Once again, Spain is out to conquer the world. This time it is not in search of gold or virgin lands, but viable markets to export corrugated converting machinery and supplies.
Producing more than 4.8-million-tonnes of paper and board annually, 2.4-million-tonnes of which is paperboard and packaging paper, Spain is the seventh largest producer of paper and board in the European Union, after Germany, Finland, Sweden, France, Italy and the United Kingdom.
Over the last ten years, paper consumption for containers and packaging production has grown 47%, shooting up 4.8% in 1999 alone. The industry in Spain has become more cost effective as the amount of paper used per unit has dropped by 20%.
Despite growth in Spain's paper and board converting sector, the domestic market is not large enough to sustain its fragmented pool of industrial suppliers — largely consisting of small, family-run businesses.
In the spirit of the Spanish conquistador, Iberian-based industry providers — plate, die cutter, splicer, roller and anilox roll manufacturers — are looking beyond Spanish borders in search of broader and more profitable horizons.
New Conquests
After the EU, the hot markets for the Spanish converting machinery and equipment are the U.S. and China. The biggest challenge, however, is formulating a strategy to penetrate these two very different and unique markets.
Asia
For any Western company, doing business in Asia is like digging for gold — a time consuming task, but if you hit the jackpot, well worth it.
With the second fastest growth market across the globe at 7.1% annually, topped with new demand for superior quality machinery, Spanish converter suppliers are vying for a piece of the fortune cookie in China.
Particularly interested in expanding its presence in China is Talleres Iruna (Tiruna), one of the largest suppliers of anilox rolls worldwide, producing on average 500 sets of rolls, new and refurbished, for any type of single facer. The Pamplona-based company's turnover grew 20% in 2000 and 37% year-on-year in October 2001.
With 40 agencies throughout Europe, the U.S., Latin America, Africa and Asia, it plans to boost sales in China, where they use low quality, abrasive paper and need durable and efficient anilox rolls.
“We are marketing our DDS, Dry Dynamic System. We sell 20% of our rolls with this technology,” says Jose Miguel Guibert, Tiruna's international director.
DDS is a patented system in which the siphon system is replaced by an internal formation that continuously removes condensation and gases and evenly heats the rolls to maintain a uniform temperature over the roll.
Tiruna is also promoting its most recently patented technology, Internal Dynamic Damping (IDD). In this system, the pressure roll is fitted with an internal dampening device to reportedly eliminate resonance in a single facer.
Tiruna's proposition for the Chinese is to improve board quality, increase production speed, reduce waste and offer a roll that lasts longer.
The U.S.
Despite an economic slowdown over the last year, the strong dollar targets the U.S. as a profitable venue for Europeans, once they get their foot in the door.
One of Spain's leading manufacturers of splicers, roll stands and paper roll transport systems, M. Torres, founded in 1975, today generates 90% of its annual turnover of EUR32.84 million through exports.
The company, however, is breaking new ground on American soil, setting up shop in Santa Ana, CA. The on site location allows M. Torres to better sell and service their products to the service intensive U.S. buyers, which already make up 5% of its total sales.
“If you want to sell in the U.S., you must offer service,” says Alberto Arbizu, M. Torres project manager. “We have 25 people around the world ready to service our machines at any time.”
With North America in the works, M. Torres is heading east toward Asia and in particular China.
“We already have two projects in China, one in Thailand, and we have installed equipment in Japan and Australia, but we are focusing primarily on China because it's a very large market. Also, most people need to improve production, so the Chinese are looking at European machinery because of its high quality,” points out Mila Garcia, M. Torres sales.
M. Torres' number one selling machine is the LTS 590 constant web tension splicer. The splicer reaches a maximum speed of 600-mpm and its most significant feature is that it works with paper under 100-gr/m2.
“When we sell this machine to a customer, we keep that customer for the future,” affirms Arbizu.
Trend Setter
Emphasis on excellent service is an effective way to differentiate your product, especially in the U.S. But if you can reinvent the wheel or the way it operates, your product can revolutionize the industry.
R. Montenegro, S.L., a medium-sized die cutter manufacturer out of Galicia, Spain, is blazing trails across one the toughest industrial markets, Japan, with its revolutionary hardcore anvil system for die cutters. The system's bearing effect allows rotation in less than three minutes, achieving quality standards which could not be met up to now with previously available systems.
The system is coupled with Montenegro's standard anvil cover, also patented, that with its jigsaw joint, allows frequent rotation in under three minutes, reportedly without deformation.
“We have created a new trend because others are using this now. It is designed to allow rotation in less than three minutes because it makes many rotations. The idea of frequent rotation is original,” states Montenegro.
To promote the Montenegro line of products in a traditionally protectionist country, the manufacturer took a proactive approach and signed up with two trade missions, EU Gateway to Japan, in 1998 and 1999 and participated in Tokyo Pack 1998. After a series of follow-up visits, within one year of first setting foot in Japan, exports from the Asian powerhouse made up 1.4% of the company's total turnover. Today, Montenegro's Japanese client list includes Oji Paper, Hitachi Mori, Rengo Ishikawa and Isowa.
The small company continues to forge on, this time in the States. Having been successful in Australia where the industry is gearing toward the use of low grade paper, Montenegro recognized a similar trend building in the U.S.
“In the U.S., they have traditionally used high-end paper. But now they are starting to use lower grade, lower grammage, recycled paper. This is an opportunity for die cutters,” indicates Montenegro. “With this trend and our process to increase die cutter productivity, we will improve the quality in the U.S.”
Competing on Price
In every business, survival comes down to the bottom line — it's either profit or perish. This bottom line mentality is what one entrepreneurial Spaniard, Isidre Nogueras, who created Inc. just three years ago, is betting on.
Inc. produces high speed litho-laminators for single face corrugated and solid board. While Nogueras recognizes that laminators are up against offset printing, he is promoting his Polylam universal sheet-to-sheet laminator, the Multilam 700 high speed, 8,000 sheet/hr., sheet-to-sheet laminator, and Multilam 9000 reel-to-sheet laminator, as the best buy for your money.
“I offer prices that are popular and not too large an investment,” explains Nogueras.
Inc. is looking to sell in Europe and Latin America where they use the most recycled paper and apply the laminated process for packaging, according to Nogueras.
“Latin America follows the European manufacturing market,” says Nogueras.
As for Asia, Nogueras says, “We are not interested because they can copy our machine and they have lower labor costs and can compete on still cheaper prices.”
Niche Markets
Narrowing your focus to hit a niche market is another export strategy. Barcelona-based Controling, S.A. scouts out customers that need either sheet-to-sheet or reel-to-sheet laminators for offset print on corrugated board.
“This is a niche market,” says Rob van der Snoek, sales director, Controling. “The laminating process is directly connected to the way products are sold in the country. For large distributing where the package sells itself, the emphasis is on print, and laminating is important. The U.S. market is already saturated, though, and Western Europe has been doing it for years. Asia is interesting, but it is a little early for offset laminators because there are not large chain supermarkets there yet. Markets vary a lot, but we have sold in Mexico and Portugal.”
Taking on the BHS's of the World
Even mid small-sized companies like Goha Talleres, which manufactures all standardized splicers, reel stands, unwinders, rollers, automatic rollstands and preps, are taking on the BHS' of the world by competing on price.
“Our splicer is going to open up markets for us,” says Rafael Ozcariz. “We have to offer quality as good as the others and very competitive prices to compete with BHS.”
Talleres Goha is represented in the States, Canada, Europe and Australia through separate agents and is gearing toward establishing a presence in Latin America.
While Spain's corrugated converting suppliers are relatively new players on the global scene, both large and small alike are determined to stake their claim in foreign lands.
