I guess nobody really saw the deal between Apex and Static coming, or was it so obvious it was hiding in plain sight all the time? On one level I think we might all be a little envious – who wouldn’t sell their business if the price were right?
Consolidation has been happening all around us for the last few years, driven by an ever changing printer consumables market. Look at the consolidation among remanufacturers in recent years. Clover, with sound financial backing has become a $1 billion company. On the supply side, components manufacturers have faced a tough time – LG Chem closed its toner operation, OPC manufacturers have closed, Baiksan has been sold, Tuico has exited the cleaning blade business. MBT, the Saudi-based toner manufacturer, closed at the end of last year, and others are, like remanufacturers, looking to reposition for the future.
Why this deal? Apex has been trying to expand for a number of years. They have a small subsidiary in Europe, but it has always faced stiff competition from Static, Delacamp, Uninet and others. In this environment generic growth is almost strangled at birth. So if you want to expand you need an audacious plan, and that is what Apex came up with.
The market is changing, and consumer trends are definitely shifting. The value proposition is very much the new mantra, and remanufacturers who deliver a value proposition are winning business from the OEM, even in the most challenging of markets. Remanufacturers are making the change to winning business from the OEMs, rather than continually defending their low margin business against clones.
Recent figures indicate that the market share for remanufactured colour laser grew by 60 percent last year, from an admittedly low base of five percent to eight percent. Why do you think Canon is suing everyone? They don’t do it for the hell of it, they are doing it because Canon is seeing their biggest customer (HP) reinvent itself this year, and HP is likely to focus more on ink where they own the technology. Consequently, Canon is facing a mature market where hardware sales are going to be more challenging, and selling consumables must be profitable. Their answer is to litigate everyone to defend their increasingly dominant position, and further narrow the market choice for consumers.
So who wins with this deal? Obviously the Static shareholders for sure, but customers as well with a broader product range and the value-add that Static provides with their product and technical support.
What this deal will do is set in motion a realignment of the supply channel, with more collaboration and transparency. I am aware of six or seven deals that are on the table at the moment, and while nowhere near as big as this deal, I am sure that three or four of them will close in coming months – and as these come into the public domain, so others will look at their options. Raising money is the issue, and in the current banking climate going to the stock market will be the best and easiest option for the more well-run and profitable companies to fund an expansion.
The real challenge for remanufacturers is to continue to build a strong, brand-driven niche in a market that is changing, and successfully winning business from the OEMs. To do that you need to make a good product and compete with the OEM, and to do that you need a profitable and dynamic supply sector that can invest in new technology and products, and keep the remanufacturing industry in pace with the OEMs.