Flint Group  mergers & acquisitions  offset- consumables 
During a whistle stop world tour of the expanding Flint Ink empire in August, Leonard D. (Dave) Frescoln, architect of the company’s merger with Xsys Print Solutions, stopped over in Sydney together with Flint Ink India Pacific president, Damian Johnson and granted an exclusive interview to AP’s Brian Moore CEO of Flint Ink worldwide since January this year, Frescoln was in Australia to host "town hall" meetings of staff and to brief customers on how the merger of the company with German ink supplier, XYSY, would benefit them in the long run.

Frescoln not only conceived but led the process by which Flint Ink ceased to be a private, family company, and conducted the negotiations which resulted in the merger of the 85 year-old American ink maker with Xsys Print Solutions, itself the product of the merger of GermanyÂ’s BASF Printing Systems and Sweden’s ANI Printing Inks late in 2004, following their respective acquisitions by funds advised by CVC Capital Partners.

The new merger is awaiting regulatory approval and it is expected that the transaction will be completed by September 30, 2005. Though headquarters of the yet-to-be-named merged company (which for convenience we will refer to here as Flint Ink-Xsys) will be in Luxembourg, Dave Frescoln, president and CEO, will continue to work out of his Ann Arbor, Michigan office.

He will have operational responsibility for the worldÂ’s second largest ink manufacturer, with a combined workforce of 8000 and anticipated revenues of more than US$2.5bn, based on combining the 2004 figures of both the merging entities.

On the global ink manufacturing table, prior to the merger, Flint Ink and Xsys ranked second and third in size respectively, behind JapanÂ’s Dainippon Ink and Chemicals. Asked if Flint Ink-Xsys would maintain multiple brands in the market as does DIC, Frescoln says that he believes there is more value in having a single, global, unified brand to compete with all comers.

"What were, just a year ago, three strong brands, will soon be a single powerful brand with a much broader global base, capitalising on the product and geographic strengths of each," says Frescoln. "Print customers are looking to diminish the number of suppliers and our recent initiatives will help them to do just that."

"Combining the resources of Flint Ink, BASF and ANI allows us to optimise the distribution of our products and to improve them, using the best of all words with technology not previously available to all the partners before," says Frescoln.

Whilst management of the expanded organisation will be centralised, manufacturing will not because, says Frescoln, such a model would not work well given the bulky nature of ink. "Instead we will continue to optimise regionally product focused manufacturing plants: in the ink business, you generally make it where you sell it to minimise logistical and quality control issues. We don’t believe centralised manufacturing makes any sense."

Until the merger is approved by the various regulatory authorities, Frescoln says it is too early to talk about major developments within the organisation, but he hints that Flint Ink-Xsys will continue to manufacture in New Zealand where Flint Ink has invested $2m in a world-class factory over the past two years. He also indicated that the company’s Melbourne facility at Dandenong would continue to expand due to increased demand.

Looking further afield, Frescoln says there is enormous potential for business growth in both China and India where Flint Ink has manufacturing facilities. Flint Ink India Pacific president, Damian Johnson, has spent much of his time in India and reveals that an agreement has been reached with Flint InkÂ’s local joint-venture partners for the multinational to acquire all of the shares it doesnÂ’t already own in Bangalore-based flexible packaging ink manufacturer, Incowax. Says Johnson, "this is an expression of our confidence both in the Indian market as well as the enormous market for packaging inks. Economic growth projections for Asia continue to outstrip the rest of the world and India in particular has been achieving an annual growth rate of eight per cent which is great news for manufacturers and packaging companies," he says.

Whilst some manufacturers have commoditised the ink business, Frescoln believes that the supply of ink is a service to which can be added a great deal of value, far beyond the product itself. "We offer a wealth of research and development expertise behind our products, expertise which can be of substantial value to our printing partners," he says. In this regard, Flint Ink has looked into the future with the development of specialised businesses to serve expanding niche markets. It has recognised the enormous growth of the inkjet market with the establishment of its Jetrion division which he says has chalked up sales in the past six months greater than those of the previous 12 months.

"Precisia has been a little more futuristic, dealing with printed electronics and RFID antennae," says Frescoln. "Among its innovations has been a tiny radio antenna which can be printed as a complete unit. The cost of development has been very high and for the time being, it is unlikely to enjoy mass distribution, but if we can get the formula right, it has the potential to make RFID a much more affordable option."

A third leg of R&D at Flint has been the development of colour management via its Progressive Color Media subsidiary, something which Frescoln admits many in the printing industry want but are reluctant to pay for. Expertise in colour measurement and management is at the heart of every ink business and he believes that his company’s persistence will pay off when "the pain becomes so great that enough printers will be prepared to buy painkillers."

Commenting about the development of software to help reduced ink consumption, he says that no responsible ink manufacturer would encourage a printer to waste ink. "Not only can we assist our customers to get the utmost value from our ink, but we can also help them to reduce paper waste and cut machine downtime," says Frescoln. "In partnership with our customers, we can audit the whole printing process in order to determine where cost can be taken out."

Since joining Flint Ink as vice president and CFO in 1992, Frescoln has risen quickly through the ranks to the leadership position he holds today. It is largely the result of his vision that the Flint Ink-Xsys deal is happening in the intensely competitive global ink market. He maintains that the Flint Ink-Xsys strategy of a single, recognisable global brand identity is the right one to see off the competition in the 21st century.