Flint Group's Future Is Coming Into Focus
As the integration of the Flint Group proceeds, its leaders look at what has been accomplished and what the potential is for the company.
By David Savastano
By combining Flint Ink, the world’s second-largest ink manufacturer with $1.4 billion in sales in 2004, with XSYS Print Solutions, the aforementioned BASF-ANI organization which had $1.2 billion in sales in 2005 and was the third-largest ink company, CVC created the second-largest global ink company, one that is well positioned to compete in every region and in every segment.The company can also use its combined purchasing power to better negotiate with suppliers.
On many fronts, it was a particularly synergistic fit, as in some cases,each company had strengths in markets where the other company was not involved. In other areas, there was overlap, and cuts would be implemented.
In January, Flint Group, the company’s new name, was introduced.Today, the company has sales of $2.7 billion, with approximately 8,000 employees.
Now, more than six months later, Flint Group’s leaders have had the time to see where its opportunities are, and while there is still plenty to do, the company has a clear vision for the future.
The leadership team for the Flint Group is a combination of Flint Ink and XSYS management teams. Dave Frescoln, Flint Ink’s CEO, is CEO of the new group. Peter Koivula, CEO of XSYS, is vice chairman, with special board responsibilities for strategic matters and the relationship with major customers at a senior level. Howard Poulson, non-executive chairman of XSYS, assumed the same function within the combined group.
Mike Gannon, CFO of Flint Ink, is president and COO of the new company. Michael Bissell, who had been CFO of XSYS Print Solutions, is executive vice president and CFO.
In a structure designed to play to the company’s strengths, Flint Group is divided into five regional operating groups and four distinct global business units.
The leaders for the five regional operating groups are Dr. Dirk Aulbert, president, Flint Group Europe; Bill Miller, president of Flint Group North America; Jerko Rendic, president of Flint Group Latin America; Damian Johnson, president of Flint Group India/Pacific; and Henry Leong, president of Flint Group Asia.
The four global business units are led by Dr. Thomas Telser, Flint Group Printing Plates; Ewald Draaijer, president, XSYS Print Solutions (narrow web inks); Craig Foster, president, Flint Group Pigments; and Dr. Kenneth Stack, president of Jetrion LLC, the company’s digital inks and systems subsidiary.
The Regional Groups
Each of the regions and business groups has its strengths and its own set of unique challenges. Here is a closer look at each of the regions:
Flint Group North America
The strength of Flint Ink’s operations were in the Americas, particularly in the U.S., where the company was among the two largest ink manufacturers in most segments. Interestingly, narrow web was the company’s weakest link, as Flint Ink divested its Arcar narrow web division in 2003. The addition of XSYS places Flint Group at the forefront of narrow web; XSYS Print Solutions will continue to operate as a separate business unit. XSYS also had a smaller position in sheetfed with the K+E brand, as well as its Printing Plates division.
‘Flint Group is a strong leader in the publication arena in gravure, heatset, coldset and sheetfed. In packaging, our customers have access to a broader portfolio of products and services. In areas like narrow web inks and printing plates we already were among the top suppliers but now we have a true global reach.’
– Dr. Dirk Aulbert, president of
Flint Group Europe
The integration process in North America has not been as vast as in Europe, although there has been some rationalization.
“Since there was little overlap in the North American market, the integration has taken place with little disruption,” Ms. Marx said.
Ms. Marx said that customers and employees are optimistic about the merger.
“Employees and customers are responding favorably and are excited about the opportunities that the merger offers,” she said.
Flint Group Europe
Flint Group Europe encompasses Europe, Africa and the Middle East. It is the also the region where there is the most overlap, as ANI Printing Inks and BASF Drucksysteme were both headquartered there, and Flint Ink had a major presence through its Flint-Schmidt operation.
The company has leading positions in news, heatset, publication gravure and narrow web inks, among others, and is among the top players in other ink segments.
Dr. Aulbert was recently named president of Flint Group Europe, succeeding Dr. Helmut Schmidt, who is leaving the company. Dr. Aulbert had been vice president and general manager of Flint Group’s European sheetfed division.
“Flint Group is a strong leader in the publication arena in gravure, heatset, coldset and sheetfed,” Dr. Aulbert said. “In packaging, our customers have access to a broader portfolio of products and services. In areas like narrow web inks and printing plates we already were among the top suppliers but now we have a true global reach.”
Flint Group Europe is also the area where the most consolidation will take place. The company has slightly realigned its product portfolio, divesting its metal decorating business to senior management of the division. Meanwhile, Dr. Aulbert said integration projects are moving ahead according to plan and most will be finished in the third quarter this year.
“The company is pursuing a dual strategy of consolidation and decentralization,” he said. “Plant consolidations are focusing manufacturing activities on single product lines. The result is to reduce manufacturing costs while improving quality and consistency. R&D and technical support are being decentralized to be able to meet local demands and have short response time.”
The additional product capabilities are allowing the Flint Group to better serve its customers’ individual needs.
“With a strategically expanded product portfolio and improved market coverage in Europe, we are able to meet each customer’s individual needs locally and regionally,” Dr. Aulbert noted.
“Our customers benefit from a balanced and complementary portfolio in terms of both geography and product offering,” he added. “The new group is a strong new leader in all sectors of the worldwide printing, packaging and colorants industries. It brings together long traditions of superior products, expert service and a commitment to meeting customer needs in all of the major markets of the world.”
Dr. Aulbert said that there have been changes within the company because of the merger, but added that those moves probably would have been necessary even had the merger not occurred.
“Our employees understand that we need to put the new company on a profitable course of growth as quickly as possible,” Dr. Aulbert said. “This, of course, will naturally involve changes, which we probably would have encountered even without the merger. There is cooperation between the individual locations and colleagues who were formerly competitors. All are encouraged by the fact that we are now a joint and high-powered company.”
Flint Group Latin America
‘In view of the forecasted growth in the printing inks market in Asia, we expect Flint Group to expand our operations here in the coming years. Of course, China will be a key area of focus, with its expected annual growth rate of about 10 percent in the printing ink market for the next five years.’
– Henry Leong, president of
Flint Group Asia
“XSYS had a very minor participation in the Latin American market,” said Mr. Rendic. “We basically do not have any issues regarding integration or market participation.”
Where the company will make gains is in its ability to offer new products to the region’s printers.
“We see the most benefit for the company and our market in new products that can become available, especially on the packaging side,” Mr. Rendic said. “Because of the increase in economies of scale, we are looking into ways to become more efficient in our product sourcing and product manufacturing quality.”
Flint Group India/Pacific
As is the case in Latin America, XSYS did not have a huge presence in the India/Pacific region, having only purchased Macro Inks, a UV narrow web label specialist, last year. Flint Ink has a large presence in the region, becoming the leading ink manufacturer in Australia and New Zealand and acquiring a portion of Incowax, an Indian packaging ink and narrow web ink firm, in 2001.
“Flint was the leader in packaging and news and had a substantial share of the narrow web market in the region,” said Mr. Johnson. “Due to the relatively small position of XSYS in the Australian market, there was no substantive change in the overall market position in the region. Even so, we did strengthen our position slightly in the narrow web market.”
In India, Flint Group completed the purchase of Incowax on April 1. XSYS’ former BASF sheetfed ink business in India will become part of the Flint Group sheetfed segment.
“In India, Incowax held some 60 percent of the narrow web market share,” Mr. Johnson said. “XSYS narrow web will be integrated into existing Flint Group operations there, and all inks in the narrow web segment will be marketed under the XSYS Printing Solutions as part of the global business.”
The combination of Flint Ink’s and XSYS’ product portfolios will benefit customers in the region.
“The primary benefit of the merger is the ability to select from among all XSYS and Flint technologies to provide the best solutions to our customers,” Mr. Johnson said.
Flint Group Asia
The Asia market, led by China, is the world’s fastest growing economy. Printing is expanding rapidly to meet the needs of manufacturers, and ink companies are developing resources and relationships in the region.
In 2004, Flint Ink made its first move into China, building a joint venture news and heatset ink plant with four major Beijing newspapers.
In 2005, the company announced plans for a packaging ink plant in Guangzhou. The commercial start-up of the Guangzhou facility in the next month or two will provide an excellent sourcing point for packaging inks in the Asian region as well as an alternative source of products for the narrow web business in the region.
“Prior to the merger, Flint was well-established in the publication (news and heatset) market in the Asian region,” said Mr. Leong. “With the start-up of commercial production in our Beijing facility in 2004, we have the added strength of being able to source both news and certain grades of heatset inks within the region. Establishment of our Guangzhou packaging inks facility has strengthened Flint Ink’s image in this market segment.”
XSYS brings to Flint Group its extensive ties to the narrow web market and operations in Malaysia and China. The company also sold K&E brand sheetfed inks through several distribution channels in the region, particularly in Hong Kong, China and Taiwan.
Because XSYS’ activities were limited in the Asian region to narrow web, not much integration is necessary. Mr. Leong said that Flint Group Asia will seek operational synergies between the XSYS narrow web facility and the new facility in Guangzhou, as well as exploring expanded distribution opportunities. As a result, the merger has increased Flint Group’s presence in this rapidly growing region.
“Flint Group’s image has definitely been enhanced in the Asian region as a result of this merger,” Mr. Leong said. “Except for narrow web, where XSYS is the market leader, Flint Group will still be relatively small in the very huge Asian printing ink market. The merger will definitely provide us with an extended portfolio of products to sell and an increased technology base to service the growing demands of the marketplace.
“In view of the forecasted growth in the printing inks market in Asia, we expect Flint Group to expand our operations here in the coming years,” Mr. Leong said. “Of course, China will be a key area of focus, with its expected annual growth rate of about 10 percent in the printing ink market for the next five years.”
The Global Business Units
Aside from the regional structure, Flint Group also set up four independent business units: XSYS Print Solutions (narrow web), Flint Group Printing Plates, Jetrion and Flint Group Pigments. Each of these units has an international presence and a specific portfolio.
XSYS Print Solutions
ANI Printing Inks, one of the two key components of XSYS, came out of Akzo Nobel Inks, and was the industry leader in narrow web ink.
To best continue the specialized service the narrow web printer requires, Flint Group maintained XSYS Print Solutions as its narrow web division.
“We think this is an excellent example of the importance of focus and dedication toward a specific marketplace,” said Niklas Olsson, global brand manager, XSYS Print Solutions. “XSYS Print Solutions has, since the early 1960s, been working solely in the tag and label market, concentrating on the narrow web converter.
“By focusing our divisions and departments on clear customer groups, we become experts in specific customer issues,” Mr. Olsson said. “We understand their business and concerns better and, therefore, we believe we are better equipped to provide solutions that work for them.”
Mr. Olsson noted that are strong advantages for maintaining an independent narrow web division, which is a particularly service-intensive business.
“In today’s competitive and specialized markets, people want to talk with experts,” he said. “That is especially true in a highly specialized segment like narrow web.
According to Mr. Olsson, “narrow web” is actually not a very descriptive name for this market
“We sometimes refer to it as the ‘product decoration market,’ since converters today can print and convert so many different applications, on the same press,” he said. “To name a few, there are self-adhesive labels, in-mould labels, wrap-around (BOPP) and shrink sleeve (PVC, PET) labels. Add to this the complexity you get by using combination presses. You can literally use a UV flexo press in the morning, and in the afternoon change to a UV offset press and print in-line using solvent-based gravure in one or two stations with the possibility of using a UV-curable adhesive lamination barrier film on top.”
Mr. Olsson said that by understanding various combinations in print techniques, XSYS can bring converters a wide array of options to create a highly eye-catching and immediately identifiable label, and can offer a one-stop-shop in this niche market.
“As a single division, we are working with the five dominant print methods – UV flexo, water-based flexo, UV letterpress, UV offset and UV screen inks – as well as UV coatings and adhesives,” Mr. Olsson said. “In addition, we have increased our offerings in specialized inks for solvent gravure, and still carry the oil-based letterpress inks that formed this industry some 42 years ago.”
There are projects already in the works that are benefiting customers. “We have enormous resources and experience in the combined group,” Mr. Olsson said. “It is going to be interesting to follow the cross-fertilization that is already taking place as we work together on a number of projects. Through our dedication and entrepreneurial spirit, we will be able to offer our customers the best and most innovative technology that works for their individual needs.”
Flint Group Printing Plates
Printing plates is a sizable business for XSYS, the world’s second-largest supplier for photopolymer printing plates.
“The printing plates business is a very technically-driven business,” Dr. Telser said. “Our customers often secure their leading position in the market by developing specific solutions for their own customers. To achieve this, they rely on our technical expertise and on our ability to provide local technical advice worldwide.
‘When you look at a merger, you always look to complement or address gaps which may exist. This merger addresses globally the gaps of both units, and coming out of the merger, you are left with a stronger global colorant and chemical company.’
– Craig Foster, president of Flint Group Pigments
According to Dr. Telser, customers will benefit from being able to purchase printing plates along with inks from the new company.
“By offering both plates and inks for flexo and letterpress printing over a long period of time – both were already part of our company product range when we were part of BASF – we built up a unique knowledge base regarding the printing process as a whole,” he said. “From this technical expertise, customers can benefit in various ways.”
Dr. Telser said that Flint Group Printing Plates provides joint technical training and presentations to its employees and its customers. For example, after the merger of BASF Drucksysteme and ANI, the company combined its technical centers for printing plates and narrow web inks in Shanghai, China under one roof, and provides combined technical customer training and product demonstrations live on press.
“We regularly find that our technicians are highly-valued by our customers for their broad expertise and thorough understanding of the total printing process,” Dr. Telser said. “By sourcing both plates and inks from one hand, our customers also know that they can hold us responsible not only for the quality of each product but also for the performance of the combination of both.”
Jetrion has been a remarkable success story for Flint Ink since its beginnings in 2002. Under the leadership of Dr. Stack, Jetrion has made tremendous gains in the digital marketplace. The company’s approach is based on working with customers to create specialized products.
While XSYS was not heavily involved in inkjet, the merger will offer opportunities for Jetrion to grow, particularly in the narrow web market, and to focus completely on the growing world of inkjet.
“XSYS is a global leader in narrow web inks, and will greatly expand Jetrion’s customer reach by opening many new customer doors around the world,” said Sean Skelly, director of product management, Jetrion LLC. “The result will be that Jetrion’s hybrid approach to the market – marrying inkjet technology with existing and new web presses – will be enhanced, thus allowing Jetrion to sell its market-leading 3025 Inkjet Printing System into a very large customer base.”
Mr. Skelly said that Jetrion will also benefit from the resources of the entire group.
“Jetrion will definitely be able to access the resources of the entire Flint Group, thus benefiting from technical collaborations (e.g., inkjet receptive coatings), purchasing leverage (common raw material suppliers), infrastructure, worldwide presence and customer access,” he said.
Flint Group Pigments
Pigments are an area of strength for the Flint Group. CDR Pigments and Dispersions, Flint Ink’s pigment arm, is strong in North America, while XSYS, though its previous BASF acquisition, has pigment operations in Europe as well as BASF Colorants & Chemicals Co. Ltd. in Shanghai. XSYS’s pigment businesses also include its alkali blue manufacturing plant in Huntington, WV. These operations are a powerful combination that fits perfectly together.
“XSYS was strong in production and distribution in Asia and Europe with pigments and additives primarily for offset printing,” said Craig Foster, president, Flint Group Pigments. “It was also a market leader in alkali blue. CDR was strong in North America and South America with production and distribution of flushed colors, pigments, additives and dispersions for offset and packaging inks, but also for non-graphic arts-related businesses. CDR offered strong distribution of products globally both from North America and Asia. XSYS was generally weak in North America and CDR was generally weak in Europe and Asia.
“The combination of the two significantly broadens the product lines available into Europe and Asia for packaging products, and adds strength to both groups’ offset portfolio,” Mr. Foster said. “It increases the manufacturing footprint and flexibility of both groups, allowing us to better serve global customers in multiple product segments from well-developed production and distribution locations.”
The merging of CDR and XSYS allows Flint Group Pigments to provide the same quality and service throughout the world.
“The merging of the two groups essentially fills in the gaps that each unit had individually, both in geographic reach and product scope. We can now effectively supply a customer in Europe/Asia and the Americas regions with the same product, same consistency and same service in each of those regions,” Mr. Foster said. “We can now also offer one of, if not the broadest, product portfolios to our customers. This is, frankly, what our customers have told us they expect from us and now we can provide it. As well, it introduces our total organization to regional customers in and out of the graphic arts sectors who previously had relationships with either CDR or XSYS individually.
“When you look at a merger, you always look to complement or address gaps which may exist,” Mr. Foster concluded. “This merger addresses globally the gaps of both units, and coming out of the merger, you are left with a stronger global colorant and chemical company.”
The Future of Flint Group
It has been nearly nine months since the merger of XSYS Print Solutions and Flint Ink was announced, and nearly six months since the acquisition was completed on Sept. 30. Mr. Frescoln said that customers have been positive about the results so far.
‘The CVC investors are obviously interested in our progress toward the goals they have set for the organization, but they have expressed confidence in the ability of our management team and are not involved in the day-to-day operations. They consider us the ink experts and that allows us to do what needs to be done.’
– Dave Frescoln, Flint Group CEO
“While the changes haven’t been as transparent to employees, our team of managers has worked hard to keep the employees informed,” Mr. Frescoln said. “The greatest changes have been in areas, such as Europe, where there was more pronounced overlap between the two organizations.”
Mr. Frescoln said that the merger has provided Flint Group with some key advantages, such as greater economies of scale and more resources.
“The new company brings a good balance between serving local interests, which are important because this is where the customers are, and corporate interests, where the focus is on economies of scale in procurement and manufacturing,” he said. “The merger has also created a financial structure that provides greater resources than we had as a family-owned company. Even though we are still privately owned, we will be able to grow more effectively.”
There are more changes ahead, both in terms of growth and further rationalizations.
“There may be some additional closures and we are continuing to review a range of factors such as location to make the right decisions,” Mr. Frescoln said. “We are pursuing a strategy that balances the synergies of consolidation with the need to fully serve our customers on a local basis. Our intention is to have factories focused on specific product areas, but not as single sites, so there will be some redundancies. We will continue to have a decentralized sales network in order to maintain close contact with our customers. We are making good progress and each month brings us closer to meeting our strategic objectives.”
Overall, Mr. Frescoln said that the new leadership team is working out very well.
“I’m very pleased,” he said. “In addition to each unit evaluating its own strategy, we have a dedicated team that is working on integration. It’s a multifunctional team, and there has been a growing appreciation for what the various segments and perspectives bring to the planning effort.”
CVC’s relationship with the Flint Group’s leaders is also critical, as the investors evaluate the course of actions that are available to them.
“The CVC investors are obviously interested in our progress toward the goals they have set for the organization, but they have expressed confidence in the ability of our management team and are not involved in the day-to-day operations,” Mr. Frescoln said. “They consider us the ink experts and that allows us to do what needs to be done.”
There is much ahead for Flint Group. Some contend that the company may wish to acquire bolt-on operations in Asia if the opportunity arises. Meanwhile, the ultimate plans for the company, whether it be an IPO or a future sale, remain uncertain. Still, one thing is certain: Flint Group is a formidable presence in the international ink industry.