News

When a UK company is bought by a larger, overseas player, there is often concern that it will end up being run by a faceless corporation with little attachment to the business and its employees. But this seems to be far from the truth in the case of CCL Decorative Sleeves.

Managing director Dale Hambilton says the shrink sleeve specialist, which has sites in Kings Lynn and Castleford serving customers such as Coca-Cola and Unilever, has been heavily involved in its Canadian parent CCL’s plans to expand in the sector since its takeover, along with plants in Austria, Brazil and the US, in January 2007.

Decorative Sleeves is no stranger to foreign ownership; its previous parent was Illinois Tool Works (ITW), the US industrial conglomerate that now owns more than 700 businesses.

When ITW bought Decorative Sleeves in 2000, recalls Hambilton, “we called ourselves Project 401 because they already had 400 companies”.

And with ITW ever-expanding, “we were a very small part of what was becoming a very large organisation”.

New markets
CCL, already a major player in the labelling industry, made an initial approach to ITW in the first quarter of 2006 and the deal didn’t complete until January 2007. But since then, Hambilton and his sales director, Jon Cowan, have been tasked with taking their expertise in shrink sleeving and applying it to new markets and facilities around the world.

Cowan has just returned from a trip to the Far East, where CCL has just bought land for a new site. It is also investing in shrink sleeve production in the US and in Brazil, and an existing French plant will start making shrink sleeves in early 2008.

Decorative Sleeves moved from Essex into its current Kings Lynn plant, an old Emap print site, in 1990, but it has become increasingly unsuitable for the business. The site was originally 3,000sqm but the company has since added another 4,000sqm.

Hambilton says the Kings Lynn part of the business needs a custom-built site to thrive in a sector that has become increasingly competitive.

“In early 2000 there were 25-30 competitors in Europe,” he says. “Now there are 160-170.”
However, Hambilton says experience is valuable in shrink sleeve production, making it difficult for new entrants to achieve immediate gains.

“There’s a lot of complexity in material selection and the way you convert it. You also use a lot more substrate than with traditional paper labels, and it’s two to three times the price of a traditional substrate too.”

The business has changed markedly since Hambilton led a management buyout of the Kings Lynn site in 1996 from its previous owner, Glyn Dowler, who set up Decorative Sleeves in 1979.

Turnover rose from less than £3m in 1990 to more than £30m in 2000, boosted by the acquisition of Smurfit Labels in Wakefield in 1998. Sales now sit at around £25m (US$50m) as international expansion enables CCL to move some of Decorative Sleeves’ work closer to overseas customers.

Hambilton says shrink sleeves offer a number of advantages over other label formats, including the fact that they are usually printed on the internal surface of clear film, meaning they are not subject to scratching and scuffing. In addition, full-height sleeves allow brands to include all the product information required by law while leaving plenty of space for high-quality print.

However, there are still some obstacles to overcome, particularly the lack of facilities available to separate label materials from containers following consumer disposal. Also, when a product reaches the end of its life, says Hambilton, there is a danger that customers can “go into cost-cutting mode” and switch to a less expensive label format that uses less material.

With the “100% backing” of Geoff Martin, CCL’s president and chief operating officer, Hambilton says Decorative Sleeves is in good shape to thrive under CCL’s ownership.

CCL’s global expansion is also providing extra work for another area of Decorative Sleeves’ business, the manufacturing of its own converting machines in association with a partner in Cambridge. Hambilton says Decorative Sleeves will be making more kit as CCL builds more plants overseas, proving that its expertise is at the heart of its parent’s ambitions.

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CCL FACTS
• CCL Industries is based in Toronto, Canada, and has three main divisions: labels, tubes and containers
• It employs around 5,000 people in 48 production facilities
• In 2006 it recorded annual sales of approximately £600m (CDN$1.2bn)
• It is the largest producer of pressure-sensitive labels in the world and one of the top three manufacturers of shrink sleeves