When I visited the Graphics of the Americas (GOA) Expo in February, I was looking for hot companies pushing the edge in new technologies. What I discovered was Sohn Manufacturing, a company that’s doing extremely well sticking to its non-digital roots.
Sohn Manufacturing is a long-standing fixture in the label and narrow web industry. Its success is based on sticking to the core business that has allowed them to thrive since the 1950s: manufacturing small flexo presses and converting machines.
It’s a niche that is targeted at small and mid-sized printers, but its innovative machines have drawn plenty of attention from Fortune 100 companies in the converting industry. Surprising for a company its size, until you see that its based in a small town that also accomplishes big things.
Sohn Manufacturing is headquartered in Elkhart Lake, WI, USA, a community of just under 1,000 people. This tiny town seems rather unassuming, until you learn that it generates $70 million in annual economic growth thanks to a rather unique niche: road racing.
Back in the 1950s, the town held road races on a street circuit that ran around the lake, with a start/finish that ended in the middle of the village. At some point, a few village elders (and their lawyers) realized there was a tad bit of liability at stake with the type of attraction. They subsequently built a track called Road America that is today home to the annual Concours d’Elegance race held by Road & Track.
Seems folks in that neck of the woods like to carve out unique, profitable niches, because during the same period, Sohn Manufacturing was launched by then owner Al Sohn.
The company began in 1955, when Al Sohn began making printing equipment. The area cheesemakers (hold your cheesehead jokes, please) were in need of labels for their product, and Sohn started printing labels as well.
Wallace Beaudry took over the company in 1973 and continued its focus on making equipment, expanding into the converting arena. Today, Beaudry explains that the company’s emphasis on machining and manufacturing equipment is a bit contrary to the current stampede to do all things digital.
Sohn Manufacturing builds “table-top stuff,” standalone units that are smaller and allow for cost-effective flexo printing, diecutting and label printing. “We let companies like Mark Andy focus on the big presses,” Beaudry said.
Machining a Distinctive Niche
Sohn’s unique niche is its rotary diecutting machines, borne of a history that includes making its own dies.
The company was one of the earlier innovators in rotary tooling. “Back in the 60s, there weren’t a lot of people making rotary dies,” Beaudry explains. The company was one of the first companies to make rotary dies fully by computer numerical control (CNC), with no handwork.
Today, Sohn continues to make dies for a variety of applications. Sohn’s rotary dies are more time-efficient than other methods, and work especially well with the wide range of substrates. It’s perfect for the markets demanding cost-effective prototypes, and quick delivery of short runs.
Innovation doesn’t always have to come with a processor and a flat-screen. Take the Sohn Rotary Wizard. The machine is designed to take preprinted material on a roll and automatically position the rotary cutting die to cut the material in register with the printed image.
The diecutting station can be used in conjunction with pre-existing machines, such as printing machines and other web or sheet-fed machinery.
Beaudry explained how cutting out a two-inch starburst might take 15 to 20 minutes to cut with other technologies, but with the Wizard, the cuts are made in a few seconds. “It’s all in the die,” he said.
The machine runs around $33,000. This may raise eyebrows when you can buy a tabletop Memjet printer for $7,000, but Beaudry notes the big advantage is the job changeover. “You can change the flexible die quickly with precision, then go on to the next job,” he said. When you get into diecut label short runs of a couple hundred, Beaudry said the cost-benefits for the flexible dies can be sizable.
The Wizard also boasts a shorter web path. There’s a smaller distance from unwind to rewind, which doesn’t waste a lot of media and add to your bottom line.
Sohn doesn’t just produce its own line of machines, either. The company also builds customized converting equipment for companies looking to create large runs for very specific pieces. “A larger company understands the benefit of that kind of investment,” Beaudry said.
Building on the Brand
Sohn Manufacturing is one of the companies that have quietly hummed along in the background, using its core business of building rotary die and label machines to expand. And for a small company in Wisconsin with a relatively low profile, it’s amazing how far-reaching Sohn’s influence really is.
The company, operating on its own 13-acre complex, has established an international presence. “We have a lot of equipment in Russia and Japan,” Beaudry said. “We’re also active in the Caribbean and South America.”
Beaudry credits the outreach to his father. Back in the 80s, Wallace Beaudry packed up his suitcase and hit the road, establishing a distributorship throughout the world. Today, the distributor system has changed, and the networks the company worked through in the past have dwindled. “People are less inclined to carry units,” he said.
Nevertheless, Sohn’s expansion efforts will make a good thing even better. The company has enjoyed solid growth throughout its history, and last year’s profits were no different. Now Beaudry’s plans are to ramp up its marketing and sales effort and look to build upon the core offering of the rotary die machines.
I’m amazed at how successful this company has become, even without a sales force or a significant online presence. It shows you the importance of product for a business, and the power of a niche.
Sohn followed a simple formula of growth: It listened to what its customers wanted, and built a product to their specifications. You might say that’s the luxury reserved for an organization with machining at its roots, but I think it’s much more than that.
Machining was simply the skillset that allowed Sohn to flex to its customers’ needs. It was the mindset of the owners – from Al to Wallace - that has created a company that’s true purpose is to fulfill the needs of its clients.
Maybe it’s time everyone integrated a little “machining” into their organization, and build a client-responsive culture. It worked for Sohn, so why can’t it work for you?
Let’s move from the cozy confines of Elkhart Lake to the big shoulders of Chicago, where I’ll be attending the AWA M&A Executive Forum – and you should, too.
Why should you attend an “M&A Forum,” especially if you’re not buying or selling a business?
Before I get to that, a little background on AWA (Alexander Watson Associates). AWA provides a complement of market research, events, business development and advisory services.
This one-day forum is the premier international mergers and acquisitions event for all those involved or interested in the fiber-based packaging, coating, and converting sector. It features 12 expert presenters from across the value chain that will discuss trends, market data and developments.
AWA brings together senior executives from companies within the sector, private equity firms, investment banks, lenders and financial intermediaries.
What they’ve put together is the equivalent to a fashion show in Paris: If you’re in our industry, you’re really going to see what’s coming down the pike.
The people you’ll hear from (and hopefully network with) are specialists in mergers and acquisitions. Whether they’re intermediaries, analysts or researchers, it’s critical that they know what market conditions are like, and when it’s the best time to make a move.
These are some of the most intelligent minds in the business, who are privy to some of the top business intelligence. Here’s a sampling of the line-up at the Forum:
The Ultimate Merger: Wall Street and Main Street. I’ll be presenting on how Wall Street and Main Street can work together, explaining how both sides can merge to make a perfect match.
Paper, Film, Coating, Laminating & Converting Market: Industry Outlook and Future Expectations. Cory Reardon of AWA will also share future expectations for the paper, film, laminating and converting market.
Labeling Industry Market Overview. Jackie Marolda, a VP and senior consultant with AWA, will focus specifically on the labeling industry.
M&A Trends in 2014 with a Special Look at Packaging and Coatings. Gain insight into the M&A trends in 2014 from the insightful Jim Hill, partner and executive chairman of Benesch, Friedlander, Coplan & Aronoff LLP.
Last year’s event featured some amazing data and research, and sparked some incredible dialogue. As a final note, one of the Forum’s sponsors is L&NW! Need I say more? Hope to see you there!
Rock LaManna, President and CEO of LaManna Alliance, helps printing owners and CEOs use their company financials to prioritize and choose the proper strategic path. Rock can be reached by email at firstname.lastname@example.org.