Diversification in Central America

A small local market has pushed DACSA, Central America’s leading label converter, to remarkable levels of diversification. James Quirk reports

When Labels & Labeling first reported on Guatemala-based label converter DACSA in 2004, managing director Alejandro Carrasco made a tongue-in-cheek comment about the company being able ‘to teach North American converters a thing or two’.

Many a true word spoken in jest, so the expression goes, and six years on the company could offer leading converters in any region of the world a blueprint for how to create an infrastructure so diverse that it can offer products and services that cater to almost any client need.

The company’s philosophy of diversification is born out of necessity. Guatemala, with a population of just 13 million, hosts a small local market. Central America, the region south of Mexico that comprises Guatemala, Belize, El Salvador, Honduras, Nicaragua, Costa Rica and Panama, has around 40 million inhabitants.

‘The market in Central America is small,’ says Alejandro Carrasco. ‘This has forced us to diversify; whatever a client needs, we will provide a solution. We have invested in an infrastructure that can compete with any company in Latin America, the US or Europe.’

This infrastructure begins with production of a wide variety of printed products, including self-adhesive, in-mold, wraparound, shrink sleeve and booklet labels, as well as adhesive tapes and flexible packaging. Digital, UV flexo, rotary screen and thermal transfer printing technologies can be called upon, as well as in- and off-line finishing options and both digital and conventional pre-press equipment. An in-house design team can work with clients to create artwork from scratch. DACSA’s products cater to food, beverage, pharmaceutical, personal care, textile, industrial, promotional, security and RFID applications.

A showroom in DACSA’s facility in the downtown business district of Guatemala City, the country’s capital, is testament to the company’s wide range of products and services. Here, a potential customer can walk in off the street and purchase ready-made labels; consumables; software; packaging materials; bag sealing equipment; barcode scanners; desktop barcode equipment from Sato and Zebra; and a wide range of label and packaging application machinery, including from US company Quadrel and Italy-based Alipack, which clients can use to test their products.

The company is a pioneer of barcoding in the region, and works with the main supermarkets for testing and quality control. It distributes scaling systems and is certified by the Guatemalan Ministry of Economy to calibrate any such equipment. A direct hand in the democratic process is not something to which many label converters can claim, but DACSA implemented an RFID tracking system in the country’s 2007 election (see boxout).

In-house design

DACSA was founded in 1962 by Carrasco’s father, who remains the company’s president. Also named Alejandro, he had arrived in El Salvador from Spain three years previously. Initially importing and distributing printing equipment and consumables, DACSA began its own label production in 1988 with the installation of a Mark Andy 830 flexo press.

Today, DACSA is a group of companies – the eponymous label printing division, which exports its products as a separate entity, Etiflex; DACSA El Salvador, which runs a sales office in the neighboring country; Servigrinsa, a material supplier; and a business that operates in the property market. The group employs 130 people. 

‘We are not a typical company,’ says Alejandro Carrasco. ‘We can start with a new client from scratch: we design the label, print and convert it, and also sell them the application and ancillary equipment that they need.’

Ten percent of jobs are designed in-house, with DACSA working closely with brands or ad agencies to create the label artwork. ‘It’s an important offering to the market,’ says plant manager Mario Gavarrete. ‘It’s an advantage that we can liaise with the brand with full knowledge of exactly what we can achieve with our technology.’

The pre-press department runs workflow software from EskoArtwork, computer-to-plate technology from DuPont and plate washing and exposure equipment from Degraf. Anilox and water-wash plate cleaning equipment from Flexo Wash is also used. Color control is handled by equipment from Troika Systems, while screen printing plates are developed with Stork Rotamesh technology. DACSA maintains a comprehensive filing system of all archived jobs, which contains plate and print specifications.

Four Mark Andy 830 presses, including the first one installed in 1988, print simple 3-color labels, while the company also uses 7-, 8- and 9-color presses from Nilpeter’s FA and FB lines and a 7-color Comco UV flexo press. A 9-color FA-3, installed in 2007, hosts seven flexo, two rotary screen and two die-cutting units, an inspection system from BST, and prints with a width of 330mm. A Siat machine produces adhesive tapes.

DACSA expanded its factory four years ago because of its continued growth and investment in new equipment. Its newest press – installed in 2009 – is an 8-color Gallus EM 510 S UV flexo machine, with a web width of 510mm, which can produce wraparound and shrink sleeve labels. A servo-driven machine with cold foiling and reverse printing capabilities, DACSA has altered its configuration to cater to different substrate thicknesses. An inspection system from BST has been integrated, and the press has automatic registration.

As well as in-line quality control from the BST systems, DACSA operates two inspection rewinders each from Arpeco and Rotoflex, and an AB Graphic Omega machine with Fleyevision inspection. The company runs two shifts six, sometimes seven, days a week.

In 2005, DACSA implemented shrink sleeve technology from Karlville, and operates two lines of two machines each – one for converting and a second for cutting. Carrasco cites this as an example of the company reacting quickly to the evolution of the market. ‘Globalization creates innovation,’ he says. ‘The quicker that we can react and be equipped to deal with these changes, the better.’

Digital move

Two years later, in April 2007, this philosophy was continued with the installation of an HP Indigo ws4500 digital press – the first machine of its type in Latin America. A Digicon converting line from AB Graphic was purchased at the same time. ‘We were seeing a trend in the market towards digitalization and shorter runs,’ explains Carrasco. ‘We already had computer-to-plate capabilities, and digital printing was a natural evolution.’

‘It was very different for the sales team,’ he continues. ‘We began to offer clients a variety of options in terms of delivery times and run lengths.’

The digital press has brought DACSA opportunities for personalization and promotional applications, as well as catering to short run work from clients. ‘Brands often like to test out a new product with a short run, to which the HP ws4500 is well-suited,’ says Carrasco. ‘If it is successful, they come back to us for a longer run, which might then be printed by either digital or conventional technology.’

DACSA has developed an in-house software program which simulates a job and shows whether it would be better catered to by digital or conventional printing. It is used for every job that the company produces.

Carrasco reveals that the company is paying close attention to the development of inkjet technology, and cites it as a likely area for future growth. ‘We are particularly interested in stand-alone machines, which we see as being more efficient and resulting in less waste than in-line integration,’ he says.

A dedicated variable printing department offers thermal transfer and laser printing through equipment from Checkpoint Systems. Prior to the installation of the HP Indigo ws45000, the department would overprint variable data onto labels printed by DACSA’s conventional technology. Now, it concentrates on small variable data applications and also produces textile labels. Five percent of DACSA’s printed products contain variable data, split between this department and the HP Indigo press, and Carrasco says that the figure is rising.

Further flexibility is provided by the company’s ink department. With two sections, one for Pantone color matching and the other for ink formulation, using systems from GSE Dispensing, DACSA does its own in-house color mixing to offer clients subtle variations on the Pantone range. It can produce any amount of ink it needs, and information for every job is stored to allow easy repeatability. ‘The GSE system also allows us to manage our inventory,’ says plant manager Mario Gavarrete.

DACSA tells its suppliers that their inks have to pass its own quality control checks. ‘It is crucial to have the consistency in ink formulation,’ says Carrasco.

Isolation breeds innovation

DACSA’s main markets are food, beverages and pharmaceuticals, and the company also serves the industrial and personal care sectors. Self-adhesive labels are its core business, at 50 percent of production, while 35 percent is dedicated to shrink sleeve production. Wraparound labels make up a further 15 percent. It produces flexible packaging, in-mold labels, squeezable films, booklet labels, ‘Cling’ labels for automotive applications, as well as textile labels and food contact-approved fruit labels.

Security applications are also catered to, with a range that includes security seals, holograms and VOID materials. Glow-in-the-dark labels are popular among its offerings for promotional applications. The company works with suppliers to develop special adhesives for harsh applications, such as exposure to high temperatures.

Fifty-five percent of the DACSA’s production serves its local market; 45 percent is exported to the rest of Central America and also the Caribbean. Costa Rica, Honduras and El Salvador, where the company operates a sales office, are its largest export markets.

‘We have all the products; we just don’t have a very big local market,’ says Carrasco. ‘Export to countries like the US and Colombia is a possibility in the future. In terms of quality, we can definitely compete.’

With no local association or training organization, DACSA has created an in-house training program with an extensive library of video footage of all its equipment and machinery. ‘We have to invest in these things ourselves,’ says Carrasco, describing a company-wide culture of reinvestment that also sees profit ploughed back into to research and development. Carrasco travels to Labelexpo shows in Europe and the US as well as the Label Summit conferences in Mexico and Brazil, to keep up to date with latest market and technology trends around the world.

A lack of local suppliers forces the company to hold large stocks of materials and consumables in order to guarantee consistent supply of products to its clients. Materials are imported from the US and Europe, as Carrasco believes they are of superior quality to those produced in Latin America, even by the large multinational suppliers.

Despite a lack of local legislation, DACSA is already focused on environmental sustainability, and has developed a program in conjunction with clients dedicated to reducing its environmental impact. The company stopped using solvents some years ago, and is currently looking to integrate PLA film into its sleeve production.

While Carrasco believes that legislation regarding environmental issues will come, he cites the company’s own social responsibility program as a key motivator, as well as financial benefits. Guatemala lacks the local infrastructure to support environmental initiatives: there is no local recycling company to which DACSA can send its material waste, so it is sold as fuel to local industries.

Of the future, Carrrasco says that DACSA ‘will be very active in further investment in our infrastructure over the next few years’, citing an increasing focus on flexible packaging, movement into carton printing, investment in inkjet technology and further progression in environmental sustainability as likely developments.

RFID in the Guatemalan elections

DACSA worked with GS1 Guatemala, of which it is a founding partner, to create an RFID tracking system that was used in the country’s 2007 election. The first application of its kind in Latin America, the successful model has been exported to other countries in the region, where it has since been replicated in Colombia.

RFID Gen 2 chips and a barcode were integrated into the records of each voting center around the country. The chip contained a code that identified the specific table in which voting center of which municipal location the records came from. The information was transmitted via a reader to a computer system that counted and sorted the records.

Carrasco reports that the government, local and international observers and the media were all surprised at the speed with which the information was able to be processed thanks to the RFID technology. The system allowed the quickest vote counting in Guatemalan electoral history – with the first round of counts taking six hours instead of the usual 48.

Pictured: DACSA’s facility in Guatemala City

This article was published in L&L issue 4, 2010