Take the plunge and put strategy into action

By Jez Abbott, Monday 17 December 2018

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It’s fizzing in the printroom at Plastic Card Services (PCS) and beyond. Last month Champagne flowed a few miles away in Chester Cathedral to toast the winning of a company-of-the-year gong at Cheshire Business Awards. A month before, PCS staff chinked glasses on the company’s 25th anniversary.

pcsgroup

Perhaps the loudest popping of corks however came with the completion of a recent investment programme that set back the company about £1m. For with mighty investments come the risks of paying for more space, people and machinery and spreading your resources and expertise too thin.

The challenge

Before the investment managing director Adam Unsworth’s team, which at the time produced 80 million plastic cards a year, seemed to have all bases covered from its own base in the shadow of the rugged Peak District to the east and the elegant city of Chester to the west.

The 2,000m² facility in Macclesfield not only rolled out gift, membership and loyalty cards with magnetic strips, signature panels and metallic inks. It also offered secure on-site warehousing, data processing and fulfilment to ensure complete control of the quality and delivery of printed cards.

And yet when he analysed customer inquiries and output, something glaring was apparent. Half of his customers were ordering quantities of cards of fewer than 3,000. For a company relying on a Koenig & Bauer press that was efficient but better suited to long runs, this was was not a cost-effective way of printing. 

“We’ve always had a constant investment programme, but we realised for a business of our size this would represent a significant amount,” explains Unsworth, whose 52 staff turnover just shy of £6m. “It became obvious we needed a digital press that offered fast makereadies and the ability to print variable data. With more and more short-run work, it was time to take the plunge.” 

It wasn’t just a digital printer his team needed. PCS was also enjoying increasing orders for high-volume work, music to the ears of the K&B operators. So a raft of finishing gear was added to the shopping list along with IT to link both new digital printer and the existing litho press to the finishing equipment. With all that new equipment, PCS would need somewhere to put it.

“So new premises went on to the investment list. In some areas, print is struggling, but our market is buoyant, as born out by our decision to invest so heavily. Gift and loyalty cards have become more common in the last 10 years. 

“Almost every retailer has a scheme and even the threat of digital technology like apps has not hit demand: people still like something tangible. Like a plastic card.”

The method

Demand for plastic may be a virtual given, but investing in expansion is always a risk, even more so for small to medium sized enterprises such as PCS, says Unsworth: “We don’t have a bottomless pit of cash and had to be careful when choosing what to buy, so it meant several months of speaking to a variety of digital print and finishing kit manufacturers.”

Though the investment programme totalled the nice round figure of £1m, PCS did not have a definitive maximum – or minimum – amount to invest, he says. Despite the need for clever finance management, Unsworth was insistent his team bought the best equipment for its needs.

“Rather than setting ourselves a fixed amount of money and squeezing kit purchases within that amount, our main priority was to buy what was best for us and most efficient for our production. We wanted to improve both ends of the business, digital and litho, and relied on bank finance and self finance through working capital.” 

Fortunately, Unsworth has powerful allies in his fellow directors including finance whiz Tim Holt, who dealt with accountants and financial advisers, and strategic thinker Rob Nicholls who is red hot on new technologies, having developed bespoke cashless payment and corporate print systems. 

PCS started to flash the cash. As well as the long-needed digital press, a seven-colour HP Indigo 5900, the company chose a Bürkle Smartlam CHK100/200 laminator, a fully automatic Col-Tec sheet collator and a MicroPoise MK2 hot-foil stamping machine.

If the headline finance figure was deliberately kept flexible, PCS had to be more exact with timescales when it came to installing kit. This is where the final piece of the investment programme fell comfortably into place. 

“We could have shoe-horned the new equipment into our existing premises, but space is a premium and we decided to take more of it on. As luck had it an extra 500m² became available opposite our existing base in Tytherington Business Park, so we took it on to now operate from three units. Another piece of luck was delivery time of each new machine. All had different lead times so we could stagger the schedule, which would not have been the case if all the kit arrived at once.”

PCS may have had a robust plan for logistics, “but like any plan, things can creep up and surprise you,” says Unsworth. One of them was the high-pressure Bürkle Smartlam laminator. Despite being advised the machine would slide into place on the finishing room floor, Unsworth not only had difficulty manoeuvring the kit but had to reinforce the floor structure to ensure stability. 

The result 

Stability is an understatement for performance about a year after the machines started to roll. Business is soaring: earlier this year PCS saw its capacity leap from 80 million to 160 million cards per year. The digital press meanwhile is set to make £250,000 in its first full year of operation, £500,000 in year two and between £750,000 to £1m in its third year.

Unsworth and his fellow directors are looking at adding at least 5% to company turnover this year and have taken on two more staff in production and one in admin. All of this growth – real and planned – is underpinned by a new web-to-print platform that took 12 months to build and stands separately from the company’s main website. 

Business clients can get instant pricing on a range of specifications. They can proof online and select a payment method. HP software routes the data to the printing machines for instant production and cards are printed and punched, packed and delivered within three days.

“We were a little unsure if businesses would want to order plastic cards online. The process of adding signature panels and personalised data can be complex, but orders and turnover are doubling each month and we currently take 25 to 30 orders a month from B2B clients like small retailers.”

Phase two of the project involves expanding the product portfolio for customers to include cards with photo IDs and video gift cards activated by QR codes.

“In some ways this is not a very fast paced sector. Many people were predicting the death of the magnetic strip as far back as the 1990s as barcodes and smartcards took over. But all these years later, the vast majority of cards still have magnetic strips. 

“But those supplying this technology have to keep moving and improving at all times to keep on top of the technology. So when we win business awards or enjoy an anniversary celebration, it’s a welcome opportunity to stop, stand back, enjoy the recognition, say thank you to our staff and let the Champagne flow.” 


Vital statistics

Plastic Card Services 

Location Macclesfield, Cheshire 

Inspection host Adam Unsworth 

Size Turnover: £5.9m; staff: 52 

Established 1993

Products Over 100 million plastic cards a year including gift, membership, loyalty, hotel key, reward, library, helpline and identity cards for FTSE 100 companies and household names including Slimming World, Coop Denmark, Booths and Showcase Cinemas 

Kit Five-colour Koenig & Bauer Genius 52 UV waterless offset litho press, Svecia screen press, HP Indigo 5900 seven-colour digital press, Oasys finishing kit, Bürkle Smartlam CHK100/200 laminator, Col-Tec sheet collator, MicroPoise MK2 hot-foil stamping machine

Inspection focusPlanning and executing an investment programme


TOP TIPS

Ensure you have a strong management team with skills across finance, strategic planning and any other expertise needed to make your investment programme succeed. 

Don’t be too hard and fast on a headline cost limit for your investment programme, which may constrain you when it comes to investing in new kit or taking on additional staff.

Be realistic with time, resources and the scheduling of milestones such as kit deliveries to avoid disruption to everyday work patterns.

Cover yourself with a contingency or ‘plan B’, because “like any plan, things can creep up and surprise you”, warns Unsworth.

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