Labour shortage problem in graphic industries worst in 10 years
The latest survey results have again highlighted labour availability as a serious problem for the printing industry, representing the worst outcome in a decade. This development is attributed to a tightening of the labour market due to record levels of employment in Australia. Labour shortages have now displaced capacity constraints as the second most common barrier to increased production, behind only a lack of orders for industry respondents.
Seasonal factors during the December quarter were responsible for an improvement in trading across a number of key economic indicators, including orders, production, sales and net profits. Despite these improvements however, business confidence in the industry is significantly lower than it was 12 months ago, though the general business expectations indicator remains at a positive level.
According to the 'Printing Industry Trends' survey report, other important December 2004 quarter developments reported by the survey respondents include:
- Increased employment and overtime levels
- Reduced selling prices
- Increased investment in plant and machinery
- Finance reported more easier to obtain but labour availability was reported to have deteriorated once again
- Increases reported across all cost categories
- Increased numbers of outstanding debtors
On the critical issue of capacity utilisation rates, the study results show 74.4 per cent of respondents were operating at capacity levels of 70.0 per cent, a rise from the last quarter's 70.8 per cent but below the 77.1 per cent reported this time last year.
76.9 per cent of survey respondents ranked a lack of orders as the primary barrier to increasing production levels. This outcome is slightly higher than the 75.2 per cent reported during September 2004 quarter, and significantly higher than the 67.4 per cent proportion reported during December quarter 2003.
Industry respondents are not optimistic that the strong trading conditions will continue into the March 2005 quarter. According to the respondents the March 2005 quarter is expected to yield the following results:
- Net balance falls in orders, production, sales and net profits
- Further falls in selling prices
- Increased availability of finance
- Reduced availability of labour
- Increased employment but reduced overtime levels
- Further increases in all production cost categories - average wages, other labour costs, and average material costs
- Declining stock levels
- Reduced number of outstanding debtors
Over the next six months (March and June 2005 quarters) the respondents are forecasting:
- Increased investment activity in plant and machinery
- Reduced investment activity in buildings
The outlook for general business expectations over the next six months remains favourable across most states, with the most optimistic state being South Australia. The December quarter also revealed that the highest capacity utilisation rates were reported in Queensland and Victoria.
As for the product sectors, high capacity utilisation rates were reported during the December 2004 quarter in the following sectors: cheques and securities, folding cartons, greeting cards, calendars and diaries, and other packaging and paper converting.
Considerable levels of excess capacity have been identified in the graphic reproduction, screen printing and quick printing sectors. The majority of product sectors are forecasting either slight improvement or little change for business conditions over the next six months.
Capital expenditure intentions remain positive with only sectors to forecast reductions during the March and June 2005 quarters including folding cartons, graphic reproduction books, as well as magazines, periodicals and newspapers.
Outstanding debtors are expected to fall during the March 2005 quarter, which has been linked to improved cash flow management and practice.
Any one interested in obtaining a copy of the full survey report can contact Printing Industries. Hard copies of the report cost $15 for members and $30 for non-members. Electronic copies of the report are also available on request and cost $15 for members and $30 for non-members.
