Heading in a positive direction – a discussion with Doug Edwards, CEO, Xaar

Doug Edwards, CEO, Xaar

Doug Edwards, CEO, Xaar

Doug Edwards is Xaar’s new CEO and arrives with 15 years’ experience at Kodak.  Whilst there, Edwards ran commercial and consumer inkjet and electro-photographic businesses as well as packaging and functional printing with revenues of around $800 million. Prior to this business he also ran the graphics division at Kodak with revenues of $1.5 billion.

So, with a solid background and track record for building a business that has a reputation for developing innovative technology and growing revenues in challenging conditions, we felt it was about time we interviewed him.

Background about Xaar

For anyone who doesn’t already know, Xaar has been hugely successful since its inception in 1990 as a company that grew out of Cambridge Consultants. First with wide-format, then with ceramics, the company is the largest independent manufacturer of piezoelectric drop-on-demand industrial inkjet printheads and has seen impressive growth over the last few years to record revenues of £134 million in 2013.

However, despite this success, 2014 was a challenging year for Xaar mainly due to the slowdown in the Chinese construction industry. But with the appointment of Edwards as CEO, who comes with a highly successful track record from Kodak, Xaar is poised to move on to a new level.

Doug talked of his vision for Xaar into the future and I have focused this article more upon the aspects of the conversation relevant to industrial print.

Q1/ So what do you want to achieve?

“My immediate goals are to stabilise the business and return to growth in 2016, with the objective of doubling revenue by 2020.

Q2/ How are you going to achieve this?

“By maintaining our position in the ceramics sector, expanding our presence in other industrial markets and also developing our business in the packaging and wide-format graphics markets.

To maintain our position in ceramics we are ramping up products launched or announced last year, such as the Xaar 1002 GS40 and the Xaar 001. Our focus is on enabling the digitalisation of the whole production process, moving beyond the decoration phase and into using Xaar’s technology to add to the tile a variety of special effects, structure and glazes.

If you look at the €370bn packaging printing market market, only a small part has converted to digital. There’s enormous waste in the supply chain. And there’s a big opportunity here.  Digital print has only really penetrated the label segment and even then, only to a modest degree. And what’s more, if you think about the label market – why do you need a label if you can print direct to the container?  At Xaar we call this  “Direct-to-shape”. Xaar’s inkjet is already being used by a number of manufacturers to print direct to the container thereby removing waste from the process. This could be the next ceramics business for Xaar.”

The company’s roots are in the wide-format graphics market.   Today a third of all wide-format printers use Xaar technology ‒ either our own Proton or Xaar 128, or our licensees’ products.  We plan to re-establish our own branded position in this market, and our new Xaar 501 product will be the first step.

Within the advanced manufacturing arena there are endless opportunities to use digital printing as a cost-effective manufacturing process for all sorts of materials such as touch screens, solar panels, medical sensors and electronic components.

Q3/ Looking back 2014 was a challenging year. Has Xaar been a little over-dependent on ceramics?

Clearly we have a very strong position in the industrial market – 70% of our revenues come from our industrial business and of that, 90% is from the ceramics sector. We’re really pleased with the position we are in but our over dependence on this market hurt us last year with the Chinese construction industry downturn. However, only around 50% of the total market is digitalised so there’s still 50% to convert. And whilst China is very important as it represents around half the total tile production, the market opportunity is truly global with a regionally diverse manufacturing base.

As I said earlier, we need to broaden our horizons beyond ceramics – and the InPrint show later this year will support this objective.  However, we also see a significant opportunity to digitalise other parts of the ceramics production process and our OEM partners have created a significant installed base of nearly 3500 printers, which is around 140,000 printheads. This installed base of printers and printheads is now generating more predictable replacement business models for Xaar and our OEMs.

Xaar is fortunate in that we possess one of the best R&D teams and facilities in the industry and we will be utilising this to develop and grow our business into new areas and this includes digitalisation of other ceramics production processes.”

Q4/ So you will be selling more products to your existing ceramics customers?

“Our OEM partners are keen to continue to develop their businesses and are looking for more products from Xaar.  Each of the printheads in the Xaar1002 range is optimised for a specific job – the GS6 excels at wall tile decoration, the GS12 which lays down more colour is great for floor tiles. And now GS40, which we launched last year, can be used to lay down even more colour, or to print glazes or add structure – things which have not previously been possible digitally. We are now seeing the GS40 roll out to our existing customer base that already uses the GS6 and GS12. So yes, we will be selling more products to existing customers.”

Q5/ But what is Xaar doing about future growth markets?

“Xaar is committed to a number of developing sectors. We will be building our business in the packaging sector as we think this is a significant segment that has only really just started to exploit the advantages of digital printing.  The label category has seen some adoption but overall, up to now, the market uptake has been slow. The packaging sector will continue to grow with the rate of change being driven by a variety of factors; not just the availability of Xaar’s technology. The potential for digital print technology to play a bigger role is considerable.

The fact that there is no electronic substitution to packaging means that everybody is looking at it. The challenge is that the packaging market is quite fragmented and printing has to cover multiple substrates; however this fragmentation also has its advantages as digital printing can provide solutions to specific application areas. The technical challenges can be far greater than in graphics and ceramics. But what gives us confidence is that the brands are driving demand. So it isn’t just push from technology providers.

In particular brands really like the new direct-to-shape technology; and we predict it is going to be huge, although the timing is difficult to predict. Think about removing the label from the printing stage, this saves materials and time, but more importantly it gives designers new freedom to create and communicate more effectively with consumers. This won’t happen overnight but we think it is just a matter of time before it does.

Xaar’s printheads are perfectly positioned to play a key role in the digital print packaging revolution. The ability to jet viscous fluids on to multiple different substrates appeals tremendously to brands. This gives designers, brands and retailers some new possibilities for production that synchronises with the increase in demand for localised and mass customised production.

The fact remains that packaging printing is a €370 billion market and is still growing. So we are pretty confident packaging is the next big thing.”

Inkjet for advanced manufacturing

The segment Edwards believes has the most transformational potential is the use of inkjet for advanced manufacturing. He sees a future where Xaar’s inkjet technology will be used more and more as part of the manufacturing process for a range of materials, meeting the requirements for cost reduction, short runs and mass customisation.  Whilst the benefits of Xaar’s technology to these markets are significant, the revenue potential for Xaar is relatively modest compared to some of the other segments.

He explains, “Solar panels, touch screen production, medical sensors and the manufacturing of electronic components are where our heads and technology can be used. Print technology is reducing some of the cost of manufacture and its use will only grow. Xaar technology works well as the printheads can handle viscous and aggressive fluids meaning they can play a role in production processes that perhaps other heads cannot match.”

Q6/ Has the market got tougher in regards to competition?

“We see the market growing and developing for everyone and competition helps this. Plus we have some key advantages over our competition.

I see the market as developmental, so both competitive and collaborative. Many companies require what we have and we certainly see this as an opportunity as opposed to a problem. We deliver the key technology in the production process and we see a lot of opportunity to expand and scale this business by partnering. A partnership approach does not affect our independence. We have an R&D facility with some of the best talent in the world and we will be enhancing this and will continue to invest in it to ensure we give our partners, customers and our people the best possible opportunities for growth.”

And with Edwards’s clarity, energy and a refreshing, open and personable approach, he could be just the breath of fresh air that Xaar needs to move on to the next level.

Edwards’ Building blocks for future growth

Secure ceramics
Expand into packaging
Reestablishment wide-format
Expanding presence into markets not v present in today (6-7% in US)
Innovate for Advanced manufacturing (innovation required)
Exploit opportunities for partnership and collaboration