Until the mid-1990’s, Europe’s printing ink industry was characterised by a large number of medium-sized companies, mainly geared towards their own domestic markets. Change began with the market entry of the Japanese-American Dainippon Ink/Sun Chemical group. Soon, a second large US company, Flint, also became active in Europe, heralding consolidation of the industry. By 2005, Dainippon/Sun had acquired over 150 companies. At the same time, large chemical corporations like Akzo Nobel, Elf Acquitane and BASF left the printing ink business.
One of the main reasons for this consolidation process was the creation of large, internationally active corporations especially in the packaging printing business, but also in print media, which expected uniform product and service quality all over the world.
Siegwerk had already expanded its European and US business in the 1990’s and become more internationally oriented – and was thus prepared for the fundamental changes on the printing ink market. Due to massive growth, the number of employees at the Siegburg site had increased to 1,200 by 1995. Revenue was 700 million marks. Against the background of this rapid development, the hitherto personally liable owner Hans Alfred Keller and his son Alfred Keller, decided to transform Siegwerk into a limited company, “GmbH & Co. KG” under German law. The company thus founded a supervisory board.
Alfred Keller had been a personally liable shareholder since 1988 and took over the chair of the new supervisory board. He soon realised that Siegwerk needed to expand its international activities even more intensely to survive in the face of progressive globalisation and the rapid concentration process in the business. When long-time General Manager Dr. Klaus Stammen decided to retire, Alfred Keller found a successor with ample experience in international business, Herbert Forker. On July 1, 1999 the new General Manager took over a healthy company that nonetheless needed to adjust to changed market conditions quickly. After thorough analysis of the status quo, Forker opted for a two-phase model: following internal restructuring, Siegwerk was to embark on an internationalisation and expansion policy. In this, Forker was assuming that the market in Central Europe would tend to stagnate in the coming years. He saw Asia, South America and the NAFTA region (Canada, USA and Mexico) as future growth markets.
Siegwerk’s new strategy was set down in a 10-point programme. Over the following years, the ten points were implemented step-by-step. They were grouped in three major categories: growth and focus on packaging, growth and portfolio streamlining in print along with re-organisation and professionalisation of company structure.
To achieve these goals, Herbert Forker specifically employed relatively young people from internationally active corporations in management positions. In just a few years, an efficient organisation developed, supplying the Board with proposals for business decisions and implementing these successfully.
| Siegwerk's 10-Point Programme | |
|---|---|
Goal | Tasks |
Growth and focus on packaging |
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Growth and portfolio streamlining in the publication sector |
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Re-organisation and professionalisation of company structure |
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At the beginning of the new millennium, Siegwerk was in an excellent position to be successful in the long term. It had plenty of competence in several ink and printing areas, a solid reputation among key customers and market partners, and a Central European site that was unique in the entire printing ink industry for its economies of scale. But more and more, other factors were winning key deals: localised availability of products and services all over the world. Here, Siegwerk had little to offer apart from a subsidiary in the USA. As early as 2000, management therefore set the target of offering global service and delivery to customers as soon as possible.
Following the ‘homework’ of reforming the existing organisation on the basis of the 10-point plan, Forker’s first internationalisation move was to look for a possible acquisition on the Asian growth market, where first initiatives were already done. In the same year, Siegwerk Ink (Thailand) Ltd. was launched in Bangkok as a competence centre for the Asian market. Since Thailand exports plenty of food, the market for packaging printing seemed ample, with large demand for the respective inks. Growth rates in Asia were in the double-digit percentage region in the year 2000. The quality of packaging was increasingly approaching that of industrialised countries, driven by the big brand names in the areas of food and hygiene. Siegwerk set itself the goal of distributing products and services from Bangkok to surrounding countries.
In 2001, the decision was reached to cover Eastern Europe with a regional company of its own. One year later, Siegwerk Polska was launched near Warsaw. Base inks delivered from Siegburg were efficiently adapted to customers’ wishes thanks to modern metering technology. In Siegburg, staff acquainted with the Polish language and culture were always in contact with colleagues in Warsaw.
The launch of Siegwerk Polska was followed by further steps in the internationalisation concept in 2002: Siegwerk Ink was founded in Golborne (UK), Siegwerk Tintas Graficas opened north of the Portuguese capital Lisbon in Venda do Pinheiro, and Siegwerk Tintas Graficas was formed in Brazilian São Paulo.
In August 2002, the company’s legal form was changed from “Siegwerk Druckfarben GmbH & Co. KG” to “Siegwerk Druckfarben AG”, since public limited corporations enjoy a better reputation in Germany and can operate more economically in many ways. The shares remained with the existing owners.
High innovation potential and a distinct service mentality with motivated staff had guaranteed Siegwerk’s market position for decades. The company continued to operate at state-of-the-art standards in the new millennium: new packaging types, like stand-up pouches that Siegwerk chemists had significantly helped to develop facilitated better packaging efficiency along the value chain at a lower waste rate. In the field of environmental protection, Siegwerk joined its customers in developing viable and ecologically sensible recycling concepts and the respective inks, even before production commenced.
The Internet age forced the publishing sector to rethink its position fundamentally. Print products were facing increasing competition from the electronic media. Even before that, business with printing inks for illustration gravure and web offset had suffered from continuous price drops. The economic pressure on customers increased the problem.
In Europe too, a process of concentration and consolidation commenced swiftly in the gravure printing business. Siegwerk management set itself the goal of extending its technology lead. To this end, a special technical centre for publication gravure was set up in Siegburg, to further improve dispersion technology. Along with continued unique customer service, such special efforts in research and development ensured that partners could rely on Siegwerk’s quality – and Siegwerk on the loyalty of customers. Among the latter, the company retains such a major client as Burda, with its gravure printing plants in Offenburg (Germany), French Vieux-Thann and Bratislavia, Slovakia. In 2002, Siegwerk inks were used to print about half the 235 magazines published by Burda worldwide and with a readership of 44 million people.
In web offset, the other part of the business area Print as it existed then, Siegwerk was able to register constant growth, but also constant price decreases. Crowding-out was getting more intense – due to new competitors from India, for example. That did not just apply to the production of printing inks, but to printing projects themselves, so that many of Siegwerk’s customers were fighting to keep their companies alive. Siegwerk took to the offensive and invested much time and energy in boosting heat set and cold set on the basis of a consistently implemented strategy. Synergy effects were achieved in cooperation with gravure – in business with international customers, too. For example, when a new contract regarding publication gravure inks was signed with a major customer in Brazil, Siegwerk was able to couple this with a deal on web offset inks.
As planned in the 10-point programme, Siegwerk’s board began assessing possible acquisitions in 2003 along with the launch of new companies of its own abroad. Following failed negotiations with a European competitor, the North American market was quick to become a focal point. The main attraction was the prospect of serving internationally active packaging companies in this important market, as elsewhere. After intense negotiations, Siegwerk was finally able to take over the printing ink manufacturer “Color Converting Inc.” (CCI) in De Moines, Iowa. In early November 2003, Forker and CCI owner Ron Barry shook hands to close the deal. On December 1, the acquisition contract was signed.
In 2002, CCI was the fourth-biggest ink producer in the USA. It ranked second for inks made for high-quality packaging printing. CCI produced about 20,000 tons of flexo and gravure inks. Along with solvent-based inks, the programme included water-based solutions and UV applications. In 2002, CCI had 320 employees and a turnover of 85 million euros. Along with plants in Des Moines and Spartanburg (South Carolina) there were five further locations in North America and four sales-only sites. 108 staffers worked in-house in the printing facilities of customers, handling ink management there.
The harmonisation of products and service offerings was conducted in record time. Successful items from the USA, such as the flexo-printing ink series “Sealtech”, were integrated in the global product palette, while Siegwerk ink series were introduced on the American market.
» Color Converting: To the top in 28 years – By Kent Shah
In late 2003, following the takeover of CCI, the Siegwerk Group was employing 1,300 people in ten countries around the world. The integration provided many new impulses, such as the in-house service concept of employees permanently deployed in a printing firm.
In Europe, the so-called “mother plant concept” continued to secure the deliveries to customers all over the continent. Basic inks and concentrates were produced in Siegburg, while further processing and metering for customers were handled locally in smaller country units.
Issues like forgery-proof inks for excise stamps or special surface embossments were challenges the company faced following the acquisition of CCI. Other Siegwerk innovations also came into their own globally in this period, including PETP sachets for the catering industry, which contained small portions of ketchup, mustard or mayonnaise. Siegwerk produced a selection of primers, inks and varnishes for these sachets, guaranteeing durability on metallised foils in the face of aggressive spices, oils and acids. At the same time, this constituted an inexpensive alternative to relatively pricey materials such as the composite PET-Alu-PP.
Regarding confectionary sold globally, the focus remained on cold seal packaging for candy bars made of oriented polypropylene (OPP). The inks and release varnishes prevent printing products from sticking together with the coldseal material along with a low content of solvent residue.
Such ground-breaking developments are only possible in close cooperation with customers. One example is the cooperation with the Australian packaging manufacturer Amcor-Flexibles in the development of the so-called DeMet procedure – an inline printing method involving partial demetalisation and lamination on metallised foil for confectionary packaging. The inline process provides an aesthetic improvement as well as lower costs compared to the two or three-step processes used in the past.
With intensive research in the Siegburg laboratory and the expansion of on-site customer services for application engineering, Siegwerk was well on the way to meeting the challenges of an increasingly globalised world in the packaging industry. But the most important goal of the owners and management – to secure entrepreneurial independence in the long term – seemed to be in danger in mid-2004. Financial investors had discovered the printing ink industry as a lucrative field. The investment house CVC combined the former printing ink division of Akzo Nobel (ANI) and the ink business of the chemical giant BASF to form “XSys”. Soon, it was clear that the investors’ appetite for more was not yet assuaged. In 2005, the takeover of the world’s second biggest producer Flint Ink followed. Since then, the corporation has been called “Flint Group”.
Management and owners at Siegwerk reacted fast. When it became known that the then third largest producer of printing inks – the Swiss Sicpa holding – was planning to sell its division for packaging inks, Forker and his board colleagues initiated negotiations immediately. On June 16, 2005, a pre-contract was signed, with the final takeover following on September 8 of the same year.
» Sicpa Packaging: International and innovative – By Gilles Catherin
