You are what you invest

Bob Cronin of The Open Approach looks at how equipment choices made at Labelexpo help define a converters’ future strategy

With the trade show season behind us, there is finally time to reflect on the industry’s new introductions and consider which of the latest technologies are right for you. And, of course, to unpack your tote bags. Fortunately, for many of you, it’s also time to plan how to market the intriguing capabilities you gained from your purchases.

I’m told this year’s Labelexpo set a record of 14,335 attendees and was considered largely a "buying show". Exhibiting companies gained monstrous numbers of leads, numerous new products debuted, and investments were made by almost every company that attended. This is not surprising based on the novel concepts seen in everything from nanographic printing; to 'sensor' technologies; laser die-cutting; waste reduction; inventive new films, foils, and presses.

Indeed, I was impressed by the ingenuity of our great label industry’s unrelenting R&D forces. I was equally encouraged by the energy and enthusiasm I saw at each and every company stop. Both the booth reps and the attendees shared in the industry’s revelry, and everyone seemed committed to not only grow their unique business but also to build the industry, leveraging the latest and greatest inventions. People kibitzed and consorted, and truly collaborated. And at the end of the day, whether you bought or not, everybody had fun.

I am in an enviable position these days. As an M&A consultant, I no longer have to focus on evaluating the ROI of a specific technology or formulating a cost-benefit analysis of changing to a different house substrate. Instead, I get to participate in seeing what label companies believe will best grow their businesses, and helping them ensure that it will. I also get to witness what investor ownership sees as the next game-changer, and work with them to articulate a winning strategy.

Bottom line, I have the privilege of seeing the industry as it truly is. I can readily appreciate its accomplishments, marvel at its innovations, and understand all the factors and influences that are coming together – and driving us forward.

Like all industry trade shows, Labelexpo was about growth. And this, my friends, is the reason we are in business.

All considered, there was a different 'vibe' at Labelexpo than we saw at some of the other industry events. The belief in continued investment demonstrated our industry’s resilience to some of the forces that are affecting other graphic arts colleagues. Additionally, our attendance roster itself underscored the investor interest that you simply didn’t see at the other shows. While private equity, for example, has multiple billions staked in the overall graphic arts, they were not largely visible at the other expos. Alternatively, if you looked at the name badges at Labelexpo, you couldn’t visit a booth or engage in a presentation without coming across representatives from a few of our industry’s top investors.

Okay, but what does all of it mean? In the past, whether you were buying or browsing, every graphic arts company eagerly sent their people to participate in whatever annual show presented itself. Organizations willingly paid for staff to attend presentations, bring clients to schmooze, or simply walk the show floor looking for leads. The economy has drained much of the 'educational experience' thinking, however. In some sectors, expo passes have gone from 50 US dollars to 35 US dollar to free. And for many of the shows, 'free' still isn’t good enough.

Labelexpo proved that our industry is thriving. Attendance this year wasn’t about your company letting you out of your cubicle for the day; it was about driving real enterprise growth. Our people were out making purchases that will help their businesses win clients, improve performance, and ultimately succeed.

This change is refreshing. It is clear that label companies truly understand what is growing the industry. You know what customers demand. You know which technologies are capturing the greatest interest and generating the prospect calls. And, truly, you know, that to stay viable, every company needs to stay abreast of the latest advents and be committed to investing in them to drive their respective futures.

In addition to gleaning savvy on the functions of the new technologies, these purchases themselves can tell you a great deal about your position, proposition, and possibilities.

Equipment investments tell you about yourself

Most companies in today’s economy have reeled in spending, scrutinizing financial decisions with ROI studies and other analyses. Still, every company needs to stay current. Every company needs to invest and improve. This is simply an expectation of the market.

You don’t have to dole out for a UV flexo packaging press (unless you really need one), but you do need to keep your manufacturing abilities healthy and find new ways to ignite customers. Maybe you can utilize some of the novelties from the Ecovillage area as opportunities to extend your sustainability edge. Or perhaps the latest new solvents, inks, or coatings can improve your production quality.

As you write your news stories and client emails about your purchase, you are not simply telling them you have something new, you are communicating what is important to your company and what you believe is valuable to both of you. 

Equipment investments tell you about your competitors

While your investments at Labelexpo can help you hone your competitive edge, they can also provide critical insight into your competitors. Instead of simply celebrating your new purchase, take note of what others are doing so you can know how to better compete.

Take note of the press release barrage on whattheythink and other industry sites, and see what others bought. What technologies did your biggest rivals pick up at the show? How do your investments compare? Did they spend more – or less –than you? Are there particular vertical markets or projects for which their investments are well suited?

Consider their spending and think through what they are doing to grow their customers and position themselves for the future. Their expenditures can tell you a lot about their business, which capabilities they are expanding, the needs of their clients (your prospects), and even a snapshot of their financial health. (If you can’t find their news readily, take a look at their own company websites.)

Once they get their technologies rolling, will you have any difficulty bidding against them? Prepare yourself for their new capabilities and have a game plan to withstand any new opposing advantage.

Equipment investments tell you about your industry

Viewed in aggregate, expenses made at Labelexpo and throughout the year can reveal real customer trends and the industry’s trajectory. And often more accurately than any research group or association. What are today’s best-selling equipment and technologies? What are the specific capabilities or functionality these bring? How do these answer customers’ needs? And finally, which of these are the key influences driving opportunity? If you understand where the industry is going – through equipment and otherwise – you’ll be better able to build your company into one of its champions. 

Yet, market dynamics will always in flux. What is in demand today may be insignificant tomorrow. Expo season or not, you need to have a command of the inventions and opportunities that drive meaningful business. One of the ways to do this is to stay abreast of what’s happening in equipment and technologies and what key players consider most valuable. Stay apprised, stay informed, and stay nimble. At some point, you will be looking to acquire, divest, sell, or exit. That’s when your investments can reap the greatest reward.

About the author

Bob Cronin is managing partner of The Open Approach, an investment banking/M&A firm focused exclusively on the world of print. The firm's proven results have made it the exclusive member-recommended firm of PIA/GATF and IPW.

For more information, visit www.theopenapproach.net, email Bob Cronin at bobrcronin@aol.com, or call +1 630 323 9700.

This article was published in L&L issue 6, 2012

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