CIG renews remanufacturing facility lease

July 22, 2016

An image from the Van Nuys plant when it was owned by MSE

An image from the Van Nuys plant when it was owned by MSE

Clover Imaging Group (CIG) stated that the site, in Van Nuys, California, will “remain fully operational” through to the end of 2019.

The site is the former MSE facility, and CIG added that it “remains committed” to the location, “renewing the lease through the end of 2019”, with the site to “continue to be a central part of CIG’s US distribution as well as manufacturing and packaging”. It also said by the remanufacturing group to be a “key research and development centre for colour and monochrome toner”.

In May, The Recycler reported that the location, on 8201 Woodley Avenue in Van Nuys, would be “eliminating” the second shift, with 205 staff to lose their jobs from June. The decision was said at the time by San Fernando Valley Business Journal to be because the work “has been relocated to Mexico”. CIG acquired the facility in 2014 after its merger with MSE, which had previously owned the site and operated it under its name, before Clover took over in February.

Luke Goldberg, CIG’s Executive Vice President of Global Sales and Marketing, told the news source that one shift of workers will remain at the site, and added that “we are still manufacturing in the Van Nuys facility, just not at the volume we had been because we have shifted work to Mexicali”. He added that Clover is “one of the last remaining toner cartridge remanufacturers in the United States, as most of the competition has moved to Asia or Mexico”.

In this sense, he pointed out, “transitioning work to the Mexicali plant is necessary to keep pace”, with Goldberg directly commenting that “we have major competition from offshore, and this is a step that helps us remain competitive for our customers”.

On the renewal of the lease, Goldberg stated: “This facility remains integral to our manufacturing, sales, customer support, and distribution strategy. The Van Nuys facility will continue to serve as a critical element in our ability to deliver CIG quality products and services to our customers in the western US and to global markets.”

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LDZ to announce strategic partnership

July 22, 2016

The German remanufacturer is hosting a meeting of its sales partners today, at which it will announce the new partnership.

An image from LDZ's remanufacturing plant

An image from LDZ’s remanufacturing plant

The company is also said to be adding to its product lines, with new products which are also going to be announced at today’s meeting, while a new programme will also be announced. The remanufacturer has been in business since 1984, and notes on its website that “we are concentrated on the development and sales of technical products for use in copiers and printers”.

In turn, it adds that “we are ‘Made in Germany’”, with a 7,000 square metre production plant “equipped with high tech machinery, precise quality control and highly motivated people”. The identity of the strategic partner is set to be announced at the meeting in Ainring, hosted by CEO Thomas Busch.

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Rise in Chinese investment worldwide

July 21, 2016

A Bloomberg feature studies how private equity from China is “taking on the world’s giants”.china

The article notes that such firms are pursuing “overseas deals at record pace”, with the industry “expanding globally at an unprecedented pace” led by companies including AGIC, Legend Capital and Golden Brick Capital. The firms are “in competition with European and US counterparts like never before”, having been “fuelled by China’s growing wealth, investor sophistication and desire to gain exposure to overseas assets”.

Chinese funds have been involved in around $16.4 billion (€14.8 billion) in cross-border deals in 2016 so far, surpassing the previous record of $11 billion (€9 billion) in 2012, where as previously the industry was “better known for ‘buy-and-flip’ investments in local companies already primed to go public”. Chinese regulators asked for help on getting such companies to “add more value”, and this year has seen Legend and PAG Asia Capital partner with Apex to acquire Lexmark.

That $3.6 billion (€3.2 billion) deal is just one of many that has happened because of “China’s growing army of high-net worth individuals”, who are “increasingly keen to diversify overseas” after China’s recent economic issues, and the Lexmark deal was also one of a few in which private equity firms work alongside “corporates and financial firms to help structure the deals and amplify their buying power”.

The funds are also becoming “more active in their home market”, partly due to a “regulatory bottleneck for initial public offerings – which encouraged companies to turn to PE firms for financing”, and also because of the rise of China’s internet industry, which its government “shields from foreign ownership”. The domestic funds also have an advantage in “identifying promising investment targets”, though many overseas firms are also investing in China.

These foreign firms, for the most part however, are “concerned about rising valuations” in China, with the average acquisition target in China last year having a value of 18 times its earnings, while “most signs point toward a bigger role” for Chinese equity firms “both at home and abroad”.

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Razor-and-blade pricing ending?

July 21, 2016

moneyAn article questions whether companies “might want to rethink” the model, with e-commerce offering “greater flexibility”.

The piece on Strategy Business wondered if “the end [is] looming” for the pricing model, which “charg[es] less up front to get more down the line”, because e-commerce is now offering consumers “ever greater flexibility, information, and selection”. It begins by noting that Kodak’s first camera, the Brownie, was launched in 1900 for $1, but executives thought that “once the camera caught on, they would make their real money by selling film rolls”.

This was followed by Gillette’s first “mass-market safety razor” in 1904, and the model aimed to “get customers hooked on a low-priced, durable item” before earning “high profit margins by selling more expensive proprietary and complementary products” – the razor and the blades. Now, 100 years later, the model is used for “printers and cartridges” as well as other products.

According to a new study, however, “the approach might be out of date”, with Apple launching a new programme “that would allow customers to upgrade every year without being tied to a specific carrier’s rate plan”. While other phone network providers have also started abandoning contracts, Epson also launched ink bag machines last year, and the “higher initial cost” allows users to “replace ink less often” at a lower cost.

Gillette has even “got into the act”, adjusting prices to “counteract the increasing popularity of online razor brands” that had been “offering blades on cheaper subscription plans”. The previous model succeeded because consumers “had a tendency to buy only trusted and durable products”, and “expressed uncertainty about the benefits of competing brands”, buying “on a tight budget”.

The internet and e-commerce “upended that” by making shoppers more “savvy”, so they “seek out bargains and lower-priced niche products”, with more access “to a far wider range of brands”. The study pointed out that “if the razor-and-blades marketer could, to borrow from an old adage, ‘fool some of the people some of the time’ before, the internet makes it `difficult to do so today”.

Sustaining the model is “tough […] in the modern economy”, because companies “have to adhere to cut-rate pricing” on hardware as well as make sure customers are “locked in” to exclusively using their package “via contractual obligations” as well as brand loyalty or functional designs. The internet makes it “increasingly difficult to implement and enforce those kinds of lock-in protocols”, and quicker upgrades and technological evolution have “become a business” as well.

Third-party companies have alsoo “sprung up to offer non-brand replacement, refill or supplemental parts and services”, a “double-edged sword” for razor-and-blade as “although the business model increasingly relies on partners in emerging economies to produce cheap equipment, those suppliers might not be the most respectful of intellectual property rights, the study points out”.

The piece concludes companies “should explore charging more for the initial purchase but spreading payment instalments over a longer period of time”, such as rental agreements, while cutting down “the need for replacement parts also helps firms’ environmental reputation”. The “real key” is offering “recognisable value” by “engag[ing] with customers in a different way”, and offering “services, upgrades, and marketing outreach efforts that achieve true customer loyalty”.

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Restore announces another acquisition

July 21, 2016

restoreThe office service provider, which owns cartridge collector ITP, has purchased PHS Data Solutions.

Proactive Investors reported on the acquisition of the document shredding business, said to be the “second largest” in the UK, from Personnel Hygiene Solutions Limited, with the deal worth £83.1 million ($109.6 million/€99.5 million). This move also saw Restore launch a £35 million ($46 million/€41 million) placing “to fund the deal”, which boosted its share price, with 12,143,632 shares issued at 290p (383 US cents/348 Euro cents) to “new and existing investors”.

Around £27.7 million ($36.5 million/€33.1 million) from the “oversubscribed placing for the deal” will be used to “draw down” an extra £48.5 million ($64 million/€58.1 million) in debt “on the same terms as its existing facilities”, and PHS Data Solutions was described by the article as also “having a significant records management business and a presence in document scanning”. Restore also confirmed that trading in the first six months of the year “was encouraging and in line with hopes”.

Additionally, Fiscal Standard reported analyst Peel Hunt’s indication that Restore’s share price may increase by 14.64 percent from its current price of 313.15p to 359p (413 US cents/375 Euro cents), with its price having increased to the former figure in the last 12 months from 256.75p (339 US cents/308 Euro cents), a growth of 17.83 percent.

Russ Mould, Analyst at AJ Bell, commented: “A week after one of its removal vans was spotted outside No.10 as the Cameron family packed their bags, Restore gets its teeth into the £83.1 million acquisition of shredding and document storage business PHS Data Solutions. Analysts believe it will give a major boost to Restore’s profits and investors certainly like the news.”

The Recycler reported the company bought out empties collector ITP in July last year, as well as UK document scanning business Crimson UK last August, document shredder Wincanton last November, and relocations company Diamond Relocations last December. In turn, Restore’s document management business also grew by 73 percent, as reported last September, while its half-year results were said to be “broadly in line” with predictions in July last year.

Most recently, analysts had advised buying shares in Restore, though ITP’s Commercial Director Jason Doran left by mutual consent in late May.

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Ricoh India seeks end of trade suspension

July 21, 2016

The OEM’s subsidiary had seen trading suspended in May “for non-compliance” after fraud allegations.

Ricoh India's headquarters

Ricoh India’s headquarters

The Recycler reported in June on the OEM facing global financial issues in addition to the fraud allegations, with Ricoh India notifying the Bombay Stock Exchange (BSE) of “progress on an ongoing investigation into failure to file financial results”, and as “details of an alleged fraud […] began to emerge”, Ricoh’s share price fell by 25 percent.

The subsidiary was then suspended from trading on the BSE, but according to NDTV, it is now trying to get trading restored, filing a petition before the Mumbai bench of the National Company Law Tribunal. The BSE suspended the OEM for “non-compliance with listing norms”, after a “delay in reporting of quarterly earnings” in both September and December 2015, only “one of the factors that led to the suspension”.

Ricoh India admitted earlier this week that accounts appear to have been “falsified”, with an estimated loss for the last financial year set at Rs 1,123 crore ($167 million/€151 million), and Ricoh has “proposed to recapitalise the firm for the loss”, in order to “cover for the estimated losses without dilution of the public shareholding”. In April, Managing Director and CEO of Ricoh India Manoj Kumar resigned from the board, after “being asked to go on leave amid an audit”.

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Younger workers influenced by technology

July 20, 2016

A study found that “nearly half” of millennials would quit a job “if their office isn’t ‘smart’ enough”.Office

The survey, undertaken by Dell and Intel through research firm PSB, was reported on by International Business Times, and also found that 82 percent of millennials believed “an office’s technologies would influence [their] job choice”, having “grown up with rapid advancements in technology” and being “well versed in using, adapting to and manipulating new, innovative technologies to suit their daily needs”.

As part of their dependence on technology, this generation’s entry into the workforce means they have “higher expectations” in terms of technology, such as the internet of things (IoT), virtual reality and AI-powered tools. 42 percent admitted they would be “willing to quit their jobs if they think their office’s technologies aren’t smart enough”, and of the 4,000 staff questioned from SMBs and large corporations, over half believe they will be “working in a smart office within the next five years”.

Three in five millennials also believe that adoption of “improved, collaborative communication technology and remote teams” could soon make “face-to-face meetings obsolete”. These younger professionals also “have higher expectations moving forward”, with 69 percent “looking to work in a smarter office within the next five years”. 44 percent also felt their current offices weren’t “technologically up to scratch”, and would prefer one that “uses data to make ‘smarter decisions’”.

These decisions concerned “employee habits like temperature and lighting”, while 63 percent of millennials and 55 percent of over-35s would rather have “high-tech perks” such as AI, augmented or virtual reality and advanced software than “low-tech perks” such as “free food or a ping pong table”. While millennials were “the most eager group” to have new technologies in their jobs, the global population “in general does seem keen on seeing them being implemented […] as well”.

Another two-thirds of respondents were interested in using such products at work, while 46 percent said using newer technology “would actually help boost their workplace productivity and make their job easier by automating and speeding up otherwise boring and repetitive tasks”. The study concluded that although many said technology “would help with work flexibility”, more advanced security was “listed as a top priority needed”.

Allison Dew, Vice President of Global Client Solutions Marketing for Dell, commented: “The workplace is reaching a tipping point. Today’s workers have a growing expectation that their employers integrate the latest technologies seamlessly and securely into their working lives. Employees have seen first-hand the ways new technologies can help them do their jobs better, and are hungry to use the latest advancements to be more productive.

“While this may seem daunting, it’s a business-critical opportunity for companies to be at the forefront of the future workplace and enable the future workforce.”

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Xerox rewarded for MPS solution

July 20, 2016

The OEM won the ‘Services Quality Supplier of the Year’ award from an MPS

What They Think reported on the award, given by FCA US – a company forming part of Fiat Chrysler’s car conglomerate – at its annual Qualitas award ceremony in Detroit, Michigan. The award was “based on the success of the automaker’s global MPS programme”, and the awards as a whole “recognise suppliers that have shown extraordinary commitment in key areas such as quality, innovation, continuous improvement and commitment”.

As part of the MPS programme installed at FCA US, Xerox spent “the last year” developing and implementing the global MPS solution “for more than 3,000 printers across 53 of the company’s office and manufacturing facilities in the United States, Mexico and Canada”. The programme is “responsible for printer deployment, mapping its facilities, toner replenishment and printer maintenance”, and Xerox reduced print costs by 7.4 percent annually.

Scott Thiele, Global Purchasing Officer for FCA NV and Head of Purchasing and Supplier Quality for FCA North America, commented: “We honoured those companies that were dedicated to helping us achieve success through teamwork, innovation and an intense focus on quality. As FCA continues to grow globally, we want to work with our top supplier partners to bring the highest quality vehicles to drivers across the world.”

Mike Feldman, President of Large Enterprise Operations at Xerox, added: “Xerox’s service delivery, which is focused on better document security, productivity and sustainability, has consistently been a competitive differentiator. With our extensive assessment of its unique business practices, we tailored solutions to help FCA US better manage printing and automate manual processes to ultimately reduce costs.”

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Further details on failed Xerox merger

July 20, 2016

Xerox Square in Rochester, New York

Xerox Square in Rochester, New York

More information has been given as to why the OEM rejected a merger with RR Donnelley.

The Recycler reported last week that the OEM was “in talks” to acquire the firm, though both companies “still ha[d] significant issues to negotiate and a deal [was] not imminent”, according to a source. The rumoured plan had been for Xerox to acquire RR Donnelley “and then merge parts of it within the two newly-created companies” the OEM is going to split into before the end of the year.

With Xerox planning the split into Conduent and Xerox – for business process optimisation and hardware respectively – Reuters added at the time that the OEM “had been trying to turn itself around, shifting focus to software and services”. Corporate customers have been cutting “printing costs and consumers [have] moved to mobile devices”, while RR Donnelly also announced plans last year “to split into three publicly-traded companies”, though it has “not yet completed” this.

However, late last week Xerox rejected the merger because RR Donnelley proposed “that its executives take control of the combined operations, and sought several hundred million dollars in new cost cuts”. The “significant issues to negotiate” from the start had meant that “a deal was not imminent”, ahead of the latest announcement.

Reuters added that Xerox has “drawn some interest in potential deals” since announcing it would split, and neither the OEM nor RR Donnelley were prepared to comment. Now, PrintWeek India has reported that the rejection of the merger was also due to RR Donnelley’s proposal structuring any such deal “as a so-called Morris Trust”, or “tax-efficient set-up in which Xerox would get a slight premium”.

The trust transaction model is a mergers and acquisitions “technique where all assets other than those beign acquired are spun off into a new public company, with the remaining assets being merged with the buyer, without incurring any corporate tax in the transaction”. It is under this model that the aforementioned RR Donnelley plan to “take control of the combined operation”, and the “several hundred million dollars in new cost cuts”, came into play.

Xerox’ board reviewed the proposal with advisors, before notifying RR Donnelley that not only was it not “interested”, but that it believed its “own plan of splitting its business into two businesses [was] less risky” that their proposal. The collapse of the merger has seen Xerox’ share price rise from $9.67 (€8.78) to $9.72 (€8.83), while RR Donnelley’s fell from $19.75 (€17.94) to $16.62 (€15.09), before “rallying” and growing back to $17.80 (€16.17).

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Brexit to make UK “challenging” for OEMs

July 18, 2016

uk-mapRecent price increases are said to show the start of the UK becoming a “challenging market for tech brands”.

PCR Online hosted an article from marketing company Gekko’s Managing Director, Dan Todaro, who believes that the UK’s vote to leave the European Union, alongside recent price increases from companies including Dell and HP Inc, will “make the UK a challenging market” for technology brands. The “potential implications” include price increases “impact[ing] on what is an increasingly tough market”, with Todaro believing this “is perhaps only the beginning”.

He adds that “one thing for certain is that any price increase will certainly not be absorbed by resellers, and will instead by passed on to end users”, with Brexit – in his belief – set to “make trading not only difficult in bricks and mortar retailers, but also a challenge for the entire channel”. For brands, it will “become harder to sell products at a price which consumers are accustomed to”, and “the harsh reality of Brexit is that consumers will begin to feel the impact on the pound in their pockets”.

For the brands, “tech products will be considerably less expensive in relative terms […] compared to other markets”, and as such, the market will become “challenging […] to manage”, with it “pretty much a certainty” that changes in the rate of the pound will impact prices for the financial year. Many retailers will increase prices “in an acceptable, stealth-like manner”, with exchange rates “affecting components”, and fuel and transport costs rising as well.

Retailer focused on an ‘omnichannel’ approach would be affected by an increase in transportation and prices, while online resellers will also “look to recoup delivery charges”, with Todaro noting that “as such, the outlook for the channel and consumers is tough”. He believes that both tech and CE products “will increase” in price, “creating a new challenge for sales and marketing teams”.

This will see “maintaining market share, encouraging end users to refresh products in line with trends and not extending the product lifecycle delaying possible upgrades” becoming priorities, and “with margins so tight and the fight for market share getting fierce, the focus on marketing teams to deliver clear strategies which explain these blanket increases and seek to assure end users that there will be no impact on build quality and more importantly innovation, is essential”.

He believes that it is “inevitable that when you ask consumers to pay more money for your products, the balancing act is meeting the expectations of end users demanding value for money from these same products and ultimately your brand. Effective use of existing marketing budgets at the point of purchase could be the tool that bridges the price gap to maintain consumer confidence, profitability and market share”.

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