As always, pricing is of paramount importance. It is often said that “quality is a given” in today’s competitive marketplace, though many converters can make the case that it just isn’t so. Providing comprehensive, superior service is an area where label printers are focusing on and spending resources. With so much competition, no one wants to lose a customer due to a lack of speed or responsiveness. More and more, label businesses are leveraging the internet – search engine technology, social media, interactive websites – to acquire new business and maintain customer loyalty.
Despite the continuous gains being made by digital printing technology, flexography remains the print process that manufactures the vast majority of PS labels. However, due to an aging workforce, finding qualified flexo press operators is now a major challenge for label converting companies.
These topics and more are top-of-mind when it comes to evaluating the economic health of the narrow web label industry. In this 2017 edition of L&NW’s Mid-year Economic Report, we asked the leaders of a select few converters for their insights regarding the aforementioned topics, the state of their respective businesses, and the label industry as a whole. Here’s what they had to say.
Brian Gale, president, I.D. Images, Brunswick, OH, USA
As a trade-only printer with a strong position in the variable information (VI) market, we are on the front lines of the “price is all that matters” mentality that has dominated the US economy since the recession. In a slow growth economy where excess capacity exists, lowering input costs becomes a top tactic for maintaining or growing margins. Not a day – or probably even an hour – goes by without a customer requesting a lower price. While this trend certainly creates challenges, it also creates opportunities for meaningful dialogues with customers. In order to have a meaningful dialogue, you have to have the proper staff. The following example illustrates my point:
Earlier this year, a customer called with a quality complaint. Labels we had been supplying for years were suddenly falling off packages. We got samples back and everything tested to be in specification. We repeatedly asked if anything had changed within their process. We were repeatedly told no. So they asked if we, or our suppliers, had changed anything. We repeatedly said no.
After scratching our heads, we asked for a sample of the packaging they were using. It turned out they had changed their packaging to a 100% recycled product. The lack of virgin fiber in their boxes made it difficult for the general purpose acrylic adhesive to adhere properly. Of course, the input identified as not working was the label! After extensive testing, we are now supplying a different adhesive to this customer. We also realized this was becoming a common problem, and we now offer a premium product line specifically for recycled packaging. Had we not continued to ask questions, we most likely would have lost the business.
The easy response to price pressure is to cut costs in order to maintain margins. Many times “cost cutting” is code for reducing staff. In reviewing the situation above, if we did not have a salesperson that had a relationship with the customer, a quality department that could analyze the problem, a procurement team that could source a solution for this problem, and a marketing team that could evaluate the opportunity, we would have lost this business.
All the functional areas involved in this situation cost money. One of the drivers behind consolidation in our industry is it is hard for smaller companies to provide a full service experience to their customers while maintaining profitability. Scale is becoming increasingly important in a market that demands competitive prices and full service.
It’s an old cliché, but it rings as true today as when someone first said it: “Price is what you pay; value is what you get.” In order to survive in a competitive, market-based economy, you have to be price competitive. In order to prosper, you need to create and communicate value. Creating and communicating value requires investments in not only equipment and systems but also in our staff.
Alex Henkel, President, Electronic Imaging Materials, Keene, NH, USA
Digitally printed labels will continue to increase in variability and complexity. Recent requests have ranged from a desire for full-color variable data to a greater demand for color-coded bar code labels attached to magnets and placards. We’ve also experienced increased requests for small quantities of many different versions of the same product. For example, a cosmetics company that launched 60 different shades of lipstick – simultaneously – required us to match packaging color to each product. This allowed the cosmetics company to measure initial response before scaling up specific products.
Short run digital printing proves essential to a wide range of our markets and industries – from cosmetics to coffee to clinical research. Certain labeling jobs require unique, color-coded labels printed in small-volume batches. In the case of a clinical research trial, all samples collected from one subject are labeled identically. The resulting information can be accurately grouped in a database file, requiring batching each set within thousands of other data sets. Because clinical studies are entirely results driven, it’s critical to the success of the study for data to be accurately tracked and this is precisely where we come in.
Working with our end users and resellers to accommodate more customization has had a lasting impact on the way we guide a customer through the ordering process. We’ve responded to these increased complexities by making updates to our intake, data file review and proofing processes. When our Label Experts receive a request, they prompt the buyer with questions designed not only to streamline their ordering experience, but also to ensure that their final purchase will be the best option for the end user’s ultimate objective or vision. Through our proofing process, we utilize multiple graphic templates that display how a consumer’s data will vary, so we can ensure the layout they envision is what they receive in their shipment.
When it comes to finding solutions to unique requests, no team member is in it alone. Interdepartmental collaboration plays the biggest role in “solving the unsolvable.” Our Label Experts – comprising sales to preress to production – combine their areas of expertise to tackle never-before-seen challenges. Meeting such a diverse range of challenges on past projects has given us the advantage of developing tried-and-tested methods for undertaking our ever-evolving and shifting needs. Based on our cumulative experiences, we continue to invest in new equipment and software that help create smarter, more variable labels more efficiently.
Even though we’ve already tackled an array of projects in variable and complex data, sitting still isn’t in our nature. It’s imperative to stay up-to-date on techniques and innovation by participating in industry events such as the Tag and Label Manufacturer’s Institute (TLMI) printThink Summit. We pride ourselves on assuming the roles of both teacher and student, providing insight on subjects we’ve mastered, and growing through the shared experiences of other contributors. The synergy between industry colleagues provides breakthroughs that benefit not just our own end users and resellers, but the label industry as a whole.
Jim Lundquist, CEO, AWT Labels & Packaging, Minneapolis, MN, USA
At AWT, we produce labels and flexible packaging and participate in medical, food, OEM, household, health & beauty, industrial and specialty markets. We are faced with all the challenges others in the industry face every day.
One of the pervasive issues that faces our industry is the lack of trained personnel. If you are growing your business, you need additional qualified employees. The first and most important thing you must do is to keep the trained personnel you have by making your company a great place to work. Developing a culture where employees can participate in and benefit from the success of the company is of paramount importance. This means a lot of things, including good benefits, open communication, performance reviews, incentive programs, employee update meetings, financial information sharing, advancement opportunity, employee committees and events, health and wellness programs, picnics, holiday parties, newsletters, charity events and more.
The industry is facing challenges as our education systems are not focusing on the trades as a viable career path and fewer and fewer young people see printing as having a promising future. In addition, many of our best pressmen and other employees are getting older and are reaching retirement age. At a certain age, the physical aspects of the job are difficult. With fewer people targeting the printing and converting fields for a career, and more and more retiring, it is not a very promising combination for our industry’s future.
In the Minneapolis area, most of the flexographic printers were accessing Dunwoody Technical College graduates for additional newly trained operators. Dunwoody’s program was two years at a total cost of $46,000. Dunwoody Technical College shut down its flexographic printing program due to it being too long and too expensive a course – it was not attracting enough students. Its instructor, Shawn Oetjen, took a job as a salesperson in the industry.
One of AWT’s biggest challenges as we rapidly grew was hiring trained flexographic press operators. AWT was going through the pain of on-the-job training programs. The on-the-job training was slow, not comprehensive, and costly as a result of errors, excess waste and the trainee pressman not having time on the press in a formalized training atmosphere.
We had been talking to Shawn about joining AWT. We were framing a position that would leverage Shawn’s training talents to meet AWT’s needs. We needed a training program that would be comprehensive, mostly on-press training, and much shorter and more affordable than the Dunwoody programs were. We then thought about how we could make this work for the industry as well as AWT.
The concept of Flexo Tech was developed. We had previously talked about industry training and education programs with ownership and management of Computype, a fellow Twin Cities-area label manufacturer. We presented to them the Flexo Tech concept and they readily accepted the program and partnered with AWT to support the effort.
States and major cities have allocated funds for trade-focused training programs. It sounds like the Trump administration may be providing support for this as well. Companies can access these funds for dedicated training programs. It requires going through some red tape, but can materially reduce the costs of these types of outside training programs. At Flexo Tech, we encourage companies looking to enroll students to access these programs.
Flexo Tech is a 501c 3 Minnesota nonprofit corporation, and with the continued support of valued sponsors, it continues to graduate formally-trained press operators for not only AWT and Computype, but for several other flexographic narrow web and wide web companies from the Midwest and nationally.
For more information about Flexo Tech, visit www.flexographictech.org
John Abbott, president, Abbott Label, Dallas, TX, USA
Since our last contribution to L&NW’s Mid-year Economic Report in 2013, Abbott Label has experienced substantial growth. We have also been faced with new challenges and opportunities that have helped us evolve and transform into the organization we are today.
In 2014, we purchased a privately-owned trade-only label and card affixing manufacturer, Brandt Affixing. Since then we have integrated Brandt Affixing’s brand into our own and created the “Affixing Division” of Abbott Label. We now offer a wide array of affixed and integrated products across the country, including, but not limited to, instant redeemable coupons, a patented M.V.P card, and a wide range of promotional printed items.
Our Digital Printing Division has also experienced a lot of growth. With little setup required, minimal waste and no printing plates needed, our HP Indigo WS6600 absorbed much of our process work previously printed on our flexographic equipment. We see digital printing positioning itself as the main mode of printing across the industry in the coming years.
We have seen a big transition from larger runs to multiple smaller runs. This evolution stems from combining the advancements of print and inventory management technologies. With print-on-demand technology via digital printing, we can print the exact number of labels needed at a time. The progress in inventory management systems allows end users to keep an accurate grasp on their overhead and set reorder points effortlessly, creating JIT (just-in-time) inventory management programs. End users can now receive a fresh new shipment of products the same day they are using the last of their current inventory.
Abbott Label’s growth can be attributed, in no small part, to our valued vendor partnerships. The Abbott family takes tremendous pride in our relationships with vendors that have been cherished for the 38 years we have been in the industry. Without our vendors’ outstanding guidance and dedication, there is no way Abbott Label could have made it this far. So, thank you to all of our vendors and know that we consider you part of the family!
One of the challenges we have been faced with since 2013 is the growing influence and utilization of the internet. Online resources are key in today’s fast-paced workplace to provide our customers with the tools they need to succeed. And in step with that development, Abbott Label is initiating a virtual marketing platform.
Another challenge experienced in recent years stems from label buyers sourcing products from offshore label manufacturers in Asia and Mexico. This migration is almost exclusively linked to rock bottom pricing being offered outside the US. A great deal of the business lost by our industry to foreign manufacturers has returned to domestic companies due to quality, service or turnaround time issues experienced with foreign manufacturers. Abbott Label prides itself on our exceptional quality, outstanding customer service and quick turn times.
The newly-published 10th edition of AWA Alexander Watson Associates’ AWA Release Liner Annual Review 2017 brings together an expert, in-depth assessment of the state of the global release liner market across all its end uses – from labels and graphics to envelopes, food and bakery, tapes, medical and hygiene, and industrial applications.
While pressure sensitive labels remain the largest global market for release liner, and grew in 2016 at 3.9%, pressure sensitive tapes and medical applications exhibited the highest growth rates at 6.8% and 6.2%, respectively, and the study examines the regional differences in markets across the globe. The developing markets of Asia were major growth drivers in 2016, alongside Europe, which experienced strong growth in eastern countries.
The critical silicone component in release liner construction and choice of curing method are also covered; and the study benefits from its exclusive annual industry survey, documenting value chain activity in the realms of globalization, sustainability, costs, M&A activity, growth, investment and key market trends. Research data is complemented by an up-to-date directory of leading companies across the supply chain.