UK: GOOD MARKS FOR WILLETT.

UK: GOOD MARKS FOR WILLETT. - Willett International is an entrepreneur's dream, a privately-owned trail blazer in the fast-moving business of coding and marking. How long can it keep up the pace?

by Geoffrey Foster.
Last Updated: 31 Aug 2010

Willett International is an entrepreneur's dream, a privately-owned trail blazer in the fast-moving business of coding and marking. How long can it keep up the pace?

There is no sell-by date on captains of industry. 'Keep right on to the end of the road,' warbled Harry Lauder all those years ago and the injunction is still heeded, even by heads of large public companies who might have been expected to plan their succession. It is very hard for a manager to break with a business which he has overseen, and built up, and totally identified with down the years. But it is even more difficult for the owner-manager of a successful private business to relax his grip on the levers of power. If he has not sold up and gone off to prune his roses by the time he is 50, the chances are that he will still be around at 90. He will totter in four mornings a week, to respectful salutes from older members of staff and bestow much impractical and unwanted advice upon his sons or successors.

Allan Willett shows every sign of being mindful of such dangers. Willett is 56 and chairman and sole proprietor of the company bearing his name, which he formed just over 10 years ago. In the interim this has grown into a substantial concern, a significant competitor in the fast-moving business of product marking and coding, with an annual turnover of some £50 million and nearly 600 employees around the world. But by the time sales reached £30-odd million - a couple of years ago - Willett recognised that the company was getting too much for him to handle, even with the aid of an old crony-cum-tame accountant. He therefore recruited a group managing director from outside the organisation, and assembled a top-level team of experienced professionals. Then he found that he needed to give them room to breathe. 'I had to let them be managers,' he says. 'To do that I had physically to depart from the scene.'

So a few weeksago Willett adopted a new regime. These days he appears in his office at Corby, Northants (the main manufacturing base of Willett International), only one week in four. But the self-denying ordinance that should keep him out of the kitchen for nine months each year does not mean that he has gone into semi-retirement. Far from it. The company has 18 overseas subsidiaries for him to get round, plus distributors in another 45 territories. And when at home in the depths of Kent, he is still '100% involved with the business', brooding over strategy and product development, and concentrating on 'the vision thing'.

As befits a blood relation of the first Duke of Wellington, Willett is the very model of a visionary leader. He has a good eye for an opportunity, plus the confidence to take risks. In his twenties ('because there was no one around to tell me I couldn't do it'), he set himself up in business importing plastics machinery. The venture succeeded. Later he became a company doctor associated with several of the banks. (Although he modestly admits to a lack of formal business training, he has nevertheless been deputy chairman of a public company.). It was while working with the banks that he 'started to accumulate businesses', some of which were to form the backbone of Willett International.

Inside one of his companies was a unit which manufactured labelling machines. Willett is no technologist but he professes 'a feel for technology', and when approached by 'a young man who knew all about microprocessors' he was able to grasp the implications. In 1978, what he claims to be the world's first microprocessor-controlled labelling machine was shown at the packaging trade fair in Dusseldorf, where it evidently caused a stir.

This was just at the point when the introduction of bar codes came together with the new technology of ink-jet printing to generate a brand new industry: the manufacture of coding and marking equipment. It is fair to say that the birth took place in Cambridge, England, since Cambridge Consultants, the contract R and D organisation owned by Arthur D Little of the US, was the outstanding pioneer of ink-jet printing. Other firms that go to make up this UK-dominated industry are clustered round the university town, where they were founded by former employees of Cambridge Consultants.

It was perhaps inevitable that Allan Willett should quickly become caught up in the product marking revolution. There is an obvious practical relationship between labelling machines and ink-jet printers since the place for both is right at the end of almost any manufacturer's production process. Besides, both lend themselves to computer control - by a single computer. Willett already had interests in printing and packaging anyway. And he was fascinated by high technology.

During the '70s and early '80s hi tech was high fashion in the UK. Even 'venture capitalists' occasionally got excited about it. Willett set up his own R and D hothouse at Cambridge, in order to pursue developments in a variety of technologies, including ink-jet printing. And he ventured his own money in the manufacture of ink-jet equipment. In those days, of course, bar codes and 'sell by' dates were still far from universal. No one could be certain that product marking would shortly take off, driven by a combination of legislation and consumerism, or that ink-jet printing - on account of its extreme flexibility - would provide an ideal way of making the marks. Hence the importance of 'the vision thing'.

In 1983 came another 'climactic moment'. The product range was by now proven. Willett sold off the great part of his business interests (save a mere half-dozen investments) for £700,000, and poured all the proceeds into a new venture. This was Willett International, which became the umbrella for his ink-jet and labelling machine operations. He never looked back. The business made a handsome profit in the first year and has been consistently profitable ever since, despite a rollicking rate of expansion which several times nearly doubled turnover inside 12 months.

Admittedly, the experience was not exactly unique. The two or three other businesses which then made up this little industry were bowling along in similar fashion, and everyone was spilling out into foreign markets. From the very beginning, Allan Willett was in no doubt about the need to be multinational. A memo from the time of Willett International's formation refers to the 'intention that this company should act as a holding company for various companies in related ownership in Europe and the United States'. In the first year it spawned a sales subsidiary in the US. Germany came next. Today Willett GmbH is reckoned to be the market leader in Germany, and is the biggest sales operation in the group.

Agreements with a couple of US companies, for the manufacture or distribution of particular Willett products in particular markets, were discontinued in the mid-'80s, opening up a clear field of fire. Almost immediately Willett sales and service organisations appeared right across western Europe. Before the decade ended a wholly-owned subsidiary was added in Japan, plus a thriving joint venture, complete with its own ink factory, in Brazil. (Manufacturing operations are otherwise confined to the UK and - for the time being - the US.). The latest sales offshoot is in Russia.

International expansion on such a scale would place an intolerable burden on most healthily growing concerns. Happily for Willett International - and its competitors - the marking equipment business is a bounteous provider of cash. Even so, it is remarkable that Willett has contrived to increase so rapidly without any injection of funds from outside. Naturally, its predominant shareholder does not cry out for a dividend, so almost everything gets ploughed back. But Allan Willett has never seriously been tempted to follow rival Domino Printing Sciences to the stock market (a newer and smaller competitor, Linx Printing Technologies, went public last year). Nor has he felt the need to introduce capital other than his own.

Bank borrowings are quite modest, moreover, being closely on a par with the shareholder's funds. What is notable about Willett International's banking arrangements is the fact that they are so widely spread. The company banks wherever it happens to be: it is with the Midland at home, with Dresdner in Mettmann near Dusseldorf, with Texas Commerce at Fort Worth. The idea is that each subsidiary should support itself. 'We're not in the exchange business,' remarks Allan Willett. 'But we don't let people run out and get limitless credit,' adds deputy chairman and chief executive Alan Barrell.

There was a point, however, about three years ago, when Willett did consider going to the market. He had just had an offer from an overseas company which, had he accepted, would have made him rich beyond the dreams of avarice. Though he turned the offer down, it seemed only fair to his family, and to colleagues, such as May (the tame accountant now turned commercial director), to give thought to the firm's future: should he find a partner, or sell out, or go public? He approached an august merchant bank and one of the big accounting firms to advise him independently. According to Willett their advice was consistent: the best option, while he was able to fund the business out of profits, was to preserve the status quo.

Such counsel suited Willett admirably. But the exercise led on directly to that examination of the management structure which brought in Alan Barrell and the current executive team, and to his own voluntary exile for three weeks in four. The mild-mannered Barrell had already been working for Willett as a consultant. A manager of long multinational experience with a US healthcare group, he was also familiar with the ink-jet printing business, having been chief executive of Domino when it floated in the mid-'80s. Other incomers include the present manufacturing and technical chief and - a new position - a director of market development.

One of Barrell's early acts was to shut down the group's head office at High Wycombe, Bucks, and move in on the Corby building, alongside ink-jet printer manufacture and the UK selling operation. (Inks are made in a separate factory at Runcorn on Merseyside, which was a runner-up in the Management Today Best Factory Awards for 1992). The relocation marked Willett International's swift transition from an entrepreneurially-driven to a professionally-run enterprise. Whether or not anything has been lost in the process, there is no doubt about the new management's high ambitions.

These days the broad, open-plan floors of the smart new (or, to be precise, vastly extended) building on the edge of Corby hum with all the current buzz words: 'quality', 'benchmarking', 'speed to market', 'teamworking', 'kanban', 'world class'. Barrell, who is an author of several management textbooks, has written about most of these subjects. Like Barrell, both the production-cum-R and D supremo, Steve Hardy, and market development director Selwyn Image are former consultants as well as practitioners, and it shows. Yet it is fair to say that a good deal has been accomplished. For example, Hardy inherited quality standards at Corby that were totally unacceptable. Besides risking the company's reputation with customers, poor standards introduced inefficiencies elsewhere, since operating companies 'were picking up the bill for imperfections here'. Failure rates of ink-jet printers have since been reduced by a factor of five. That still leaves room for improvement. Even so, management is sufficiently encouraged to have cleared the way for more of the higher volume products to be assembled at Corby, beginning with programmable labelling machines, leaving the US factory to concentrate on special projects.

Productivity is up, inventories have been slashed and lead-times shortened. New products have been introduced (a device for printing on foil was launched recently) and there are more innovations to come, including better and safer inks for marking foodstuffs. Willett and Barrell talk of broadening the product base further: not of diversifying, but of putting more coding products through the now well established distribution network. Both emphasise their wish 'to keep the momentum going'.

In the short term that might not be easy. Ink-jet printing proved remarkably resistant to recession but it was not, in the end, immune. Both Domino and Linx have warned of lower than expected profits this year. Profitability is down at Willett International too. Moreover, the economic news from Germany is bleak, and the outlook in its No 2 market, the US, remains uncertain. (Strangely, Willett has never done particularly well in the UK.). Nevertheless, the company continues to claim a healthy order book, and is budgeting for sales growth on much the same scale as last year's 20%.

There is no doubt that the advance of coding and marking is unstoppable. Date stamping is an ever more ubiquitous requirement. Lesser developed countries are increasingly having to invest in the wherewithal, frequently because they want to sell to the West. Managements everywhere are learning to use the information that coding provides. What is a lot less certain is whether, as the industry matures, an independent middle-sized company will be able to preserve its private status at the same time as its position in the market. Allan Willett, who thinks of himself as representing the British Mittelstand, has considered funding a study into the reasons why middle-sized private businesses are now so few in the UK. Willett International might itself provide the answer.

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