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Oh, to be in England

The U.K. market has become saturated with wide- and superwide-format, digital-print machinery.

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News about what has happened with the United Kingdom’s economy has caught worldwide attention. After a period where our print industry has flourished, it has now hit a downturn that's accompanied by recession threats. The number of companies having “gone into administration” has increased. In the United Kingdom, a company going into “administration” means calling in a specialist receiver who determines what’s salvaged or sold — or whether the company should fold.

One can blame who they like for the causes of this economic house-of-card’s collapse, but the first unease set in with the Northern Rock Bank disaster (fund problems at Northern Rock, the United Kingdom’s fifth-largest mortgage lender, triggered a run on the British bank.) The U.S. subprime mortgage crisis triggered the bank’s problems and, although Northern Rock was eventually nationalized, the blame debate continues.

We’ve also suffered fuel and oil price increases and, now, everything costs more. Inflation is higher than it’s been in 16 years, and this influences everyone — consumers to all sizes of companies. It’s difficult to keep up.

Interestingly, the spiral’s decline begins with the lowest element, the working person. Their basic shoppers’ bag now costs 15% more, and their mortgage interest rates have increased, so there’s little, if anything left for extras. Further, personal borrowing ability has been restricted; thus, the elemental unit of purchasing, the common worker, is down to basics.

Although everyone hopes this economic slump and its accompanying credit crunch are short-lived, I believe it will last two years. Let’s hope I’m wrong.

Such a decline naturally reduces personal spending habits and consequential corporate profits, which subsequently influences business spending, product development and, accordingly, the development of new projects, the advertising of which is the lifeblood of the wide- and superwide-format printmakers. They, in turn, now struggle to meet the higher energy and supply costs: heat, light, power, media, ink, materials, logistics and deliveries.

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In the wide-format-print sector, printmakers had an easy decade, and this enabled them to keep ahead of technology. Investment has been easy, and they’ve had plenty of available projects, so Britain’s digital-print machines have earned their keep. Until recently, it’s been incredibly easy to borrow money, but, the good times have ended because nothing lasts forever — a saying brought to fulfillment by the recent credit crunch.

Eighteen months ago, I voiced fears that U.K. printers could quite easily find themselves with too much equipment and not enough work orders. The U.K. market has become saturated with wide- and superwide-format, digital-print machinery. Higher prices and inflation have exacerbated the problem.

The U.K. digital-print field is fiercely competitive, and minimal costs are used to gain contracts. Few alternatives exist. Today’s costs have also ascended because suppliers — hit with their own cost problems — pass their price increases to their product buyers, that is, printmakers who’ve already hit a brick wall because their budget-restricted clients won’t, can’t, accept price increases. This trend loops back to item one: reduced consumer spending.

To add to this gloomy speculation, the drive to produce environmentally friendly applications has also set a materials premium. Everyone wants to save the planet, but few print buyers are prepared to pay the additional costs. They expect the print provider to do it. And, unfortunately, such efforts may help a shop gain a bid advantage.

Further, no U.K. moneylender is keen on speculative loans; thus, the process of upgrading equipment lists — or gaining operating monies — is difficult. Recently, in the United Kingdom, sizeable businesses have closed without warning, because they reached the financial road’s end.

The United Kingdom — or world — economy may get worse before it gets better, and dependence on traditional work orders may not be enough to stay in business. The niche and specialty producers currently thrive because their leaders understand that it’s important to run a well-tuned company.

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