Heady mix of Covid and Brexit's impact on business means suppliers struggle as insolvencies rise (but the death of the Duke of Edinburgh has boosted the print industry with extra supplements)
One of the few big beasts of the printing and publishing industry has been forced into major cuts and potential redundancies according to a report by Jo Francis in Print Week.
Squeeze on jobs
Croydon and London based CPI Group employ 1,100 staff in the UK and another 1,400 around the world with a revenue of £135m a year. There is no area of printing that the firm does not cover but now it is set to cut back to concentrating on its book publishing business.
Jo Francis wrote: “CPI Group is planning to cease third-party commercial work at its CPI Colour operation after the pandemic hit volumes, with the group set to focus on its core books business.”
In a statement, Alison Kaye, CPI UK managing director for STMA and the colour business, said: “The Covid-19 pandemic has caused a significant downturn in the commercial print sector with no sign of recovery. This downturn and negative outlook have unfortunately made this division of our UK operation unsustainable for the longer term.”
It’s another sign that the British economy is taking massive hits from the joint influences of the Coronavirus shutdowns and the controversial Brexit trade deal. Trying to work out which one is worse is difficult as they are inevitably intertwined.
Death of the Duke
The print industry has been in decline for some years as newspapers, magazines and sales literature increasingly has gone on line. Covid has not helped although books sales have remained buoyant – but the death of the Duke of Edinburgh has given newspapers and magazines the opportunity to publish a whole raft of supplements and extra editions – one of the strange consequences of a Royal death.
De La Rue – who print money – have repaid their furlough payments according to Print Week. De La Rue stated: “Due to the positive outcome of the financial year, the company has repaid all the money received from HM Government's Coronavirus Job Retention Scheme. Furlough payments received under this scheme totalled approximately £0.4m.”
So at least a chink of hope as for a time in the recent past De La Rue were in a spiral of decline.
Picture: The Economist
Zombies
McKinsey reported this month that it could take up to five years for some sectors to come out of the recession created by the pandemic with the arts, entertainment and recreation industries slowest to recover. Currently around 2.7m people are out of work but that could rise to somewhere around 3m by Christmas.
Ian Carrotte of ICSM believes the ending of furlough payments will see many ‘zombie’ firms collapse as the life-support system is removed. “We are aware of so many companies that are just hanging on while the payments continue,” he said, “as they kid themselves more support is in the offing. They have taken grants and loans but if the work isn’t there then cash flow will dry up in October and by 2022 I think the levels of unemployment of the recessions of the 1980s will be surpassed. 4.7m people are on furlough – it is not sustainable.”
Retailing, hospitality, travel, holidays and recreation have been worst hit with around three quarters of a million jobs slashed in the last 12 months. On one day in 2021 British Airways cut 12,000 jobs and since March last year 750,000 jobs have gone for good in the UK including 368,000 in the hospitality industry.
Pic: The Guardian
Irish border
Brexit initially hasn’t seen a big dent in the economy, but the trade deal has which is why there is a delay to its ratification by the EU. Northern Ireland’s economy took the first hit with a de facto border down the Irish Sea damaging trade between the rest of the UK and the province. The resulting instigation of import and export checks and tariffs on some goods has seen trade fall from the Irish Republic and from the ports in Wales and Scotland. Grace periods to ease tensions have been created but long-term having tariffs on goods crossing the Irish Sea are not acceptable to UK and Irish businesses.
One of the most high profile losers with the Brexit trade deal is the fishing industry which it feels has been sold short of the promises. Exporters to the continent have also been hit with many firms deciding on setting up branches across the English Channel to get around the tariffs and even moving wholesale their HQs across the water. It’s a trend that will continue – but it will be many months if not years for the full effects to become apparent – and as to what can be blamed on Covid and what attributed to Brexit.
Suppliers
ICSM's Ian Carrotte (pictured) said the biggest problem of any recession is business failure. He said: "It takes one major firm to collapse causing all their suppliers to lose out as invoices are not paid.
The 1980s experienced periods of high unemployment
"There is the added problem of replacing the lost trade assuming the bad debt doesn't bring the supplier down as well. That is why ICSM is dedicated to helping its members which number in the thousands - from one man bands to major international oufits - to get inside information of potential business failures. By hearing of problems early on companies can minimise their risk and refuse further credit with problem firms and live to fight another day. The Brexit trade deal and the pandemic have created highly unusual trading conditions with a recession that will make the 1980s downturns seem comparatively mild."
About ICSM Credit
ICSM Credit has more than four decades of experience as a credit intelligence group whose members gain inside information about firms in trouble allowing them to avoid bad debts and rogue traders. To join costs less than a tank of fuel - while at the moment there's a special free temporary membership offer during the Covid-19 crisis which gives access to free legal letters. ICSM also has an effective debt collecting service which has a global reach - ask for details from Paul.
For details about ICSM Credit call 0844 854 1850 or visit the website www.icsmcredit.com or email Ian at Ian.carrotte@icsmcredit.com on how to subscribe and to join the UK’s credit intelligence network to avoid bad debts and late payers. Follow ICSM Credit on FaceBook, Twitter and YouTube and Ian Carrotte on LinkedIn.
To keep up to date subscribe to the FREE ICSM Credit Newsletter to hear all the latest insolvency news and to see who has gone out of business click on the orange panel on the top left of the home page of the website www.icsmcredit.com or send an email to Ian.carrotte@icsmcredit.com
For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk