is a quintessential part of Britain's much talked about `creative economy'. The UK's leading brands are dependent on the highest standards of design and print to achieve high impact with end customers. Creative works such as books, magazines, advertising copy, newspapers etc all reach the mass population by virtue of the print process.

The UK's world-renowned cultural economy is also highly dependent on print. The designers and image-makers who design the brochures, programmes and catalogues for high value artistic goods depend on the medium of print to display their works.

  The Department for Culture, Media and Sport recognises the importance of fostering creativity in the UK. DCMS' mission statement is to "increase the productivity of the creative industries, raise their profile, and support their development so that the UK can become the world's creative hub". Print is a vital part of this of this process. Our examples show just how crucial print is to the UK's leading creative industries.

What can be learnt from the experiences of other countries in this area and how fast other countries are moving up the value chain?

  The European Union's statistics office, Eurostat can reveal the differences between the UK and other EU countries and the figures are promising. The UK has the second largest printing industry in Europe, just behind Germany. GVA per employee is the highest of Europe's Top five (Germany, Italy, France and Spain)

The chart below shows that 90-100% of company turnover in each of the other major European printing economies came directly from printing. In the UK 30% of company turnover came from activities other than printing, evidence that UK companies have indeed moved away from the manufacturing role of printing on paper and added aligned services as a means of adding value to their business and for their clients.

Printing Industry - principal activity % of turnover

  Government needs to hone in on the positive lessons that can be learnt from print and to disseminate these across trade and industry as a whole. Not only is the UK printing industry top of its game in Europe, but also in terms of Gross Value Added, it is leading the European pack by a considerable margin.

The extent to which UK business has absorbed new business practices such as lean manufacturing?

  Vision in Print—the Print and Packaging industry Forum—is a subsidiary company of the BPIF providing industry specific and cost effective service to help printers and packaging manufacturers to proactively improve their productivity and competitiveness. It achieves this goal with industry support and through a close relationship with the BPIF, suppliers and purchasers of print services.

The company was founded in April 2003 as a direct result of the then DTI funded Print 21 industry competitiveness study, published by the BPIF. This highlighted a number of strategic actions needed to keep the UK printing industry competitive against overseas production and alternative media.

  Vision in Print focuses on one of the two main recommendations of the Print 21 report—that companies must optimise productivity for long term security and growth.

  To achieve this goal, Vision in Print employs process engineering specialists who work with companies to implement continuous improvement and lean manufacturing techniques, established in world class manufacturing industries. With print and packaging based knowledge and a close working relationship with industry partners, it has developed a broad range of cost saving programmes to help drive the efficiency of the UK printing and packaging industries.

  Vision in Print's "best practice" and "lean manufacturing" techniques deliver enhanced performance and cost savings to UK print and packaging companies and their customers and suppliers.

  From an initial diagnostic, to a host of cost-effective, industry-relevant programmes, Vision in Print engineers are able to coach businesses to improved productivity and profit.

  With simple-to-use tools, ViP's "hands-on" approach has inspired companies of all types and sizes—Newspapers, Commercial, Packaging and Magazines & Books—to progress quickly to sustainable process and bottom-line improvements. The knowledge and experience ViP has gained working with its clients in the five years since it's inception have been diseminated to the wider printing industry through a series of best practice studies:

  In the past four years Vision in Print has delivered:

    —  245 Diagnostics

    —  200 Improvement Programmes

    —  1,200 Delegates on Programmes

    —  10,800 Training Days

    —  £6.1m Added Value Benefit formally recorded (£127,000 average per programme reported)

    —  Six Best Practice Reports published

    —  10 Process Improvement Engineers trained and developed 13 Standard Products developed

  More information can be found at www.visioninprint.co.uk

Why some sectors of the UK economy appear to be more effective at embracing value-added activities than others

  Where there are people, there is print. Print enables all parts of the economy—schools, financial services, retail, distribution, travel and tourism and the manufacturing industry. Because the printing industry interacts with so many different sectors, it is tuned into the needs and the changing environment of the business world. In fact, print is leading the way. This familiarity with the supply chain, marketing and the end product gives print a unique insight into the added value economy. Printing companies can see first hand "what the customer is after" and that way, move in harmony with the times. This is a constant learning process and one that is continuously adding value to service.

This changing landscape of business is no more evident than in the book printing sector. Companies that historically simply printed books, now offer a number of services to compete against low-cost producing countries such as China. Ten years ago, where UK companies would simply print, bind and deliver a book; they now print, bind, laminate, mail, deliver and give a digital option as well as a litho one. Further relationship building services include storage, distribution and warehousing, especially attractive with smaller customers.

  Below we can see from an ONS chart that UK printing adds more value than all other manufacturing sectors, and publishing

GVA as % of total turnover

  The Printing industry with its related services leads the way. It had the highest turnover of GVA across industry. This approach is sustainable and competition-savvy and BERR should learn from and spread this knowledge as widely as possible.

  The impact on business of government efforts to promote research and development, including the research and development tax credit.

  Since the introduction of R&D tax credits in April 2000, small and medium sized entities and April 2002 for large entities, companies have been able to benefit from enhanced relief for expenditure incurred on qualifying R&D. Additional relief of 50% is available to small and medium sized entities and 25% for large entities. Small and medium sized entities are able to benefit from a tax repayment if they are loss making giving an immediate cash benefit equal to 24% of the actual qualifying R&D spend.

  Large entities on the other hand cannot benefit from the tax repayment, however the enhanced relief available equates to 7.5% of the actual R&D spend. These savings would clearly be considered when reviewing the cost/benefit analysis of an R&D project.

  The availability of R&D allowances/credits to businesses is however restricted due to the degree of innovation required in order for the expenditure to qualify under the R&D scheme.

  Government needs to hone its interpretation of R&D to more sector specific benefits that would help industry.

  R&D is about product innovation and about crossing new boundaries in industry. This principle is essential to the UK's future prosperity and the more industry is encouraged and attracted to this line of thought, the more prosperous our future

The progress that has been made on university/business co-operation and knowledge transfer since the publication of the Lambert Review in December 2003

  One of the major sustainability issues that the UK printing industry faces is attracting fresh talent to an industry that has a declining workforce. Young people no longer look to the printing industry as an attractive career. It is often viewed (and portrayed as such by those who know little about the sector) as an old fashioned industrial trade. Consequently many do not see printing as a "sexy" or interesting career. However, the print industry needs to encourage young people to consider working for the UK's fifth largest manufacturing industry if it is to survive and attract the brightest minds.

PrintIT! is a major initiative to encourage young people to embark on careers in the UK printing industry, which was launched three years ago. Led by Proskills (the sector skills council for process manufacturing, including print). PrintIT! is a joint venture between the printing industry, the Specialist Schools and Academies Trust and leading charity The Fairtrade Foundation. It is targeted at Year 10 students studying GCSE Graphic Products and Product Design.

  600 schools and nearly 38,000 students have taken part in PrintIT! so far, thanks to everyone that has helped make the project such a great success. More information can be found at www.printit.org.uk

  The ongoing and crucial area for manufacturing industry as a whole is skills and training. The future of industry depends on getting a grip of the issue of skills gaps and shortages. DBERR business support programmes should be working closely with the DfES to mould a competitive and steady future. There should also be more coordination of activities with schools and universities to promote vocational training programmes and the value and excitement of a career in manufacturing.

  The falling numbers of school leavers taking up careers in traditional manufacturing industries is something Government needs to address. Just as funding for science, maths and technology based subjects receive funding and media attention, manufacturing industries also need their share of the pie. The public needs to be informed about the opportunities that are available for them out there and this task is a national one that Government needs to take a lead on.

Whether business and government interpret innovation too narrowly

  The BPIF welcomes Competition Minister Stephen Timms' recent announcement to reduce the number of business support schemes from 3000 to 100. Innovation needs to be fostered with Government support, especially if we are to promote an entrepreneurial spirit.

This support from Government needs to be clearly defined, easy to follow and attractive to both small and large business owners.

  The Department of Business, Enterprise and regulatory Reform defines innovation as "the successful exploitation of new ideas". As shown above, print is not only one of the most adept industries in the UK at added value services, but also in Europe. We are successful at exploiting new ideas. Printing fits with and works towards the Government's interpretation of innovation. The printing industry is a shining example of innovation.

  Government needs to recognise where the success stories are and foster these with a growing interest. New ideas can be transferred and disseminated from sector to sector, industry to industry, but there is a need to begin with the most promising examples of innovation to start this process for singling out innovation. The printing industry is a fantastic place to start.

What the government can do to further promote higher value-added business activities and innovative thinking among UK businesses

  The approach from Government should be one of `targeted' support for UK manufacturing. When channelled through existing networks, investment in manufacturing companies reaps rewards for individuals and UK plc. This is the link in the chain to better value added activity. Yorkshire Forward's funding of Print Yorkshire (see www.printyorkshire.com) has allowed printers in Yorkshire to access support for training, environmental improvement, business improvement and marketing the industry to buyers. A business improvement support initiative, Print London, funded by the London Development Agency, is now under way and will bring similar benefits to the London printing industry. Vision in Print's growing success is a clear indication of how a relatively small investment targeted at a specific industrial sector has reaped substantial benefits.

The Government should encourage the idea of partnership in every section of economic life. Campaigns should promote the collaboration of businesses with showcase examples. This will encourage SMEs to interact with one another and to find new ways of creating business.

  Print Sells (www.printsells.org) is a pan-European advertising campaign promoting the use of paper as an extremely effective marketing tool. Intergraf, the European confederation of paper and allied industries, supports it. The BPIF and other Intergraf member federations will be promoting it in their respective countries.

  Initiatives that not only help an industry, but the wider economy through added value, need the support of Government. Funding decision makers need to focus on where it matters most, and the sustainability of manufacturing industries through targeted campaigns and on global competitiveness grounds, are paramount to ensuring a thriving and forward looking UK economy.

The effectiveness of machinery of government arrangements in encouraging innovation and creativity

  In an over capacity industry, the printing industry is eager for business to concentrate on competitiveness, which we feel is a vital component of modern business strategy. `Added value' is the area that should be addressed by DBERR as a leading advisor and supplier of business support.

Government needs to better communicate via Business Link activities. Each office under the Business Link brand should be briefed on a common protocol: namely, to provide service only up and until the point at which better service could be provided elsewhere. The BPIF's network of specialist business advisors is vital to ensuring ongoing best practice within the printing industry. Industry knowledge and experience, combined with business support skills, is a tried and tested formula for business improvement that sector trade organisations are uniquely placed to offer. In order to avoid duplication and due to the technical and bespoke nature of the printing industry, this is a service we would be best placed to offer and one which Government should be seeking to support rather than replicate. The spending of public money should be done with maximum efficiency and where expertise already exists in the fields of manufacturing, technology, agriculture etc., Business Links should refer clients forward.

  Government needs to enable sector specific advice to be given by those who are most able to provide it. In the case of the printing industry, the BPIF and Vision in Print are the most qualified and experienced business support organisations in the sector. Business Links throughout the UK need to be aware of this not only in relation to printing, but also for the hundreds of other sectoral specialist business support organisations that are best placed to give in-depth advice to firms in their specific sectors.

APPENDIX (not printed here)

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Prepared 25 September 2009