Energy crisis could mean printing price surcharges

The energy crisis that is currently affecting many industries across the UK could result in higher price costs for customers of energy-intensive printing operations such as hot rotary offset, where companies must also use gas to operate. their dryers.

The wholesale price of gas has inflated 250% since the start of the year, although consumers are currently shielded from the increase by the cap on energy prices.

The situation is also affecting electricity prices, due to the shift from coal-fired power stations to renewables, with gas taking over and accounting for around a third of electricity production.

The UK is also particularly exposed to global fluctuations in energy prices due to the large amount of imported gas.

Companies are not protected by the price cap, with British Steel warning that the situation is “getting out of hand”.

While some printing companies may have set up fixed-term contracts, those that do not or have recently terminated their contract have found themselves in a difficult position.

BPIF CEO Charles Jarrold said Printing week that printers were already facing the most severe cost pressures in a decade, with prices for ink, plates, blankets, paper and logistics on the rise.

“The sector has been remarkably resilient throughout the pandemic, reflecting the experience, knowledge and diversity of the sector. Unfortunately, as I noted at the time of the recent increases in national insurance, there is acute cost pressure throughout the economy, and our industry cannot escape it, ”he said. -he declares.

“Our print outlook survey shows that August’s cost pressure was at its highest level since 2011, and we know there are other real pressures on both the availability of critical materials and skills. Businesses will need to think very carefully about their business strategies as these cost increases spill over, and we will continue to engage strongly with government both to ensure their awareness of the pressure on business and to seek to reduce the impact of some of the government initiatives that can very significantly increase the operating costs of the sector, ”Jarrold said.

A web offset printer said Printing week that even if his company was currently on a two-year fixed contract, it would be worrying if the situation continued.

“It is the renewal that is a concern right now,” he said.

Walstead Group, which has three heat-welded tape offset factories in the UK in Peterborough, Bicester and Roche, have reportedly written to customers explaining that they will have to implement a surcharge due to the situation.

Group chief executive Paul Utting declined to comment on the details of the surcharge, but said the increases in energy costs were “huge and we cannot absorb them without involving other stakeholders” .

He said: “Since last week, gas is four times higher than a year ago and electricity five times higher.

“Especially for web offset businesses that are heavy users of electricity and gas, this is a significant problem. “

He said the increase in gas and electricity alone amounted to a 20% increase in overall costs.

“It’s a problem for everyone. In addition to the problems with paper, logistics, ink and blankets, all of our costs are increasing by a double-digit percentage. As an industry, we have to share it with customers, ”he said.

Jeremy Walters, CEO of Paragon Customers Communications, said if the situation persists, it could lead to competitive disparities as well.

“If it’s short term, we have enough agreements in place to be protected, but that’s what happens when those agreements are under review. We could find ourselves competing with people whose costs are locked in, ”he explained.

“We have had the strongest headwinds on costs for a very long time from a people perspective and also from a materials and utilities perspective. “

Mark Pfeiffer, commercial director at Prinovis UK, said the rotogravure and web offset printer was keeping the situation under review: “Obviously, the cost increases that we’re seeing across a range of key direct cost areas are huge. Ink, paper, transport and in particular energy are becoming more and more expensive and will already have a dramatic impact on our industry.

“We are currently evaluating the impact on our business and we are working hard to mitigate what we can. Unfortunately, mitigation will not be possible for most of these costs. We believe that it is inevitable that these changes will end up in the prices that we can accept and for which we work. “

British paper makers are also affected.

Andrew Large, CEO of the Confederation of Paper Industries, said: “From our perspective, electricity and gas are inextricably linked and in a way it is not really possible to separate the two anymore. . This is yet another increase in costs for paper makers and must be seen in the context of all the other costs that have increased. Clearly this is hurting profitability.

On Green Gas Day earlier this month, the Energy Network Association and The gas network companies have argued the crucial role that other green gases, such as biomethane produced from agricultural waste and sewage sites, must play in reducing dependence on imports and working with hydrogen. to meet the UK’s net zero emissions target by 2050.