1 July 2005

BPIF summer Directions shows barometer set to ‘low’

Contrary to the uncertainty of the same period in 2004, respondents to the latest BPIF Directions Quarterly Survey of Trends are suffering from a stagnating market with companies focusing on break-even before contemplating the lure of profits. Rising input costs coupled with the omni-presence of over-capacity continues to squeeze margins further with a balance of 44 reporting worsened margins in the last three months, and a balance of 3 expecting further deterioration in the next quarter. Investment continues to focus on efficiency and productivity as an alternative route to profitability with more firms actively involved with ViP and other ‘lean’ techniques. As the forecast for average prices over the next three months reaches its most pessimistic for almost three years many companies seem to be running hard just to stand still. BPIF Deputy Chief Executive Cicely Brown comments: “Following a buoyant beginning to the year, the market is now back to reality. Although unwelcome, it does give companies the opportunity to look carefully at their business processes with a view to implementing any productivity and efficiency improvements before ramping up again for Christmas. “ The stationery sector held steady during the period despite conditions markedly harsher than expected with new orders at a balance of +41 against the expected +44, although a negative balance of –62 on margins suggests this was achieved at the cost of prices. Like the rest of the industry, belts are being tightened with stocks being reduced and capital expenditure being curbed with a balance of 52 expecting to spend less on new machinery compared to over 90% intending to spend more a year ago. In the Final Thought, Silver Lining’s Peter Hunt draws the industry’s attention to the looming Hazardous Waste Regulations, which require all companies needing to dispose of ‘hazardous waste’ to be registered by 16 July 2005. “At the end of May the Environment Agency admitted that of the estimated 230,000 hazardous waste producers in this country only 142 companies had registered,” he comments.