Stormy Weather
Hardship. Crisis. Recession. Sound familiar? The current combination of escalating food and gasoline prices is surely reminiscent of the 1970s when high energy prices drove up grocery costs. Americans are desperate for a solution now, but economists predict continued economic doom and gloom. According to ABC News, those struggling to purchase gasoline at $4 per gallon will have to prepare for a $3 increase within two years. Furthermore, the U.S. Department of Agriculture speculated that food prices will continue to spike for at least the next few years.
Similar to other industries, label and tag suppliers are combating the increases in raw material pricing and rising variable costs. Jennifer Dochstader, communications director and editor for the Tag and Label Manufacturers Institute (TLMI), located in Naperville, Ill., observed that manufacturers of consumable products to the narrow web printing industry, such as pressure-sensitive films, plates and inks, are frequently notifying customers of price increases.
“While most packaging buyers certainly anticipate cost increases from label vendors due to market volatility, a lot of narrow web business is contracted business, and it’s imperative companies navigate their way through the current economic landscape while keeping margins intact,” she cautioned. “This is going to present a tremendous challenge to many companies in our marketplace.”
Yes, times are tough. However, many tag and label suppliers are unwilling to become another casualty of an unstable economy. And this market, in particular, presents driven professionals with a unique opportunity.
“As consumer products companies scale back product marketing media campaigns to cut costs, they’re focusing on more affordable ways to try and increase brand presence and product appeal—the labels on their products,” Dochstader explained. “The bar on complex, printed graphics shelf appeal has never been set higher, and label converters are meeting—and exceeding—these demands while managing to make their own production floors leaner and more efficient.”
Kay Toledo Tag is one supplier with no intentions of leaving the scene any time soon. The Toledo, Ohio-based business has been a major presence in the printed products industry for more than 63 years. Originally a small business serving local customers with jobs consisting of commercial printing and wedding invitations, Kay Toledo Tag has evolved into a leading provider of tags, labels and forms to distributors nationwide. To date, the company has purchased multiple businesses over the years and operates a total of five plants between Toledo, Ohio and Neenah, Wis.
The company is particularly committed to providing value-added features for all label and tag needs. For example, distributors can request oversized eyelets for lock out danger tags with a large variety of finishing options for tags, including strings, wires, zip ties, dead-locks, tagger ties, plastic coated wires and baggage hooks.
Some might be surprised to learn that Kay Toledo Tag is family-owned and operated. Now in its third generation, the company is headed by brothers Thomas Kay, president; Daniel Kay, vice president of sales; John Kay, vice president of production; and Robert Kay, secretary/treasurer.
To stay competitive in this industry, the Kay brothers believe manufacturers should have multiple machines running 24 hours a day. In addition, it is necessary to routinely invest in new equipment. “We have been taking our old technology and adding new technology, combining the two into new hybrid presses that offer a more advanced wide variety of flexible letter press quality. We find we are able to multitask our presses,” the Kay brothers said.
Headquartered in Midlothian, Texas, Ennis has two tag and label facilities located in Wolfe City, Texas and DeWitt, Iowa, respectively. With more than 15 label presses, the company offers a complete variety of items from custom labels and express labels to four-color process labels and custom die shapes.
Like its competitors, Ennis has recently added new equipment to keep up with the changing marketplace. In fact, the company’s throughput in the area of variable imaging has more than doubled as a result of a new UV inkjet system purchased last year. “We have expanded our variable imaging capabilities with a total of six flexo presses in two locations that can offer inline variable imaging with less than [a] two-week turnaround,” said Chuck Hester, general manager of the Wolfe City, Texas facility. He went on to say, “We have strong relationships with the major material vendors giving us quick turnaround on custom materials for the most specific applications.”
Not surprising, the pressure is on for faster turn times and shorter run lengths as a result of the current economic climate. Hester observed, “Everyone is trying to get by on just a little less than before.” Terry Pennington, vice president of Ennis, mentioned the company carries more than $2 million of raw materials in its warehouses, which makes fast turnaround times a plausible request.
The Kay brothers also have noticed that many customers are ordering what they need on a monthly basis instead of stocking large-volume orders like before. The company’s stock and hold program, for instance, is gaining popularity with distributors. “Customers are able to have material on hand, ready to ship on-demand, and this keeps packaging more stable,” the Kay brothers said.
To complicate matters, suppliers are strategizing to keep products affordable for their customers. The Kay brothers contended, “Our message to our clients is not to fight us, but join us. With pricing of fuel and the economy, we try very hard to give the lowest prices available. We are [striving] to keep American-made items in America.”
Hester stated, “Customers are more and more consistently looking for options to save them costs. Whether it is the specs on the job, packaging or the shipping method. Everything is looked at.”
Pennington elaborated. He suggested distributors invite their manufacturer to their end-user customer’s facility to conduct a process evaluation. “We may find customer[s] can use a lower-cost material as an alternative to their existing, more expensive product,” he said.
Flexo printing may be a way to save money, as well. “On the flexographic label side, I think there are some that may still question the quality versus other printing methods, but with the computer-to-plate technology, inks, aniloxes and substrates available today, flexo printing can compete with a lot of other printing methods out there and save the distributor money,” Hester surmised.
The dire need for cost-effective solutions raises another important issue. Is it really economically feasible to be eco-friendly at this time? Pennington conceded eco-friendly initiatives are not implemented to a large extent. “It appears end-user customers expect the cost to be neutral, which is nearly impossible due to higher raw material pricing from our suppliers,” he noted.
Nevertheless, Ennis is currently reviewing options to assist customers with their sustainability programs. And, Hester said adhesives are being formulated to be more environmentally friendly.
Kay Toledo Tag is working on an eco-friendly line called Earth First Products. “This includes labeling; tamper-evident, shrink-sleeve labeling; windowing; lidding; overwrap and flexible packaging material. This film is a viable, environmentally friendly alternative film. The benefit of this material is to help lower energy and compost by BPI to ASTRM D6400 standards. This stock is produced from a renewable resource of corn,” the Kay brothers explained.
Dochstader noted the packaging industry especially is one of the largest contributors to the world’s landfills, thus making the need for green difficult to ignore. Because more customers are expecting solutions from every level throughout the supply chain, TLMI will be unveiling a green certification program to its converter members at Labelexpo Americas in Chicago on Sept. 9-11. Dochstader went on to say the central focus of TLMI’s 2008 annual meeting, scheduled for Oct. 19-22 in Palm Beach, Fla., is sustainability.
The tag and label sector’s rich history is undeniable. While all participants acknowledged the struggling economy, they remained optimistic about the future and agreed there is still much left to accomplish. Hard times do not necessarily have to mean the end of time.
“We’re an industry that excels at sharing knowledge, and contributing individually for the greater good and advancement of the collective,” Dochstader commented. “There is a lot still left for the industry to accomplish because the demands of packaging buyers are always changing; graphic designs are becoming more and more complex, advances in overt and covert security labeling technologies are constantly being made and sustainability practices will force converters to develop a new production paradigm. The opportunities for our industry are limitless, as is the pioneering spirit that drives it.”
Related story: Trend Alert: Sizing it Up
- Companies:
- Ennis, Inc.
- Kay Toledo Tag