Be it an Indian joint venture, a European technology transfer or a Chinese franchise agreement, selling-and succeeding-internationally has become a regular part of doing business in the 21st Century for many converters and package printers.
But, how best to "Go Global?" Fortunately, that question was addressed in some detail at last month's Tag & Label Manufacturers Institute annual meeting. In one session at the Orlando, FL, conclave, a panel of six labelmakers-three US and three foreign-related their experiences as part of the program's "Global: The Good & The Bad" theme. What they learned could be applied to converters of all stripes seeking to grow outside our borders.
Allied forces advance
"Our customers wanted global sourcing, and we wanted to grow internally-not through an acquisition but through an alliance," says William F. Donovan, senior vice president of Wilmington, MA-based Dow Industries, Inc., explaining how his company went international.
Initially, Dow sought referrals for potential partners from its end-user customer base back in 1997. Managers visited two European businesses the following year, and a cooperative marketing agreement was signed with one of them in March 1998. Over the next two years, additional trips were made, a press was purchased, and test runs were performed. Unfortunately, the business was transferred to the partner in 2000 when the exchange rate completely favored the Euro rather than the US dollar. Since then, Dow has established a second alliance with a different partner.
In any alliance, "mutual, consistent goals are needed," Donovan advises. "You need to leverage the resources of both to reduce risk and increase rewards."
Acquisitions opening doors
While labeling giant WS Packaging Group, Inc. (Algoma, WI), is currently focused on the US market, says Scott Fisher, chief operating officer, its experience serving major global brand-owners such as Procter & Gamble means the converter isn't immune to the need for international sales. "Some partnerships are set up now," Fisher says.
With 17 plants and $330 million in annual sales, WS Packaging has been on an acquisition track for the past few years. And with nearly half of the 500 or so label-converting businesses in North America looking to sell out in the next decade as older owners near retirement, Fisher explains, WS Packaging will continue to search the market for potential buys. Those companies likely may be located in either Canada or Mexico (or have operations there), rather than the US.
Multinational management
Oslo, Norway-based labelmaker Skanem AS had until recently been focused mainly on delivering product only to European customers. "My role was one of Pan-European customer development," says David Harrisson. "But now that 40 percent of our sales are multinational, my job has become exactly that-more global."
Skanem already has plants across Scandinavia, in the UK, Germany, Poland and Russia. Its latest move, though, is building a 45,000-sq-ft facility in Bangkok, Thailand to capitalize on the thriving East Asian market.
Skanem is basically following its customers. "They have global teams for color management and brand management," Harrisson says. Succeeding internationally means standardizing on materials, sharing knowledge with other companies and converting partners, and then leveraging your prices to reflect your value-added capabilities, he advises.
Next-door delivery
When LG International, a Portland, OR, converter of high-tech industrial labels, saw its customers move manufacturing to China a few years ago, their plan was clear: Make labels right next door. Today, the company's Wuxi, China, plant near Shanghai is helping it recoup sales formerly lost to strictly local suppliers.
"We are there now as our customers demand it, conducting transactions in the local currency," explains Lane Kagey, LGI chief operating officer.
He recommends a phased approach to setting up manufacturing halfway around the world. First, rewinding and packaging of US-printed product; then diecutting, and now printing-all with an eye to keeping investment in line with existing sales.
Situational strategy
With $13 million in sales, one plant and 98 employees, Labelgraphics, Ltd. (Glasgow, Scotland) may be the smallest company represented on the TLMI panel, but it also has the longest history of pursuing global sales. "We started the company in 1983 and immediately began going after global customers," says president Alex Mulvenny. "The rest of the world wants everything the US has"-and packaging is one way to sell it to them.
Mulvenny's recommendations: Use suppliers as a staff-training resource; focus on small- and mid-size press runs in UV-flexo process; and collaborate on projects with customers to brainstorm and innovate.
Visit early and often
Geoffrey Martin, president of CCL Industries (Toronto), has five points for all potential global sellers to keep in mind. With half of its plants located outside the US, including two in Russia, two in India, and a second to open soon in Thailand among them, CCL should know.
"While many global customers are headquartered in Europe, it is a mature market," says Martin. Think instead of emerging markets for higher growth but remember that corruption is just as high, he warns, and international taxes, laws and the legal systems can be a nightmare. Also, a mixture of local managers and expatriate staff may be the best setup for plant and sales oversight.
A final word of advice: As owner, "you need to be there often," Martin says. Make onsite visits quarterly, if not more frequently.
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