Hammer Packaging Sets Sail for a Second Century in Business

You'd think a company that's been around since 1912, reports annual sales of more than $100 million, and regularly garners high praise for its core business practices and people-oriented culture, might be inclined to rest—if ever so briefly—on its abundant laurels. You might think so, but in the case of Hammer Packaging you'd be dead wrong.

For more than 100 years, the Rochester, N.Y.-based label printer has weathered economic downturns, consolidation in its customer and supplier bases, and the rapid evolution of label printing technologies to become one of the Top 400 printers in North America, one of the Top 100 privately held companies in Rochester, and a past recipient of the prestigious Rochester Business Ethics Award. Designated a "Best Workplace in America" for 12 years running, the company is also one of the top five North American businesses recognized for consistently reinvesting sales revenue back into its business.

Steady as she goes

Despite what he calls the "mind-boggling" proliferation of SKUs and a fiercely competitive market, Hammer Packaging's President and CEO Jim Hammer keeps a level head and a clear-eyed focus on leadership, innovation, and workforce development.

"One way we compete in the marketplace is through technology that enables us to reduce the cost of production rather than our prices," Hammer said. While the company has always added production capacity as needed, he explained, it was during the 1980s that Hammer instituted a formal policy of reinvesting 10 percent of the previous year's sales back into the business to drive down operational costs and expand the range of products and services the company offers.

"Everything boils down to economics and managing the playoff between cost and price while keeping quality high," Hammer said.

Triumph of a trend-watcher

Founded in 1912 as Genesee Valley Lithographic Company and formerly known as Hammer Lithograph Corp., the company changed its name to Hammer Packaging Corp. in July 2005 to better reflect the company's core competency. While its heritage is rooted in offset label printing, Hammer has moved well beyond that today, providing foam, shrink sleeve, roll-fed, in-mold, cut-and-stack, pressure sensitive, and specialty label printing services to an impressive roster of North American food, beverage, and consumer products companies ranked in the Fortune 500. The company also provides vendor-managed inventory and ordering, prepress, technical assistance, training, and customer services.

During the most recent recession, Hammer spent money while the market was down, taking advantage of its buying power so that the company was ready when the market came back—in effect, "digging new trenches" during the downturn, said vice president of strategic partnerships and marketing Lou Iovoli. The company installed both of its 64-inch KBA large-format sheetfed presses, a 41-inch Heidelberg Speedmaster CX 102, a 10-color, narrow-web Nilpeter UV flexo press, and a 9-unit VSOP web press from Muller Martini between 2010 and 2013.

When the company became the first packaging printer in North America to offer high-quality VSOP web offset printing with variable-sleeve technology and began manufacturing shrink sleeves in 2007, the move was met with skepticism by many of Hammer's industry peers. Confident in its ability to anticipate market trends, however, the company persevered. Today, Hammer operates no fewer than three VSOP webs, and its shrink sleeve business represents approximately 40 percent of the mix, with order volume growing at a rate of between five and seven percent per year. "Time has told the tale," Iovoli said. "We feel that the advantages of no cylinder or plate charges and combination printing have given us the value-added position we hoped for in this market. We hold a space no one else has approached."

Sheetfed offset cut-and-stack label printing is consistent, and still accounts for 50 percent of Hammer's business. While flexo represents 10 percent at present, it is the company's fastest-growing segment, as well as one that continues to attract the most new clients. "We see a convergence of web-based technologies and continue to search for the best solutions for our clients using both our VSOP and flexo webs," Hammer said.

After assessing the feasibility of adding short-run digital capability for some time, the company today is "almost engaged" with digital to handle smaller runs in-house," Hammer said. "We want to be 'leading-edge' but not 'bleeding-edge'," preferring proven state-of-the-art technology to solutions as yet untested in the marketplace.

"When we finally stop 'dating digital'," Iovoli added, "we want to be in a position to offer our customers a unique value proposition. We really like what we see with digital inkjet technology. Many vendors have approached us with unique opportunities to integrate their technology with our existing formats. That is where the future is going."

Don't fence me in

Enlarging Hammer's physical plant is another way the company has added production capacity. Over the years, vigorous sales growth in the food and beverage markets compelled a series of relocations and expansions, both at Hammer Packaging's headquarters and manufacturing facility in West Henrietta, N.Y., as well as at the Rochester Technology Park.

In 1999, the fast-growing company left the Metro Park Business Complex in Rochester—its home for 26 years—to occupy a new, 90,000 square-foot corporate headquarters on a 14-acre parcel of land adjacent to the Rochester Institute of Technology. This facility houses an array of large-format printing presses for producing cut-and-stack, roll-fed, in-mold, foam, and shrink sleeve labels. In 2012, Hammer Packaging completed a second major expansion at the nearby Rochester Technology Park, adding 60,000 square feet to its existing finishing and warehouse operations. The entire Tech Park plant, where half of Hammer's 450 employees work, now encloses a total of 270,000 square feet. Most recently, Hammer Packaging engineered a 13,000 square-foot expansion adjacent to its corporate headquarters in West Henrietta, N.Y. to accommodate the company's third variable sleeve offset printing (VSOP) press, bringing the total in that facility to 113,000 square feet. The addition of this third press makes Hammer the single largest user of VSOP sleeve technology in the world, Iovoli said.

High sense of urgency

Everyone at Hammer Packaging is part of its culture of quality. One of the first printers in North America to adopt ISO quality standards, the company recently elevated its quality level by implementing rigorous Hazard Analysis and Critical Control Points guidelines, and last month invited one of its biggest customers to host a five-day Kaizen event at its facilities to find efficiencies in both processes.

That commitment to quality quickly becomes second nature to new hires, who—like all Hammer associates—are required to inspect and take responsibility for their piece of the workflow, based on the company's formal documented quality management system. "We don't have people in white coats whose job it is to monitor the quality of our employees' work," Hammer said. "We believe each employee owns his or her quality." For example, "While we have all sorts of automated vision inspection systems, our pressmen still are required to do the necessary checking at the press console. Our employees all have a high sense of urgency. Their motivating spirit has to be one of teamwork because there are so many handoffs along the way."

A major investment in quality occurred in 2011, the year Hammer Packaging became a G7-qualified Master Printer. "It was a detailed, time-consuming, and expensive undertaking, as well as one of the most significant milestones in our evolution," Iovoli said, explaining that Hammer employs a 7-color process ink set, and that a significant percentage of its "common conditions" are documented and verified on an ongoing basis. The benefit of calibrating all of Hammer's presses to the same ICC profile was well worth the investment in every respect, Iovoli said. "Being a G7-qualified Master Printer has made us better at what we do."

The company characteristically takes customer service and collaboration one step further by requiring its research and development team to furnish new ideas and develop value-added innovations every six months—in addition to providing technical assistance to customers. "At the moment, our R&D group has ten people, and the budget for the group is high because of the value they provide to the enterprise," Hammer said. Among the innovations owing their implementation to Hammer's R&D efforts are the world's first mix-prevention sortation system for cut-and-stack labels, and technology that enables the company to print shrink sleeves in offset.

Hammer's culture of quality finds yet another expression the company's willingness for customers to meet proactively with production personnel to discuss ways to save time and reduce costs. "Any opportunity to interact with and learn from our customers is of benefit to us," Iovoli said. It's hardly an accident that the company claims a customer retention rate of 97 percent.

Beyond converting

Hammer Packaging's overall business model hinges on how the company views itself. "We're a label converter, certainly, but first and foremost we're a decorating company. That means we look at what's happening to packaging, not just at equipment used to convert," Iovoli said. "We're all about looking at the next generation of packaging and determining whether we have the equipment to produce it or whether we need to invest in it to ensure our growth."

As packaging has evolved, Hammer has evolved right along with it. "Package decoration today is so much more than cut-and-stack labels for glass bottles or cans, notably as the result of the development of PET technology," Iovoli said. "As a result, we have to buy equipment that enables us to expand the range of products we offer. We constantly look at trends, promotions, and performance characteristics to see where things are moving—areas such as flexible packaging, inkjet promotions, performance materials, etc."

"We aim to lead, not follow," Hammer reiterated. "Today, Hammer Packaging is three businesses in one. We look forward to the day when we can add new technologies to our existing equipment, and new equipment to our existing platforms."

What leadership also means

It takes a lot of chutzpah for some companies to claim, "People are our most important asset." In the case of Hammer Packaging, however, it's simply a true statement, which the company backs up with a dozen years of "Best Workplace" awards and a corporate style that encourages—and rewards—teamwork and empowerment.

One of the company's biggest challenges—hardly exclusive to Hammer—is the ability to hire the right people to function as part of the Hammer team. To offset that challenge, Hammer has forged strong ties with neighbor RIT's School of Print Media to let students have first-hand exposure to the industry during semester-long co-op arrangements. "This provides students with valuable exposure to the industry, and gives us a first look at the next-gen workforce," Iovoli said. The company currently employs 44 RIT grads across the business and does cross-functional training every day using outside sources, including RIT.

It's a common theme and problem for the companies like Hammer that any position involving manual labor has a tendency to turn off some younger-generation candidates. "It actually creates two challenges," Iovoli said. "One, to fill those positions, and two, to fill them with people who want to move up in the organization. We believe strongly in developing our workforce, but that workforce has to want to be developed. We are very fortunate to be able to tap a pool of RIT Print Media co-ops. Outside of that context, however, it is very difficult to find the right people."

Staying power

A thriving company since 1912, Hammer Packaging today is a fourth-generation, family-run business with 450 quality-driven associates and a top-down commitment to high standards and continuous improvement. Hammer owes its longevity to a carefully tended business model based on strategic reinvestment, its culture of quality, and to the people that make it run. From the perspective of an established player, however, today's rapidly shrinking industry presents a formidable barrier to entry for small, independent converters, not least because the cost of capital investment in increasingly complex, sophisticated equipment is so high.

What Hammer Packaging can do is to continue to lead by example, develop the next-generation workforce according to the values it cherishes, and inspire the industry by virtue of its extraordinary business success. pP