November 6, 2014
Graphic Repro reported on Memjet’s decision to terminate its partnership with Rapid Packaging Service for the development and manufacture of narrow-web inkjet label presses, which The Recycler previously reported on. The move was undertaken by US private equity owners to terminate the partner agreement, despite it being scheduled to run until 2017.
While Memjet “refused to say” why due to “commercial confidentiality”, Rapid’s Founder Bruce Mansell stated there had “absolutely not” been any outstanding commercial liabilities, and that Rapid “have been paying in advance for print engines, heads, and ink. We have not been given any legitimate reason why”.
Memjet’s Office and Desktop Manager Kim Beswick confirmed the termination, but refused to give a reason, and asked about the impact on Rapid’s 250 Memjet customers, Beswick said she would find out how they could get in touch with Memjet and its resellers, but added that “those who need to know, know” and asserted that “no one would be left behind or stranded”.
Graphic Repro’s Andy McCourt studied the situation, and stated that “there’s more to it than meets the eye”, referring back to the legal issues Memjet faced in 2012 that saw US fund groups fighting over the company, with Memjet eventually acquiring everything the technology’s creator, Kia Silverbrook, had patented, as well as his labs in Sydney and staff.
According to McCourt, the label printer engine “was [the] first commercialised” of the Memjet technologies, but “didn’t work”, and “it took” Rapid to make it function, with its 33 years of experience in label presses. The company worked hard to get the machine to work, saying it invested over $3 million (€2.4 million) of its own money into Memjet, and had been looking to make this back with a new machine in the next year before Memjet “tore up the agreement”.
Memjet’s response was to refer Rapid customers to “a direct competitor” in Canada, RTI Digital, though no comment was forthcoming about how the company “proposed to supply Rapid’s customers with Rapid-chipped ink cartridges” in nations in which it “has no representation”. McCourt feels that Beswick “may not be aware of the production requirements of the label industry”, and says “it looks [like] a big American stick is being waved around to bludgeon a 38-year old successful Australian manufacturer”.
He speculates that Memjet may have found Rapid wouldn’t “toe the line on inkjet ink pricing”, as Rapid stated they had “absorbed three Memjet ink price increases in two years” in the belief that “the commercial label market will not withstand” high ink pricing, with Memjet wanting “double” what the maximum for the market should be per litre, especially as the Memjet machines and their refilling model aren’t as financially viable.
Concluding that “only speculation exists” as to the real reasons behind the situation, McCourt states that “from all that I have in front of me […] I summarise in two words how it appears: it stinks”.
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