Ink Factory Closure
by Brian Reynolds
Brian Reynolds joined Sun Printers in 1979 as printing director and was Sun’s managing director at the time of his departure in 1990.
Sun’s Ink Factory had opened on April 2, 1952. Previously, ink had been made on the main factory site, adjacent to the gravure pressroom. The Factory operated as an individual profit centre and there is no indication that any effort was ever made to compare costs with specialised ink manufacturers.
I subscribe to the philosophy that successful companies invest money in their main activity and purchase other services from specialists. Apart from concentrating capital where it can achieve its maximum return, this also focuses management effort where it can be most effective. Soon after I joined Sun Printers I concluded that we should be purchasing ink from an external source. However, as we were about to enter a phase of major development and investment, I put this thought to the back of my mind. We had just been awarded the TVTimes contract (in July 1980), and the firm was undertaking major engineering works in the printing and finishing areas. As director of printing and engineering services, I was responsible for the selection, installation, and operation of all the new equipment.
In August 1980 I was contacted by John Derbyshire, managing director of Ault & Wiborg’s publication gravure ink company, who asked me to meet with him and his chief executive officer, John Houghton. At this meeting they referred to Sun Printers’ securing the new contract to print TVTimes for seven years and said that they estimated we would need to make an additional 2,000 tonnes of ink per year to service the contract. They suggested that, in order to save Sun Printers further investment in additional ink-making capacity, they could supply the extra volume. They pointed out that they had been supplying similar ink to Odhams for many years. I told them that we had enough capacity but that I supported the concept of an external ink supply, and I asked them to submit a proposal for supplying all our ink – 6,000 tonnes per year. They did this, and I took their proposal to the next board meeting. It was received with incredulity by a number of directors, who preferred the status quo. I pointed out some of the advantages:
I persuaded my colleagues that Stewart Fraser (Sun’s commercial director) and I should evaluate the proposal. We looked at five possible ink suppliers:
1. Ault & Wiborg Sun Chemical – already making publication gravure ink in Watford
2. BASF – Watford-based but not making publication gravure ink in the UK
3. Coates Bros. – a leading UK ink manufacturer but not publication gravure
4. Lorilleux & Bolton – a leading UK ink manufacturer but not publication gravure
5. Johnson & Bloy – a very small company but considered by me to be the best-managed ink maker in the UK. They would not be able meet our needs but could give us good advice, and we asked them for a report and recommendations.
Our evaluation concluded that only Ault & Wiborg Sun Chemical had the experience and the capacity to supply our needs; in their report, Johnson & Bloy also recommended Ault & Wiborg.
We now began to discuss the commercial details with Ault & Wiborg as well as with BASF, the latter firm included because A&W might back out and also because this was too big a contract to award without competition. BASF were also always in the running because they were less expensive and were part of a huge corporation (Inmont) that could have made it happen.
We specified that:
• the ink must be to our current specification (which was different from the Odhams requirement);
• we would not be willing to pay more than 1p per kg above our own manufacturing cost;
• Sun’s Ink Factory manager and his deputy must be offered equivalent jobs with the new supplier if they wished to move there.
Now I had to announce to the Ink Factory staff what we were evaluating. The managers acknowledged that, whichever supplier was chosen, they would be offered career opportunities in an environment in which they were specialists, and with a company operating worldwide. The trades unions had no real problems with the closure, as their members were not being adversely affected: they would all still have jobs within Sun Printers, because more assistants would be needed for the new presses.
We had full presentations from BASF and A&W Sun Chemical – both of them extremely professional. Both companies had extensive experience of manufacturing publication gravure inks on a large scale, with A&W having the edge insofar as they made the ink in Watford, while BASF would have to build a facility there and would have to import technology from the USA – all of which would take time and money. As it happened, BASF’s prices were lower than those of A&W Sun Chemical; in fact, they matched our manufacturing cost. But in the end, the contract was agreed with A&W Sun Chemical.
Many asked, “Why was this, when BASF were cheaper?”
Both companies had an equal opportunity to include whatever they wished in their final presentation to us. A&W Sun Chemical offered a deal based on supplying 6,000 tonnes per year. The base price was set at 4,000 tonnes and a sliding scale discount up to 12.5% was applied up to 6,000 tonnes and beyond. But crucially, as part of their presentation, A&W Sun Chemical offered to prepay Sun Printers a £1.0m discount on the day we signed the contract. This clinched the deal. Sun Printers was now about to receive £2.0m from the combined sale of the Ink Factory site to Watford Council and the prepayment of discount from A&W Sun Chemical. At this time (1980), the British Printing Corporation, comprising 43 major printing companies, was virtually bankrupt, so the deal was a good one for the firm. In addition to the financial incentive, A&W had local manufacturing capacity, skills, and expertise in publication gravure ink technology.
A&W wanted to install additional ink storage facilities adjacent to our existing storage tanks at a cost of £250,000. We resisted this idea. I was convinced that A&W’s cost would have to be recovered at some point through an increase in ink price or through product changes of which we might not be aware. A&W argued that during peak demands for ink (e.g., during printing of the Christmas issues), our stocks would be very low. In reality, the same situation arose when making our own ink. Ink would now have to travel two miles from North Watford instead of 200 metres from the Ink Factory, and I could not see this as being a concern. In any case, A&W had storage capacity in their plant. Providing we never got into a negative storage situation with any colour, I didn’t see a problem. It simply required the supply to be managed, and we had our own experienced manager, Ed Joyce, to do this.
Stewart Fraser and I went to the USA in January 1981 to look at ink installations in Sun Chemical customers’ plants. By then we were aware that Maxwell was stalking BPC, and we asked Ed Barr, Sun Chemical’s Chief Operating Officer, to help us in a management buy-out of Sun Printers. We could see that the plant was going to be hugely successful during the 1980s – which it was. However, the reply came back that it was not the policy of Sun Chemical to hold equity in their customers.
The ink deal was implemented as of March 1981. But the following month, Robert Maxwell bought 29.5% of BPC and discarded the offer of prepaid discount from A&W Sun Chemical. I don’t know the reason for this, but perhaps he wanted to negotiate a better deal, and perhaps on a wider scale. There was probably also an element of bravado in his action, because I was told by someone in Sun Chemical that Maxwell had said they needed the money more than he did. I don’t think Maxwell ever considered that it wasn’t a good deal strategically.
Notwithstanding the elimination of the discount, A&W Sun Chemical became the sole supplier of gravure ink to Sun Printers and eventually to Purnell also, and Maxwell developed a very close relationship with Sun Chemical. It was a long time before the contract was formally signed (possibly in 1984), but supplies from A&W Sun Chemical commenced in the autumn of 1981.
We were very happy with A&W’s performance overall. Their supply was reliable and the technology was fine. We held weekly meetings with them for the first year or so, and then at monthly intervals. The meetings evolved from day-to-day fire-fighting to dealing with technology and longer-term development work. A&W were closely involved in the lasergravure research.
In short, the project was very successful and eventually Purnell’s ink manufacturing was also out-sourced – gravure to A&W Sun Chemical and web offset to BASF. We held regular cost meetings to measure actual ink cost against budget and we also analysed and measured the quality of the ink we received (we had access to A&W’s manufacturing quality measurement results). We experienced few quality problems and never ran out of ink. We had access to Sun Chemical’s broad research and development experience, which proved beneficial on more than one occasion. In addition, Sun Printers management were relieved of the need to manage a separate factory. The ink factory site was eventually bought by Watford Council and is now part of Croxley Green Business Park. By the time of the sale the Sun Printers gravure plant had closed, and I assume the payment for the land went into Maxwell Communications Corporation funds.