Election spells good times for printing business

The survey, completed by companies across all states and originating from 16 printing and associated sectors showed that business confidence now stands at the highest level since the September quarter 1994.

This surge is a result of the imminent federal election, according to Hagop Tchamkertenian, national policy and research manager, Printing Industries.

"Given that we are probably three to four months away from a federal election, the printing and associated industries are reporting increased confidence about future business prospects," he said.

But the industry optimism was not reflected in the actual trading outcomes reported for the June quarter, said Hagop (pictured below). Outcomes for a range of key economic indicators such as orders, production, sales, net profits, employment and overtime were all below expected outcomes.

Important June 2007 quarter developments reported by the survey respondents include:

Modest increases reported in orders, production and sales;

Reduced employment and overtime levels;

Increased investment in plant and machinery and buildings during the past six months;

Finance reported more easier to obtain;

Labour availability was reported to have deteriorated once again for the 12th consecutive quarter;

Increases reported across all production cost categories;

Selling prices reported to have fallen for the 26th consecutive quarter;

Reduced levels of raw material stocks; and

Increased numbers of outstanding debtors.

On the critical issue of capacity utilisation rates, the June 2007 quarter results show that 65.2 per cent of respondents were operating at capacity levels of 70.0 per cent or higher, up from the 64.9 per cent proportion reported last quarter and the 60.7 per cent proportion reported this time last year.

83.9 per cent of survey respondents ranked lack of orders as the primary barrier to increasing production levels, higher than the 82.0 per cent during the March 2007 quarter, but lower than the record 94.9 per cent during June quarter 2006.

According to Hagop, the September 2007 quarter is expected to yield the following results:

Net balance increases in orders, production, sales and net profits;

Recovery in selling prices;

Increased availability of finance;

Reduced availability of labour;

Increased employment and overtime levels;

Further increases in all production cost categories - average wages, other labour costs, and average material costs;

Increased stock levels; and

Increased number of outstanding debtors.

The June 2007 quarter report reveals high capacity utilisation/activity rates were achieved by the Cheques and Securities, Labels, Quick Printing, Graphic Arts Machinery and Supplies and Paper Merchant sectors.

Considerable levels of excess capacity seem to exist in the book binding, screen printing, graphic reproduction, desktop publishing and graphic design, digital printing and greeting cards, calendars and diaries sectors. All product sectors are expecting improvements to take place in general business conditions during the September and December 2007 quarters.

While most sectors are either forecasting increased investment or no change in plant and machinery over the next six months, the folding cartons, other packaging and paper converting and greeting cards, calendars and diaries sectors are forecasting reduced investments.

Material costs are moderating on the back of a much stronger currency with the net balance outcome reported during the June 2007 quarter being significantly lower than the corresponding outcome 12 months ago. Raw material stocks were also reported to have declined helping to reverse last quarter's reported rise which was the first rise since September quarter 2000.

Whether or not these buoyant times will continue is uncertain. "It remains to be seen whether the confidence will hold up during the September quarter," Hagop said.

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