An excerpt from AP March 2020 Print Leaders Forum – by Ai Group senior membership executive Jenny Berry
We’re a quarter-way into 2020 and already, it is shaping up to be a year of significant challenge for Australia’s printing businesses, locally and globally.
These include long-term headwinds such as a slow economy, slow consumer spending and significant technology shifts, plus the immediate impact of drought, bushfires, global supply chain disruptions and, most recently, the impact of a novel strain of coronavirus sweeping across China, which is Australia’s largest trade partner and the world’s second-largest economy.
Australia’s printing industry currently numbers around 5,780 businesses including 3,000 small employers and 2,500 self-employed sole business people (those with no employees), according to the ABS business register (as of June 2018).
The industry has already undergone a significant degree of rationalisation over the past decade, mainly in response to digital technology developments and consumer trends. Since 2013, the industry has slimmed down from around 6,500 businesses, a reduction of around 12 per cent in business numbers over five years.
The printing industry employed 34,000 people in 2019. The Department of Education, Skills and Employment expects further industry rationalisation due to technological trends will reduce this total to 29,000 by 2024, which is a reduction of 15 per cent over the next five years.
This shift is expected to occur within the context of relatively stable employment numbers across manufacturing as a whole, which suggests that some printing-related roles will, in practice, move to other sectors – for example into paper, cardboard and plastics packaging for food and beverages producers or into textiles and homewares production processes.
Ai Group’s monthly Australian Performance of Manufacturing Index (PMI) confirms that food, beverages and consumables production (e.g. toiletries, cosmetics and healthcare products) remains an especially strong sector of growth within Australian manufacturing, despite the immediate impact of drought and fire (which are already reducing the quantity and quality of some local raw materials and increasing their prices).
The lower dollar is supporting long-term exports growth for Australian processed foods, beverages and other consumable products throughout the Asian region in (as populations and incomes grow) and helping to win back local wholesale supply contracts.
The printing sector is of course not alone in facing down a challenging outlook. Official data confirm that Australia’s economy slowed to just 1.4 per cent over the year to June 2019.
The 2019-20 financial year started no better, with GDP growing by just 0.4 per cent q/q (1.7 per cent p.a.) in Q3 of 2019. This dip was on par with the GFC period of 2008-09. It occurred for a range of global and local reasons including trade disruptions and a slower-growing China; drought; reluctant business investment; subdued consumer spending; and a downturn in local construction.
Ai Group’s latest annual survey of Australian CEOs’ business experiences and expectations found that the disappointing conditions experienced in 2019 – together with a modest growth outlook at best – helped to lower CEOs’ expectations for 2020, even before this summer’s bushfire crisis (and the virus-related disruptions across Asia) took another notch off local growth rates and confidence.
More CEOs are expecting a deterioration in their trading conditions in 2020 (relative to 2019) than an improvement, with 40 per cent of CEOs expecting no material change in their business conditions in 2020 and 34 per cent expecting a deterioration, but only 26 per cent expect conditions to improve.
This indicates 2020 will be the first ‘net negative’ year for Australian business expectations since 2015, on a ‘net balance’ basis (that is, more CEOs expecting a fall than a rise in general business conditions).
Additional copy from chief economist Julie Toth
This article was written prior to the impact of COVID-19. The digital version of AP March 2020 is available here.
And as part of AP’s 70 anniversary, we’re pulling together a list of 70 local industry pioneers – you can make your nominations here.
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