12 July 2013 Print Companies

Fifty not out

Ted Stephens looks back on the company he founded 50 years ago and forward to the trends that will shape the business in future.

There is a pop up banner in the reception area of Optichrome’s factory in Woking which celebrates the 50th anniversary of the print business. On one wall is a large photo of staff and a helium balloon of the figure 50, also recording the fact that in 1963 Optichrome was registered as a limited company by Ken Stephens. For much of the time, however, Ted Stephens, now chairman, has been in charge and daughter Natalie, currently marketing director, is positioned to take independent family ownership into a third generation.

There are a host of events planned for this year to mark the anniversary: a client day at Windsor Races was a success, staff fun day this month and an open day is planned for July. It is clear that Optichrome is justifiably proud to have reached a landmark that few of its contemporaries have achieved and which in modern times is increasingly rare. And the company continues to thrive, morphing with the technology and the times to continue to serve a customer base which has in many instances been with the business for many years.

Artist and cartoonist Richard Cole, for example, is Optichrome's longest standing customer and uses the company for all his prints. There is a case bound book of beautifully moody and printed mono photographs, its title London debossed in gold on the white cover. It is being used to sell a top end property development in London to a clientele that has no need of mortgages. The company is handling more of this type of work, befitting its reputation as one of the best quality litho printers in the London area.

But there is more to the business than this. Optichrome is also a leading digital printer with Kodak colour and mono sheetfed machines and the Xeikon colour engine. There is a growing volume of variable data work, particularly for the financial services sector as well as more straightforward short run work.

The latest investment is the UK’s first Xeikon 8500 digital press, which it installed last year, and Stephens is now mulling a new offset machine. “Ten years ago I made a prediction that we would never buy another litho press,” he says.

However, the rate of advances digital print technology has slowed and the decision has to be made. It is made trickier because, just as customers are loyal to Optichrome, the company has been loyal to its suppliers
over the years. Its oldest supplier is Kodak, followed by paper merchant EBB and then Manroland from whom Stephens reckons to have bought more than 100 units over the half century.

The relationship began when he was at Twickenham College studying lithography with Frank Werkmeister whose family owned Pershke Price Service, then the Roland agent for the UK. It continued through Favorits, Rekords, the Roland 300 and now Roland 700s. But while admiring what current owner Tony Langley has done in stripping out costs and as an Englishman generating a profit from a German engineering business, there is frustration that Langley runs the business at arm’s length. “I want to be able to look him in the eye and ask about future development of the presses,” says Stephens.

So far that meeting hasn’t happened, though the decision to continue to invest is an indication that Stephens is realistic for the future of print and for the company. “We are not falsely confident,” he says. “We are quietly confident. There will be growth in things like 3D printing or scratch and sniff interaction, but these will be peripheral small markets. I’d like us to look at short run packaging again.”

A decade or so ago, the company had a project for multipack cartoning for yoghurt. By printing litho it was able to shave a huge amount of time from artwork design to packaging for short run samples for consumer testing in the supermarkets of Swindon over the previous process.

“Packaging is never going to go away. It has guaranteed longevity. Books on the other hand are under threat. That’s sad because books are among my favourite things. There are people that love the tactile feel and the quality of a book, but I can’t really see that book printing will be there for another generation,” he explains.

Optichrome has itself invested in lay flat binding equipment for high quality presentation of short run volumes, so the demise of the book is not imminent, nor are other forms of print even if the company is keeping pace with technological change. “The cross media stuff will come naturally,” Stephens says. “Some customers ask us to handle email blasts and others want detailed data management of databases and to ensure the security of these databases.”

The company offers this and responds when the standards move and buyers need extra reassurance. It is working towards ISO 27001 for example. Around the building, security is tight with access restricted areas and firewalls in place. And Stephens says this sort of work is worth pursuing. “There's no doubt that complex programming for digital printing adds more value. We like complexity because it means that you are adding value. Once something becomes easy for everyone to do, they will do it and that drives down the price because there is no other mechanism to sell on.”

There is a twice a year job that amounts to 40,000 personalised fully variable 28pp reports and printed on the Xeikon. This is not the sort of job that a company investing in its first digital press can walk into. Behind the order are the designers and programmers to work with the customer to shape the data and the content through the Pageflex and Kodak Darwin systems to drive the print engines. Nor is this is the sort of job where Optichrome has to offer the cheapest price.

That lack of strategy is one reason why many companies fail, he says, and in 50 years Stephens has seen a lot of companies fail. After Twickenham College in the early 1960s where his final dissertation was on the subject of process control in the printing industry, he enrolled on a management course at Slough, equivalent to today’s MBA programmes. There the independently minded student developed his nascent taste for entrepreneurship. He returned to the family small offset business determined to forge out on his own, but instead was persuaded to stay and help develop Optichrome. At that time colour repro was at least as important as print for the business. Gradually Optichrome replaced small offset presses as the business expanded with Solnas and then Roland Favorits through the 1970s and 1980s. It then embarked on a number of industry firsts, the first four-colour plus coater Favorit for example, but more important was innovation in prepress where Optichrome became the first in the world with a batch of Hell equipment for colour retouching, full page make up and one-piece film imaging.

It was also in the vanguard of companies using computers and these were deployed to implement the ideas about process control in print that Stephens had developed a decade earlier. This became the Optichrome Multi User System, or Optimus as it became known. It was the first print MIS to be created around production management rather than adapted from an accountancy package. It was also among the first to develop a shop floor data collection device to improve the collection of work in progress information. This came after Stephens was asked to help a computer industry start up that had a promising technology and a complete absence of management skills. He imposed order on the software developers, acting he recalls like a strict headmaster in order to corral the apt to be distracted Oxford graduates.

That experience is now coming full circle as the print company is looking at ways it can act as an incubator to young business entrepreneurs who cannot get backing elsewhere.

“It will be about working with creative people who can be difficult to manage. We can provide homes for these sorts of start ups that don't have the resources to invest themselves. We might invest in them to see if different ideas from different ideas from different industries can help us in the future,” he explains.

Internally Optichrome continues to take on apprentices, albeit not for the five-years craft oriented training that used to be necessary for a finisher, compositor or printer to learn his craft. At one time around 10% of the staff might be undergoing some kind of training with college day release helping to acquire and hone the necessary skills. Now training is provided inhouse with external assessors or by equipment suppliers. Outside providers help keep the programmers up to speed on the more involved applications the business has to run.

The people in the business, from the receptionist and kitchen staff through the factory remain the crucial asset. It ensures that things are done properly. People are greeted at reception, are provided refreshments when they arrive and will be supplied with lunch if the time is right. “Not many printers still employ a receptionist let alone someone in the kitchen these days, and we still make a profit,” Stephens points out. “When as a customer you buy into Optichrome you are buying into the people and the confidence that we will get the job done and that if we don’t get it right, we will do it again for you.

“We have a culture of can-do which flows through the company.”

It provides the basis for the long term customer relationships the company has built up. Natalie Stephens concurs having seen for herself at the Windsor Races event that “the relationships that have been forged between customers and our staff is fantastic”.

She has also been driving the project for Optichrome to attain Emas. This is now on its final lap and it will put the company among a select band of printers with the environmental management gold standard, and something else that customers are beginning to look for.

Ted Stephens attributes the longevity of Optichrome to a core set of values that places management skills at the centre of the business. And while he is a born entrepreneur it is a drive he exercises carefully. The company has been built carefully, Stephens taking care to measure and monitor every aspect of the business, provided by the Optimus MIS. (Optimus itself was sold through a management buyout though continues to reside in the Maybury Road building).

There can be no surprises. “It’s been about good old fashioned management skills, never believing that you have arrived but that you still have to get there, nor believing the flattering comments you receive,” he says. “For example, the balance sheets of almost every company that has fallen into trouble since the 1990 recession will show that in the couple of years that the shareholders took money out of the company.”

He is a keen collector of balance sheets, from those of rival companies and those of potential acquisitions. It is like being a football fan he says, and not knowing how rival teams are performing, who is scoring and so on. This data allows Optichrome to benchmark its own performance.

Down the years Optichrome has been a frequent buyer of companies, Stephens reckoning that he has completed 13 or 14 such deals, some larger than others. These days acquisitions bring new business into the company to compensate for declining print runs and erosion elsewhere and to add technology, ideas and sales staff into the company.

The first deal was not quite like this. It was at the time that Robert Maxwell was in his pomp and had inspired others to emulate the slash and burn takeover tactics the Bouncing Czech adopted. Bourne Press was advertised for sale in the Daily Telegraph after its millionaire owner Tom Simpson realised that its largest customer, British Rail, for whom it printed the age-old pink board tickets, was moving to magnetic strip technology, stripping 35% of the revenue base. Rather than reinvest, the business was put up for sale and the Stephens bought the company sight unseen from its flamboyant owner. “I wanted to do a business turnaround without having to be a bastard,” he says. Other deals followed. However, rather than retain different sites when recession hit in the 1990s Optichrome consolidated on its purpose built Woking site, relying on the power of its Roland 700s. It has been a case of being flexible and adapting to circumstances. “I started becoming very worried again in 2005 when youngsters were being offered 110% mortgages. Something was going wrong, and because by 2007 I couldn’t find a technology that would make a difference, I decided we would have to run for cash. Now there is £1.8 million of cash in the business.”

There are no yachts or palaces on the Mediterranean, instead the profits have been kept in the company rather than being taken from it. It is he admits something of a Victorian attitude towards the business and the people in it.

The attitude was at least partly informed by a mistrust of the City formed in boyhood when a friend’s father was instigator of a major scandal of those years. “I’ve always felt that the trouble with City people is that they are making money by using other people’s money,” he says.

Of the companies Optichrome has acquired, he says: “Without exception, all those companies had a short term view. When in the 1980s things were going well, anybody could make money,” he says. It was a time when litho printing flourished and in there were a clutch of companies in around the London and Surrey borders that produced high quality sheetfed work, CTD, Alderson Brothers and Midas Press alongside Optichrome. All the others have gone.

And recession has had an impact on company values also. The most recent acquisition was being watched for five or more years, but valuations were too high. “The owners are getting ten times less now than had they sold before the recession,” he says. “You have to buy companies at a price that allows you to run them. It always takes two or three years to sort things out with a takeover.”

With the industry continuing to shrink, Optichrome will need to continue to buy businesses in order to bring in the sales to drive volumes of work through the business. It has no intention of being on the wrong end of industry consolidation.

“It would be nice to get supply and demand balanced for a good few years,” says Stephens. That, as he knows, is unlikely to happen. Instead consolidation will continue and the challenge is to take advantage of that while staying true to the company’s business culture. That part should not be difficult. The attitudes, the systems and the approach that has stood Optichrome in good stead for its first 50 years will provide the basis for the next chapter.

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Optichrome was founded by Ted Stephens 50 years ago. Now his daughter Natalie is preparing to take over the running of the group. The company has been responsible for numerous innovations, not least developing an MIS which has been spun off as Optimus.

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Ted Stephens has remained loyal to Roland presses, buying the first Parvas, moving to Favourites, Rekords and now to the Roland 700. Optichrome has two five-colour machines. But it has also used Solnas and Heidelbergs down the years. Its prepress began with one of the first full Hell systems outside central London. Today a growing percentage of the turnover is accounted for by digital printing where the company has Xeikon and Kodak presses.

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