On the day ProPrint visits STI Lilyfield, the sun is beating down and the local temperature in western Sydney is racing past 30C. Over in Lauterbach, Germany, at the head office of Lilyfield’s new parent company, STI Group, the mercury has dropped to an icy -4C.
But differences aside, STI Group chief operating officer Dr Tom Giessler says the parallels are far greater. Giessler, the German company’s second-in-command, is out on one of his regular fly-by trips to visit STI’s latest acquisition. He has picked the right week if he wants to the full force of the Australian summer. And he believes STI picked the right Australian print company to grow its global ambitions.
STI Group was founded in Offenbach am Main in 1879. The town itself has
a venerable print history – in 1774, music publisher Johann Anton André commissioned Alois Senefelder, the inventor of lithography, to come to Offenbach and set up five litho presses – the world’s first ever commercial use of lithography.
Over the past 131 years, STI’s own commercial printing approach has seen it grow into a 2,000-strong company, with plants across Germany, as well as sites in Poland, Hungary, Czech Republic, Romania and – since 2009- Regent’s Park, Sydney. Through expansion and acquisition, it has grown to become a full-service packaging and point-of-sale (POS) provider, from creative service to production.
Award winner
Lilyfield has its own shorter, but no less important place in Australian printing history. Founded in 1979 (exactly 100 years after STI Group), Lilyfield was born out of a bankrupt business acquired by Reg Hammond. He turned the company’s fortunes around, winning a clutch of awards over the years and installing the country’s first six-colour Heidelberg CD 102 in 1994. In August last year, Hammond retired after selling up to the STI Group.
The German company already had a presence on Australian shores, in the form of a small design hub it opened up in 2003. “We decided to give more commitment to our customers here in Australia,” says Giessler.
“The fit was perfect. We have a brilliant skill set here with Lilyfield. It was an easy strategic conclusion to go for it.”
But before looking at the reasoning behind the buyout, what was the response to the move here on the floor at the Lilyfield plant? Was there a backlash?
STI Lilyfield managing director Ian Kingham – who had been general manager of Lilyfield since October 2007 – says the buyout was communicated to staff by both himself and Hammond straight after the acquisition.
“We then followed this up two weeks later with a formal communication from Tom Giessler presenting the benefits of the STI Group,” says Kingham.
Of course, there must’ve been some anxiety about the new structure. “There is always some uncertainty with change and this was no different for the staff at STI Lilyfield. The management team were well informed and understood the business plan moving forward,” says Kingham.
“We were very open with the staff informing them of changes and communicating everything we possibly could to them. The key was that there were no major changes for us with the day-to-day running of the business – just a great opportunity to grow the business.”
He adds that suppliers were all behind the buyout. “When we have such a strong printing company from Germany backing us, this is a positive message to our suppliers,” says Kingham.
From the buyer’s perspective, the purchase certainly makes sense when you consider STI’s international customer base. Its client list reads like a who’s who of FMCG companies.
If one thing is key to worldwide brand owners, it’s the power of the brand. A recent US study said we are now entering the “decade of the brand”. Having a powerful, recognisable and “true” brand
is said to be the key to providing meaningful differentiation in a world overrun by commodities.
Giessler says: “A significant share of our customer base is multinational companies. What they use in Europe look very similar to what they also use here in Australia. It benefits the multinational customers to have one service company in Europe and in Australia.”
These companies want their print to make its mark as a powerful communication tool that reinforces a consistent brand – worldwide. Giessler reckons brand integrity is paramount to growing any business – not just global companies, though the advantage for multinationals is a no-brainer.
“A global company can launch a product in Germany and can be confident that the same product can be launched throughout the world using the same approach and consistency when using a global supplier. This reduces duplication of resources and, ultimately, waste, resultinwg in a more consistent solution with benefits for the customer,” he says.
The upshot of this will be more big brands and household names rolling off the presses in Regent’s Park. Giessler says he expects to see STI Lilyfield working with more of these blue-chip brands.
But global clout is nothing without the local touch.
“The critical element of this is customer service and competitiveness in the local market,” says Giessler. “We still need to maintain our customer service and quality. We need to remain competitive in the marketplace to ensure we can still take advantage of opportunities that a global organisation can offer.”
He says that being adopted by a new German parent won’t affect Lilyfield’s customer service offering. “Although we are now a part of a global organisation, we will still operate as a local business and offer our customers one-to-one service. The only benefit is that within this, we can offer our customers global solutions.”
Two such solutions are point-of-sale (POS) and promotional packaging – a brand owner’s stamp on the retail space. STI Lilyfield is following customers into this growth area. Lilyfield Printing already had a footprint in POS and packaging before it was acquired, but the acquisition strategy is underpinned by a desire to grow this aspect of the business.
“We are going to dramatically expand our service offering to the benefit of our customers,” says Giessler.
“We will also adapt the service offering in Europe and adapt it to the needs of the Australian market,” he adds.
But what about STI Lilyfield’s commercial print foundations? Kingham says this “core strength” won’t be pushed to the wayside. “We have always been strong in POS as well, but that offering will now grow with the ability to use the resources from the STI Group in Europe. We’ll be able to do full POS from concept to production to final delivery.” He adds that promotional packaging, currently a sideline, will become more central.
Kingham estimates that POS and promotional packaging had made up around 45% in the pre-STI days, with a mix of in-house and outsourcing.
“The great thing about what’s happened with the STI Group is that we’ll now be able to produce the majority of that in-house,” says Kingham.
This in-house trend is an important part of STI’s family values. While Giessler points out that print management is part of the STI bag of tricks, he says the company’s ethos is “do most of it, especially the crucial elements, in-house”.
The offering is increasingly complex, but the strategy is simple. “We follow our customers,” says Giessler.
Both he and Kingham reckon the big growth for STI Lilyfield will come from the POS side. “That’s how the market is developing. The investment in POS from our customers will increase,” says Giessler.
Commercial print is a mature market and growth is static, but POS offers a dynamic revenue stream. To take a slice of the POS pie, Kingham hints at an upcoming equipment investment, though won’t give the game away just yet. Giessler adds that “a few assets” have been procured already, but says he would prefer to “invest first, announce second” before giving a full picture of STI Lilyfield’s equipment battery.
Merger roadmap
If the future looks bright, then what about the past? How did STI navigate the acquisition roadmap, and were there any bumps in the road?
“The lessons learned are that the market mechanisms in Australia are pretty specific to the local market. We already knew this because we had people on the ground beforehand,” says Giessler.
What is different, he adds, is the legislative system. “There are quite some different ways to operate companies, which delayed us on certain things. It’s not the end of the world, but lessons were learned and next time I would approach things differently,” he adds.
“Every country’s legal system has its own specifics. We are currently opening up a factory in Romania and they have their own habits. It’s very much the same with Australia,” says Giessler.
With the gift of hindsight, he says the acquisition could have gone through even quicker. “That’s the only thing. We would have taken the same decisions.”
The global economic collapse can’t have helped. STI bought Lilyfield Printing in August, as the financial markets were falling apart and Australia seemed to teeter on a plunge into hardship. But Giessler says things weren’t so bad.
“As we are a family-owned business, we’re not so interested in short-term results but long-term success. We’ve been in operation for 130 years – if you only focus on small downturns, you’re not investing in the right business opportunities,” he says.
“Don’t get me wrong, we feel the economic downturn, but we’re conservatively funded so we don’t have the same problems.”
In fact, Giessler is adamant that some STI Group factories don’t even have enough capacity to meet the requirements of customers. “We even managed to grow business, which is fantastic.”
Setting growth aside, what was vital in the Lilyfield buyout was something much less measurable but no less tangible – shared values.
Despite its 2,000 workforce and global position, STI Group still considers itself a “small family company”. Lilyfield may have changed ownership, but it still employs members of the original family, including customer services manager Sunnee Campbell.
Company parallels
“The parallels between our companies were highly important. The biggest asset of a company is its people,” says Giessler. “Our business cultures are very similar. We are dedicated to innovation. We know how to manage our resources and understand the limits of our capabilities. These parallels mean we can offer complementary services to our customers. The core values are similar.”
Most companies would say they are care about their employees. But Giessler backs this up by talking about the employment opportunities offered up thanks to the Lilyfield acquisition. “The staff here are very important for us. They highly appreciate that we are investing into Lilyfield. And on the other side, we have people volunteering to come here to Australia.
“You need to attract people, you need to attract the best talent.” For instance, one designer is soon to head out from Germany for a stint in Regent’s Park.
Giessler says that to win the best candidates in marketing-driven candidates such as POS and promotional packaging, you need to make the job attractive. “Otherwise you only get a commodity. And we’re not a commodity.”
It’s not hard to imagine some of STI’s European staff jumping at the chance for an Aussie summer. By the time ProPrint leaves STI Lilyfield, a cool change has broken the 30C heat. There’s not a cloud in the sky above Regent’s Park and the skies look equally clear on STI Lilyfield’s horizon.
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