Poised for Growth
YORK Label has used acquisitions and innovation-driven organic growth to position itself as a major force in the label industry.
June 2010 By Tom Polischuk
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YORK's prepress operations use the latest in computer-to-plate (CtP) technology, Klotter reports. "CtP offers greater efficiencies in speed to produce final printing plates, which means more plates output per shift, and much shorter downtime on press for plate remakes. Digital, high-definition plates are more consistent plate-to-plate for better registration, with increased detail and improved plate quality, specifically in tonal images and minimum dot," he explains.
YORK Label provides products for some of the most dynamic end-use markets, including home and personal care, wine and spirits, healthcare (pharmaceutical and medical), and food and beverage. "The majority of our revenue is generated through pressure-sensitive labels, but we have significant glue-applied capabilities, in addition to very innovative extended-content labels and flexible packaging films," Klotter says. "Furthermore, our Equipment Solutions Division represents world-class label application manufacturers, supported by in-house application engineers and service technicians."
Early adopter
YORK Label has been on the leading edge of several new technologies that are impacting the package-printing industry. It has been printing labels with digital technology since 2006 using HP presses, reports McKernan. "We are certain that digital technology will become even more important in the future, particularly as digital presses become more productive and capable," Klotter predicts. "Because of trends like SKU proliferation and shortened run quantities, we believe this is a tremendous area for growth for mainstream label applications."
RFID is another developing technology area in which YORK Label has experience. "We have done a tremendous amount of research and development in this area and feel the smart-label category will grow," Klotter says. "Because of diverse industry standards and early cost hurdles, RFID at the SKU level has come much slower than anyone expected. Smart labels pose an exceptional opportunity for growth to not only carry critical data for tracking purposes, but as innovative and cost-effective marking indicators to include time, temperature, security, brand protection, and expiration."
What's ahead
Like virtually all other package-printing companies, YORK Label had to work through a difficult business environment throughout most of 2009. "We faced challenges along with our customers, particularly in luxury product categories (e.g., high-end wine), and felt the impact of de-stocking across the supply chain and trade down towards lower priced products," says McKernan. The company met the challenges head-on with several plant consolidations, SG&A (selling, general, and administrative) reductions, and tight cost control.
During this time, however, YORK was able to position itself to benefit during the recent turnaround. "We increased our commitment to innovation, added three new presses, created a new U.S. Healthcare module, and finished the year with the acquisition of Southern Atlantic Label," he reports.
Overall, McKernan reflects on his impression that the label converting industry is still facing a "challenging and unfavorable profitability trend, primarily the result of excess capacity exacerbated by 2009 market contraction and purchasing power of buyers. Ultimately, this will lead to failure of weaker players and additional consolidations amongst converters."
Even with the highly competitive business environment, Klotter sees several areas for growth of pressure-sensitive labels. The company is working hard to encourage the transition from glue-applied and in-mold labels (IMLs) to pressure-sensitive. "We have been pushing our material suppliers to develop commercially viable and cost-effective thinner gauge films and liners to help transfer more work from IML and cut-and-stack … It's not just for beverage anymore," Klotter says. In addition, he continues to see opportunities in the use of emerging technologies such as digital printing, along with growing end-use markets such as healthcare.
Of course, sustainability is another area that Klotter believes will create changes, and therefore, opportunities in the label business. "Clearly, the direction is toward less mass, less waste, lower conversion energy, and easier recycling," McKernan observes. "Since our customers are selling their products to Wal-Mart and other retail channels, it's only natural that we are subject to environmental audits and scorecards from our customers. We have many great examples where we recycle matrix and help customers find sources to recycle spent liner. We also have eliminated corrugated with many customers where we utilize reusable containers. In addition, we constantly challenge ourselves to look at lighter weight papers and thinner gauge pressure-sensitive materials to further drive out unnecessary waste and cost."
Innovation is key
McKernan believes YORK Label's future success will come from the continuing execution of its strategic objectives—providing world-class customer service, delivering exceptional value, and earning organic growth. It is also relying on its heritage in innovation. "We have increased our internal investment in innovation and aligned ourselves with global innovation partners to create new opportunities for our customers and to accelerate growth," Klotter notes. "Creativity and innovation is the fabric upon which we exist and spans back to the earliest days of YORK Label." pP
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