Commercial Shops Add Packaging: Treasure Chest or Pandora’s Box?
If you are a commercial printer who aspires to expand into packaging, the best way to begin pursuing your ambition may be to acknowledge that you don’t know what you don’t know.
Successfully breaking into package printing is possible - the packaging success stories of the three printing companies profiled here confirm it. But, introducing packaging into a commercial print environment means rethinking the nature of the business, even if the packaging volume is relatively small. Equipment and software requirements will change, and so will customer relationships, skill sets and sales strategies.
According to Brian VanderHooning, VP of national sales and business development at Foremost Graphics Group in Grand Rapids, Mich., the difference between commercial and package printing is the difference between waiting to hear a customer say, “Hey, print me 5,000 brochures” and proactively innovating as a solutions provider not just to the customer, but to the entire supply chain that the customer belongs to.
Commercial printing know-how can be helpful for would-be packaging producers, notes Mark Mills, VP of sales and marketing for Orlando, Fla.-based Spectrum Print Communications, but only up to a point - the finishing is the real point of departure. Be prepared for “a complete retrofit of your entire business” to get the end-to-end production capability you will need, he advises.
Physical Structure of Packaging: Will It Fill?
Being able to print and convert a package is only half the mandate, observes Gus Chew, COO at K&D Graphics in Orange, Calif. The package also has to meet opening-force specifications and the other strict requirements of the filling line where it will receive its contents. This emphasizes the performance of the physical structure to a degree that isn’t seen in commercial work, Chew points out.
There is no exact count of the number of commercial printing firms that have ventured into package printing. Jim Workman, VP of Printing Industries of America’s Center for Technology and Research, estimates that if the definition includes labels, 10% to 15% of commercial plants derive some portion of their revenue from packaging.
Likewise, the 2017 Printing Impressions 400 listing includes 91 companies reporting that packaging represents from a few percentage points to 90% of their total sales volume. The average and median percentages are 19% and 10%, respectively.
If the metrics for the migration into packaging aren’t completely clear, the motivation is. Industry consultant Kevin Karstedt says that while some commercial businesses enter the market “simplistically”- either to compensate for shrinking margins on traditional work or because they’ve heard rival shops are trying to break in - others do it for strategic reasons that could lead to real opportunity.
No-Frills Folding Carton, Insert Work
According to Karstedt, a shop with an offset press that can print 20-pt. board for clients who “put products into a box” is a good candidate to profit from what he calls “Lite Packaging:” no-frills folding carton and insert work that commercial customers will be happy to obtain from a reliable source that they’re already doing business with (see sidebar above).
He says that mainstream folding carton converters - the top 500 firms serving the likes of Kraft and General Mills - know they’re at risk of losing this short-run “easy stuff” to cherry-picking by commercial plants with basic packaging credentials.
The companies whose executives were interviewed for this story, however, are anything but cherry-pickers: they’ve made serious, long-term commitments to packaging and corresponding investments in production capability.
VanderHooning says that Foremost Graphics, a producer of flexible packaging since 1999, entered the folding carton market by means of a strategic acquisition in 2015. Offset production had been “stagnant” on the commercial side, but folding carton printing on paperboard and plastic has grown to a point where it now accounts for about half of the company’s business. Success in the niche was a factor in transferring packaging production to a new, 90,000-sq.-ft. facility in Walker, Mich., a few miles from its original plant in Grand Rapids.
Don Chew, CEO of K&D Graphics, who started the company in a garage in 1981, says that, by 1999, he could see that web shops were cutting deeply into K&D’s commercial volume. After rejecting the idea of acquiring a web press of his own, he opted for packaging by purchasing a pair of six-color Heidelberg Speedmaster CD 102 sheetfed offset presses.
Initially, an 80/20 percentage split between commercial and package printing revenue prevailed at K&D. Today, those percentages are reversed as the company anticipates further growth in high-end folding cartons for cosmetics and telecommunications accessories.
Spectrum Print Communications used to be an all-commercial printer, says Mills, until declines in sales and margins made it clear that remaining exclusively in the niche would no longer be “a sustainable business model.” The company diversified first with direct mail and later made its entry into folding carton production for food, pharmaceuticals and cosmetics in 2014.
Now, folding cartons deliver about two-thirds of its revenue, with direct mail contributing about 30%. What’s left comes from a few commercial accounts that Spectrum continues to serve, although Mills says the company no longer actively seeks new business of this kind.
In the Long Run, It’s Short-Run
All three of the businesses profiled in this article owe some of their fast-track growth in packaging to demand-side changes that are driving run lengths down and obliging their pressrooms to be ultra-efficient.
Three years ago, according to VanderHooning, Foremost’s short-run work in packaging (25,000 sheets or fewer) was “minimal.” But now, thanks to SKU proliferation breaking up orders into ever-smaller quantities, it can represent as much as 40% of the workload.
Defining a “short run” at K&D Graphics as one consisting of 5,000 sheets or fewer, Gus Chew says that about 60% of the company’s packaging work comes from jobs in this range. Printing multiple SKUs for cosmetics customers means being adept at gang-running, a skill that K&D demonstrates by imposing up to 25 different versions on a press sheet in a single run. Mills, likewise, reports that Spectrum depends on gang runs to stay ahead of the under-10,000-sheet jobs from which about half of the company’s production comes.
A capable press is far from being the only thing that success in packaging requires, but much obviously depends on how automated, versatile and efficient the printing platform is. As Karstedt points out, it may be possible to retrofit an existing press to handle heavy substrates and meet other packaging requirements. But, the surest bet probably is on late-model equipment built for the task from the frame up.
Such a press is the KBA Rapida 106 sheetfed offset press installed at Foremost Graphics late last year in conjunction with the move to the new facility in Walker. VanderHooning calls the six-color, 41˝, coater-equipped machine “the state-of-the- art press for the packaging industry” because of its packaging-specific features.
These include anti-static units in the feeder and heavy-duty transfer grippers to assure uninterrupted throughput of plastics and other thick materials at high speeds. An on-board camera system inspects every third sheet while the press runs flat out at 18,000 sph - a capability that VanderHooning says brings the Rapida 106 as close as a press can come to being controlled by artificial intelligence.
Given its reliance on serial gang runs, K&D Graphics needs a press that can proceed from job to job as uninterruptedly as possible. Don Chew says that the company’s recently installed Heidelberg Speedmaster XL 106 accomplishes this with its “Push to Stop” technology: press control software that automates job preparation and changeover by minimizing the operator’s involvement in the process.
According to Chew, 10-minute makereadies are routine on the press, which also features the Prinect Inpress Control 2 inspection system for color and registration accuracy.
In January, a new Komori GLX640-C with LED and HUV curing went into full production at Spectrum, replacing an older Komori sheetfed press. Mills says that with its six printing units, three curing stations and coater, the 18,000 sph press is good at adding “cool printing techniques” to a wide range of packaging substrates. Its folding carton printed output is in keeping with Spectrum’s FSSC 22000 certification for strict quality assurance standards in food packaging production.
Although none of the companies profiled here is producing a significant volume of packaging on digital equipment, they all show degrees of interest in moving in that direction. Probably the most inclined is Foremost Graphics, which, according to VanderHooning, is looking at HP Indigo digital equipment as a potential solution to a rising demand for packages in small quantities.
What’s Your Post-Print Profile?
Equipping for packaging production means equipping for finishing or, if that investment isn’t feasible, partnering with reliable outside providers of post-print services. Karstedt says that the contract finishing companies belonging to the Foil & Specialty Effects Association (FSEA) can be good resources for commercial plants taking their first steps into “Lite Packaging.”
But, as Mills points out, having full finishing capabilities in-house is table stakes for being taken seriously by serious packaging customers. This is why Spectrum, like K&D and Foremost, is vertically integrated for postpress with diecutting, folding/gluing and whatever other finishing processes come into play. K&D, notes Gus Chew, even fabricates it own dies.
Enterprise resource planning (ERP) software tailored to packaging environments is similarly tied to achieving production efficiency. ERP software manages operational and administrative functions - from estimating to invoicing - and a good ERP package, according to VanderHooning, should be able to carry out these tasks in the context of multilevel SKU manufacturing. He says Foremost achieves the kind of process control it needs with CartonERP, a folding carton-oriented system from Workpack Solutions.
Industry-Wide Issue: Lack of Talent
Besides what it requires in equipment and software, success in package printing has a human ingredient. Mills points out that because packaging is a specialty, “there is not a lot of packaging talent out there” for printers and converters to recruit. This is why he works with the University of Florida to identify students in its packaging engineering program as potential hires.
Then there is packaging sales, which Mills calls “a totally different process” from selling commercial printing. Territories will change along with the type of product being sold, and so will compensation plans. Print salespeople will have to learn to interface with purchasing agents and other decision-makers that they may not be used to dealing with on the commercial side.
The commercial and packaging sales teams at Foremost are separate, but VanderHooning notes that everyone is cross-trained to handle both types of accounts. Progress in packaging at K&D Graphics, which until now has not had a formal sales force, is prompting the Chew family to begin building one in anticipation of rising orders.
Source of Satisfaction
With all of the hurdles and obligations that come with it, packaging, as Karstedt says, isn’t a venture for the faint of heart. But when it works, it can warm the heart with the glow of accomplishment. All of the printers quoted here agree that packaging sales drive commercial sales more strongly than the other way around. Gus Chew explains that once a company has proven itself as a supplier of packaging, it becomes bona fide in the customer’s mind as a one-stop source for everything else.
The balance, however, isn’t easy or quick to strike. When packaging came to Spectrum, says Mills, “everything got changed in the company” in ways that weren’t fully apparent at the time. He remembers “bumps and bruises” as lessons that needed to be learned in the first few years.
According to VanderHooning, there’s more at end of the learning curve than just an increase in volume: the whole nature of the relationship with the customer changes, and for the better. “We’re not just a ‘me-too-er,’” he says. Earning loyalty as a packaging supplier makes it “a lot harder for a partner to disengage” from that supplier in pursuit of the small, but deal-breaking, price differences that commercial printers are used to losing accounts to.
Leaving that impediment behind was proof enough for Foremost Graphics that the investment in packaging had paid off and that greater returns were on the way. “We just love the new adventure,” VanderHooning says.