27 May. 2020

Topic: Printing, India

A survey by PRESSIdeas weighing the different aspects of COVID-19 situation and its repercussions on the Printing Industry.

Key findings:

• 3% of the respondents believe it would take one year or more for the situation to normalize again.
• Almost three-fourth (73.5%) plan to cut cost in the existing scenario.
• Liquidity of money and ease/ increase of purchasing power of citizens may help in reviving the economy of the country.

Though there has been a wider sentiment of empathizing with people in need in these difficult times, yet it is pretty obvious that COVID-19 and the lockdown have dealt a blow to millions of small businesses in the country.

COVID-19 has upturned the normal flow of our lives. Industry is facing the most uncertain of terms due to the uncountable repercussions of the sudden crisis. Every stratum of people has been affected so as the various sections of the industry. The economy is in turmoil, which is no less than the social and professional lives of individuals world over. The coronavirus spread unabated with no cure, no prevention except ensuring a safe distance from the virus carrier itself. It spreads so fast through direct human contact that it is usually too late before it is detected. It is often not before it has already infected many others creating a dangerously extended chain which is far more taxing to be properly tracked.

The impending danger of infection and a high mortality rate therefrom triggered panic decisions from authorities world over; many coming as off the cuff and many proving inefficient due to the sheer scale of the spread. Those suspected of possible infection were quarantined, marked and isolated. Those suffering were isolated and kept under medical supervision for the duration of the infection; and those who were worried were presented with a long list of medical advice to follow to avoid the bug. Indian government came up with Lockdown, which meant every outdoor activity, save for a listed few essential services, to be stopped for a period, which was the estimated ‘incubation’ period plus the duration adequate to break the chain of spread of the virus. Most of the country was shut down – with no economic or business activities, no schools, no offices, no factories…. – actually no stepping out of houses. As a result, the industry, chiefly dependent upon unorganized workforce, triggered a wave of fear because of absence of work, earning capacity and uncertainty about future. The salt of lockdown was enough for the injury of economic slowdown the industry was already suffering.

The Lockdown period in India has been extended many times over because the virus kept spreading at ever increasing rate risking more lives should the lockdown be eased. At the time when the present lockdown (the third extension) deadline is too drawing towards a close, PRESSIdeas conducted an online survey of industry colleagues to look deeper into the impact of the present crisis on our Printing Industry.

The survey included decision makers (management, sales, marketing, administration, production) from the industry representing – Printers (offset, digital, flexo, gravure etc.); Print Buyers, Print Machinery/ Consumables Supplier; Printing trade services; Paper suppliers; Packaging; B2B printing services etc. Of all the respondents who took part in the survey, a sizeable 38.8% said COVID-19 impacted their business significantly. What is more concerning is that about 35.7% have termed the impact as critical and about 12.2% have termed it as deadly. Only 13.3% from the industry called the situation more or less normal.

Cost cutting measures will be the direct effect of COVID-19 pandemic

Around 24.5% of the respondents perceive their main difficulty during the crisis as the ‘lockdown impact’ while over half (55.1%) of them suggested that lack of business or orders as the main difficulty. The third largest group called lack of transportation/ material movement as their main difficulty. A small size of industry people pointed lack of labour, finance and other factors as their main difficulty. These difficulties were faced by businesses as there was little or no movement of ‘uncategorized’ material, products and services. Various local authorities put up barriers to strictly implement the lockdown for fear of spread of the disease which also as an effect brought a virtual stop to raw-material as well as finished products.

About 19.4% of the respondents agreed that there has been staff retrenchment/ redundancy while half (51%) denied it. 29.6% are not sure about it. Since, the situation was held in ‘as it is’ situation, employees, customers, labour and material got stuck where they were. Many rushed to their homes with whatever means available to ensure extended sustainability. Even a few who could be shifted to ‘work from home’ scenario were sparingly available.

Cost cutting measures by the businesses representing the Printing industry will be the direct effect of COVID-19 pandemic. Almost three-fourth (73.5%) agreed that they plan to cut cost in the existing scenario. It is obviously because of piling overheads, fixed costs as well as salaries, which are all in absence of the normal business cycle of earnings and spending.

What is fearsome is a big majority of representatives have put their investments on hold. Those who are still waiting to reach a decision in this regard together with those who have already decided to hold investments constitute a big 83.7% of the respondents. It is chiefly because there is uncertainty regarding the elimination of virus which is today freely roaming around hideously. Investments require demand to boost sales and thus return on those investments.

Demand for waivers in fixed monthly costs

In the uncertainty of when and how the situation will be back to normal, investors are holding back their decision to invest. It is more obvious when we see that 65.3% of the respondents from the industry believe it would take one year or more for the situation to normalize again. Only 11.2% say it will normalize in 3 months. Exactly half of the respondents say EMI deferment won’t be of much relief. 39.8% called it a relief while 10.2% have other suggestions to relieve the hardships. Among the EMI deferment suggestions, the period of relief has been wished anything above 6 months without future interest.

Many have agreed about the ‘new normal’ because of COVID-19. The sizeable industry believes extending the lockdown is not a viable solution. The industry should be allowed with clear-cut rules about social distancing, masks, gloves, sanitizing etc.

One respondent in his suggestion said, “The Government Regulations guidelines and support should be less vague. The government should allow all activities related to printing and paper applications so that there’s less burden on the industry and its people.”

“Today, I am worried about the future orders. The industry is facing a very bad situation. I am uncertain about future. I am afraid about customers shifting towards digital advertisements instead of print,” said another worried printer respondent.

“We would also like some waivers in our fixed monthly costs such as electricity and rent which run into lakhs. Please also consider reducing PF and ESI contribution of the Employers as this is also a huge expense,” demands a respondent.

Need for discipline on pricing, payments, HR management, facilities management and protocols for post Lockdown

Though there has been a wider sentiment of empathizing with people in need in these difficult times, yet it is pretty obvious that COVID-19 and the lockdown have dealt a blow to millions of small businesses in the country. Without assistance, most will find it difficult to survive. Printing industry is finding it difficult to receive pending payments. Moreover, there are no fresh orders and many have suffered cancellation of previous orders by customers. “We have already witnessed changes to how work is getting done in this unique “new normal” scenario. In my view only essential services (Boxes, Label priniting) will survive, rest will have to look for changes in their business model,” said a concerned printer.

“Packaging might come back to normal soon but commercial printing would take longer,” adds another.

“There should be waiver of interest and EMI for at least one year. Deferred EMI is only postponing the inevitable. Companies should not hold on or pass on credit when not required,” advised one respondent.

Someone suggested that before anything, the Govt. has to play a vital role by pumping in huge money in the economy so that liquidity of money and ease/ increase of purchasing power of citizens may help in reviving the economy of our country.

We need to adapt to the changes and need to formulate strategies adhering to the changing scenarios. The industry must use this time to formulate discipline on pricing, payments, human resources management, facilities management and put protocols in place to be practiced as soon as the Lockdown lifts.

Some believe there will be fiercer competition post lockdown. While a few others fear there will be heavy shortage of labour in coming months. They think process automation will boost the production.

The situation is extremely bad and will take more than 6 months to come back to normal. Sustaining will be a big issue. The industry needs to bounce back ASAP or else a lot of businesses will be closed. Industry is eagerly waiting for essential Govt support especially for the MSME and necessary relief offerings by way of easing of restrictions, allowance in fixed payments, interest waivers and financial aid for returning back to activity.

Only time will tell what will the COVID-19 really cost the industry before the normal business returns back on track.

Source: https://www.pressideas.com/printing-industry-braves-covid-19/