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Long runs, high volumes and low cost production attract blue-chip customers.



By Jack Kenny



Published July 19, 2005
Related Searches: Label converter Pressure sensitive
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The customer list at Convergent Label Technology is not very long. But it's impressive: Wal-Mart, UPS, Motorola, Target, CVS. Names like that. Not many prime labels emerge from the presses at Convergent, but its two plants run 24 hours a day, seven days a week, and employ about 180 people.

Convergent Label Technology is headquartered in Tampa, FL. It's other plant is in Joplin, MO. Together these operations ring up sales of about $50 million a year. The company produces a wide variety of functional labels for major retail and logistics businesses, as well as for the nation's largest pharmacies. "We have served some of our customers well over 15 years," says CEO Graham Lloyd, "and a number of our sales people have been with the same customer for more than 10 years."

Convergent Label Technology was formed in the year 2000, bringing together three existing operations under a new name. Since the early 1980s, Woodside Industries had thrived in Tampa as a label converter. Under the same roof was BCE Technology, a manufacturer of label application equipment. These companies were acquired in 1995 by Graphic Technology Inc. (GTI), based in New Century, KS.

Blue Point Capital Group, a private equity company with operations in Cleveland, Seattle and Charlotte, began a search a few years ago to enter the label and packaging business, and after discussions with GTI acquired the Tampa businesses and the plant in Joplin, which had been established in 1995.

Convergent established a facility in Lenexa, KS, just outside Kansas City, for a short period of time, but that plant's operations were transferred to Tampa and Joplin by early 2002 "to improve customer focus and secure our position as the lowest cost producer," Lloyd declares.

Today, the Joplin plant is the focus for Convergent's pharmacy labels, and Tampa focuses on labels for retail and logistics industries, as well as food processing.

In July 2001, Graham Lloyd (a member of the board of directors) moved into the chief executive position at Convergent Label Technology. Lloyd is an industry veteran, having run Fasson's Canada operation for Avery Dennison, and holding several leadership positions with ICI Canada.
A Convergent team works at one of the company's 12 Aquaflex presses. The company also has Mark Andy and Webtron presses.

Meeting pharmacists' needs
At Convergent's two plants — each about 50,000 square feet in area — more than 5.5 billion labels are produced each year. In Tampa alone more than four billion of those are manufactured.

In Joplin the majority of the work is production of labels for pharmacies. "And with the arrival of a big new customer," Lloyd says, "Joplin will be focused 100 percent on the pharmacy business." Right now, Convergent's pharmacy labels are used in more than 12,000 store locations.

These are not pharmaceutical product labels. Instead, they include the labels and associated paperwork that pharmacists must process night and day to dispense medications to customers. A typical product is a roll-to-sheet combination of pressure sensitive and bond paper. The PS product is printed with one or more inks and pharmacy identification information and diecut in a multitude of shapes for various label uses after it is run through a printer at the drug store. It includes the label that goes onto the container of medication, the label that goes onto the package or bag, and the label that gets affixed to the record book for customer sign-off. According to Lloyd, Convergent has a 40 percent share in the market.

The people at Convergent Label Technology have developed expertise in addressing problems with the printers that are used in the pharmacies. "A pharmacist doesn't want a label that won't work very well," Lloyd says. When a printing problem occurs at the pharmacy, the pharmacist tends to think "label problem," he adds, and Convergent gets the call. Most of the time it's a printer problem, but the label manufacturer will handle the issue to keep the customer happy, even going so far as to send a technician to the store to fix it, regardless of the distance.

Graham Lloyd, CEO of Convergent Label Technology

"We work closely — very closely — with the companies that manufacture the printers," notes Lloyd, "to ensure that all goes well. We are a designated converter for several of those companies."

Printer problems often can be related to heat. "These labels and forms require duplex printing, which means that they get exposed to more heat inside the printer," he says. "Therefore, the adhesive backing has to be strong enough to endure that heat. Sometimes, though, there can be curl problems with the bonded paper."

Convergent maintains an active R&D department to address customer issues. "We perform tests at our plants, using the labels on the same printing equipment that the customers use."

Beyond the rewind area are stacks of fast-turning inventory.

Retail, distribution, logistics
A variety of label products are converted at the Tampa plant. On the retail side, these include shelf-edge and price marking labels, hang tags, security labels, jewelry labels, and various products for laser, thermal and thermal transfer printing equipment.

In the food industry, Convergent makes pre-price labels, weight labels and others, including those with nutritional facts and handling instructions.

For the vast distribution industry, the company produces labels for shipping, receiving and all between. Customers include grocery warehouse operations, department stores, mass merchandisers, third-party logistics busineses, and e-commerce companies. Leading shipping and transportation companies, Lloyd says, use Convergent Label Technology's products on more than a billion packages a year.

In addition to the names mentioned above, Convergent's customer list also includes Sam's Clubs, Safeway, Albertson's, KMart, Dell, Kroger, Publix, and Circuit City. "We have a blue-chip customer base," says Lloyd.

Operations
Inside its plants, Convergent runs 12 Aquaflex presses, which range in width from 16" to 23", with up to eight print stations. The company also prints on Mark Andy and Webtron presses.

Convergent operates a four-shift system: Employees work four 12-hour days, followed by three 12-hour days. This system, notes Lloyd, was chosen by the workers themselves. Safety, he adds, is the company's number one value.

A profit sharing plan is in place, and Convergent runs a monthly incentive program that rewards employees in such categories as cleanliness, safety, quality, spoilage reduction, productivity and service.

Top positions in the company are occupied by Tom Sefcik, the chief financial officer and executive VP of operations; Bob Farrell, the Tampa plant manager; Mike Denny, plant manager in Joplin; and Michael Clarke, head of sales and marketing.

Convergent's board of directors includes two members outside the company: John Birk, a businessman, and Rick Majewski, founder and former president of Impaxx.

Opportunities
At $50 million a year, Convergent Label Technology is a large company, but not a giant. Still, growth is in the plans for the future.

"We have to get bigger," declares Lloyd, "in one way or another. Big chunks of business are coming up. Right now we have $40 million in opportunities in our sales funnel. Because of our focus on being the lowest cost producer, we can save our customers seven-figure sums."

Lloyd says the company anticipates that acquisitions and/or mergers "will be part of our future." Right now, however, "my focus is on organic growth."



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