Xaar 2.0: Nimble, Innovative and Acquisitive

It was and two and a half years ago, right at the start of Doug Edwards tenure at Xaar as CEO, that he and I met and had a chat about his vision for Xaar, his goals and plans for further growing and developing the world’s largest independent inkjet head manufacturer. One of the leading lights of the Cambridge inkjet phenomenon, Xaar has grown, and then contracted, and then grown again. So since his joining, what has happened and how is the company performing against Doug’s ambitious goals for growth?

So Doug when we last met 2014 was a difficult year for Xaar due to the slowdown in the Chinese market. Please give us an update on progress made since then?

It was a difficult year for the company.  Ceramics is maturing, more than 80% of the decoration of ceramic tiles globally is now done digitally. There has been no consolidation of the OEMs and they are competing for fewer new printer installs.  The market is highly competitive and will remain so. Hence our overriding strategy has been to reduce our dependency on ceramics and diversify our business.

Apart from the acquisition path, where is growth occurring, or not, within the markets Xaar is active now?

Our ceramics business will remain largely flat at around £40mn over our strategic planning horizon. Our fastest growing segment is Product Printing & Packaging, which last year grew more than 80% year on year and by the end of this year will be one third larger than ceramics.

Do you still have plans for product development for ceramics?

Yes we will continue to enhance our portfolio and have introduced two new products – the Xaar 1003 and Xaar 2001+. 

The Xaar 1003 and the Xaar 2001+ are the 2 major printheads for ceramics. The Xaar 1003 is targeted at end users who are looking to upgrade their existing ceramic decoration machines. In terms of efficiency, the Xaar 1003 is superior to the Xaar 1002. With the Xaar 1002 you would have to clean the nozzles at times which affected productivity a little, but with the Xaar 1003 you don’t need to do this and for the tile manufacturer this is huge in terms of productivity gains.

The Xaar 2001+ is our latest high performance ceramics printhead aimed at new machine builds running at 35 m/minute or more. It can also be configured in dual colour mode so you jet two colours through one printhead – in some cases the printheads represent half the cost of a machine, and if you can reduce the number of printheads, you can reduce a lot the overall cost of the printer.

At Ceramics China in June this year we announced our new High Laydown Technology which enables very high laydown of ceramics effects inks such as gloss or adhesive. This is available for both the Xaar 1003 and Xaar 2001+ printheads.

You also acquired US based EPS – how has this added value to Xaar?

The EPS acquisition has gone well for us. They continue to perform ahead of plan and have brought us direct customer contact. They are a product printing business. They build highly customised solutions for some very large companies typically looking at printing onto irregular shaped objects as part of their production process.

In acquiring this business we were careful not to compete with our traditional OEM customers, and we do not.  It is important to understand that product printing is direct-to-shape printing, they are one and the same.

You also appear to be developing the company by collaborating, in particular with big names such as Ricoh and Xerox – aren’t they competitors?

Yes they are in some areas, but we are all developing new markets, so it really makes sense to work together in the market areas that require research and development and it provides both partners with tremendous value. It may seem odd to some people as we compete with Ricoh in some spaces but work together in others. But if it wasn’t a win/win situation then neither of us would do it – so we get to work together in some areas and compete in others!

The product that we collaborate on with Ricoh is the Xaar 1201 and this is selling into wide format graphics and in particular in China. Our collaboration in Bulk Piezo is with Xerox and in Thin Film it's with Ricoh. This works for us as it gives them economies of scale and access to new industrial markets. 

We have to manage both relationships carefully and sensitively.

You mention China, how important is this market for you?

Figures from the first half of this year show that China represents a third of our revenue. It’s a huge market for the manufacturing of wide format graphics machinery. Our Thin Film Xaar 1201 is proving very attractive here – we’ve recently done the largest deal in Xaar’s history for 90,000 printheads over 2 years.

The Xaar 5601, our own thin-film development is now shipping to a number of OEM’s.  We are targeting the textile, packaging and commercial print markets. The opportunity for this printhead is extremely large. The combination of resolution, productivity and cost is unmatched.

You have grown organically and with acquisitions in the past two years, any more plans to acquire?

Acquisitions represent roughly £30-50 mn of our 2020 revenue goal.  We have so far secured £15mn of it with the EPS acquisition.

How has the culture and people in the organisation changed to enable this growth?

The big transformation we are going through is moving from an internally focused technology company to a more externally focused customer business. We have made key appointments in the leadership team to reflect this new culture. I think that Xaar must be an outwardly focused global business that is able to react to customer needs on a local level. In my previous 15 years, I worked in much bigger organisations, so to work here with this talented team, then add more talent in the right areas to enable this growth has been relatively straightforward. It is much easier to move this smaller ship than to attempt to change course when you are steering a huge aircraft carrier!

Xaar has traditionally been seen as a British company, does being global mean your operation in Cambridge will change?

No, we remain committed to the UK in terms of our R&D and manufacturing. Cambridge is an important part of our heritage but also provides us with practical access to a lot of technical talent. However, the fact is that less than 1% of our business is in the UK. As I have said, China is nearly a third, and to run a business in China from Cambridge is a challenge. So we really need to connect globally with our markets in order to serve customers well and truly understand where the business is going and what needs to be done.

I think the company needs to be more global for the future and this is the right thing to do. If we want to get to these numbers we don’t have any choice and it does create its own tensions of course, growth is not plain sailing!!

You mention people being important, explain a little more?

Well if you don’t have good people, then you don’t really have a performing business. The challenge is to keep good people. Cambridge is an expensive place. Trying to bring young people here with the high house prices around here, with high rents and with the cost of living being so high, I - well, it’s a challenge!

Part of what we are doing is making the culture more appealing to younger people and I know the culture has become less formal at Xaar as people keep telling me so. The leadership team is far more approachable than before, our people are encouraged to bring forward ideas and the feeling here is more open than before where there were silos and as I say, I think the operation was more inward looking, retrospective even. We have progressed a lot and I am mindful of the shift in culture – it has challenged some people more than others and that is always the way!

Xaar is exhibiting at InPrint 2017 booth #514.