Poised for Growth

Some companies are old; some are new; and some, such as Omaha, Neb.-based YORK Label 
(www.yorklabel.com), are both old and new.

The "new" YORK Label was formed in early 2006 when management and a private-equity sponsor acquired York Tape & Label of York, Pa. and Industrial Label Corporation (ILC) of Omaha, Neb., says Mike Polcyn, chief financial officer. Both of these companies had their roots in the mid-1900s, with York Tape & Label starting up in 1947 and ILC being founded in 1961.

The new entity grew up fast, acquiring the operations of several high-quality label converters in the U.S. and Canada. The acquisitions started late in 2006 and continue to this day with the latest acquisition, Southern Atlantic Label of Chesapeake, Va. In addition, YORK Label has an international presence with a joint venture in South America.

"Our mission is to be the premier global provider of high-quality, cost-effective, innovative labeling solutions to our customers," states John McKernan, president and CEO. "Our core values include a commitment to the highest level of integrity and transparency in all our activities, while maintaining the highest level of respect towards the environment and our associates, customers, suppliers, and local communities. We are also committed to attracting and retaining exceptional associates in our organization and providing them with a safe environment and personal development opportunities, all while generating an attractive return for our shareholders."

YORK Label 2010

Today, the company has 10 manufacturing facilities in North America with approximately 80 printing presses and 800 associates. In addition, the South American joint venture has two production facilities in Chile.

As a result of acquisitions, YORK has several diverse equipment platforms across the company that it has supplemented with recent acquisitions of modern press equipment. "This allows us to add value for our customers with world-class printing capabilities—including graphics and label constructions—and a wide range of processes and materials," says Dave Klotter, vice president of sales and marketing. YORK's printing capabilities run the gamut—flexo, combination flexo/screen, roll and sheetfed offset, gravure, and digital.

YORK Label also provides its customers with full-service, state-of-the-art graphics and prepress capabilities. "Our graphics departments support the latest versions of industry-standard application software," says Klotter. "This allows us to work with a wide variety of customer-supplied files, no matter what application is used. In addition, we also help customers with early artwork development and color separation support, as well as full prototype and sales sample services."

YORK's prepress operations use the latest in computer-to-plate (CtP) technology, Klotter reports. "CtP offers greater efficiencies in speed to produce final printing plates, which means more plates output per shift, and much shorter downtime on press for plate remakes. Digital, high-definition plates are more consistent plate-to-plate for better registration, with increased detail and improved plate quality, specifically in tonal images and minimum dot," he explains.

YORK Label provides products for some of the most dynamic end-use markets, including home and personal care, wine and spirits, healthcare (pharmaceutical and medical), and food and beverage. "The majority of our revenue is generated through pressure-sensitive labels, but we have significant glue-applied capabilities, in addition to very innovative extended-content labels and flexible packaging films," Klotter says. "Furthermore, our Equipment Solutions Division represents world-class label application manufacturers, supported by in-house application engineers and service technicians."

Early adopter

YORK Label has been on the leading edge of several new technologies that are impacting the package-printing industry. It has been printing labels with digital technology since 2006 using HP presses, reports McKernan. "We are certain that digital technology will become even more important in the future, particularly as digital presses become more productive and capable," Klotter predicts. "Because of trends like SKU proliferation and shortened run quantities, we believe this is a tremendous area for growth for mainstream label applications."

RFID is another developing technology area in which YORK Label has experience. "We have done a tremendous amount of research and development in this area and feel the smart-label category will grow," Klotter says. "Because of diverse industry standards and early cost hurdles, RFID at the SKU level has come much slower than anyone expected. Smart labels pose an exceptional opportunity for growth to not only carry critical data for tracking purposes, but as innovative and cost-effective marking indicators to include time, temperature, security, brand protection, and expiration."

What's ahead

Like virtually all other package-printing companies, YORK Label had to work through a difficult business environment throughout most of 2009. "We faced challenges along with our customers, particularly in luxury product categories (e.g., high-end wine), and felt the impact of de-stocking across the supply chain and trade down towards lower priced products," says McKernan. The company met the challenges head-on with several plant consolidations, SG&A (selling, general, and administrative) reductions, and tight cost control.

During this time, however, YORK was able to position itself to benefit during the recent turnaround. "We increased our commitment to innovation, added three new presses, created a new U.S. Healthcare module, and finished the year with the acquisition of Southern Atlantic Label," he reports.

Overall, McKernan reflects on his impression that the label converting industry is still facing a "challenging and unfavorable profitability trend, primarily the result of excess capacity exacerbated by 2009 market contraction and purchasing power of buyers. Ultimately, this will lead to failure of weaker players and additional consolidations amongst converters."

Even with the highly competitive business environment, Klotter sees several areas for growth of pressure-sensitive labels. The company is working hard to encourage the transition from glue-applied and in-mold labels (IMLs) to pressure-sensitive. "We have been pushing our material suppliers to develop commercially viable and cost-effective thinner gauge films and liners to help transfer more work from IML and cut-and-stack … It's not just for beverage anymore," Klotter says. In addition, he continues to see opportunities in the use of emerging technologies such as digital printing, along with growing end-use markets such as healthcare.

Of course, sustainability is another area that Klotter believes will create changes, and therefore, opportunities in the label business. "Clearly, the direction is toward less mass, less waste, lower conversion energy, and easier recycling," McKernan observes. "Since our customers are selling their products to Wal-Mart and other retail channels, it's only natural that we are subject to environmental audits and scorecards from our customers. We have many great examples where we recycle matrix and help customers find sources to recycle spent liner. We also have eliminated corrugated with many customers where we utilize reusable containers. In addition, we constantly challenge ourselves to look at lighter weight papers and thinner gauge pressure-sensitive materials to further drive out unnecessary waste and cost."

Innovation is key

McKernan believes YORK Label's future success will come from the continuing execution of its strategic objectives—providing world-class customer service, delivering exceptional value, and earning organic growth. It is also relying on its heritage in innovation. "We have increased our internal investment in innovation and aligned ourselves with global innovation partners to create new opportunities for our customers and to accelerate growth," Klotter notes. "Creativity and innovation is the fabric upon which we exist and spans back to the earliest days of YORK Label." pP