Steve Katz, Editor07.21.15
According to some experts, 2015 marks one of the packaging sector’s first sustainable booms. Meaning, unlike the 90s boom, driven primarily by the NASDAQ 5000, the sector’s current peak does not appear to have an underlying growth bubble.
One such expert is Bill Hornell, managing director at financial and operational advisory consulting firm Mesirow Financial. Hornell, who serves as the firm’s packaging and M&A expert, says 2015’s strong stock market, low interest rates and record levels of fundraising have created a “perfect storm” for the packaging space with regard to M&A activity.
“There are a lot of elements within the packaging industry – and package printing in particular – that make it very attractive, and I think some of those dynamics are growing and continuing today, leading to high stock prices and lots of M&A activity. And today there is a lot of private equity capital that finds the package printing industry attractive,” Hornell says. “So we’re seeing a great deal of activity from both strategic and financial buyers that are attracted to the characteristics of the packaging industry in general and certainly the package printing segment.”
Hornell points out that one doesn’t need to be an economist or financial expert to see what makes labels and packaging a sound investment. He says, “You just have to be a shopper walking down the aisles of a grocery store or drugstore to see the proliferation of SKUs.
“Segmenting is going on in the marketplace for brands targeting all different types of demographics and lifestyles. You see it everywhere you go – through advertising, promotions – the world just keeps getting more and more segmented and targeted. And I think the label world benefits from this, as this SKU growth leads to more and more opportunities for label and flexible packaging providers,” he says.
Label and packaging companies being looked at as attractive investments is happening globally, Hornell adds. “When you look at the global macro demographic trends, you can see where they are affecting the M&A tactics and strategies of the participants,” he says. “For example, growth of the middle class in China, India, Southeast Asia, Africa and certain parts of South America is creating growth in the label and narrow web industry, and we’re seeing M&A participants react to that.
“Whether its Bemis, Sonoco, CCL or Multi-Color, a quarter doesn’t go by where you don’t see one of these groups and others making an acquisition – whether they’re adding a label business in South Africa, or a flexible packaging company in India – and this flurry of activity has been going on for three to four years now,” he says.
Hornell stresses that the businesses the bigger players are buying are not hundred million dollar operations, but smaller companies, closer to the 20 to 30 million dollar per year range. “There’s also specialization going on,” he adds, “and you can sort of track some of their product strategies, when you see a Multi-Color or a CCL buying a $10 million in revenue liquor and spirits label manufacturer, for example.
“On one side of the equation is a billion dollar revenue business and on the other side is a 10 million dollar revenue business. But it makes sense for the two of them to combine. It’s an interesting phenomenon, and we’re seeing it in North America, as well as in the emerging global markets.”
By Dan Miller, Executive Recruiter for the Labels Division of Direct Recruiters Inc.
One of the most common questions recruiters get from clients and candidates is “How is the job market?” to which the only fair response is, “It depends.” It depends on what type of position you’re looking to fill, what you’re looking to pay, what the location is, what type of talent you’re looking for, etc. I recently had the opportunity to speak with industry leader Scott May, senior vice president of sales and marketing at Inland, and here’s what he had to say about the state of the industry, how a growing market has impacted his hiring strategy and unique ways he is finding talent.
Dan: What’s the industry look like from your perspective?
Scott: There’s a lot of opportunity out there. It’s pretty robust. There are four things that our customers are looking for: differentiation, overall equipment effectiveness (OEE), help with reduction in total cost and how we can help them grow. Companies that can show value in those areas to the customers are doing quite well in this industry. The industry is also becoming increasingly competitive.
Suppliers, competitors and customers are becoming more consolidated and growing. We’re also seeing a lot of our customers rotate out their procurement group so it makes it more difficult to build relationships. Because of this we’ve had to figure out ways to communicate at all levels of the organization like packaging engineering, brand/marketing, innovation and operations to articulate the value we can bring to these individuals.
Dan: How has this changed the way you approach hiring?
Scott: We wanted our sales team to be good at everything: Prospecting, filling the sales funnel, sales presentations, needs analysis, proposals, closing business, transitioning and managing the business. In order to deal with the long sales cycles in the industry you have to make sure your resources are in a position to maximize their strengths. I’m not going to take a resource that’s good at hunting – if that’s what they’re good at and that’s what they like doing – and put a whole bunch of existing accounts on their plate. Likewise, I’m not going to take somebody that doesn’t like cold calling or new business development but is fantastic at building relationships and force them to cold call. It’s about putting people in positions where they’re strong and letting them go.
Dan: How are you thinking outside the box to find new talent?
Scott: First and foremost, you want to develop people already within the organization. We also started a sales training program about seven years ago, because we were getting frustrated with trying to find experienced talent within the industry that fit our culture. We know they’re out there, but we were struggling to find them, so we started to partner with universities that have sales minors or majors and began sponsoring sales competitions.
Dan: What are some of the advantages of identifying talent through these competitions?
Scott: The participanys have already determined ‘I want to be in sales and here’s why.’ In addition, there are things you’ll see in a role play that you may not see in an interview. We get to look at their sales skills and compare them to others. We also get to see things we can’t teach like passion, commitment, honesty, integrity and selflessness. The biggest driver for Inland is finding people that we know will fit our culture. That is above all most important. I’ll take someone who fits our culture any day over someone with 20 years of experience.”
By Darin Lyon, Executive Vice President of Anderson & Vreeland Inc.
The year 2015 is a year of integration, advancing mature technologies and greater acceptance of digital printing. Brand owners and converters appear to be taking parallel paths, aiming for the same end results – better quality, faster turnaround and lower manufacturing costs. We hear this all the time, but let’s quantify what this means to both the brand owner and converter.
Brand Owners
Brand owners will continue to leverage more control over their product, having raised the bar year-after-year for improved quality, efficiency and lower cost of manufacturing. This is very healthy for the industry. The fact that we can produce the same jobs anywhere in the world and have the same color consistency is a huge benefit compared to where we were even five years ago. We also are seeing overseas manufacturing jobs returning to North America as labor costs rise abroad.
With brand owners demanding shorter press runs and greater design independence, technologies such as digital printing are moving forward at warp speed. We are witnessing print speeds north of 300 fpm, the introduction of 4-7 color presses, hybrid presses and bolt-on press modifications that provide 4-color variable data.
The cost of manufacturing is becoming more appealing to brand owners as they can now pay for total usage over the course of a year rather than by the job or project. What does this mean? This means brand owners can now afford digital printing using extended gamut colors, breaking free of design obstacles associated with traditional flexo printing.
Converters
Converters, at the same time, are leveraging their relationships with vendors/suppliers while taking advantage of technology breakthroughs. We see this with “flat-top” dot construction. Printing 4000dpi was once deemed expensive or even cost-prohibitive. This benchmark has now been surpassed by 4800dpi and 5080dpi at a lower cost of ownership.
New CTP lasers are much faster and adaptable in the field. We are seeing the decline of closed-looped systems with new approaches for manufacturers that share assets and intellectual property; combining best of class products in an open market.
Digital front ends and digital printing are providing converters greater flexibility on how to route jobs. Label producers are starting to invest in tying their existing solutions together via connectors. ERP/CRM integration is emerging toward the top of the “Hot List” as companies attack asset management in an all-digital landscape.
The cost of manufacturing for converters, albeit more complex then ever, is certainly better managed and more consistent today then in previous years. Packaging and corrugated markets are finding ways to re-invent themselves much to the delight of brand owners. All things considered, we are very fortunate to see the economy stable yet growing. The gaps in market position or awareness – up and down the supply chain – are more transparent and identifiable, allowing us to produce incredible work that packaging and label consumers have come to expect.
One such expert is Bill Hornell, managing director at financial and operational advisory consulting firm Mesirow Financial. Hornell, who serves as the firm’s packaging and M&A expert, says 2015’s strong stock market, low interest rates and record levels of fundraising have created a “perfect storm” for the packaging space with regard to M&A activity.
“There are a lot of elements within the packaging industry – and package printing in particular – that make it very attractive, and I think some of those dynamics are growing and continuing today, leading to high stock prices and lots of M&A activity. And today there is a lot of private equity capital that finds the package printing industry attractive,” Hornell says. “So we’re seeing a great deal of activity from both strategic and financial buyers that are attracted to the characteristics of the packaging industry in general and certainly the package printing segment.”
Hornell points out that one doesn’t need to be an economist or financial expert to see what makes labels and packaging a sound investment. He says, “You just have to be a shopper walking down the aisles of a grocery store or drugstore to see the proliferation of SKUs.
“Segmenting is going on in the marketplace for brands targeting all different types of demographics and lifestyles. You see it everywhere you go – through advertising, promotions – the world just keeps getting more and more segmented and targeted. And I think the label world benefits from this, as this SKU growth leads to more and more opportunities for label and flexible packaging providers,” he says.
Label and packaging companies being looked at as attractive investments is happening globally, Hornell adds. “When you look at the global macro demographic trends, you can see where they are affecting the M&A tactics and strategies of the participants,” he says. “For example, growth of the middle class in China, India, Southeast Asia, Africa and certain parts of South America is creating growth in the label and narrow web industry, and we’re seeing M&A participants react to that.
“Whether its Bemis, Sonoco, CCL or Multi-Color, a quarter doesn’t go by where you don’t see one of these groups and others making an acquisition – whether they’re adding a label business in South Africa, or a flexible packaging company in India – and this flurry of activity has been going on for three to four years now,” he says.
Hornell stresses that the businesses the bigger players are buying are not hundred million dollar operations, but smaller companies, closer to the 20 to 30 million dollar per year range. “There’s also specialization going on,” he adds, “and you can sort of track some of their product strategies, when you see a Multi-Color or a CCL buying a $10 million in revenue liquor and spirits label manufacturer, for example.
“On one side of the equation is a billion dollar revenue business and on the other side is a 10 million dollar revenue business. But it makes sense for the two of them to combine. It’s an interesting phenomenon, and we’re seeing it in North America, as well as in the emerging global markets.”
By Dan Miller, Executive Recruiter for the Labels Division of Direct Recruiters Inc.
One of the most common questions recruiters get from clients and candidates is “How is the job market?” to which the only fair response is, “It depends.” It depends on what type of position you’re looking to fill, what you’re looking to pay, what the location is, what type of talent you’re looking for, etc. I recently had the opportunity to speak with industry leader Scott May, senior vice president of sales and marketing at Inland, and here’s what he had to say about the state of the industry, how a growing market has impacted his hiring strategy and unique ways he is finding talent.
Dan: What’s the industry look like from your perspective?
Scott: There’s a lot of opportunity out there. It’s pretty robust. There are four things that our customers are looking for: differentiation, overall equipment effectiveness (OEE), help with reduction in total cost and how we can help them grow. Companies that can show value in those areas to the customers are doing quite well in this industry. The industry is also becoming increasingly competitive.
Suppliers, competitors and customers are becoming more consolidated and growing. We’re also seeing a lot of our customers rotate out their procurement group so it makes it more difficult to build relationships. Because of this we’ve had to figure out ways to communicate at all levels of the organization like packaging engineering, brand/marketing, innovation and operations to articulate the value we can bring to these individuals.
Dan: How has this changed the way you approach hiring?
Scott: We wanted our sales team to be good at everything: Prospecting, filling the sales funnel, sales presentations, needs analysis, proposals, closing business, transitioning and managing the business. In order to deal with the long sales cycles in the industry you have to make sure your resources are in a position to maximize their strengths. I’m not going to take a resource that’s good at hunting – if that’s what they’re good at and that’s what they like doing – and put a whole bunch of existing accounts on their plate. Likewise, I’m not going to take somebody that doesn’t like cold calling or new business development but is fantastic at building relationships and force them to cold call. It’s about putting people in positions where they’re strong and letting them go.
Dan: How are you thinking outside the box to find new talent?
Scott: First and foremost, you want to develop people already within the organization. We also started a sales training program about seven years ago, because we were getting frustrated with trying to find experienced talent within the industry that fit our culture. We know they’re out there, but we were struggling to find them, so we started to partner with universities that have sales minors or majors and began sponsoring sales competitions.
Dan: What are some of the advantages of identifying talent through these competitions?
Scott: The participanys have already determined ‘I want to be in sales and here’s why.’ In addition, there are things you’ll see in a role play that you may not see in an interview. We get to look at their sales skills and compare them to others. We also get to see things we can’t teach like passion, commitment, honesty, integrity and selflessness. The biggest driver for Inland is finding people that we know will fit our culture. That is above all most important. I’ll take someone who fits our culture any day over someone with 20 years of experience.”
By Darin Lyon, Executive Vice President of Anderson & Vreeland Inc.
The year 2015 is a year of integration, advancing mature technologies and greater acceptance of digital printing. Brand owners and converters appear to be taking parallel paths, aiming for the same end results – better quality, faster turnaround and lower manufacturing costs. We hear this all the time, but let’s quantify what this means to both the brand owner and converter.
Brand Owners
Brand owners will continue to leverage more control over their product, having raised the bar year-after-year for improved quality, efficiency and lower cost of manufacturing. This is very healthy for the industry. The fact that we can produce the same jobs anywhere in the world and have the same color consistency is a huge benefit compared to where we were even five years ago. We also are seeing overseas manufacturing jobs returning to North America as labor costs rise abroad.
With brand owners demanding shorter press runs and greater design independence, technologies such as digital printing are moving forward at warp speed. We are witnessing print speeds north of 300 fpm, the introduction of 4-7 color presses, hybrid presses and bolt-on press modifications that provide 4-color variable data.
The cost of manufacturing is becoming more appealing to brand owners as they can now pay for total usage over the course of a year rather than by the job or project. What does this mean? This means brand owners can now afford digital printing using extended gamut colors, breaking free of design obstacles associated with traditional flexo printing.
Converters
Converters, at the same time, are leveraging their relationships with vendors/suppliers while taking advantage of technology breakthroughs. We see this with “flat-top” dot construction. Printing 4000dpi was once deemed expensive or even cost-prohibitive. This benchmark has now been surpassed by 4800dpi and 5080dpi at a lower cost of ownership.
New CTP lasers are much faster and adaptable in the field. We are seeing the decline of closed-looped systems with new approaches for manufacturers that share assets and intellectual property; combining best of class products in an open market.
Digital front ends and digital printing are providing converters greater flexibility on how to route jobs. Label producers are starting to invest in tying their existing solutions together via connectors. ERP/CRM integration is emerging toward the top of the “Hot List” as companies attack asset management in an all-digital landscape.
The cost of manufacturing for converters, albeit more complex then ever, is certainly better managed and more consistent today then in previous years. Packaging and corrugated markets are finding ways to re-invent themselves much to the delight of brand owners. All things considered, we are very fortunate to see the economy stable yet growing. The gaps in market position or awareness – up and down the supply chain – are more transparent and identifiable, allowing us to produce incredible work that packaging and label consumers have come to expect.