Featured In Issue: CLT.biz Insights – Spring 2017
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According to the United Nations, 1.2 billion people, or one-fifth of the world’s population, live in areas of water scarcity. It’s a problem that affects every continent and is expected to be an issue for many societies in coming decades.
Water as an Economic Driver
Catawba-Wateree Water Management
Water Supply Master Plan
The Water/Energy Nexus
It Takes a Region
“In business, the greatest rewards come to those who can adapt to the changing dynamics of a global economy without losing sight of their core values. These are the ethical entrepreneurs—innovators and leaders who understand that maximizing profits and maintaining integrity aren’t mutually exclusive,” maintains Dr. Anthony Negbenebor, dean of one of North Carolina’s rising star schools and insightful thought leader.
A Strong Foundation
Igniting the Mind
Courses of Study
iUndergraduate is the larger school. “For undergraduates, we have what is called the DCP program—degree completion program. It is designed for evening adult students to return to school and finish their degree. Also, for those from community college and working.
Gardner-Webb offers the following undergraduate Bachelor of Science degrees from the Godbold School of Business: Accounting, Business Administration, Computer Information Systems, Economics and Finance, International Business, Marketing and Healthcare Management. They also have various undergraduate offerings through the Broyhill School of Management.
“Hospitality and Tourism Management started this past summer, geared for those individuals who would like to manage hotels and hospitality institutions, those who aspire to be directors of tourism, or those who would like to work in reservation, housing development, and so forth.
“Our Sport Management major, offered jointly by the School of Business and the Department of Physical Education, Wellness, and Sport Studies, has become one of our most popular areas of study. The Sport Management major prepares students for employment by professional athletic organizations and by public or private athletic facilities as coaches, club professionals, or in running athletic facilities.”
A Well-Rounded Education
“You may choose to complete an internship with one of the companies in our area, to study or travel abroad through the university, or to take advantage of our Campus New York program,” describes Negbenebor. “You may also want to pursue a leadership position in student organizations such as Students in Free Enterprise (SIFE) or the Institute of Management Accountants (IMA) Program.
“A variety of organizations and classes take advantage of Gardner-Webb’s Broyhill Adventure Course, allowing student s to learn and stretch their skills and confidence through climbing and other team-building exercises. All of these opportunities help students develop themselves into the type of individual that is attractive to prospective employers.”
Negbenebor is not one to rest on laurels, however. He believes strongly, “A good liberal education is not just about learning to write well or to think critically, or any other specific outcome or competency. It is about putting students into contexts in which they are exposed to new ideas, asked to think about them, and to talk or write about them. One hopes that students will be engaged and questioning—and even thrilled—by what they learn.
“In addition to mastering the basic competencies, we as educators need to ensure that students will have the intellectual experiences that apply directly to real life experience. And that they are well equipped to make ethical choices and act with integrity.
Celebrating 20 years in the linguistic services business, Choice Translating founders Michelle and Vernon Menard look back as witnesses to a technology revolution that has certainly changed the fundamental ways in which they do business. Yet what has been most critical to them has been to maintain their extreme dedication to accuracy, precision and localized style—something that has been appreciated by the organizations they serve.
Transition to Translating
Vernon invested in Choice Translating. In 1999, Vernon and Michelle moved the firm into the Ben Craig Center, a business incubator now known as PORTAL (Partnership, Outreach, and Research to Accelerate Learning) at UNC Charlotte. The same year they hired their first employee, and Vernon sold his business in 2000.
In the incubator, the couple learned quickly. “They taught us how to get government contracts,” Michelle says. “They taught us how to grow, but not too fast, and about human resources issues and hiring the right people.”
When the pair emerged from the incubator, they’d simplified the name to Choice Translating and adopted a gyroscope logo because, Michelle says, “It is used for navigation and represents stability in motion.”
The business has grown consistently in annual sales and is now the Carolinas’ largest locally-owned linguistics agency. The company is in the top 50 such firms in the United States, out of several thousand.
Michelle smiles as she remembers her original goal of attaining an annual sales number that “required two commas.”
Translating the Difference
Blum has been conceiving, developing and building brilliantly functional and ergonomic home storage solutions for over 60 years. Amazingly smooth, superbly damped motion for doors, pull-outs and lift systems combined with outstanding use of storage space is the Blum hallmark.
Blum-ing in Charlotte
“We began as a two-man team in Hickory during 1978, but by 1979, we moved to the Charlotte area,” Rudisser explains. “Initially, we brought the products in from Austria, warehoused them here, and then started selling. Although the furniture market was strong in the Hickory area, after careful thought, that really wasn’t our target industry. As we expanded, both in the United States and abroad, our eye was on serving kitchen designers and manufacturers as well as cabinetry professionals, with advanced concealed hinges, drawer systems, and seamless lift systems.”
Apprenticeship 2000 A Game Changer
A Win-Win Situation
Just last year, France’s largest privately owned design firm opened a U.S. headquarters in Charlotte. Team Créatif USA, located uptown in the Carillon Building at 227 W. Trade Street, brings with it a powerhouse of branding and package design from working with some of the world’s leading brands.
Growing Into Charlotte
Everything is Possible
The Charlotte Team
Last December marked the first anniversary of the merger of American Airlines and US Airways, which created holding company American Airlines Group, Inc. (NASDAQ: AAL), and made American Airlines the largest airline in the world.
When the merger was first announced in 2013, many in Charlotte saw it as a benefit to the area, but others had concerns about the future of Charlotte Douglas International Airport and its role in the post-merger American network.
Charlotte Douglas, which serves more than 39 million passengers annually, is widely considered a strategic asset in attracting and maintaining businesses for the area and figures prominently in local leaders’ vision for making Charlotte a future global hub of trade.
Prior to the merger, US Airways operated 90 percent of daily flights in and out of Charlotte Douglas, with Charlotte Douglas as its largest hub.
As the integration of the two airlines progresses, the US Airways brand is eventually absorbed and rolled into American, operating 90 percent of the airport’s daily flights, with Charlotte Douglas as its second largest hub behind Dallas/Fort Worth.
So a year into it, how is the merger going?
According to Chuck Allen, American’s managing director of government affairs, “It’s been a busy year. A lot has been accomplished, but this is a multi-year undertaking and we have a busy year coming up too.”
An early accomplishment of the past year was linking the two airlines’ route networks. In January 2014 the airlines began code sharing, placing their designator codes and selling tickets on each others’ flights.
“We’ve created the largest code share in the industry,” comments Allen. “This gives customers access to the combined network.”
The combining of the two airlines’ mostly complementary rather than competitive routes has created a substantial network. With the inclusion of the wholly-owned and third-party regional carriers operating as American Eagle and US Airways Express, the new network consists of nearly 6,700 flights per day to 339 destinations in 56 countries from its hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix and Washington, D.C.
And while the airlines’ frequent flyer programs have not yet combined, customers can currently earn and redeem miles on flights operated by either airline and have reciprocal access to clubs and upgrades.
Another past year milestone is the consolidation of duplicative operations. “We’ve combined operations in 82 different cities,” says Allen. “That allows us to be more efficient in the cities in which we’re co-located.”
When asked how that affects the airlines’ Charlotte labor force, Allen responds, “We’ve co-located ticket counters and absorbed those employees so there haven’t been any employment reductions.
“Right now, American employs over 10,000 in Charlotte. That will remain fairly consistent. Obviously, we look for additional flight opportunities out of Charlotte and that might drive future employee hirings.
“Companywide, we’ve been hiring people—more than 650 new pilots and over 2,000 flight attendants this year.”
Going for Great
In addition to new employees, American is also acquiring new aircraft. They took delivery of nearly 100 new aircraft in 2014, giving the airline an average aircraft age of 12.3 years and the distinction of having the youngest fleet of any U.S.-based network carrier. Orders of new aircraft continue with 112 expected in 2015 and 84 in 2016.
“We’re taking delivery of a new airplane and retiring an older one about every four days,” says Allen. “These new aircraft are passenger-friendly and more fuel efficient than the aircraft they’re replacing.”
The company reports orders of the Airbus A320 family, A350-900s, Boeing 737 MAX, 777-300ERs and will receive its first Boeing 787 Dreamliner this month.
In addition to new aircraft, American intends upgrades for much of its existing fleet. Refurbished interiors and new seats are planned for many aircraft including lie-flat seats in Business Class on both the 767-300s and 757s. The 93 A319s of the legacy US Airways’ fleet will also receive new seats and 24 main cabin seats offering extra space.
Improvements to in-flight entertainment and connectivity are also planned. By the end of 2016, all of the airline’s 777-200s will be retrofitted with in-seat entertainment systems and a walk-up bar.
Customers will also have an easier time powering devices in-flight. New 737s, nearly all new A321s as well as retrofitted A319s will have power ports in every row. And all new wide body deliveries, including 777-300ERs and 787s will have power ports at each seat.
Satellite-based internet access on all 787s, 777s, A330s and retrofitted 767-300s and 757s will allow connectivity on international flights.
The aircraft upgrades are just part of $2 billion in customer improvements American recently announced. The airlines’ nine hubs, including Charlotte, will also receive capital improvements.
Updated lobby designs and additional newer, faster and more reliable kiosks will streamline the check-in process. New worktables with 12 power outlets each and seating for eight will allow travelers to charge up devices near the gates in hub and gateway airports.
The company’s Admirals Clubs will also get a facelift with refurbished restrooms and shower facilities, improved technology, and expanded and healthier food options.
“Now that we have the network to complete globally, we’re going to deliver a product that’s better than our competitors,” explains American’s Chairman and CEO Doug Parker. “Refreshed cabins and clubs, modernized ticket counters, improved technology and new aircraft are further examples of how American is ‘going for great’—providing our outstanding team members the tools they need to deliver a great experience for our customers.”
The announcement of the $2 billion airline improvements comes in the wake of a banner financial year for American. Third quarter 2014 net profits, excluding net special charges, was a record $1.2 billion, an increase of 59 percent over 2013 third quarter results. Third quarter 2014 GAAP net profit was $942 million, the largest in any quarter in the history of the airline.
The company also declared its first dividend since 1980, returning $185 million to shareholders through payment of $72 million in quarterly dividends and the repurchase of $113 million of common stock.
“Our chairman has said the fourth quarter will also be a record fourth quarter so we’re going to have a record year of profitability for the company,” adds Allen.
While the challenges of the first year of the merger appear to be successfully met, the airline admits 2015 is a year of “heavy lifts.”
Behind the scenes, the company is working on getting a single operating certificate from the Federal Aviation Administration (FAA). “We have to combine the American and US Airways operations into one single book of operating procedures and the FAA must bless that,” explains Allen. “It’s extensive and very detailed but it should be completed by the summer of 2015.”
By the second quarter, American plans on merging the two carriers’ frequent flier programs. Mileage totals will combine for those having active balances in both AAdvantage and Dividend miles programs. And for the time being, American will continue to award points based on miles flown rather than on ticket cost, a change recently made to frequent flyer programs at Delta and United.
One of the “heavier lifts” of the upcoming year is the combination of the two carriers’ reservation systems. “This integration is behind the scenes but can be very visible to the public if we don’t do it right,” says Allen.
American has cause for concern. The integration of US Airways’ and America West’s reservation system a year and a half after their 2005 merger caused serious disruption at several airports. Combining the reservation systems of United and Continental was similarly problematic in 2012.
But the heaviest lift of all might be the Herculean effort of unifying 100,000 employees into a single workforce.
After a narrow loss last November and subsequent binding arbitration, American and the Association of Professional Flight Attendants reached an agreement worth $112 million in late December that would cover the 24,000 flight attendants of American and US Airways.
Efforts continue with pilots, passenger service agents, mechanics and ground workers. Not surprisingly, in a past year of record profits for American, profit-sharing has become a source of contention. While several other airlines have employee profit-sharing, American’s management prefers fixed pay increases. Negotiations continue.
“We are laser-focused on all the 2015 issues,” Allen states, “so if there are any surprises we can deal with them immediately. Obviously, our goal is to make sure there are no surprises.”
So a year in, what has the merger meant for service out of Charlotte?
“Charlotte has exceeded our expectations for a long time,” Allen states. “It’s a great operation and now it’s the second largest hub in the world’s largest airline. We continue to look at opportunities, but Charlotte will continue as a terrific East Coast domestic hub for us.
“We’ve got a lot of service out of Charlotte to the Caribbean year round. We’re now doing daily doubles to London and we’ll continue to fly to Frankfurt. We’ll also continue to do top destinations in Europe in the summertime.
“Since the merger, we’ve added a number of new destinations in the Midwest like Tulsa and Oklahoma City.”
When asked about the Charlotte Regional Intermodal Facility, which is located at the airport and enhances global trade for the area by facilitating cargo transfers among airlines, trucks and railroads, Allen responds positively. “It’s a great addition to Charlotte,” says Allen. “It provides opportunities that most airports in the country don’t have. We’re very pleased it’s here.
“The new, larger network provides more opportunity on the cargo side in Charlotte, but cargo operations in this country are predominantly on wide body aircraft. As primarily a domestic hub, we fly very few wide bodies into Charlotte currently. Of course, the more wide bodies we have in the future, the greater our opportunities are.”
While opportunities certainly exist, several current issues have the potential to impact the future of American at Charlotte Douglas.
The airline’s 30-year master lease with the airport, negotiated under legacy US Airways, expires in 2016. “I think we’re going to be partners for a long time,” Allen says on the topic. “We have a substantial investment here. The Charlotte operation is one of the best in the country. The airport is the most efficient in the world.”
In fact, Charlotte Douglas’ historically low operating cost is a major part of its attraction for American or any airline and one of the reasons why there is so much at stake in the ongoing battle over who controls the airport.
A judge’s ruling last October allows the city to maintain control of the airport and blocks an independent commission favored by state legislators from taking over. So far, the FAA has declined to weigh in on the decision.
Expressing confidence in the current management at Charlotte Douglas, American Airlines remains neutral about who should control Charlotte Douglas. “Our position hasn’t changed,” says Allen. “We remain agnostic as to who runs the airport.
“We just want to make sure that it’s run in the most efficient and cost-effective manner like it has for years. Management that keeps the airport as a low cost, efficient operation is what we want to see in Charlotte.”
That low cost could soon be threatened, in part, not by airport management but by the North Carolina General Assembly.
In 2006, North Carolina lawmakers approved a cap that refunded airlines any fuel taxes paid in the state in excess of $2.5 million. The cap, with an estimated value of $10 million of revenue to the state, is set to expire January 1, 2016. American is the largest beneficiary of the cap.
“Taxes are an important factor in the cost of an operation,” says Allen. “Certainly, you want to put your assets where they have the greatest return for you. Virginia has a very low tax rate on fuel, as does South Carolina, and Texas has no tax on fuel.
“The tax cap is certainly beneficial to American and if it were to sunset, as it’s scheduled to do at the end of the year, without being continued or mitigated in some form, then that will change the cost dynamics in North Carolina and Charlotte. The fuel tax is the number one legislative issue we’ll be focused on in North Carolina for 2015.”
According to a recent Tax Foundation blog, Illinois has the highest total tax rates for commercial jet fuel, followed by California and Connecticut. North Carolina is 20th on the list. Neighbors Virginia and South Carolina ranked 38th and 42nd, respectively.
Texas, where American is headquartered and where it has its largest hub, doesn’t tax jet fuel. Neither do Delaware and Ohio.
Airlines serving North Carolina are lobbying state lawmakers to extend the cap or even exempt the jet fuel sales tax completely. They estimate that if neither step is taken, North Carolina will be the fifth costliest state for the purchase of jet fuel.
Despite upcoming challenges, Allen says American “will remain fully engaged in the Charlotte business community at multiple levels and in multiple organizations.”
We’re very interested in the growth of Charlotte,” Allen continues. “That’s why we are members of the Charlotte Chamber of Commerce and Charlotte Regional Partnership. We think the Charlotte area has a lot of opportunity and we’re committed to making Charlotte grow.”
Taking out the trash may seem like a chore, but for Wastequip, it’s big business. The company manufactures many of the common trash cans consumers use every single day, but it also manufactures a large variety of steel containers, compactors, and vacuum truck systems that are used across a variety of industries.
“The company was founded in 1989,” explains Wastequip CEO Marty Bryant. “At that time, the focus was on the steel container side of things. But around 2007, Wastequip started to grow larger, integrate, and buy new brands.
“Today, Wastequip is the leading manufacturer of waste handling and recycling equipment in North America. We specialize in products, systems and solutions to collect, store, transport, and manage a wide range of waste and recyclables. We’re one of the few companies that manufacture a complete line of both steel and plastic waste handling equipment.”
Wastequip’s extensive product selection includes dumpsters, compactors, balers, carts and more. The company’s brands include Wastequip, Toter, Galbreath, Pioneer, Accurate, Cusco, Mountain Tarp and Go To Parts.
“In June 2012, New York-based private equity firm Centerbridge Partners purchased the company,” continues Bryant, “and I came to Charlotte along with that transition.”
The Charlotte headquarters started out with 28 employees, but that number has grown significantly to nearly 80 professionals, with more than 1,600 nationwide. Bryant attributes much of this growth to the company’s team-based strategy developed in 2012.
“I joke all the time that the CEO is the least value-added position in the company,” laughs Bryant. “Prior to June of 2012, the company was run as one large entity, so we had all the corporate-type functions in a matrix-style formation. So the leader was here and responsible for all the sales people, the company, and so on. Upon Centerbridge’s purchase of Wastequip, one of the first things we did was break that up into independent divisions in order to shrink the size of corporate.”
In fact, in November of 2014, the company’s headquarters underwent a massive renovation to assist in furthering the breakup of a ‘corporate mentality’ by removing dividers and offices so that all employees, including the CEO, are now all accessible in one large floor space. In addition, the few offices that the company now has are almost all glass-enclosed in order to promote openness and transparency.
Part of the reason for this is that Bryant himself started from the bottom and worked his way to the top, so he understands the feelings and needs of his staff. After serving in the military during Operation Desert Storm, Bryant returned to the United States and took a job as a janitor, later working on a Johnson Controls assembly line while attending college.
He explains, “For me, it’s a privilege that I don’t ever take for granted to be the CEO. Also, I’m biased, of course, but our private equity firm is one of the best to work for in terms of a management team. So, I handpicked Wastequip to campaign to become the CEO of, and part of the reason for that was that Wastequip was and is a good, solid blue-collar company.
“The waste industry itself is fascinating in that if you really could imagine for a little while if no one picked up garbage or efficiently processed waste…Wow!” He continues, “Additionally, the waste industry has an amazing history in the United States, including Martin Luther King Jr. and the 1968 garbage workers strike. We’ve made huge strides in American manufacturing.”
As a result of Wastequip’s changes, the company currently occupies the number one space in its industry for a variety of products, and Bryant states that the only reason that some products are in the number two space is because of the lack of a need to grow into certain areas at the moment.
Wastequip is set to take over a number of segments, but for now, the company is working on a strategy that runs very deep, and that strategy includes evaluating safety, efficiency and employee satisfaction.
“We do take our management very seriously, and we’re also serious about our safety culture and employee happiness,” states Bryant. “The first money spent upon acquiring Wastequip went toward upgrading bathrooms and breakrooms, things that really matter to our employees. We also haven’t raised our insurance rates since 2012, and this year, we expect to reduce costs a bit further.”
In the waste disposal and treatment industry, most large companies have several facilities in a geographical area, but due to Wastequip’s footprint across North America—including plants in the United States, Mexico, and Canada—it can service national brands easily.
In fact, last year, Republic Services, a respected waste services provider, struck a deal with Wastequip to only buy steel containers from the company, something that Bryant says speaks volumes about Wastequip’s ability to deliver quality products and superior service.
Positioning Itself Strategically
Bryant is definitive on the company’s North Carolina location: “While Wastequip was headquartered in Charlotte in 2012 at the time of our purchase, we had the opportunity to move the company anywhere in the United States, but we stayed here for a multitude of reasons. You can be at the beach in a few hours, you can be in the mountains in a few hours, you’ve got great arts and entertainment here.
“Opportunities as far as education abound, and it’s one of the fastest growing cities in the country. We have yet to call and recruit someone and say we’re from Charlotte and it’s not a bonus, whether they’re in New York, Los Angeles, or anywhere in between.”
Aside from selecting great employees and managing staff like pros, Wastequip also has an eye for the long term. In the past, the company only offered steel containers, but now, it is concerned with everything from how to collect waste to where it’s going for recycling, waste energy, and landfill transfer.
Wastequip has products to suit individual consumers, small business owners, all the way up to the larger commercial side with its steel containers. And it also provides hoist truck components that pick up the steel containers, tarps that secure waste in trucks, compactors that require fewer pickups, vacuum trucks that work in oil and gas exploration, and a parts division that services all of its products.
“As the company has split itself into divisions and brands,” comments Bryant, “it has not only grown in size, but also in customer base, and experienced the synergies of vertical integration.”
“Marketing our brands includes direct sales employees who are long-term waste industry veterans, but we also market to authorized dealers who are exclusive to us. Then again, with Toter, for example, we market through retail in stores like Lowe’s and Home Depot,” says Bryant.
“So, we go across all three of those depending on what’s best for the specific brand. However, our new parts division that launched in 2014 (www.gotoparts.com) is taking off, and customers can order directly from the website, making it a huge plus for both Wastequip and its customers.”
The company has also helped customers by building brand loyalty—creating products that customers need before customers even know they need them. Constantly creating and innovating, Wastequip’s research and development team looks through customer feedback surveys in order to find out what works and what doesn’t.
On top of that, the company is working with UNC Charlotte on a new way to address consumer convenience issues, signaling a major shakeup in the way that waste is processed.
Bryant continues, “When it comes to building brand loyalty, our research and development team works very hard to constantly create new and innovative products for our customers, but also, the main part of our core business is that we take our customer service seriously. When a customer has worked hard to earn a dollar, and he or she has decided to share that dollar with us, we truly value that, and as a result we have to ensure quality products are delivered on time, every time.”
“Our Galbreath hoist systems and Pioneer tarp systems are by far the most preferred in the industry,” Bryant adds, “and that’s why we hold command positions with those products…that’s something we’re very proud of.”
Waste Disposal and the Future
In order to keep up with advances in waste disposal technology, Wastequip has already taken steps to maintain the lead. The company’s Galbreath brand above-frame hoist allows customers to rapidly switch to compressed natural gas, and the switch to natural gas is a trend that the waste disposal industry is quickly adopting due to its lessened impact on the environment.
“Additionally, Wastequip is supplying intermodal containers that are steel and leak-proof to commercial customers in New York City to remove trash and ship it on barges in order to reduce pollution,” says Bryant.
“If you think about it, every segment of every industry produces some type of waste, so there’s no limit to who we can serve. We sell a lot to haulers that are serving every industry from health care to schools to private homes. A lot of our Toter products are sold to government, and Cusco products, provided by our vacuum truck systems division, are used heavily in the oil and natural gas industries.”
To meet the growing need for waste disposal, transport and processing into the future, Wastequip is taking a very active role in selecting employees. The company is focusing heavily on human resources, an area that has not been broken out like its other divisions, and candidates are heavily screened not only to see if they fit the culture of Wastequip, but also to see if Wastequip is the right fit for the candidate.
Bryant continues, “Supervision is team-based; we pay attention to how many supervisors we have. We try to keep the organization as flat as possible. Measuring success, on the people side, we do an annual, anonymous survey to see where concern areas are. For two years in a row, Wastequip’s Charlotte headquarters has been selected as one of the best places to work in the city by the Charlotte Business Journal, and that means a lot, not only for professional success, but also in personal satisfaction.”
Going forward, Bryant is excited about the manufacturing sector. In the waste industry, he says that keeping communities healthier, safer, and more beautiful is a major priority, but he views things on a nationwide basis.
“The waste industry will expand as populations grow, not only in the United States, but across the world, and there will always be a need for professionals to collect, process, and dispose of waste. Additionally, technology is making it so that consumers have to think less and less about their disposal choices while taking still caring for the environment,” Bryant points out.
“There are a lot of inventors out there, and that’s good for the industry. The fact is, you’ve got a core set of products that are always going to be there, but you also have fringe products that are helping to move things forward. The industry is getting more sophisticated.
“For example, many garbage trucks today have GPS tracking, and they can measure the amount of trash in a can so they can be routed more efficiently. Technology is definitely a major factor, and we are fully embracing innovative ideas.
“We’ll continue to stay organic in our drive to bring in new customers, but with the launch of our parts division at gotoparts.com, I’m sure we’ll drive additional business as well,” comments Bryant.
“We’ll also continue to expand into new services, and we’re always evaluating acquisitions that make sense for us as a company.
“It’s a great time to do business in the Carolinas!”
Far beyond labels, companies now use the entire package of the products we use to convey advertising messages with words, images and graphics, in an array of bright designs and appealing colors.
Packaging, printing, and product branding have become multi-billion-dollar, multi-faceted industries that support each other. The North American flexible packaging industry is growing at a rate of six percent per year, largely based on population growth. According to industry analyst Smithers Pira, the global flexible packaging industry is set to reach $231 billion by 2018.
Within the mammoth printing industry is Charlotte’s own FLXON, an innovative consultative sales, marketing and distribution company that, for the past 20 years, has serviced flexographic and rotogravure printers of consumer product packaging.
Rotogravure (roto or gravure for short) is a type of printing process, which involves engraving the image onto an image carrier. In gravure printing, the image is engraved onto a cylinder because, like offset printing and flexography, it uses a rotary printing press.
Flexography (often abbreviated to flexo) is a form of printing process which utilizes a flexible relief plate. It is essentially a modern version of letterpress which can be used for printing on almost any type of substrate, including plastic, metallic films, cellophane and paper.
The rotogravure method has been in use since the 1850s. The newer flexographic method is applied to flexible substrates such as potato chip bags, frozen foods, and cartons for yogurt. Both methods are used for large runs.
Wielding the Doctor Blade
“When you go into a supermarket or retail store, almost everything you see that is printed is printed by either the flexographic or rotogravure methods,” says Paul Sharkey, president and CEO of FLXON, Inc.
“Our business philosophy is deeply rooted in a commitment to establish relationships with printers and converters based on improving their process and their bottom line,” Sharkey continues.
“FLXON’s mission is to partner with them to drive waste from their process, thereby helping them to be more precise in their quality, improve sustainability, remain price competitive, and earn greater profits. Savings on waste can go to their bottom line or in next year’s price negotiations between the printer and their clients.
“Waste in printing consists of process-related print defects such as streaks, hazing or shifts in color that their customers would reject,” explains Sharkey. “Waste can also mean loss of production time resulting from stopping a press mid-run to replace the ink metering blade, also known as the ‘doctor blade.’
“The doctor blade is at the heart of the printing unit, controlling the ink volume to be transferred. It is used to remove excess ink from the roller transferring ink to the substrate, which may be of a variety of materials from coated paper stock to film.”
This is where FLXON’s innovation and vision has helped to move the industry forward. Sharkey says he started his business by introducing a superior, high-performance, steel printing metering blade called SWEDCUT to North America, Canada and Latin America.
“The SWEDCUT blade, manufactured by Swedish Development Company in Munkfors, Sweden, is made of super refined steel that lasts longer with less negative impact on the printing press, particularly to the anilox roll or ink transfer roller, an integral part of the press,” Sharkey explains. “FLXON is the exclusive distributor of SWEDCUT blades within the North American Free Trade Agreement (NAFTA) area.
“FLXON’s more than 500 customers are spread out over Canada, the United States, Mexico and the Caribbean. Our customers print wine and beverage labels, health and beauty packaging, food-related flexible packaging, folding cartons for cereal and ice cream and more. The list includes everything seen in a supermarket or retail store plus pharmaceuticals, tobacco, gift wrap, envelopes, wall and floor coverings and magazines.”
Printers include companies such as Bemis Flexible Packaging, Sealed Air, Sonoco, Printpack, Bryce, Rock-Tenn, Georgia Pacific, CCL Labels, Multicolor, and Mac Papers.
“There are plus or minus 6,000 flexographic and rotogravure printers in our coverage area,” remarks Sharkey. “We consider our target audience to be wide or narrow web flexible packaging printers and high quality label printers who understand the value of our proposition.
“Printing is a precise, detailed and very technical industry which operates with expensive equipment. Our customers know that the smallest detail can affect a buyer’s choice. You go into the supermarket and reach for the product you want. But, if you’re not sure, the packaging begins to assist you in your decision, and you might pick the one that has a higher quality printing and color appeal.”
Some industries, such as tobacco, have a zero tolerance for printing defects. Others, like the fast-food industry, are less concerned about absolute perfection in their packaging. “This is because with fast food, the product is already sold to the end-customer before they become engaged with the packaging,” explains Sharkey.
Engagement with potential customers begins with trained FLXON staff sitting down with printers and converters to determine if there is a problem with waste through defects, frequent press stops, press speeds, or repetitive wear to individual parts of the equipment. “We’re very selective with our time. We want to make sure we are connecting with the people we need to be working with,” says Sharkey.
Addressing the Marketplace
FLXON is fully staffed with 14 employees. “We are in growth mode and very proactive,” Sharkey says. “This past year we’ve hired a full-time marketing manager and two customer satisfaction staff members. We get high marks on service. Calling on them before they are calling you helps us both.”
“But we don’t want our sales team doing that work. Rather, we want them to focus solely on generating business.” The company divides its business into six geographic territories, each one with a business development manager to build the business. Most employees live in and travel from Charlotte; one covering the Northeast lives in Pennsylvania.
More than half of FLXON’s employees are fluent in Spanish.
“Mexico offers our greatest potential for growth,” explains Sharkey. “Many U.S. and Canadian companies have moved production there. It is extremely valuable to us to have staff that are bilingual in English and Spanish.
“The Mexican market is the big opportunity for us. Factories there are bigger and newer; there is more investment there than in the U.S. at this point. Some of the factories have eight to 10 printing presses, whereas here there are usually one or two. Many Canadian companies shut down factories in Canada and opened up more in Mexico. European companies are also investing in Mexico.”
Also vital to FLXON’s growth is the state of Wisconsin. “It is the most significant state for us,” says Sharkey. “They have so much printing and packaging because of the amount of food processed there—dairy, cheese, potatoes, and cranberries.”
FLXON maintains a warehouse and assembly plant for technical support and new product development in Appleton where customers can send used metering blades for detailed analysis and feedback about how they performed on press.
“This process helps us to develop new customized press components that perform better in a particular or unique application. These products include peristaltic pumps to transfer ink more efficiently, high capacity ink filters, and a variety of blade holders,” says Sharkey. “Kansas, Missouri, Pennsylvania, and Texas also offer good market potential; they are all big food producing states.”
Sharkey is satisfied that his company is located in the best place possible: “Many people don’t know that Charlotte is one of the major centers for flexo and rotogravure printing technology,” he says. “Many support companies, including Flint Group, Sun Chemicals, Harper Corporation of America, ARC, Ceramco, INX, Tesa Tape, and others, are making anilox rolls, ink and graphics operating here in support of the rest of the country.
“Part of the reason for this concentration,” he points out, “is that the manufacture of anilox rolls is very similar to the manufacture of rotary screens that were used in the textile industry.”
FLXON expects future growth to be around 20 percent in 2015 and anticipates doubling current levels within the next five years, according to Sharkey. “We have a clear path; we know where we’re going to go to get it. There is already enough in the pipeline to carry us far,” shares Sharkey.
Their Competitive Edge
FLXON contracts with Specialized Warehouse Service for warehousing and distribution services. Large container-sized shipments arrive by sea every other month. The company also places spot orders for materials to arrive by air. “They have three people dedicated to FLXON,” says Sharkey. “Using contract services allows our team to concentrate efforts on customer service and support.”
FLXON’s relationship with Swedish Development Company is critical to its mission. The specialty steelmaking company is a single-sourced company that manufactures precise products such as the doctor blade. It’s made of strip steel as are razor blades. None of this is manufactured in North America, according to Sharkey.
“Our competitors are buying strip steel—long and flat—but they are buying in a marketplace where they don’t always know where the steel is coming from. Lots of manufacturers are making steel without knowing what the final use will be—Venetian blinds to razor blades,” explains Sharkey.
“Our product is always coming from one source. We know the origin completely and our product is always manufactured to become a doctor blade. The microstructure of the steel has a lot to do with the performance of the product and we’re the only doctor blade provider that speaks about the steel itself.”
Sharkey started FLXON in July of 1995, having spent 19 years serving the flexographic printing industry in the U.S. and Canada. “It was a period of great technical advancements that remarkably improved the printing process,” says Sharkey.
“As the vice president of sales and marketing for an anilox roll manufacturer here in Charlotte, I had the opportunity to work with major printing and packaging companies to help them upgrade their process.”
Sharkey traveled extensively, increasing his exposure in the industry. It was during this time that he discovered the steel ink metering blade being manufactured in Sweden and used by printers in Europe but not yet in North America.
Sharkey is originally from Long Island, N.Y., and met his wife, Carol, who is from Charlotte, while attending college. He first worked in the D.C. area in sales, marketing and advertising for the General Electric Corporation. Then, he moved with his wife to Charlotte to work with Ron Harper & Associates. Following that he worked with Consolidated Graving and then Anilox Rolls Company.
“I realized that I had done all that I could as an employee and that I really did want to start a business,” he says frankly.
Running a successful, growth-oriented business comes with a few challenges. Among them is constantly monitoring and adapting to the foreign exchange rate. FLXON buys bulk container-load quantities and pays in Swedish Krona (SEK). “After a long period of the dollar being down against the SEK, it’s starting to rebound,” acknowledges Sharkey.
The most significant challenge the company has faced is getting through the 2008-2009 recession. “In 2008, six of our top 10 customers closed their doors. In all, we lost 30 percent of our business as a result of closures and reductions in our customers’ business. We didn’t have any layoffs but were not able to fill vacancies.”
The industry went through a major consolidation over the following few years. Says Sharkey, “While it should have been an ideal time for us to gain new business based on our ability to help reduce waste and costs, it was not because customers were faced with layoffs, overworked employees and overall uncertainty.”
“It took us until 2012 to regain the same revenue levels we had achieved in 2008. However, in the process we have increased our customer base, largely by gaining business with higher quality printers who were focused on improved productivity. Making it through has made us a more focused company.”
Sharkey does not see the need for additional locations in the foreseeable future: “We can distribute out of Charlotte to anywhere. We can ship faster out of Charlotte to Guadalajara than if we had a facility in New Mexico.”
Although Sharkey is nearing retirement age, he has no plans to retire anytime soon. But he admits to putting in too many hours and wanting to have a transition plan for his son, Ryan, to take over the business. Ryan currently serves as the company’s area business manager.
Sharkey’s stellar career puts him in a good position to give advice: “People often fail in the first year of business because they are not prepared to start a business.”
He urges entrepreneurs and others who want to go into business for themselves to save up the necessary start-up money and practice due diligence with research, “beyond what you want to do or sell, there is a business side of things.”