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Edwards: embracing change at Xaar

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James Matthews-Paul

Written on 02/06/2015 | Posted 2 years 8 months 19 days ago

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Edwards is bullish about Xaar's growth possibilities moving forwards Edwards is bullish about Xaar's growth possibilities moving forwards

As inbound chief executive Dr Doug Edwards puts it, Xaar ‘became a victim of its own success’ in 2014. He, at the time, was watching from the vantage-point of his previous position at Kodak, where his last stop in a 14-year trajectory was to lead its digital printing and enterprise group following successful emergence from Chapter 11. At the time, he didn’t know he would be invited to take the reins at the print-head manufacturer, whose fortunes it is now incumbent upon him to reverse.

A chemist at heart, Edwards’s career began at International Paper, having earned his doctorate studying the superconductivity of organic materials. His subsequent time at Kodak saw him develop his commercial skills in product areas as diverse as ink-jet, packaging, functional print and pre-press consumables, in which latter sector he oversaw the digital transformation, the acquisitions of KPG, Creo and Versamark and grew the figures to a not-so-modest $1.5 billion. 

“The thing that makes me tick most in this industry is looking to grow new businesses, and I’ve done that a fair bit,” Edwards says, not immodestly. “The opportunity to come to Xaar, which I’ve known about for many years – I first met them when they were still a part of Cambridge Consultants – was too good to turn down.” Indeed, his involvement at Kodak saw the company through a critical period, including its entry into and emergency from Chapter 11 bankruptcy protection, so the move to Xaar was temporally opportune.


 

“The businesses I was running then were the growth areas so there wasn’t really anywhere else for me to go within Kodak. This is a great challenge, coming to Xaar; it’s a perfect size of company, has great technology and people, and presents the opportunity to move into some areas I know very well. Working and living in the US for 15 years, I can see a lot of market potential there. If you look at the Xaar business, only seven percent of its revenue is in the US market; it’s clearly under-represented." 

Edwards is all too aware that his mission is to diversity Xaar both technologically and geographically. After ‘phenomenal growth’ in 2013, which he watched from abroad, the next year brought about a performance slump resulting from over-reliance on its industrial products for, in particular, printing to ceramics. The dependency bias towards the Chinese market for this output area provoked Xaar ‘to become a victim of its own success’, as he puts it.

Edwards's capability and vision are why financial analysts recommended snapping up shares in Xaar

“Xaar grew close to 80 percent year-on-year and that was driven by the ceramics market and the Chinese construction industry. 70 percent of Xaar is industrial and 90 percent of that is ceramics. I think it’s a very important strategic direction the company has to take to broaden into some other industrial markets, as well as the likes of packaging and graphics.”

His first mission for 2015 was to ‘shore up Xaar’s position’, a move already anticipated by the previous management team in 2014, which shed one fifth of the workforce to combat the loss of revenue – 19 percent in comparison with the first two quarters of the year. A range of new products based on the 1002 print-head, such as the large-drop GS40 which can process glazes and other special fluids, will help to drive that new-found security, with Edwards predicting that various platforms will incorporate them before the year is out. “We’re looking at digitizing other parts of the workflow in the ceramic tile process, and then in other market segments. If you look at packaging, it’s still not heavily digitised – possibly only four or five percent – and that’s primarily in labels." 

The labels and packaging segments currently represent no more than 15 percent of Xaar’s revenue, but Edwards sees a key point of expansion therein: “We’re really excited about the direct-to-shape solutions that we have, and think that technology could really change the industry. Why do you need a label when you can print directly to the container? That’s what we’re looking to do. It has the potential to take a lot of cost out of the value chain, including waste materials and time to market, and to introduce more flexibility; direct-to-shape can do what digital has done in so many other markets, to collapse that value chain.” 

Apart from its core offerings, Edwards will also seek to address a growing industrial demand for digital ink-jet that the variations upon its 1002 head can also meet. “Ink-jet can play in significant areas, from electronic components to medical solutions and touch-screen sensors, and we’re just starting to see some of those areas use print in the manufacturing process. We have a significant advantage, being able to jet metallic or conductive inks, and that will help us stand out in those markets.”

As well as diversity of product, Xaar has a need to expand to meet the demands of original equipment manufacturers in different territories; Edwards sees how his decade and a half of US living could usher in this awakening, with ‘a lot of market potential’ for his new charge. “The differentiator we have is our ability to jet very abrasive, very viscous fluids. If you’re coming from the commercial or consumer markets, that’s not something you’d have to deal with, typically; you’re normally looking at water-based systems. Only seven percent of Xaar’s revenue is in the US market, so it’s clearly under-represented, and I know a lot of people and potential partners that would be interested in what we have to offer.”

Water-based systems aren’t to be overlooked by Xaar, however, with much of its latest research and development investment – a massive clean-room facility occupying much of a new wing at its Cambridge facility – now dedicated to Platform 4, a thin-film piezo technology it hopes will be a game-changer. Little more has been revealed, to date, but Edwards indicates that ‘more than half’ of the company’s R-and-D spend is focused thereupon, tackling the growth areas of food-based packaging and cotton- or celluloid-based textiles, both of which demand safety and zero-migration.

Xaar’s journey is not that dissimilar to print’s own, seeking out new horizons upon which to grow, and Edwards is sanguine about the challenges the sector faces in general. “One of them, for sure, is bringing in younger people. We need to reskill, and we need to make this industry sexy; I think it is. We also need to embrace new technology, understanding the coexistence between electronic output and electronic media, which will bring in an interesting, younger and more digitally savvy generation.” 

For that to happen, we could do to find leaders like Edwards and put them in front of the potential scientists or business heads of tomorrow. Typically, in the industry, we find individuals with attack-dog ferocity failing to comprehend the modern world and print’s role therein, who become defensive at the very idea that we may have to change in line with global forces. Edwards does not; he conveys a realism that is at once calming and exciting. His capability and that vision are certain to be, in part, why financial analysts recommended snapping up shares in Xaar upon his appointment in January 2015. 

“What excites me about print is not what most people would say,” Edwards considers. “If you look at the printing processes, both traditional and digital, they just amaze me, and the potential for them to do so much more in so many areas is fascinating. It’s a minor miracle that some of these processes actually deliver output, if you think about them. How many layers you can print at once, what fluids you can lay down – for me it’s about the possibilities, which I can see in so many areas, rather than the touch and the feel.”

With the excitement of a chemist, the approach of a businessman and the ethic of a Trojan, Edwards is a solid bet for Xaar. He recognises that this company can be at the forefront of leading print into an era of cross-pollination and realises what must be done to allow it to do so. His track record in growing businesses is precisely what the company requires at this point; indeed, financial confidence since his arrival is evident in its share price, which is on a steady climb similar to that observed before its 2013 surge. With a potential success story on the cards, what does he advise the industry to do in order to achieve similar positivity?

“Embrace new technologies, really embrace them. They’re not a threat; they’re a massive opportunity to diversity, to move into new areas of business. Don’t fear that they are going to substitute traditional print because they’re not; they’re going to co-exist and work together, and be very complimentary. Embrace that.”

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