Market: Three months of a pandemic and now?

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We all probably felt the same. We were reflecting on what our printing industry would look like once the corona virus was defeated. SARS-CoV-2 is far from over. In the DACH region and around the world, there are differences, which has been impressively demonstrated by the Print Media Industry (PMI) Climate Report of Heidelberg Druckmaschinen AG since week 12. Of course, there were manufacturers of food packaging who are generating very strong sales, and the same applies to the third-party packaging sector, which is benefiting from a clear shift to the online/mail order/take-away sector. But the economy is suffering worldwide. Now the question is: Who is among the strong, who can survive this disaster?

“Advertisements will cease to be the same and the print and media landscape will change forever,” murmurs from the advertising scene. Thomas Strerath, the former CEO of Jung von Matt, sketched a picture of the post-Corona era very early on, in which creativity would still play an important role, but would take place in a completely changed ecosystem. A change has at least taken place: What the CEO and the CTO had not achieved in many companies, the COV(id-19) easily managed: giving a strong boost to digitalization. It is becoming increasingly apparent that the speed of change is perhaps not very healthy, and that some companies are slowing down.

Relaxing the coronavirus protection measures along with reopening the retail sector does not prevent airplanes from remaining grounded, travel agencies from closing down completely and hotels and restaurants from being left in a heap of rubble. Printing companies are also feeling the effects of this. After the cancellation of Oktoberfest, all public events, at least until autumn, have been cancelled. Even if production in China is up and running again – lost consumption will never, to the same degree, be regained. Nor will the income that was lost – at least in part. Crisis winners remain the minority. You don’t have to be at the forefront of the crisis, you don’t have to be a retailer or restaurateur to feel that this pandemic is hitting us all hard. The German Federal Minister of Finance and Vice Chancellor Olaf Scholz classified the magnitude of the disaster as “unprecedented”. CNN cited the Spanish flu, the Great Depression and the world wars as references. Whether the bazooka benefits or harms the German government will be seen in the long term. Economists at home and abroad have a highly varied opinion on this. But above all, what should we do if there are indeed further waves? If local lockdowns and the regulation of problem industries, such as meat production, are not enough? Far be it from me to give a socio-critical or medical analysis of the pandemic, what I am concerned with is the impact on the printing industry in Austria, Switzerland and Germany.

The Austrian market has largely adjusted

Christian Handler, of the Austrian Printing & Media Technology Association, attested to the good and unbureaucratic crisis management of his chancellor, Sebastian Kurz. Tax deferrals and short-time work benefits have also helped the colleagues in the Alpine Republic. Handler considered the remaining 500 or so printing companies in Austria to be relatively well prepared for the crisis, as the market shakeout had already been largely completed before the crisis. Of course, there were also companies that were and still are confronted with 60% to 80% loss of sales; at the same time, prices for increasingly scarce resources such as isopropyl alcohol rose. The association switched its website to up-to-date assistance (earlier than the colleagues from Germany and Switzerland). Legal texts were translated there in such a way that even I could understand them and there is still advice from business management specialists.

Handler recommended that the companies take bold measures and become active. Skilled workers are not simply turned out, that’s for sure. “Let us see it as an opportunity for our teams and let us develop a spirit that will hold us together in times of need,” is what I was told on the phone. A good thought. And when I look at the initiatives of the neighborhood aid organizations, I like to think that we humans are, for the most part, socially conscious – now that the toilet paper/pasta hype has died down. The fact that borders were closed was understandable. The uncelebrated birthday of the Schengen zone should remind us that Europe was and still is a good idea. Even if the Italians sang “Bella Ciao” and the Austrians sang Fendrich’s “I’m from Austria” on the balconies. Negotiations are taking place in Brussels and financially, much suddenly seems feasible.

” Regardless of whether it’ s Austria, Switzerland or Germany, no one had a master plan for a pandemic, but companies that have been unprofitable for years and whose liquidity is tight have been suffering not just since Covid-19.” – Bernd Zipper

Mobilization of Switzerland

The situation regarding our federal friends was not to be envied either. The mobilization of the military in Switzerland should not be overestimated, since the military is strongly rooted in Swiss society. In the opinion of Rene Theiler (Swiss Printing Industry Association), the Federal Council reacted quite well in the beginning. The relaxation of measures was at first hesitant, but then courageous. Both were criticized by experts from different camps. What one has to endure nowadays. In the social media there was criticism of the government in Bern. Action should have been taken earlier. One explanation for this position can be found in Swiss tabloid papers during the first Corona weeks. There, journalists reported that in Prato, Italy, thousands of Chinese were slaving away in the garment industry, some of them crammed into factories. The truth is Italy has been cooperating with China for a long time. The fashion industry has not relocated production to low-cost China but has rather brought the cheap labour into its own country, who must now fight racism as “wage slaves” in Italy. No wonder the populists were suspicious – many of them used the nearby Switzerland as a destination for time off from the work ghetto. How the Chinese workers are supposed to pay for such a trip on an hourly wage of about 1€, the fake investigators don’t say.

Rene Theiler, from the Association of the Swiss Printing Industry, reported on uncomplicated loans for companies with a maximum turnover of 5 million CHF. This includes many printing companies in Switzerland. There were 20 billion CHF available as interest-free loans for seven years. However, the situation is extremely tense. After all, the franc has been struggling with its strength against the euro for some time now. As far as bank loans are concerned, many financial experts warn of a delicate situation that could lead to over-indebtedness. The market shakeout in Switzerland, as in Austria, is far from over – although there are numerous companies with “pre-existing conditions”. These entrepreneurs often lack the means and words in times of crisis. “Incidentally, the Swiss were not singing from their balconies. They clapped their hands for the nursing staff who are working against the virus in the hospitals,” confirms Rene Theiler when asked.

Shortage of skilled workers and short-time work

And Germany? Heidelberg’s CEO Rainer Hundsdörfer wanted to take up the case with Minister of Economic Affairs Peter Altmaier for his clients. The complainers were already on his heels. But the man did what any good captain does: he stayed on board, investigated the situation and put his hands on the wheel.

Jens Freyler, M & A Expert at KNOX GmbH, drew a very differentiated picture. Similar to Austria, a large part of the market adjustment in Germany has already taken place in the industry. Demand is clearly collapsing and the at times confusing communication from politicians and the occasionally contradictory reporting continues to unsettle both the printing companies and their customers. No one had a master plan for the pandemic, but companies that have been unprofitable for years and whose liquidity is limited have been suffering long before Covid-19. Hit by the corona situation, they could easily start to stagger. However, many companies could make ends meet with the mix of measures created by the German government, according to the banks providing liquidity support.  “Companies should not be blinded by general statements but should make decisions according to their own specific situation,” advises Jens Freyler.

Almost all sectors – with a few exceptions – are experiencing a problematic phase due to the Corona crisis. The printing industry in particular is affected by the many interconnections with other sectors of the economy and their dependencies. The Print Media Industry (PMI) Climate Report from Heidelberg Druckmaschinen AG provides an up-to-date insight into the state of the print media industry since the start of the COVID 19 pandemic. What is worrying is the rapid development and influence on commercial printing and increasingly also on print shops that produce packaging and labels.

The bvdm economic telegram is already showing a downward trend. The full extent of the crisis will only become apparent when the data for the following months becomes available. The association surveyed 777 companies directly. 94 % of the companies stated that they were affected by declining orders and cancellations, 75 % of them quite heavily. One third of the companies expect a halving of their turnover in the second quarter of 2020 compared to the same quarter of the previous year. According to the survey, just under three quarters had requested short-time work, with most companies using the corona crisis to reduce overtime.

The trend towards e-commerce has continued due to the restrictions in the number of contacts. This gives online printers the opportunity to benefit from their many years of experience. In addition, the crisis is increasing the demand for attractively designed print products. Many printing companies are beginning to fundamentally rethink their position. It could be that some companies are now reaching the point where the existing business model is no longer viable faster than expected.

Musically, the “Ode to Joy” should give courage in 15 German federal states. Well, whether the fourth movement of Ludwig van Beethoven’s 9th symphony helped more than the Bavarian anthem performed in Söder-Land will most likely remain unclear.

The pattern of damage after three months of corona

The printing companies in the B2B sector quickly suffered from the lockdown, as orders were simply cancelled. Things are looking up once again in some cases. People stayed at home and some people made up for the forbidden visit to their grandmother with a personalized mug, canvas or T-shirt. B2C companies, such as Spreadshirt, were able to score here at the beginning. But now people are slowly running out of ideas and money and the B2C segment is experiencing a slump.

And even if we provide as much money as we can, it will lead to bankruptcies. As it was written in an NZZ editorial “Wealth can’t be bought”. The question now is: Who will be able to get the contracts? Many traditional commercial printers who had orders until now have nothing in the pipeline. The sales force cannot get close to the buyers and the production staff who are working in home offices. They control their orders between two team meetings from their computers, and many are happy just to be able to order. A point for the print shop with a good webshop. They pick up the buyers where they are – on the web – and offer additional useful options. Corona has proven to us that we can achieve more if we use methods such as web meetings – and so the crisis is now the source of an incredible leap in the level of digitalization within our society. It’ s high time too.

Healthy people will survive!

In Business Week, economists philosophized about when we must consciously accept the death of some in order to prevent the whole system from dying. We will not be able to save all patients, be they people or companies. Even if I’m not Latin: “a healthy mind needs a healthy body.” Healthy printers have good ideas. They advertise to their customers with products that your customers can advertise with. These companies will survive.

It was the onliners who had ideas and were able to implement them, who can use all their expertise in these times. Landing pages were quickly online, and consumers and resellers alike were able to stock up on everything from simple disposable mouth-and-nose masks with matching screens to individually designed fabric masks.

Bernd Zipper My Take: The results of the Heidelberg survey on the worldwide influence of commercial printing are bitter. Labels and packaging will continue to recover. The companies in the German print and media industry are in principle among the system-relevant institutions, according to the Federal Minister of the Interior, and he is absolutely right. Books and newspapers convey curated knowledge and function without electricity. Only packaging and labels enable products to be sold. The quick reaction of the onliners shows that transformed printing companies can simply react more flexibly to extreme changes. Onliners are where the customers are – online!  Transforming companies will continue to develop and succeed – those companies that have so far refrained from any changes to their business processes will be left behind. And Corona will swallow them up – as we are currently seeing. But: The final results will not be available until autumn. As of October 1, the registration protection for insolvent companies will cease – and I fear the worst. Maybe I will choose my own crisis song after all. I still oscillate between Peter Cornelius “It’s never too late” and “Hells Bells” by AC-DC.
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Market: Three months of a pandemic and now?
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Market: Three months of a pandemic and now?
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We all probably felt the same. We were reflecting on what our printing industry would look like once the corona virus was defeated. SARS-CoV-2 is far from over. In the DACH region and around the world, there are differences, which has been impressively demonstrated by the Print Media Industry (PMI) Climate Report of Heidelberg Druckmaschinen AG since week 12. Of course, there were manufacturers of food packaging who are generating very strong sales, and the same applies to the third-party packaging sector, which is benefiting from a clear shift to the online/mail order/take-away sector. But the economy is suffering worldwide. Now the question is: Who is among the strong, who can survive this disaster?
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Beyond-Print.net

Founder and CEO of zipcon consulting GmbH, one of the leading consulting companies for the print and media industry in Central Europe. The technology and strategy consultant and his team actively support practical implementation in a wide variety of customer projects. His work involves developing visions, concepts and strategies for the players active in the print production process across a wide range of industries. His areas of expertise include online print, mass customization, strategy and technological assessment for print, and the development of new strategies in the print and media environment. Bernd Zipper is the creator and chairman of Initiative Online Print e.V. and, in addition to his consulting activities, is an author, lecturer and sought-after speaker, orator and moderator. His visionary lectures are regarded worldwide as trend-setting management recommendations for the print and media industry. (Profiles also in Xing, LinkedIn).

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