Packaging Processors: Finishing first

Some might call it serendipitous, but the organic growth that Packaging Processors has enjoyed for nearly three decades has just taken another turn — again, for the better.

With a staff of 18 and a solid, diversified client base providing regular work, the company has enjoyed continued success, even during the GFC. Working in a tight market space, Packaging Processors has tuned its operations for efficiency and profitability, despite the tough competition.

Then in early July one of its main competitors, PNPS Packaging & Print Finishing, slid into administration. Packaging Processors’ directors seized the opportunity to acquire the assets and consolidate their market position by taking on a much wider range of services and reaching new customers.

The failed $1.5 million company’s equipment and other assets have been moved to Packaging Processors’ Silverwater headquarters and to newly leased premises in Rydalmere.

General manager Chris Montague sat still just long enough to talk to ProPrint before running off to finalise the transfer of equipment.

 

From small beginnings

Packaging Processors is about 25 years old. The company started out with one small gluing machine, to glue straight line and crash lock cartons, and added more here and there as more jobs came in. It was previously owned by Peter Knapman and Susan Parker for about 13 years before current director Marc Desmarais and his father bought the company 18 months ago.

Montague has been with the company as general manager for six years. At about the same time a single Heidelberg Cylinder was joined by an SBL flatbed diecutter. Two more Heidelberg Cylinders were bought five years ago to boost the count to three, and three Jagenberg gluing machines were also installed, giving the company a diversified product inventory that grew with customer requirements.

“Most of Packaging Processors’ work is from Sydney and New South Wales printers. We deal with printers for pharmaceuticals, games cartons, veterinary cartons and so on. We also have a couple of customers in Queensland who require tricky panels and gluing and can’t get it done up there,” Montague says.

“The company has morphed as the customer demand has changed. Now, with many designers not really knowing what is technically possible it places extra pressure on us. But you have to make it possible. A lot of work still has to be done by hand.”

That’s where the acquisition of PNPS makes sound business sense for Packaging Processors. It adds equipment assets, builds its skills base and broadens the range of services while appealing to bigger customer numbers.

“PNPS was in administration. They still had their customer base but the quantities had dropped off, and their equipment and staff were geared to a certain volume and that just wasn’t there anymore,” Montague says. “We have a wide spread of customers — every business needs to have that spread to get through those drop-offs in work from some customers.”

“It was a perfect fit for us to acquire PNPS. We took on three large gluers from them, and we’ve never done window patching before but we now have the capacity to do that.

The acquisition, and especially the three gluing lines, has given Packaging Processors about 50 per cent extra capacity. It now has four Jagenberg lines, two with 4/6 point gluing facilities, one Brausse, three Molls, one Moll Sprint, one Fidia as well as several semi-automatic gluing lines, which Montague says will make a big difference to the range of services it can offer existing and new customers.

“There was also a lot of specialised hand work that they did for printers, because they had that skills base. At this stage we will be looking to employ many of their ex-employees,” he says.

 

Making a move

The decision to acquire PNPS required concerted effort to consolidate the assets of PNPS into Packaging Processors. Expired leases and other factors focused all efforts on moving inventory to Packaging Processors’ facilities, and leasing a new building in Rydalmere to tide the company over.

“PNPS’s plant in Wetherill Park has been shut down and the lease on their building expired the week after they went into liquidation, so we didn’t have long to get everything tied up and out,” Montague says. “We started moving the day the signatures went on the contract. It’s only been two weeks since we started moving, but we’re pretty organised now.”

“We’ve had to split things up a bit. We don’t have the room here in Silverwater for everything to be installed. We’ve got all the Jagenberg gluing machines installed here, while the window patching system is now close by in Rydalmere, under the brand name PNPS.”

Montague concedes having two premises is not ideal, but the company will continue to operate from both for the time being. With its central location in the greater Sydney market and proximity to customers, the Silverwater area will be the location of choice for the company for the foreseeable future.

“The advantage is that a lot of printers are around here, and we’ve also got Allkotes, Avon Graphics and Rotographics just down the road. Our customers often also deal with them so it’s handy for all of us,” he says.

“Because time is so important in trade work for us and those companies, it makes good sense to be close to each other, to cut transport times and also costs.”

 

Consolidate and conscript

The acquisition gives Packaging Processors a plethora of new product possibilities, which will make it the market leader in NSW for the range of trade packaging and finishing services it can now provide.

PNPS had been in business since 1987, and had provided carton folding, inline tip-on gluing for wallets, multimedia packs, folders and files, and had developed a client base for window patching, window facing and taping. It also handled specialised services for point of sale, promotional and special purpose items, kits, showcards, brochures and counter stands, sample swatches, eyeletting, riveting and stapling. Disc dots, magnets, velcro, labels, stickers and struts also came under their bailiwick.

This spread of skills will be maintained and nurtured by Packaging Processors, to cement their market dominance.

“We’ve got some serious firepower here now,” Montague says. “We’ve got all forms of gluing — straightline, crash lock, four-and six-point — we’ve got window patching, CD sleeves, wallets, small and large presentation folders, gussetted and ungussetted pockets, as well as the other products that PNPS specialised in.”

Montague hopes that many of the PNPS staff will be re-employed to continue this portfolio of work.

“They’re very good people, and take great pride in what they do. Most of them had been at PNPS for a long time — 17 to 20 years is typical for many of their staff. And we’re similar here — most of our staff have been here a long time. That’s a very important factor in any business’s success,” he says.

 

New fields to work

Montague says the new-look Packaging Processors will be positioned to compete on a bigger playing field, with opportunities to grow by degrees through a bigger equipment inventory.

“It gives us access to clients we haven’t dealt with before for other types of work. It also lets us approach bigger customers for overflow work from large operators,” he says. “Generally, they don’t like to do what they would call short runs, but we would call quite long runs of half a million or more.

“In the past we haven’t had enough firepower to handle those kinds of runs. With the new machines we can now handle that sort of volume, and everything in size up to a 1290mm sheet square, so we can take on larger sheet jobs now. We haven’t done window patching, four- and six-point gluing before, so we’re in new markets there too.

“As far as our customers are concerned, the acquisition is very attractive because we are now a one-stop-shop. We’ll be looking into what else we can value add. It’s a matter of keeping those customers happy by doing more for them, we are always looking forward.”

Montague says once the PNPS acquisition is fully absorbed, the company may consider further acquisitions, but that will be well down the track.

“I wouldn’t doubt that the directors would look at acquisition possibilities in a couple of years if something like the PNPS opportunity came up,” he says.

Montague views the current print marketplace as plagued by inconsistent business practices – when cohe says companies should be promoting the value of printed products. Instead, he said, they opt for excessive cutting of prices to attract work. “We don’t get into price wars,” he says. “Quality is paramount, but on-time delivery is an equivalent requirement. The problem for us, though, is that we’re at the end of the food chain. The end customer’s expectations don’t move but the job can be moved around for everyone in the chain except us.”

“The customer still wants it on Wednesday even if we get it on Thursday, so we have to get it to them yesterday. We are the ones who have to make up the time,” he remarks drily.

Despite the slow market, he and director Marc Desmarais are confident that there is an upturn just around the corner.

“Yes, the market is depressed at the moment, but it’s eased up a little for the past couple of months, so there’s a glimmer of hope there,” he says.

“This acquisition has added confidence to the company. Marc and I are both excited about where the company is going. There are exciting times ahead.”

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