What makes your business distinctive?
I would say it's the technology and the talent. If you look at inkjet, this is probably one of the best places in the world to be.
The technology is differentiated. It has the ability to jet abrasive and viscous materials in very harsh industrial environments. The majority of our revenue today is in the ceramic tile decoration market, where there are kilns blasting out in the factory and it is stiflingly hot and dusty. Even in that environment, our printhead runs and runs and runs. It's very robust.
And its potential in other markets is huge. In packaging, for example, you have to jet quite viscous materials like varnishes and UV inks – and again our printhead does that very well. Look at some of the emerging areas, where printing is starting to get used as a manufacturing process for many different things, from touch screen sensors to solar panels, electronic components to medical sensing devices; and the whole area of 3D printing. There are many markets opening up where this technology plays really well.
Our R&D capability is significant and I think we have one of the best R&D groups in the world. About 20% of Xaar’s revenue each year is invested in R&D – which is very significant– and we will continue to do that because we are a technology-based company.
(Image removed)Our major operations are in the Cambridge area. We have invested over the past three years £60 million in a state of the art manufacturing plant in Huntingdon, which is now one of the best in the world. We also have three buildings on Cambridge Science Park, our HQ and two R&D buildings. One houses the core bulk piezo (printhead) R&D work and the other is for thin film development activity. Our R&D spend is split about 50/50 between those two.
Thin film opens up a number of new market spaces. Our printheads are extremely robust but to date we don’t have a solution for jetting aqueous inks. Commercial printing of laminates and textiles, for example, typically uses water-based fluids so we need that capability.
This company has already transitioned the market in a couple of important areas. One is in the wide format graphics market – outdoor signage – where 75% of the printers today have Xaar printhead technology in them. The next market that we transformed is in ceramic tile decoration. We have a strong presence in Asia (half the tile production in the world takes place in China), Europe and elsewhere, and Xaar has a significant market share – more than 70%.
What are the greatest challenges your business faces, and how will you overcome them?
There are many market opportunities for us and we need to keep moving to stay ahead of the competition.
We are hugely successful in the ceramics market, which represents about two-thirds of our revenue today. That's both a good thing and a not so good thing, because it makes us dependent on one segment of the market. We have to diversify our offering and start to generate a second, third and fourth leg to the stool – which may be packaging, graphics or advanced manufacturing. That is something we need to do and we are doing.
(Image removed)A number of areas have the potential to be many times bigger than the ceramics business. In packaging, for example, 'direct-to-shape' printing (see bottle pictured left) enables you to jet the ink directly onto a substrate such as a plastic bottle, instead of doing what's typically done now, which is to encase the bottle in shrink wrap label.
A number of well-known household brands are already doing this. It's a much more cost-effective method because you can eliminate some steps in the manufacturing process. It means less waste and less time, enabling manufacturers to get products on to the shelf much more quickly with a greater degree of design freedom.
One of the key drivers in every market is the reduction of waste in the supply chain. For instance, book printers have printing facilities, but they also tend to have stock held separately, with significant inventory. Print on demand, which is already happening, eliminates the need for them to hold that stock.
In the packaging segment, waste is a lot more costly. Glass, aluminium cans and bottles are more expensive than paper, so the cost of holding a lot of inventory is enormous. Direct-to-shape can help to reduce this inventory as well as help provide greater design freedom for brand owners.
The packaging market is massive, worth around $350 billion. Unlike other markets such as books, where Kindles and electronic devices can be used, in packaging there is no electronic substitution; you are going to have to continue to print on physical substrates like plastic and glass. And the packaging sector is just one example where there are opportunities for Xaar.
(Image removed)Our printhead (pictured right )lends itself to other areas too. 3D printing is an exciting new sector and we are involved in a UK consortium (Factum) with a number of academics and major industrial partners to develop it. Already we have carried out high speed sintering where we can jet a polymer layer by layer; heat each of the layers and solidify them one at a time to make a product. We've done this and made things like chain mail, a washing machine hose component and chess pieces. Sheffield University recently announced their intention to develop, by 2017, a large scale printer that it hopes will produce plastic parts as fast as a production line for high volume manufacturing.
You can see that spare parts inventory could be reduced dramatically, as you could print your spare part on demand. Cost savings are potentially enormous. We are focused in the plastics and rubber area and some of the major 3D printers in the world are interested in licensing this technology. If it takes off it will be a very significant market.
Printing is a very cost effective manufacturing process and we are also investigating printing electronic components and touch screen sensors like bezel plates and the transparent conductive grids found in phones and tablets.
What are the greatest challenges Cambridge faces?
The area has changed a little bit in the 35 years I've been away! I'm not an authority after just a few months here but it looks like it's been a victim of its own success in terms of the infrastructure. The roads are often log jammed and that's an issue. House prices can be a challenge too, especially for younger people.
The other thing, which is not unique to Cambridge because I've seen the same in Israel and elsewhere, is the ability of technology start-ups to be taken from the tens of millions to the hundreds of millions. Typically this is only done via acquisitions. Why? I think it takes quite a different management skill set to grow in this way. Strong entrepreneurial people who are technically savvy can drive a business to a certain level, but you need a different process in place to take it into the billions. You need an understanding of your markets and customers and supply chains in other parts of the world and sometimes it's not an easy decision to make to say ' we are now at a point where we need to transition to a different skill set.’
That's what I want to try and do here with Xaar – to build the company and employ lots of people and see it grow. One of the main advantages of Cambridge is the talent pool. There are a lot of very talented people here, but there is also a lot of competition for them! I think recruitment is a challenge. To keep good people, you have to make sure people see development and a future and reward in your organisation.
What’s the best thing about Cambridge?
I like the diversity of people, cultures and technologies. You only have to wander around the Science Park to see that, but we have it here within the company too. If you are developing technology you have to understand the requirements of different geographies and market segments and the more people you have physically here, from more parts of the world, the better.
The networking in Cambridge is also very good. If you want a partner you can find one easily.
Who or what has influenced you personally in your business career?
I'm sure I could name lots of individuals, but beyond people, a couple of things have really influenced me. Coming from Kodak [where most recently he was President, Digital Printing and Enterprise], I've seen the power of technology transformation. If you look at Kodak's history, they invented the digital camera, but it eventually took away their traditional business. So the company had to reinvent itself and now it's transformed from being an analogue to a digital business.
Much of my career has been with large multinationals, which has given me a great opportunity to live and travel around the world. I've built plants in China, India, and Brazil and lived in the USA for 16 years. I worked all over Asia and I've learned that there is no 'one size fits all' solution. You build a product and you think the world's going to want it, but there are regional variations in market requirements. You can't understand that unless you've been there and spoken to people and lived and worked with them. That's quite an important lesson for technology start-ups and I am very grateful for that experience.
Doug Edwards was in conversation with Judi Coe, Cambridge Network Editor
This article also appears in the August 2015 edition of Cambridge Business magazine.
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