The Path to Evolution

IF THE FIRST RULE of business is to stay in business, as the adage goes, then the second must surely be to embrace change. Because there is simply no alternative. Markets shift, technologies emerge and mature, and client needs evolve faster than any single vendor’s capabilities possibly can. Some companies adapt while others perish. This is true in any field, but especially in the specialty printing markets served by the readers of this publication. Many companies have existed for generations, undergoing numerous transformations along the way and often bearing little resemblance to the original enterprise. The lesson being, longevity and willingness to adapt are not coincidental characteristics of a successful business.

Yet there is a growing sense in our industry that change is now more imperative than ever. Digital technology has weakened the barriers that once separated different market segments, allowing printers to explore applications that were once someone else’s turf. Hence, sheet-fed offset printers purchased wide-format flatbeds in abundance, sign franchises acquired embroidery and DTG capabilities, and wide-format specialists used textiles to springboard into all sorts of new industries.

This phenomenon of technologies, markets, and print providers colliding has been described as convergence. Some view the trend favorably and envision a coming time when the industry will be populated with one-stop shops that possess roughly the same technologies and offer comparable menus of services.

But convergence isn’t necessarily positive. When automobiles converge, the result is a traffic jam or, worse, an accident. When vultures converge on carrion, each one that lands cuts into the prosperity of those that arrived earlier. And the image of vultures descending in ever-tighter concentric circles offers a grim, though apt, analogy of what convergence historically means in the printing industry: The stronger the competition becomes, the more prices fall and profits plummet in a literal death spiral.

So is the answer to compete for the work others are doing? Is there an alternative? Consider how three established print companies are responding to the question that is now front of mind for virtually every print provider.

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Connecting Brands and Consumers
Jones Packaging isn’t the type of company most Screen Printing readers would initially consider to be a peer. Founded in 1882 and now in its fourth generation of family leadership, with operations in Canada, the UK, and Spain, the company began as a folding carton printer and remains a pharmaceutical packaging specialist to this day.

Coming out of the Great Recession, the company’s board of directors viewed the consolidation taking place throughout the converting space with alarm. Big players weren’t just taking competitors out of the market to grow their share; they were expanding vertically as well, making upstream acquisitions to take control of their supply chain.

“We saw the writing on the wall,” says James Lee, director of the company’s Innovation Solutions Group. “We saw the consolidation happening around us and the number of competitors that were dwindling as they were eaten up by the giants. We thought, ‘OK, what are we going to do about this? We don’t want to be acquired. We don’t want anything to do with forestry management or purchasing paper mills because it’s not in our wheelhouse. How do we survive? We can’t compete based upon price.’ It forced us to look at things differently.”

In the strategic planning that followed, company executives considered the success that the largest commercial printers were having as they realized that handling data, not cranking out printed paper, was their key value proposition, and wondered how to bring the same dynamic to packaging. They felt that if they could turn packages into sensors, they could build an entirely new interface between brands and consumers. This led them, improbably, into printed circuits.

Aided by a Canadian government initiative to foster the growth of printed electronics, the company began an intensive R&D process in 2013 to learn how to print carbon inks onto uncoated surfaces using flexo and offset presses. The challenge, Lee explains, was finding a way to build sufficient thicknesses of conductive ink, at production speed, on presses clearly not designed for that purpose. (They experimented with rotary screen as well, which addressed the ink deposit but introduced new issues in getting a sufficient cure.) 

Initially, the company concentrated on applying coatings for touch-screen activation before switching its focus to a hybrid approach. The company developed a lamination process to become the first in the world to embed Thinfilm NFC OpenSense tags into folding cartons. Earlier this year, the company introduced a new line of medical packaging that married the two technologies. “The touch-screen printing process taught us how to print electronic components and conductives, and that was important,” Lee says. “The NFC side taught us how to marry conventional electronics with printed electronics in a hybrid scenario. Now, with our medical packaging, we’ve put those two concepts together and we actually have packaging that integrates sensors.”

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Lee says that through October, the company has produced 50,000 cartons and other structures with integrated NFC tags and the volume is growing rapidly. Being first to market with the technology has cast the company as an innovator with longtime clients, helping to counteract the perception that packaging is a commodity; it has also led to some interesting opportunities they didn’t anticipate. “Now we have customers in different industries altogether who aren’t looking at us for packaging at all,” Lee says. “They want us to print a component they manufacture, and it’s not something we’ve ever thought of before. We used to be a packaging manufacturer: Now we’re an advanced manufacturer that happens to make packaging but can make other things as well.”

Exploring the Third Dimension
Reinvention is old hat to Craig Miller. He was nearing his 50th birthday when he left a career in psychology to found the Las Vegas-based Pictographics during the early days of wide-format digital printing. Diversification and early adoption of new technologies have been key elements of his strategy from the beginning, from bringing electrostatically printed commercial wallcoverings to market (the first to do so, he says) to founding a separate business unit to develop innovative applications for the military and law enforcement agencies. 

Now 74, Miller is in the midst of his most daring journey yet – repositioning Pictographics as a 3D printing specialist. “When people tell me I was smart to get into 3D printing, I tell them I didn’t do it out of ambition,” Miller says. “I did it out of abject fear.” He believes wide-format inkjet technology has evolved to the point where there are too few differentiators for print providers to carve defensible niches. “You’ve got speed, you’ve got image quality, you’ve got color gamut, you’ve got durability – you’ve got all of these features” irrespective of the printer brand, he says. “But to be honest, ‘faster/better/cheaper’ is part of the formula for marginalizing the industry and commoditizing the product.” He reasoned that advancements in 3D printing, which had been limited to hobbyist and prototype work until recently, could open up entirely new industries for the company to pursue. 

Pictographics’ first 3D printer acquisitions were designed to extend the range of the company’s traditional work: the Massivit 1800 3D because of its size and the Mimaki 3DUJ-533 because of its near-unlimited color capabilities. But the long-term plan extends far beyond the graphic arts. “The real money is in additive manufacturing,” Miller says. “It takes us out of a multibillion-dollar market for 3D printing and puts us into a $12-trillion manufacturing market.” By eliminating the tooling and minimum quantities common in traditional manufacturing, 3D printing now presents a realistic alternative with distinct advantages. The tooling costs and minimum quantities associated with injection molding and other processes are eliminated, along with the inventories and middleman suppliers that drive up costs. And 3D printing can now produce exceptionally intricate parts from a wide range of structural materials.

To that end, Pictographics already has an HP Multi Jet Fusion 4200, said to be ten times faster than earlier 3D technologies with a lower consumables cost. Miller says he produced 1000 parts in a 10-hour stretch earlier this year. He hopes to have a dozen of the units by mid-2019, giving him the ability to print about 15,000 parts per day. He also has a MarkForged X7 unit, which prints with continuous strand carbon fiber, Kevlar, and fiberglass, and he expects to have two metal printers installed soon. Miller believes he’s offering the most diverse range of capabilities of any 3D print provider.

And the beauty of additive manufacturing, Miller says, is that the opportunity for reinvention only accelerates over time. “Before, you would set up a plant to make one thing, or a few things. You maybe served one or two markets,” he says, noting that the costly, highly customized production lines pigeonholed that facility more or less permanently. “3D printing is entirely agnostic in terms of markets. The metal printer, the plastic printer, the ceramic printer – whatever – it doesn’t care what it’s making. All of a sudden, you can move with whatever the market trends are. You can diversify and serve so many markets that you’re not hit hard by downturns.”

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Taking the Road Less Traveled
Reinvention doesn’t necessarily require pioneering a new technology or application as Pictographics and Jones Packaging have done. Sometimes, all it takes is a fresh look at a market that has been there all along.

Dolf Kahle, second-generation owner and CEO of Visual Marking Systems (VMS) in Twinsburg, Ohio, has always considered his core business to be industrial OEM product identification, though he and his management team keep an eye out for growth opportunities. Fleet marking and vehicle graphics became a key secondary market for the company in the 1990s. In 2002, an acquisition brought the company into public transportation graphics; it also dabbles in P-O-P, though it’s a market Kahle has mostly avoided due to stiff competition and pressure on pricing.

With the digital side of his business growing steadily, Kahle considered other inkjet applications that could be fruitful. “OEM is a very slow growth market,” he says. “If you can grow five to seven percent, you’re doing pretty well. Transportation is a nice little niche business, but it involves a lot of transit authorities, bids, long sales cycles, and they beat you up on price. Fleet was growing, but we wanted more.” 

Two years ago during the company’s biannual strategic planning process, an idea came up to take the company in a most unusual direction for an industrial printer. Ron Gizzo, COO of VMS, had been doing heat-transfer decoration in his basement under the name Badlime Promo and Apparel to support his wife’s dance studio and suggested bringing the operation into VMS. The management team researched the market and was impressed by data showing textiles to be the fastest-growing market in digital printing. Client discussions revealed that many VMS customers were already buying decorated apparel, creating a solid opportunity for VMS to extend their footprint. “We knew we weren’t going to be starting from scratch,” Kahle says. “In our initial pass of our customer base, we figured we had $1 million in sales, and we could expand the current base further. So we said, ‘Let’s give it a shot.’”

Deciding to keep the Badlime name (which Kahle cheerfully describes as “goofy”), they leased additional space in a nearby facility where VMS installs vehicle graphics. They acquired the assets of an embroidery business that happened to be in the same building, purchased two Workhorse automatic presses and an Epson SureColor F2100 DTG printer, and with Gizzo’s transfer operation were soon offering a full complement of decorated apparel by July 2018. 

In addition to providing a solid pool of prospects, Kahle believes that the discipline required in the core VMS business will provide a significant advantage in the apparel operation. “We have put together an incredibly systematic approach to business that’s required for the industrial OEM side,” he says. “Our clients demand inventory management practices, quality assurance programs, ISO 9000, sustainability. When they come into a factory, they want to see an operation that is clean, organized, and running well. We feel we can take this model and use it in the garment industry, without the ISO and excessive paperwork that’s required.”

The Business of Evolution
What do these three businesses, with their dissimilar backgrounds, have in common? The curiosity to think differently. The courage to take risks. The strength to act decisively. The unwillingness to allow themselves to become irrelevant to their clients.

Each of these executives expressed concerns about the ubiquity of digital technology and the uncertainty it has created. They see the same market dynamics as the industry pundits. Yet each has plotted a distinct future course for their business. Rather than converge, they have chosen to diverge, to evolve and find a unique path that others aren’t following. It has been a critical force throughout the history of print and it is sure to be the most important trend in this industry for the next five years and far beyond. 

Read more from the December 2018/January 2019 issue, including the full report on the “Five Key Trends for the Next Five Years” series.