Over its history, Fremont, California-based EFI has captured more and more of the wide-format printer and accessories market using a combination of strategies: internal—what it calls “organic” growth—and growth by acquisition. In the latter category the company has occasionally made some big headlines—as it did earlier this year.
On July 1 2015, EFI announced two key acquisitions. First was its buyout of Italy-based Reggiani Macchine, a maker of direct-to-fabric inkjet printers. EFI also purchased Israel-based Matan Digital Printers, a maker of roll-to-roll inkjet printers and related equipment.
At a recent trade show, EFI executives shed some additional light on July’s announcements and what they mean to the company’s future.
The aggregate market for industrial inkjet printing is potentially worth some $32 billion, Scott Schinlever, senior vice president and general manager of inkjet solutions, told a lunchtime press conference audience. He added that both Reggiani and Matan play key roles in his company’s cutting into a larger piece of that pie.
Later, in EFI’s booth on the trade show floor, vice president of marketing Ken Hanulec elaborated on the value those purchases bring to EFI.
“I often say to people, the market never lies; people vote with their checkbook,” Hanulec says. “We put up $180 million for these two acquisitions, so we really believe that there is in fact upside, and I’ve got a lot of shareholders that have a very clear expectation that we’re going to deliver on that.”
Both the companies fill what had been gaps in EFI’s portfolio, he says.
Until it bought Reggiani, EFI did not have a digital inkjet printer targeted at the fast-growing textile market. While printing on fabric continues to grow in popularity, digital printing on textiles still accounts for less than 2 percent of all the work being done.
“I think there’s probably a couple of reasons (for that),” Hanulec says. “One, it’s a very mature market. In any mature market there’s a pre-existing supply chain and unless you can break in and offer value in a new way to do the execution or the manufacturing of the products you’re not going to break into that supply chain. Cost has traditionally been a big part – cost per unit is a really big barrier. And anytime there’s new technology or innovation, in order to leverage the supply chain you’ve got to bring a better economic argument and you’ve got to bring value in terms of something else, like a particular innovation.
“As you know, EFI’s stated strategy is to focus on high-value, high-growth segments of the marketplace that are going to go from analog to digital. So by definition, if 2 percent of the market is digital today, 98 percent analog, there’s big upside – it aligns perfectly with our strategy.
“Just like we learned in display graphics, in ceramics, in some other industrial inkjet applications and other verticals that we play in, there’s a lot of advantages to digital: I can print 1 or I can print 10; I have very low inventory carrying costs; the technology in terms of quality, in terms of speed, in terms of flexibility – all the benefits exist in textile, so it was just a natural fit for us to move into that market space.”
Hanulec says EFI views textiles as basically divided into two big buckets. Industrial textile applications include in-home décor, such as draperies; automotive parts such as upholstery; and aviation products. And when you’re talking about automobile or airplane manufacturers, you’re talking about companies with billions in revenue, he notes.
The other side of textiles is the soft signage display market, Hanulec says.
“As you know, vinyl has been around for a long time,” he says. “If you look around this trade show, literally all my walls are soft signage, everything you see on the ceiling – from either my booth or the competitors’ – there’s a lot of soft signage.
“There’s a lot of inherent advantages in that. I could crumble that sign up, put it in a FedEx box, ship it to a trade show anywhere I want in the world and have some installer take it out of the box and snap it into a frame and I’ve got a beautiful, stunning representation of my brand.”
Other examples include flags and other signage that retailers use and backlit displays in airports and other public gathering spaces.
“So there’s a big, big market in soft signage,” Hanulec says. “I think soft signage will cannibalize some of the existing roll-to-roll work that’s done on vinyl, but it will also take new stuff to the market in that people are just thinking about the market differently.”
With its buyout of Reggiani came the acquisition of the company’s three printers: the EFI Reggiani ONE 180, a 1.8-meter entry level production printer with eight printheads that can print 3,336 square feet an hour; and the EFI Reggiani PRO, which comes in a 1.8-meter size, with 16 printheads that prints at 6,458 square feet an hour, and the 3.4-meter PRO that comes with eight or 16 printheads.
Roll-to-roll inkjet printers are where the Matan purchase comes in. During his press conference, Schinlever noted that EFI didn’t previously have anything in the entry- to mid-level roll-to-roll market, which is why the Israeli company was such a solid fit.
“There’s just a whole lot of print market that we’re not getting to,” Schinlever told the audience, adding that his company’s VuTek machines were “overkill” for the jobs many print shops were getting. “You don’t need 1080 DPI (drops per inch) to do a billboard.”
The roll-to-roll machines Matan makes offer three levels of quality – and by extension, price. The company’s 3-meter and 5-meter production printers range from delivering “billboard” quality to “pop” quality to “museum” quality, EFI says.
“Our products – we’ve always been kind of a premium brand in the marketplace, in terms of price, performance and quality, and generally that has a higher selling price or acquisition cost, so there’s clearly some gaps in the sub-$250,000 market that we didn’t currently enjoy on our product line,” Hanulec says.
He says the Matan line of printers and accessories, and the team behind them, bring a couple of notable things to EFI’s portfolio of products.
“One, they brought 15 years of roll-to-roll engineering expertise, so they’ve got amazing design, high reliability (and) great price positioning in the marketplace. … Matan’s (also) got cutters and slitters and backprint IDs, and these are – they may seem trivial, but part of the overall manufacturing process is when you have an application or a technology that is in a very mature state, when you can take pennies out of that process that’s a big deal. And Matan offers a lot of opportunity to do that.”