‘I only want to be in a business that’s about growth’
Monday, July 13, 2015
Quite how a £42.5m business with around 350 staff can be a well-kept secret might not be immediately clear, but that’s exactly how Anton chief executive Malcolm Lane-Ley describes the Essex-based business he joined two-and-a-half years ago.
What’s not a secret though is that much of Lane-Ley’s 35-plus years of industry experience has been firmly rooted in the commodity driven paper industry, including a number of senior roles at various Paperlinx operations. So while on ‘paper’ his appointment may have seemed a strange choice to some, in terms of a business leader who understood the challenges of corporate businesses and had developed a pathological loathing of managing decline, then there were probably few better candidates to steer Anton through its next chapter of growth.
Darryl Danielli How did you get involved with Anton?
Malcolm Lane-Ley I first came across Anton in 1997 when I was managing director of one of its suppliers, Mason Paper, and that was when I first met [then chief executive] John Knight. We probably started talking about me becoming involved with the business three years before I joined two and half years ago.
And why was John keen to get you involved?
I guess John, who has turned 70 now, was thinking about his retirement plans at the time. And for whatever reason saw something in me that made him think it would be a good idea to get me involved.
How do you mean?
Well the Anton Group was formed out of a number of businesses with multiple cultures that were brought together and then ultimately converged into one. I had experience of trying to bring multiple cultures and businesses together, so I had a lot of experience of change management - so I guess I looked like a good fit.
And what appealed to you?
In truth, having been in the paper industry all my life I had probably had a gut-full of it by the time 2011 came. In the end all I was doing every year was downsizing a business in line with demand.
But then print hasn’t exactly had an easy time either?
Well, that’s true. It wasn’t an easy decision, but I could see that Anton offered something different. It had a future that was well defined in terms of where the market was going and that was all built around personalisation where there was a strong ROI so it was about realising that potential.
Which must have been more appealing than just managing decline?
Absolutely. I saw that Anton was a bit of a sleeping giant, in a good way. They had invested significantly, whereas a lot of rivals had been riding on the back of fully depreciated assets during the recession. That was an important thing for me.
But there were still some similarities to your previous life surely, like the model being lower margin work compensated for by high volumes?
You say that, but compared to industry standards we don’t have low margins, but you’re right the volumes are definitely big. But we evolved from a high-volume general commercial print business into one that is very big in added-value personalisation.
How would you describe Anton now?
Well, at the core of the business is this highly service-driven business that is ultra responsive, because part of its background is City work that needed to be produced overnight. And then there’s the competency that we grew out of mailing and secure documentation. Then you have to couple those two key areas with the scale. So what you’re got with us is a hybrid, because we have massive responsiveness coupled with an extremely safe pair of hands.
Do you think the hybrid model is in part due to the fact that it was built as a very entrepreneurial business?
Yes I do. It has always been very service driven. One of our strongest values is that we’re good to our word, even if it ends up costing us. We would rather die as a business than let a client down. It’s one of things we do and are known for, despite the fact that many of the projects we work on, because of their nature, are late before we even get them.
I appreciate that this was before your time, but you mentioned that the business was in effect a merger of half a dozen or so companies?
Well, how it happened originally was that some of the guys were in repro and as we all know that sector almost disappeared over night, they did actually have some relationships working with each other on a trade basis so I suppose it was an organic merger over time. Eventually they went into a unit together in Hutton, Essex around the mid 1990s and in 1998 the businesses became one legal entity: Anton Group.
And when did the business move to its current site?
In 2006, and that was when the business really took off.
It’s a high-risk time though, moving to a big site – just look at the number of businesses that have failed during or after a big move.
Absolutely. The cost always over-runs and so do the time scales, which inevitably means letting customers down, but because of how the move was managed, with a six-month handover, Anton had a very successful transition. And two years after the move turnover had literally doubled, because they could suddenly go to people and ‘look at what we’ve built’ – ironically though they lost the ability to tell that many people shortly afterwards as everyone went into siege mode, because of the recession.
And I guess it was a couple of years after that the business first started looking seriously at inkjet?
Anton has always been very innovative and we’ve been loyal to our suppliers, with partners like Kodak, Heidelberg and Agfa. Kodak were really pushing the Prosper [Press] technology, but at the time it wasn’t good enough and was too expensive. Their response was that we needed to put our prices up, but sadly, as they realised, the world doesn’t work that way. But it started us thinking.
About how the technology might work for the business you mean?
The guys here looked closely and decided that our customers wanted better quality, they also couldn’t afford the price of inkjet print, and the colour matching wasn’t good enough at that time either. They also realised that most of the personalisation at that time was still mono, so full variable just wasn’t needed – but they recognised the potential of the core Prosper head technology.
And that was when the idea came to build your own system?
Yes, [around 2011] we mounted the heads on a frame on the front of a Speedmaster XL so that they could run inline; it was a bit of a Meccano set and took a lot of R&D to get right.
But you had been running personalisation before that though?
Yes, on flat [sheet] Scitex machines, which were much slower and a separate process. But by putting it on an all in one process, it literally changed our world.
When did you add the duplexing Prosper system to an XL then?
October 2013. We took it a stage further because we were doing more and more duplex personalisation, so we invested a lot of money and now we can put a roll of paper in, and out come sheets of two-sided personalised colour print.
But you seem to have been a bit quiet on the big spends of late; Anton used to be famous for the big show deals?
We’ve been keeping the spends more and more relevant, the last press only went in two years ago and to be fair even Heidelberg seems to be saying that there’s nothing new been added to the machine since then, so we can already produce 18,000sph. So what we’ve been focused on lately investment wise is the ‘money per hour’ we get off the machines rather than ‘sheets per hour’.
And I guess you just keep those kinds of spends under the radar and just tell your customers?
Perhaps we have been a little secretive, but sometimes we’ve told the wrong people. So I’ve stopped people coming in without being vetted first.
Well some bright spark let one of our rivals in because they were so proud of what we’d done, so guess what that company bought shortly afterwards. That’s by the by though, there are precious few secrets in print anyway.
True. How else has the move to personalisation changed the business?
How the work leaves the factory is the big one, more and more of it is leaving the factory by mail rather than by truck to another place. Around two thirds of our output goes straight into the mail now, from one third three years ago.
That’s a pretty quick transformation, what’s the capacity of the plant now?
Around 2m mail items a day, we can probably turn around 6m B1 sheets a day. It’s phenomenal firepower. Because of the ability to change the information on the sheet from one to the next we’ve built a reputation in new markets, we’ve become an expert in ballot papers for example, particularly for foreign governments. We’ve also invested quite a lot of money into our file-based enclosing capability, so we’re increasingly moving into the transactional, business critical space.
Does that mean you’re looking again at continuous inkjet?
We’ve never stopped looking. Within 18 months time we’ll have a pretty good idea of whether continuous feed inkjet really is going to start to replace litho, and I think that will set the tone for our future investments.
Is that next on the agenda?
We’ve got people courting us all the time, but, being an ex-merchant, I’m cynical about the substrates because a lot of them are just heavily sized offset papers. Our customers want fully coated silk, gloss or matt paper, so it’s not convincing at the moment. The ink also looks flat, the image is fuzzy. But I think they’ll get it right by Drupa – so right now I’m just trying to learn as much as I can.
I guess investing in technology to enable you to enter new markets is fairly straightforward, but the culture shift can be much harder?
At one end of the scale is the grey and boring, and at the other you have calypso, which is changeable and exciting. We’ve got the two because we’ve got speed, scale and massive responsiveness and we have also done this accreditation and procedural work. We tend not to brag about it, but we have one of the leading private banks as a client, for example, and you tend not to get that kind of work unless you’re a pretty safe pair of hands.
The business became an Employee Ownership Trust last autumn, how did that come about?
Well, John is cracking on a bit, as were most of the owners to be honest, and they wanted to retire.
I didn’t realise there were multiple owners; I thought it was all John?
He was certainly the public face of the business and because of how the business came about he pretty much controlled the voting rights. But there were three equal majority shareholders who had about three quarters between them and the rest was spread here and there. But they basically wanted out of the business in a structured way.
Was that part of the plan then, to hand running the business over to you?
It was a sensitive issue. All three of John’s children work in the business, but he felt that I had the necessary skills to come in and take the business to the next level, purely because I had held a number of big roles.
And you taking the reins went smoothly?
They joke here is that me and Chris [Stockley, finance director who also came from Paperlinx] are the corporate men, but I don’t think we are – we just come from a corporate background in some ways. The idea, I think, was that we could bring some things to Anton that perhaps the internal experiences couldn’t. That’s not a criticism at all, every business needs a combination of skill sets and I just think John had quite a specific vision for the business and we were all of us part of the plan to realise that.
You talked about the culture shift in the business, have you had to change your approach too?
Yes, I have. I’ve found myself having to look at things in a different way. I’ve worked in the corporate and private worlds, and I’ve learned that some of the corporate world was complete bollocks and some of the ‘hand-knitted’ private world is just not good enough – but what we’re building here is something that will offer the best of both worlds.
Was part of getting you on board to help transition the business to new ownership?
I was in here well before the practicalities of selling happened. So we looked at all options, but one of the big things at the front of our minds was the care of the people. There has always been a Knight family member in this business, but then there’s the bigger Anton family and if we tried to sell to a VC or a competitor then we might have been putting a lot of people’s livelihoods at risk.
You must have had a few approaches though?
Over the years there were a couple of nibbles, but the owners just didn’t feel they were right. Also, we genuinely felt it was a good idea to do something different, so we created an Employee Ownership Trust.
How was it structured?
We struck a deal for a seven-year pay-out to the owners. This was designed to let them to exit the business in an equitable way that managed the handover in a way that their experience would still be available. So we formed the trust and all the shares have been sold to that trust, so basically every employee is an owner of the business. We’re not issuing shares to staff though, because we felt that most people would want something they could spend – so we went down the profit related pay route rather than shares.
Is John still involved with the business?
He still comes in most days for a couple of hours, which is good for us and doesn’t make John feel like we’ve run off with his baby.
It must be tough to take away something he created?
It is difficult, people joke that John has two things in his life – Spurs and Anton. That’s not quiet true [laughs], but it’s probably not too far from the truth. But we’ll never forget that it’s John’s vision that made the business what it is.
Moving to employee ownership must have been complex though?
It was very involved, we spent a lot of time talking to banks, lawyers, and stakeholders. But we got there over a period of about a year, and we actually beat Colchester Print Group in becoming a trust by a couple of weeks.
Did you talk to them about the process?
I knew Philip [Colchester] a little bit and so we’ve sort of become Employee Trust agony aunts to each other – we meet up every couple of months, compare notes, and look at how we can help each other take employee ownership forward.
It’s not just a case of signing the papers and moving on then?
I think key to making it work is employee engagement. It’s one thing to tell the staff that the company has changed hands and they’re the new owners, but it didn’t really feel any different to many people. We want everyone to feel as involved as possible, have a stronger voice and the opportunity to make difference.
The obvious benefit being that you have hundreds of people developing ways to make or save more money presumably?
Absolutely. We belong to the Employee Ownership Association, and they have data that shows how EOT businesses seem to significantly outperform market peers.
But surely you could have started some of these initiatives and changed the culture of the business if you had done an MBO say?
That’s true, but we just believed that the employees had contributed a lot to the business over the years and we wanted to do something different that recognised that. The thing about the trust is that offers a much longer-term vision for the business.
And how did the change go down with the market?
Suppliers and customers were very positive about the change; some were honest enough to say that the old management structure was creaking with age a little and they were concerned about succession, others said that they were pleased that there was no VC involvement.
In terms of you, though, who’s your boss now?
The bank [laughs]. There are six trustees of the business, two of whom are shopfloor staff voted in by the employees. I’m the chairman of the board of trustees. In effect we operate two levels of management, you have the trustees, who govern the business; then there’s the operational management team, also led by me, who actually run the business.
And what changes are you driving?
Strategically we’re moving more and more into personalisation, because we know clients are increasingly looking at targeted marketing print. I think the DMA quotes it as offering a return of something like £3.80 on every pound spent, so being in that sector seems much better to me than just being in a sector that produces static marketing, say.
But you still do general commercial work as well?
We do, we can’t afford to be that picky. But we’re doing less and less as time goes by. We’re in this space that’s into dynamic marketing and business-critical print, but I see that we’re in danger of being hemmed in as just being the printer. So what we really need to do is take control of the process earlier. So we formed a strategic partnership with a marketing agency called Nutshell.
How did that come about?
We want to produce an end-to-end piece. There’s an income at both ends of print and then there’s the bit in the middle. The trend seems to be that people are looking at partners that can do everything, because everyone is under more pressure, so they want people to take problems away from them. For me, I think ‘bundling’, if you like, is something that is going to grow and if we can capture somebody early on then we can do the creative element, we can now offer them the capability to do something in print and online, by having full cross-media capability and then say ‘look because of our scale, we can offer you postage discounts as well’. So there’s a new income stream for us, and we’re making people’s lives simpler.
Through postage services?
There’s a lot of confusion on the client side regarding postage and they need to lean on experts who can help, and we want to position ourselves to be that expert. The postage situation in the UK is really complicated, so if we can leverage our expertise to support our clients then that’s only a good thing.
Is offering digital campaigns something new though?
We’ve been doing it for around a year. Literally we can track all sort of activities for clients, so they set us off with data and ask what they can do next and it might be a mail piece, that links to a PURL, they do something else, which then fires off another action.
So it’s campaign management really?
Exactly. The idea behind the partnering really is that it can get us into new areas, perhaps where we don’t have an expertise right now. It’s all about the best of supply. So if it’s design, or data, or video creation, it’s about making Anton a communications company, so that we can help our clients in which ever area they need.
By working with best-in-class partners you mean?
Absolutely. We put Nutshell in front of clients when it’s appropriate and introduce them as our team of experts. It’s more credible, because generally we find that people struggle to think of printers as marketers.
Have you looked at any other sectors as potential growth areas?
The sector that’s showing a lot of promise is file-based enclosing and high-integrity mailing; postage is another opportunity. We also have an eye on packaging, I think there are a few things we need to do first in the packaging space though. What I’ve seen so far is that packaging with personalisation doesn’t seem to be happening, what seems to be happening is run lengths are coming down so that people can produce shorter runs and variable packaging design, which to me suggests that you need full variable print, which we don’t have yet.
So it’s more a watch area then?
I think so; we haven’t ordered any white hairnets for the production floor quite yet anyway.
Or it could be an area that you look to buy in the expertise?
Well, my view is that the short route is to look at an acquisition, we don’t have the sales contacts in packaging, or the packaging design expertise and to me there must be lots of packaging companies that are of a certain size who don’t know what to do next, and they might be attractive to us.
It sounds like you’ve looked into it?
We’ve done some work with Heidelberg to identify the sorts of areas we could look at going in to and it looks pharma or food packaging would be attractive. There’s a raft of businesses around the £10m-£12m turnover mark that might not have a succession plan and wonder what to do next. They might be a good fit, but it’s very early doors and we’ve got enough to digest at the moment.
You’re not actively looking at any acquisitions perhaps in the data analytics space for example?
We would probably like to talk to someone about perhaps forming a partnership first [in data], a bit of a ‘try before you buy’ if you like. I think if we get into the analytics then we’re straight into actually creating campaigns for people instead of just managing something that someone else has created.
You’ve mentioned some of the opportunities, what are the challenges?
The key challenge for us is new client acquisition. Once we have them, we tend to keep them – but we want more. On a wider industry scale the threat is people diverting activity away from print. We’ve seen a bit of a shift in people returning to print, but it’s a demographic challenge as people in their teens and early 20s are a little too comfortable receiving marketing digitally. So our challenge is that we reformat the industry so that we’re focused on outputting, regardless of what method is used.
That must be a challenge for your people internally too, in terms of not simply selling a commodity product, but selling more of a solution?
It is. What we’re trying to do is get the guys to think about what the customer is trying to achieve and then for us to try and leverage our expertise to meet those needs better.
I can’t talk to you and not ask your thoughts on what happened to Paperlinx, seeing as you spent so much of your career at the business?
Well I guess there are couple of observations. I was shocked and I suppose hurt when it happened. When you’re in a role you take pride in what you do, and I worked in that business for 27 years and it just made me realise that in some respects that’s wasted time now. It’s gone. The thing that shocked me the most though was how quickly the industry absorbed such a massive competitor, with probably 35% to 40% of the market. It only took probably two months for normality to resume.
A few people have said the same.
I mean, if any printer is sitting there thinking ‘oh good, so and so has gone bust, there will be a bit more work’, forget it, because it illustrates that it would take a thousand printers to go bust for it to have any impact on the general market. The thing I’m perhaps most disappointed about is that I’ve not really seen a new business model come out of the paper trade.
Why hasn’t someone created an online trading model? Because in the merchant model something like 12% of the price of the product is all logistics costs. I worked with the BPIF a few years ago to put together a best practice guide on buying paper to stop people ordering one packet for 7am delivery, say. More printers need to consolidate their spend, try and hold a bit of stock so that they can have one delivery a month say. Because if you’re a small customer the mills and merchants are going to be losing money on your business and you’re going to be squeezed out at some point because you’re too expensive to deal with.
But to create a whole new business model for paper supply is big step surely?
Maybe it will happen over time. I don’t think it will be anyone who’s in it already, because it’s too painful a change; it will be someone new who comes in, perhaps an Asian company? More and more paper is white and coated and the inventory that people have to carry is less and less. So there must be another model somewhere, because all that [the collapse of] Paperlinx has given the other merchants is some time to realign their business.
If its market, in terms of volume, was in decline and suffering from oversupply is there anything that could have been done to save it?
The truth is that we just couldn’t get ahead of the curve. The company had a lot of overheads and we could never strip out costs fast enough to match the declining volumes in the market.
Were there any lessons that you learned from the experience?
Yes, I never want to talk about shrinking. It’s terrible being part of a business that is downsizing, for everyone involved. I only want to be in a business that is talking about growth.
Because success breeds success?
Absolutely, it’s a drug.
Final question: what are your ambitions for the business going forward?
They’re very simple too. By the time I retire I would like us to be twice the size we are now. I would like us to be a very vibrant communications company – whatever that might look like in 10 years’ time. We have to be able to change and we have to evolve, because that’s what our customers do – and that’s exciting.