Enovation Graphic Systems is America's largest distributor of equipment, consumables and technical services to the graphic communications industry. The giant represents more than 300 suppliers at more than 60 branch locations and should ring in some $800 million of revenue in its first year. The company will employ more than 1,000 people. Enovation was formed in connection with Fujifilm's recent acquisition of three distributors to the graphic communications industry -- PrimeSource Corporation, Heartland Imaging and Graphic Systems, Inc.

James F. Mullan is President of Enovation and formerly served as Chairman and President of PrimeSource. PrimeSource was the largest of the three dealers with over $500 million in revenue.

On October 22, Mullan named three of the company’s top executives. Daniel Maffeo was appointed to serve as executive vice president for Enovation. Robert Gourley and Jon Wright have taken posts as vice presidents. Maffeo was formerly vice president and general manager of the Graphic Systems Division of Fuji Photo Film, U.S.A. Gourley was CEO of Heartland Imaging and Wright was previously President of Graphic Systems Inc.

With his team in place, Mullan takes time for a rare interview to update us on the progress made thus far with integrating the three companies. He discusses Agfa’s decision to terminate their relationship with Enovation, challenges in the digital printing market, his adjustment to a new culture and strategies for printers when making capital investments.





Jim, are you among those that believe there will be further consolidation in the supplier chain and are there additional acquisitions planned for Enovation?

The industry will continue to consolidate further. There are many redundant costs that can be eliminated during this process and you will most likely see more as time goes on. As for Enovation, we are fully engaged in integrating these three companies. When you think about it, these companies were three of the top six or seven dealers in the country. Needless to say, its both interesting and challenging.

There was rich tradition and culture in the three companies that have combined - PrimeSource can be traced back 135 years. What has it been like adjusting to new ownership?

Any time you join or merge companies there will be issues and differences. Fuji has its own culture, just like PrimeSource did and it will take time for everyone to adjust. Through time, Enovation will develop its own unique culture which in itself is an exciting opportunity.

You were CEO of publicly traded PrimeSource. Will you miss all the responsibilities under that structure?

I will not miss it. Leading a publicly traded company in the US is certainly different. At PrimeSource, I spent most of my time working in the business, but there were demands to comply with all the activities around the regulations of being publicly held. The pressure on companies to meet short-term goals is tremendous and can sometimes hinder the focus on more important, long-term initiatives. That's the part that makes Enovation so attractive - the ability to really plan and grow a profitable and sustainable business with a longer horizon.

Some say that Fuji's ownership of Enovation will cause conflict among vendors like AGFA and Kodak Polychrome Graphics who compete with Fuji. AGFA has recently said they would sell via other channels and not use Enovation. Are these concerns justified?

All the companies that we sell for have indicated their willingness to work with Enovation. AGFA is the exception and has made a strategic decision to not use Enovation as a reseller of their products. I do not support that decision and their view of the channel, but it was their choice. At PrimeSource, we always had a very healthy relationship with AGFA and it is unfortunate that it could not continue with Enovation. Enovation can not afford, nor does it have the desire, to become a partner that conflicts with the companies we sell for. The customer has to be served and we will do that in the same objective manner that PrimeSource, Heartland and GSI did before becoming Enovation.

Looking back at PrimeSource, what was your thinking in terms of implementing e-commerce for supply selling and what e-plans do you have for Enovation?

At PrimeSource, I was intimately involved in examining the buying of supplies over the Internet. During a period of about six months, I attended several conferences and talked to customers. As you can imagine, numerous vendors offered to help us with an e-commerce system. The supply perspective is somewhat different than what most might have initially thought. Each customer is unique and their needs are very specific. For example, a plate, film, or proofing customer will need a product that has been made in many cases for their individual requirements and is held in inventory specifically for them.  This type of purchase is not the best use of the Internet.

It's very hard to squeeze the end portion of the overall cost of selling. Instead of going to the "conclusion" of the process, we must begin to reduce the costs from the end of the manufacturing line to the press. Our focus remains on the significant and compelling areas of targeted cost reduction other than simply having an online store.

What are the challenges today versus recent history for printers that are deciding on their next major capital investments?

Customers face many challenges in terms of digital technology and investment decisions overall. In the past, a printer could buy a press and expect it to be in use for ten or more years and even when they were ready to upgrade, their old press still held 50-60% of its value. Doing research on a piece of equipment or product took maybe three to six months and was fairly straightforward.

Today, the product cycles are 12 to 24 months and printers spend more time trying to determine how their new investment will effect their overall workflow processes and how they can get a return on their investment within a relatively short timeframe. The question printers should be asking their suppliers is, "How do I migrate?" - not just to their next projected purchase, but their third and fourth. Enovation brings the resources to help printers bridge the present with the future. Our goal is to add value by always being on the forefront of technology.

Workflow products and services have become essential tools for printers to stay competitive. What does Enovation bring in terms of solutions to printers in this area?

Understanding workflow processes is extremely important for today's printers. It is not easy to migrate from an offset press to a digital press or from an image setter to a CTP installation.  There are integrated and complex workflow issues that have to be understood and resolved. Printers should ask their vendors, "Do you understand my business, Are you going to be in business in 48 months, and Where do we go from here?" At PrimeSource and now at Enovation, our greatest asset is the understanding of color workflow process and applying that knowledge during the life of the supplies and products we sell.

We have reported recently on the opportunities of digital color printing. One area of growing debate is that pricing is the "dam holding the water back." What are your thoughts on this subject?

Digital color printing has not taken off like many predicted, but mass adoption of "revolutionary innovations" often take longer than expected. I remember reading a study in 1978 that said film was dead. Well, 23 years later, it may be sick but it’s still not dead.  However, price is important and that will certainly spur this movement onward. More essential is education. Suppliers need to educate print buyers about the true benefits of variable printing and the very attractive ROI that is realized for those using it correctly. Heidelberg, Xerox, HP and Xeikon are on the right track with these (digital) resources, but they will probably not be fully-accepted for another 5 to 10 years.

Digital printing is the future for the graphic arts industry. It's been a "long night" but it has not been a long time. The coming together of various digital technologies and the ability to cross-over to serve numerous segments will bring tremendous opportunities to the entire graphic arts industry.