To step into a printing company where the lobby looks more like a fancy café or restaurant is just raising the expectations, and the audience was for sure given food for the brain during the few hours open-house event. Highcon is the host, and INKISH was commissioned to cover the event, however, the coverage to turn out to interviews, and nice visuals. After a short introduction to the event by Vice President and General Manager Matt Bennets from Highcon Americas, the stage was hand over to Mike Ferrari. Ferrari is a well-established name in the industry as being a great speaker and motivator, and of course, the purpose was to give the audience an insight in why digital finishing is becoming more and more interesting. One of the high lights was that pricing of, i.e. packaging has to be seen from a different perspective than the production cost itself – or what brands pay today. The price has to be way more about what value it brings to a product. Short-run, personalization, and even completely new types of packaging are just a few of the promises.
Then it was time for a demo. The work-floor had only two machines – a Landa S10, and a Highcon Beam – but those two machines are the ones that give Virtual Packaging a tremendous success. Highcon presented how fast the setup time was, the production of the DART (creasing), and then, of course, the production of different types of products.
But why not just watch, and listen – after all a bit easier!
Mike, thank you very much for taking time on this late night evening here in Virtual Packaging, North of Dallas. You actually have a career from Procter & Gamble, you said?
I do, 32 years.
So you should know everything that is worth knowing about packaging and how it’s used in a retail space?
Well, I understand the retail space, but the entire industry is constantly changing, so you cannot rely on five-year-old fashions and trends. You have to keep up every year.
And that was one of the things that you spoke about during your presentation is that the trends and how things are changing and what new technology enable converters to do as well. Can you very briefly tell the head points of your speech?
Consumers are looking for experiences. Consumers are on the internet, on the go, so they’re looking for eCommerce, they’re looking for new things, things that excite them, things that put them in the moment. So relevancy is important, therefore you have to be able to deliver relevancy and to do that you really need digital technologies.
And that is one of the reasons why we’re here, because Virtual Packaging is an all digital printing company. And, as some people may think that packaging or print is tiring, I guess this company shows that you have a whole bunch of new opportunities with this digital technology.
Absolutely. My hat is off to Virtual Packaging. They are a lean forward. They see the future. And one of the things I think they look at, they’re not just looking at the numbers, they’re looking at what are the trends, what can I do with disruptive technologies that I couldn’t do before, and they’re creating value for customers.
You said it now again, because you said also in your presentation, that sometimes when you invest in new technology you have to change the metrics basically.
Absolutely. You cannot just look at old metrics. You can’t just look at speed and costs. You have to look at value, and how do you create value. And of course right now, people are really wanting speed to market, and how do you put a cost to that? But people are willing to pay more when they need speed to market.
We started looking into digital, early 2000s. And we began with the wide format roller roll and flatbed printers, switched to Indigo presses. And in 2005 we started looking for wider format, B1 format. We didn’t have any success for a long time and then we actually started talking with Landa in 2016, and we signed an agreement to purchase in April that year. At the same time we were working with Highcon and made a similar deal with them at the same time.
I’ve known Monty for a while. He did come by the booth when I was at HP in 2012, and I know he looked at Highcon, and he wanted to do something that other people weren’t doing. And quite frankly, I thought that he was going to buy some equipment back then, but he was patient, it wasn’t the right equipment, he didn’t feel like it gave him that edge that he was looking for. So he waited. Two years ago when he saw the Highcon and he saw the Landa. It came together for him. And what they’ve done here is truly amazing.
I congratulate you on this business case because being able to tell that story to all your potential customers out here in America, it must be just fantastic because it’s a truly amazing place.
It’s incredibly gratifying to go out in the market every day and talk to customers, talk to converters, and talk about the success stories that we have out in the marketplace. And Virtual Packaging is an incredible one that we love talking about.
From a business perspective, isn’t it extremely risky to go into something that is untouched territory?
It can be. I really like doing due diligence and so we ran a lot of numbers, did a lot of analysis. And we like challenges too.
So instead of troubles you see challenges basically?
Oh yes. And our business, our entire team likes a challenge. And our management team and myself have been working together on it for several years now. And I don’t think there was any doubt in any of our minds that this was the thing to do. We had enough information and knowledge that we knew there was some demand. What we couldn’t tell is, we couldn’t put a finite number to it, but we could ballpark it. And to be honest with you, the numbers are coming in pretty much right where we thought, and we’re very happy with it. The sales themselves have started off a little slower than we’d hoped, but as far as the margins, the margins are there. Nice attractive margins. And what we’re seeing is, I think maybe we might’ve been a little over aggressive on the sales early on, but now we see them climbing and I think we’re going to see continuous climb, 10, 20% increases month after month for quite a while now.
One of the things that always concerned me a bit is that there seems to be a tendency in, at least with the commercial printers, that everything gets commoditized. Are you worried about that strategy, what to do when more and more companies will go digital, that it will commoditize the market?
Yes. And that’s one of the reasons why we wanted to be first to market with it. But we wanted to establish the pricing and let people see that you don’t have to give it away. Because you’re producing a high quality product and you can get a margin out of it. And in addition to that, you’re providing a service that no one is able to provide right now. The shorter term, quick term type things.
And I would say that when you sell a premium product, like the combination of S10 and a Highcon Beam, it seems that you have been able to attract customers who are also willing to get into the more value added products, right?
Absolutely. Our clients, they tell us “We want to stand out on the shelves, how can you help us?” So we do a lot of special finishes, spot varnish, matte finish, embossing, that type of thing, to help them. And the nice thing is, is that with the technology we have with the Highcon and Landa, our pricing versus offset short runs, is cheaper. So we can give them a higher quality product for about the same price.