The rubber rolling industry has begun to expand outside of printing, according to an industry executive.
“We now are officially a machining business,” Dan Cahalane, president of American Roller Co. and Plasma Coatings, told his peers during the annual Rubber Roller Group meeting, held May 4-6 in Las Vegas.
Rubber roller companies now serve a variety of markets, including rubber rolling, rubber urethane, steel, aluminum and even ceramics. They handle everything from re-covering to new project work.
“When I came to the company in 2005, I came as the vice president of sales, and at that time the company was 50 percent in the printing (industry),” Cahalane said. “Today, less than 10 percent of the revenues of the company are in the printing industry.”
The company evaluated the business and saw a decline in pricing in printing, deciding that was not something that was going to work long term. It was at that point the firm “made this strategic decision” to take what is available, he said.
“One of the philosophies that I have while running a business is that if you're not growing or you're not targeting growth of 7-10 percent, that it's not good enough,” Cahalane said.
After realizing things were changing, American Roller had to develop a new strategy, he said. “We came up with this plan that we were going to take this coating business and expand it into new markets. And we were all ready to rock and roll, and then (the recession of) 2009 hits. And we did what probably everybody did; we retrenched,” Cahalane said.
Back on track
The expansion strategy was put on hold until about 2011 when American Roller began to grow again.
“The last two years, the company has doubled in size revenue wise, tripled in profits, and we've got 105 more people,” Cahalane said. “We are excited that the strategy worked because what that ultimately does is free up a lot of cash from which to reinvest in initiatives that we may not have otherwise went after in 2007 or 2008.”
The roller industry has been facing challenges, but Cahalane views those as opportunities.
“Over the last decade ... there's been a tremendous amount of downsizing,” he said.
In decades past, the 1990s and early 2000s, companies could rely on big, corporate engineering groups. Today, because of downsizing, very few companies have engineering teams.
“And as a result, we have a lot more generalists. A lot more people wearing a lot of hats,” Cahalane said.
In turn, there are fewer corporate deals. He recalls a large aluminum company that spent $3 million in 2008 and had 35 different rollers. The company deemed this too many and consolidated, reducing its need to three different rollers. However, it did not work as customers expected a certain turnaround time that was not being met.
He said the maintenance and engineering departments have had to wear several hats. Because they are focused on keeping things running “and because of these multiple hats and some of the people retiring, there is a vacuum gap in a lot of cases about roller tolerances, roller compounds and how rollers function on the production machine,” Cahalane said.
Clients are leaning more on roller companies to fill that gap. “They need that engineering knowledge, but they still like to be pretty unit-price focused,” he added.
Other changes are occurring in the industry besides the business transitioning from a printing focus. For example, business practices are changing.
Cahalane said when he joined American Roller, he saw a struggle with paperwork and tried to mandate if there was no purchase order, to stop production. His managers told him that would stop 40 percent of the business, so this was something to iron out.
Clients are working with multiple suppliers, he said, which makes sense. American Roller does the same. Everyone gets anxious with just one supplier, so that must be understood.
Cahalane said one position shoulders most of the blame for clients not understanding the value of rollers: the plant manager. Rollers are important to a machine's productivity and quality, but he said some plant managers aim solely for a lower price. Plant managers are not really looking for continuous improvement.
If the plant manager undervalues the importance of a rubber roller, that belief can filter to the maintenance and engineering departments.
Cahalane said he is amazed about how important the roller is to production, and how little the customer actually knows about it.
“When you think about that, that's a big gap for being an efficient organization for our customers. And likewise for ourselves,” he said, noting that specifications will continue to change if customers do not understand the process.
In 2008, Cahalane said he kept saying, “If we don't innovate, if we don't change, we're going to die.”
The roller industry is not like software or mobile phone companies that change every six months, he said. Even though the industry has a longer time frame, it still needs to grow.
“We cannot just be happy with the status quo,” he added. Whether it is a new formulation or a better business practice, “as an industry, (we) have to challenge ourselves.”
To start that process, a company must first decipher how to innovate. That does not refer to something the company did 20 years ago, Cahalane said. That was great then, he said, but what about now?
U.S. market vs. global market
The graphic arts part of the industry is being consolidated, Cahalane said, and “digital printing is making tremendous strides and will continue to do so.”
This does not mean the entire industry is struggling, as other market niches exist.
“What we see is steady opportunities in converting and flexible packaging and film. ... Plastics are starting to pick up. The steel industry has its ups and downs,” Cahalane said.
Because of the recession, there was pent-up demand for the projects business in 2012, so American Roller had a busy year. The repetitive services were fine, but specific projects really increased, he said. In 2013, he said things settled down and he thought it might pick back up in 2014, but that has yet to happen.
Many stateside issues, such as not having purchasing orders before a project and downsizing by customers, are occurring in Europe. However, Europeans are putting more money into technology, he said.
He added that U.S. firms that are expanding into other parts of the world want the products they use domestically available around the world. That is one reason why American Roller is in China.
The European market is looking for ways to grow, Cahalane said, with many companies looking east, toward Poland and Russia.
Cahalane said the Asian and Chinese markets must know that American roller companies have to grow, “and there's a lot more demand for better rollers than they have today.”
This does not mean a company should enter another market “dreamy-eyed” and think, if you build it, they will come. But, Cahalane said, opportunities are there.