But then disaster struck. “HP invented the desktop laser printer and it changed the market overnight,” explains Faint. “We knew that we had to look for a new marketplace.”
Fortunately Faint realised early on the potential consequences that this new technology heralded and so he canvassed the opinion of his customers, through the distribution of a questionnaire, to find out just what it was that they wanted from their print partner. The main answer was storage so that they could get items on demand. Redlin addressed this through the creation of a warehouse storage facility.
However, over a period of time, Redlin established that approximately 33% of stock was wasted and to help reduce this figure, the firm invested in a digital press so that it could print slow moving products on demand. This side of the business quickly took off as word spread that the company could print colour digital jobs. “The next thing you know we were under pressure,” explains Faint. More presses were bought to accommodate this additional work and it was around this time that Faint was faced with his conundrum.
Overcapacity
“We knew the industry had tremendous overcapacity and that we had to do something about it,” explains Faint. From discussions with his peers he established that overcapacity was around 25%, meaning that one-in-four printers were unviable. Faint didn’t want Redlin to become just another statistic so he embarked on a series of acquisitions – four in total – to grow the business to a size that offered greater economies of scale and a diverse range of services.
The first company he bought was Ridge Paperprint, primarily because the premises that the firm was working out of were more suitable for printing than Redlin’s. Next Faint picked up two small commercial B2 printers that were generating modest amounts of income. “A small company with turnover of around £1.5m is not going to survive – you can’t even make a profit,” explains Faint. “But with these deals we purchased turnover and skills and from that we drove in economies of scale.”
But that wasn’t the end of it. In 2007 Faint snapped up Tarn Print, a litho company operating out of nearby Basildon. As part of the deal, Redlin acquired Tarn’s premises and now has three sites, including its storage facility. Following the buy, production was reorganised so that the Chelmsford site is strictly B2 colour work. Basildon is more focused on digital work with separate management systems for both sites.
“Digital and offset printing are a bus ride apart in terms of the way that you approach them, so it was natural to split the two operations,” explains Faint.
This tactic of growth through acquisitions is paying off. The firm currently has around 550 active clients from a wide spread of different sectors (“no customer represents more than 5% of our turnover,” says Faint).
On track
Redlin’s staff has grown from 20 to 70 employees and despite the takeovers it has hardly had to make anybody redundant along the way. Faint says that the firm is on track to hit £6.5m this year and he believes that his maneuvering will eventually pay off in spades. But that’s not to say that it’s been an easy ride. “The real art of acquisitions is making them work,” claims Faint. “The deal is the easy bit – the key is putting the package together after. There is a specialised skill to it but we seem to be doing okay so far.”
A big part of this skill is getting employees on side from the off. “If you do a good job and get a strategy in place then you can get your team to buy in. We’re very open. We tell them what we’re trying to do and we work hard to make it work.”
The pay-off
The firm was rewarded for its efforts last year when it entered the BPIF and PrintingWorld Excellence Awards and ran away with the top prize. “We thought that we were doing the right thing but we wanted our peers to confirm it. The Excellence Award has been a great boost for our firm – it’s really motivated the staff and helped us keep up the pace with implementing further change. It’s also been really good for our reputation amongst our customer and supplier base.”
As for the future, Faint is eyeing up a number of business improvement strategies and investment in state-of-the-art kit. The firm attained ISO 9001:2000 and is working towards ISO 14001, which it expects to achieve by the end of this year.
Another key part of the business blueprint is growing the digital side of the business. In late 2007 the firm purchased an iGen and personalisation software to complement its digital offer and the Xerox machine is already being used for a growing amount of variable data printing and transactional work.
“It [variable data printing] is our main organic area of growth and it is moving forward quite fast, hence the investment in the iGen. We’re going to give it room to develop and grow and over the next five years we believe that it will play a significant part in our production process.”
Redlin will also put a training programme in place through the Investors in People scheme to up-skill some of the employees and ensure that the firm can meet the demands of the modern print market.
“Back in the 1980s everyone could set up a printing company because everyone knew a buyer. But now we have got to be more professional in the way that we operate and we need skilled people to support that,” believes Faint.
He hopes that this kind of investment in both skills and equipment will help the company fulfill his ambitious vision to be the best in class. “We feel that we must be professional at what we do and give our customers reliable service. We want to develop, and indeed we are developing, a strong management structure to take the company forward and we also want to introduce a continuous improvement programme to the services that we offer our customers. Above all we want to be transparent – and profitable of course.”
Strategic goals
Faint’s masterplan may eventually see the firm consolidate its three existing facilities into a single site but that goal is still some way off. “We need to get to a certain size, get ourselves organized and give our customers a good service and then we can start looking at things like that.”
As for the acquisitions trail, the journey isn’t quite over yet. “I am looking for one more,” Faint says. But given that he will run the rule over between 25-50 companies a year with a view to a potential acquisition, what kind of attributes is he looking for?
“Ideally, the target would enable us to strengthen our position in the digital market. However, it has got to be the right fit. If you can say ‘yes, there is a fit. I can make it work’ then you go for it.”
REDLIN FACTFILE
Type of printer B2 commercial printer with growing digital division
Annual turnover £6.5m
Number of staff 70
Problem Small outfit in failing print sector
Solution Expanded size and range of specialisms through acquisitions
INSPECTION LESSONS: COUNTERING OVERCAPACITY
• Overcapacity is still a major problem for the printing industry, but those companies that can grow the size of their business can also take advantage of economies of scale
• While organic growth typically takes months, or more commonly years, acquisitions can be done swiftly and, thanks to the current high levels of overcapacity, there are lots of companies ripe for the picking
• Doing the deal is the easy bit – you need to make sure that you find a company that fits well with the way that your own business works. The majority of acquisitions that fail do so because the new firm does not fit well with the existing one
Buy your way out of a failed market
Seven years ago Derek Faint, managing director of Essex-based SME Redlin Print was faced with a stark decision: either increase the size of his firm or risk becoming just another printer ripe for picking off by a larger rival. Faint, a frustrated salesman with a long track record in the industry, including a stint selling print in the US, had set up the firm in 1978 and over time it had developed into a strong forms printing outfit. Business was relatively brisk: at that time our paper merchants told us that we were the largest user of NCR paper in the south east of England, says Faint. And the firms 24-hour operation boasted a clientele that included a long line of well-known corporates.
