As if running a circa €1bn merchanting business, with 1,100 staff in the UK alone, wasn’t enough he’s had to contend with the fallout from the collapse of its major rival, Paperlinx.

In the end though, after months of preparation, when Paperlinx finally fell over, Antalis, like many of its peers, simply rolled out its plan and calm was restored to a market that had, for a brief time, feared the worst.

Not that he would probably admit it, but much of that calmness clearly stemmed from Hunter himself. A big fan of logic and process, provided it doesn’t stifle creativity or create bureaucracy, his two-pronged approach to business is simple: look at everything from a customer perspective and make sure you don’t hurt your people. 

Darryl Danielli I guess it’s safe to say that 2015 has been a pretty unusual year for you?

David Hunter Well, for the business it has been a pretty good year. We started planning for Paperlinx around 18 months before it finally went, because based on everything we knew about the business we just couldn’t see how it was going to survive.

So it was more a case of when rather than if it would fail?

Exactly. We looked at how we would handle the call volumes, what would it mean in terms of credit and the logistics. And also what our strategy would be.

And what was it?

It was that although we knew there would be huge volume available, that’s not what we’re about. We’re a company focused on profit and service. So we looked at what we could do well and focused on that. It was never our intention to simply hoover up volume. We’ve been very careful and cautious and we’ve seen good growth – the plan worked well. There has been very little disruption, not just in terms of us but across the whole supply chain. 

When it happened there were serious concerns on what impact it would have on printers, but so far it seems to have been limited.

I think some of the huge concerns that the industry had about bad debt, so far at least, haven’t flushed through. I think we’re just starting to see some of that now as the administrator starts to get tough on some of the old Paperlinx debts that were owed. But it looks like the industry as a whole coped with the volumes and the credit requirements and it’s not been as extreme as many of us feared it might have been.

That’s true, a lot of people have been amazed by how little the collapse of Paperlinx impacted the UK sector.

In terms of supply problems and shortages, I can’t think of many items [that have been affected], broadly our service levels were maintained, there might have been a few days in a few areas where some customers were possibly let down, but by and large our ‘on time and in full’ measures didn’t take that much of a hammering. We had the stocks in place, the plan went into action and it was business as usual. We’d briefed the staff well in advance too, so there was no great shock. On the very first day our volumes went to stratospheric levels that just wouldn’t have been sustainable, but after a week it settled down when people stopped panicking and realised that they could get supplies. 

Credit was one of the big concerns for a lot of people, because many had two credit lines with Paperlinx.

It’s fair to say that we’ve had to work hard with some customers to get them through a sticky period, but broadly it’s been very successful. Clearly it was a huge amount of credit that went out of the industry, but one way or another as a company and as an industry, we’ve accommodated it. 

You also took the opportunity to buy some of the assets of Paperlinx, the three packaging operations, were you not tempted by anything else, for example I would have thought the wide-format VTS division would have appealed?

From an acquisition point of view, we looked at a number of [Paperlinx] opportunities and settled on the three packaging companies. We were in well-advanced discussions [about VTS], but the issue for us was some of the complexity of the move, how much business it had already lost and in the final analysis I decided it just wasn’t right for us. So while the negotiations were very advanced, at the final stage I withdrew.

But you’re happy with what you bought?

The three independent packaging companies are all good businesses, well run and profitable, and haven’t missed a beat since they joined us. They’ve all got excellent management and we’re busily learning from them.

In terms of the business post-Paperlinx, what is Antalis’s share in the UK now then? It seemed to be generally accepted that Paperlinx was 40% of the UK market.

It depends on what markets you’re in. One of the surprises was how much Paperlinx had shrunk. Market share varies by area; we’re clear leaders in print and also office, sign and display, we’re in the mix in packaging and a strong number two. We’ve certainly grown our share, but we think we were already number one a while before it happened. It’s just that we’re a very quiet company. We’re about our customers, not our ranking – because a customer doesn’t care if we’re number one or number three. 

In the broad brush UK merchanting landscape, then, are you around 40% of the market now?

It depends on which part of the market you look it. The part of the business I directly look after, the UK and sub-Saharan Africa, mainly Botswana and South Africa, which are relatively small, then we’re approaching being a €1bn [£734m] business.

So how big is the UK?

It’s the lion’s share of that.

That’s as much as you’re going to say isn’t it?

[Laughs]. From customer point of view it really doesn’t make an awful lot of difference. We’re more interested in what our business means to each individual customer. Whether you’re the biggest or the smallest, as long as you deliver the right product, at the right time, to the right place, and are decent folks to deal with, then it doesn’t matter. We’re not into puffing our chests out.

Fair enough, in terms of you personally, you joined the business around February 2012?

Spot on. It’s coming up to four years, but I’m still a newbie in industry terms.

I think in print anything less then 20 years is a newbie. But then you came from the construction supplies industry and it was probably the same there?

It’s interesting. I remember at the end of my first week I was trying to work out if I had changed industries at all, because a lot of the dynamics, the discussions and the issues were so similar. I’ll never ever pretend that I’m an expert on product, but I’m fortunate that I’m surrounded by people who are.

I imagine the construction sector is of a similar make-up to print: a few large companies, but mainly SMEs?

They’re both artisan-based industries too. Our conversations are not just framed by a B2B discussion, they’re around technology, product and craft and with that comes attention to detail on credit and supply chain.

Any other similarities?

Again from my previous life it’s staggering how many builders would have a requirement for the same day or the next day. So it’s no shock that a 24-hour turnaround, or even faster, is the norm in print too. So although I was conscious that print is a different industry in many respects, there were sufficient common themes that I felt comfortable that I could add value here.

What attracted you to the role though, because your last job was as head of similarly sized operation?

The last company I worked for was Wolseley, I was there for many years, and I was managing director of the ‘heavyside’ business in the UK, which was around £500m. But for the last three years I had been working internationally as the global programme director. The group had been going through a wholesale business change, it was 50,000 employees and £15bn turnover and I was doing the whole business change piece based in the US before I came back to the UK to enjoy this great industry. I suppose what appealed was that I had spent a number of years working here, there and everywhere in a very strategic and theoretical world and I was really looking for an opportunity where I could run a company, have my own train set I guess. But it also interested me because I would have a whole new industry to learn. 

And I guess the other similarity between the two businesses was that there was a need to change; the printing industry was changing and the merchants needed to change?

That’s a fair observation. First and foremost the business was in very good shape, and had been for a good few years. So it would have been easy to say ‘steady as you go’. But with all the changes the market was facing, there were things around some IT challenges, or opportunities, and from a logistics point of view we perhaps had a model that was perfect for the industry five or 10 years ago. But our business had changed very rapidly, through the acquisition of Xerox’s paper operation, and through our growth in packaging – all of which has led to a new logistics model. 

At basic level though, do you think the traditional merchanting model is broken? Because I should imagine that logistics are the largest part of your costs…

Absolutely, it’s over half.

But the industry is used to picking up the phone and getting a delivery the next day or even the same day. But you shoulder the cost for that, and that must be difficult to manage?

I think the model has changed to some extent, but the basics are still there. I spend a lot of time out on customer visits and it’s the same story: the lead times for our customers are getting shorter and shorter and it’s not that they’re inefficient, it’s just that they don’t necessarily know what they’re going to be doing tomorrow, or certainly in a week’s time. So we’ve just had to make sure we get better and develop a more joined-up understanding of what customers want.

And I’m guessing its something along the lines of: better, faster, cheaper?

When I joined we had fantastic customer service metrics, but they were all internal. According to our numbers we were running at 99.9%. When we started looking at them from a customer perspective, the results were different.

How do you mean?

Well, say the customer wanted a hundred and wanted them by this time, if we’re late or get 99 there then it now scores zero – so it’s much tougher. We use a true ‘on time and in full’ measure, you see it everywhere you go here. We have two critical measures, on time and in full and number of days since we last had a lost time incident, that was probably the first thing I did when I came here: have those nailed up everywhere. 

But surely the biggest challenge, customer service-wise, is of your own making, having such a massive range?

There are around 13,000 products. Another staggering statistic is the percentage of our deliveries that are under £100.

What is it?

25%.

How can you make money on those?

Well, you can’t. So we introduced a minimum order charge, which caused a bit of a stir. But when you get down to £100, you’re almost down to Amazon levels in logistics terms. So we introduced a charge, but I would prefer that nobody ever paid it and that everybody just orders a little bit more.

And I’m guessing that you don’t have many customers that only ever have order values below £100?

Of course not. They’re special orders or an emergency top-up, but that changes the shape of our deliveries, because I’m not going to say to customers that I’m not going to deliver anything less than a full pallet. What I need to do is work out how do we meet the requirements of those customers. So I have to say meet me halfway – sub-£100 orders are a hell of a challenge for any business-to-business organisation. 

What are your typically delivery volumes then?

On an average night if you just take stock deliveries, and indent would be the same again, we shift over 1,000 tonnes, sometimes 1,300 tonnes – every night. So we shift a lot of volume, but they’re by no means all pallet loads. So it’s not simple.

But then it does sound like things need to change. Perhaps by limiting your range?

If you look at our model, the warehousing needs, the complexity of the business, working capital, aged stock – the simplest thing we could do and the most obvious is probably halve our product range. But we pride ourselves on the fact that by and large, if you want something and you phone Antalis, we’ll have it. That has a value. That’s part of our proposition, because otherwise it’s a commodity and we want to be more than that. We want to offer a good service and that means customers know that they can talk to knowledgeable staff and can get things when they want them. 

I know it’s a very simplistic observation, but you must have all this data that you could analyse and identify 50 core products that account for say 75% of your sales. So why not just stock those and still give the best customer service?

It’s a model that would be very tempting. And most people coming out of business school would make the exact same proposal and tell us how they can revolutionise our business overnight. If you saw the Pareto analysis of the range, it’s not quite as extreme as you suggest, but it’s not far off. So when we go through a logistics review for the business over the next 10 years, that’s the first thing our advisor would say – just chop the range. But we would destroy what we stand for. And if we said to customers; ‘well we can supply these products, but you have to go and buy these others elsewhere’, then they might just do that for everything. So our strategy is to offer a wide range, stock in depth and keep the customer service going. We’re not going to change that.

But do you think printers need to change their buying habits though? 

It’s up to customers to decide how they want to buy; it’s up to us to decide how we can fulfil that. We work with some customers where it’s difficult to tell who is the supplier and who is the customer, because it’s such a close partnership. 

What are the biggest challenges facing your customers though?

The obvious challenge facing many is working in what is seen by some as a shrinking market. Then there’s the challenge of new, disruptive technologies coming along. Some of the smaller guys also have to strike a balance between being a craftsman and also being out there marketing and selling their products in markets that are constantly changing. Then there’s the credit issue. From a credit point of view things aren’t going to get easier as our insurers take an increasingly tougher view of the market.

In terms of the business, what is an acceptable level of bad debt?

Zero.

Okay, silly question. In reality what sort of levels do you run at?

Within the industry you would see anything south of 0.5% of turnover to some that would be north of 2.5%. We’re at the bottom end of the scale, probably one of the best performers in the industry. That’s not to say that we don’t take risks, but we have very established processes and very experienced people. It’s no coincidence that my office is in the middle of the credit control team either.

With that in mind though you must have a pretty good view on the health of the industry?

There’s more optimism, there’s more business going through. Some of the big guys in the sign and display market are finding it quite tough as the big supermarkets cut back though. But most of our customers are busier than they have been, but then that causes its own problems. On one hand its great to be busier, but on the other it soaks up working capital. There’s been a lot of research in various industries that shows that sectors are at their most vulnerable when they come out of recession. We’re also still mindful of the tail end of Paperlinx, now that the administrator is homing in on its debts.

Even the best businesses can have a cashflow crisis though, how do you help customers through that?

We’re all grown ups and we’ve all been in business for a long time. Most of our customers have been with us a long time too and there’s an understanding. On the one hand we have to be very firm, but on the other fair. And if someone does have an issue, and is open and honest, then we’ll try and work with them. Where we get tetchy is when people try and hide things. 

Back to your business though. In terms of the common [Sequana] ownership with Arjowiggins, is it a help or a hindrance being aligned to a manufacturer?

Both. They’re good partners, but we always have the dance between them being absolutely fair in the market, but that’s part of our heritage and our DNA. But there’s certainly no favour asked for, or offered. When it comes to the commercial aspects it’s a very arms length relationship.

We started the interview talking about the Paperlinx UK saga, a lot of its problems stemmed from financial issues, so its only fair to ask about your parent’s, Sequana’s, situation – there have been some issues there with refinancing, debt write-offs, etc. So what is the financial footing?

I would say it’s in better shape than it has been for a long time. You have to look at it against the backdrop of the industry; it’s been tough for all the major players. No one has had an easy time of it and it’s largely been about reducing capacity and survival for a lot of them. It’s not for me to speak on behalf of Sequana, but what I would say is all the things that you would expect; the banks have taken a very pragmatic view, new investors have come along with Impala being a major investor and the French government through its investment vehicle – so the balance sheet, which was also reinforced by a rights issue, is on firm footing, so we’re in reasonable shape. A lot of work has been done to make the business fit for purpose.

I appreciate a lot of the problems have been in regards to the manufacturing side, so in regards to things you can talk about, Antalis?

From an Antalis point of view though we’re in good shape, and from UK and Ireland point of view we’ve been making good returns for many years and we continue to go in the right direction.

And with the loss of Paperlinx, what are you predicting as your bump this year?

We’ve been quite modest. It depends on what area you’re talking about. But as I said earlier we were never looking for a big volume increase. I hear stories in the market of some merchants reporting volume increases of 30% and more, we’re more in the 10%-20% range – we’ve been very careful with who we partnered with, we’ve been very careful with credit and we haven’t just gone for volume.

Do you have a single credit line or multiple, like Paperlinx?

No, its just Antalis. Back to the original question, some areas have seen stratospheric growth of 30%-40%, but that had little to do with Paperlinx. Overall though, it’s somewhere between 10% and 20%. We’ve made significant investments in people, to the tune of around £1m.

Clearly the packaging business has grown dramatically in recent years, is that part of the plan? Diversifying the business?

Of course, packaging is now £80m and as a business we’ve grown every year in our UK and Ireland core markets, like print, for a while, but also in new markets. I’m not saying it’s a gold rush, but you would struggle to find anyone here that isn’t excited about opportunities.

What about supplying things like plates, inks, pressroom consumables... does that appeal?

It’s something that we regularly look at; we do it in South Africa and it’s big business. Is it something we might do in the UK? It isn’t right now, but if enough customers asked us about it I think we probably would look again. But it has to fit in with our strategic plan and we have to rank the opportunities. Let’s be clear though, print doesn’t feel like a declining market from where I sit, so we can stick to the knitting. 

What are your ambitions for the business?

That we develop a business that is a benchmark for customer service in our industry and maybe even wider as a reference point for other sectors. The second is that we go for a year without hurting a single member of staff – that everyone goes home with all their fingers and toes. From a corporate point of view that we’re realistic that our core market might be shrinking, but that we can grow profitable market share and my bottom line can grow faster than my top line. Our results on all of these are always improving, but it will never be good enough. 

What are your personal career plans then, are you with Antalis for the duration now?

Unless you know something I don’t [laughs]. I get an almost childlike thrill every morning that I drive into work and I see the scale of the building, the scale of the team and the scale of the opportunity to crack on and do the right thing. I think it’s fair to say that I get minimum input from elsewhere and I think there are very few leaders who can say that and also have such a great team to work with. I would do it for free. I know it sounds corny, but I love it and feel genuinely fortunate. Do I want to go and work somewhere else? No thank you. 

Final question, and unsurprisingly I want to get back to the model, and I think I can predict the answer, but isn’t the Antalis business model to be last man standing?

No. We’re conscious about the size of the market, and one thing we can’t do is dictate how other people run their businesses, so we spent a lot of time over the past few years being very clear about what markets we want to be in, which ones we don’t, which opportunities we want to pursue and which ones we don’t. And ultimately what we want to base our proposition on and, first and foremost, it’s service and that means having the right range and keeping our delivery promises. If your last customer interaction was crap, then your customer service, in the eyes of that customer, is crap. So it’s about differentiating us though service, through people, through training and our obsession with health and safety. We’re not perfect in any of those areas, but that’s the model we’ll always aim for. Not being the last man.