“The reality is no business, regardless of size or historical success, is immune to failure,” Lerigo says. “Simply because a company has been lucrative and enjoyed market dominance in the past, does not automatically mean it will do so in the future.”
So when Lerigo decided to try and turn around the fortunes of Customark back in 2006, he took on a company in stasis: the marketplace had moved on while it had marked time. And when the former bosses finally realised they were no longer ahead of the curve, it was too late. Almost.
The problem
Lerigo has owned – or part owned – Customark not once but twice. Established in 1968 as the consumables division of US corporation Markem Systems, the firm originally made blank and printed labels and not much else. By about 2000, Markham was keen to sell.
Mail-Well, the giant US envelope producer, bought the company but within two years it too wanted out as it set about selling its UK assets. Five industry leaders, of which Lerigo was one, used their own money and venture capital to raise £800,000 and buy the company in the early noughties.
But by 2004 Lerigo had quit to move into screen printing and within two years Customark had tumbled into administration. On 13 May 2006 Lerigo bought the assets of the West Midlands company, which by that time had been put in liquidation, for £80,000 of his own money.
What he bought was a company not just running out of cash but ideas. Cracks in the foundation had started before the brutal day of collapse that led to its administration and eventual liquidation. The firm had failed to diversify into new markets and all but ignored a seismic shift in the print sector.
Digital technology was taking off, but while rivals snapped up new machines and market share, Customark bumbled along with old thermal kit churning out labels in two or three colours. Lerigo’s venture into screen printing – he had bought the company Intascreen – sharpened his focus.
“What my involvement with screen printing taught me when I bought Customark was I had to look at what the company did in a fundamental way. Up to that point it had been using flexo and hot-foil kit and the business team quickly realised we should go digital. That was the start of the transformation.”
Despite its problems, Customark had a turnover of £1.5m, several very good customers and reliable staff. Lerigo credits a very strong middle-management team for holding the business together in its darkest days. By the time he took over the company in 2006, its original staff roll-call had dwindled from around 40 people to about 24. Another eight would leave before the reconfigured business returned to strength.
The challenge
One of Lerigo’s first big moves with his leaner team and clearer focus was to buy a Roland SolJet reel-to-reel digital printer. Within six months it was working at full capacity and was joined by another SolJet. Before long a third SolJet was trundling away at the company headquarters in Lye.
Part of Lerigo’s turnaround strategy for Customark included further acquisitions. Intascreen was merged into the business and within two years, IC Labels had joined the fold, now known as Customark-Wiltshire. Prestige Labels and PD Graphics further expanded the company’s services along with the acquisition of Oxford Pad Print.
The scope of supply now includes plain and printed roll labels, packaging labels, specialist labelling such as security labels, screen printing, graphic overlays and keypads, pad printing onto industrial parts, precision laser-cut acrylic components, and point-of-sale materials including shelf wobblers, shelf-edge strips and floor stickers, and promotional branded products.
Diversification threw up technological challenges, but the personal challenges in re-motivating staff who had faced months of uncertainty as the Customark of old unravelled was an even bigger challenge, says Lerigo.
“We had to reinvigorate the staff who were very dejected at the beginning. One of the ways to do this is by being honest with them on both the problems and the plans. Showing strong leadership is as crucial as a credible vision. This helps recreate the sense of worth.”
Actions speak louder than words however, and Lerigo offered all his staff a pay rise: “Many hadn’t had a rise in four or five years, so we made sure they got one – not a big one – but it was a great way of making them feel better and of getting them on our side. There is a bonus scheme for all staff and they get 26 days holiday a year, with three further days for those with 15 years of service.
“Another hurdle was re-establishing supply lines with creditors, which was very hard. A few would not give us credit for 12 months. Again, the honest and plain approach works best: say what you will do and then make sure you do it.”
The result
Lerigo adds: “Now we have new companies knocking on our door on a daily basis wanting to supply to us. We are loyal to our suppliers because many helped us in the early stages when it was difficult to get going. If you want loyalty from customers, you must give loyalty to your suppliers.”
Customark, which recently rounded off an 18-month £450,000 investment programme with the purchase of an EFI Gamsys MIS, now has 90 staff and a turnover of £4.7m. Turnover has grown around 10% year-on-year for the past three years and profits are running at 8.5% per year.
Thanks to its acquisitions, the business operates from four sites, with Lye in the West Midlands its HQ. The others are Calne in Wiltshire, Cambridge and Oxford. The firm has more than 2,740m2 of space across all four sites, the biggest being Lye at around 1,200m2.
Key staff including managing director Neil Turner, production director Barry Foster and business development director Robert Bromley run the business on a day-to-day basis, with Lerigo in regular contact with them and clients such as electronics titans Sharp, Honeywell and Makita. All place their trust in Customark to deliver high-quality components on a just-in-time basis.
Individual companies under the Customark umbrella are thriving. IC Labels, for example, used to clock up £30,000 revenue a month but now rakes in £120,000. The fully integrated EFI MIS, which was installed in June, cost more than £125,000.
Meanwhile other investments included £115,000 spent on extensive new manufacturing facilities at its main sites in Lye and Calne. The firm has added three Mimaki JV33-130 wide-format printers to its Lye factory, to join the three existing Roland wide-format devices.
“The investment programme has brought to the business a huge amount of production diversity while the IT system will reduce the complexity of the business. At the end of it all you will see a better return on investment, which will allow us to further invest in our staff and business.”
VITAL STATISTICS
Customark
Location Head office: Lye
Inspection host Greg Lerigo
Size Turnover: £4.7m; Staff: 90
Established 1968
Products Self-adhesive labels, screen print and industrial graphics for clients in the electronics, technology, automotive, medical and scientific industries.
Kit Two Edale UV flexo presses, two Newfoil hot-foil presses, three Roland SolJet reel-to-reel wide-format printers, Roland VersaUV LEF-20 flatbed printer, three Mimaki JV33-130 roll-to-roll wide-format printers, four Daco reel-to-reel die-cutter/rewinders, two Zünd S3 M-800 flatbed plotting machines, three Trotec laser cutting machines, an S300, S400, S500, four semi-automatic screen print lines and 10 screen printing hand benches across four sites
Inspection focus Turning around a struggling business
TOP TIPS
Change before you are forced to Many struggling companies shift emphasis, markets or innovative focus only when their hand is forced.
Write business, sales and operation plans Investors, managers and employees need to know what the company’s future plans are and where they fit in.
Don’t bite off more than you can chew Adopting new products and services is a key way of improving a business but beware of trying to change too much too quickly.
Identify key staff and directors Then brainstorm what is wrong and what needs to be done to fix the company.
Meet with staff Admit that things have gone wrong with the business and tell them how your management team plans to fix it.
Meet with customers and suppliers Clarify rumours; be honest and inform them of your company’s situation and how you plan to correct your flagging fortunes.
Prune dead wood Nobody likes to let people go, but for the business to survive you want to keep only people who are bringing in or making sales.
