Commentary & Analysis
AIP Restructures Presstek, An Interview with New CEO David Savage
In October of 2012, Presstek announced the completion of its sale to American Industrial Partners Capital Fund, taking the company private. WhatTheyThink has learned that the company is in the process of undergoing a significant restructuring. Senior Editor Cary Sherburne spoke with David Savage, Presstek’s new CEO, to get the details.
By Cary Sherburne
Published: April 11, 2013
Recently WhatTheyThink learned that Presstek, which was acquired by American Industrial Partners Capital Fund in October 2012, is undergoing significant restructuring, including the closure of its corporate headquarters which was moved to Greenwich CT during Jeff Jacobson’s tenure as Chairman, President & CEO. I spoke with the company’s new CEO, David Savage, who has been associated with previous AIP investments, to get the details and understand the strategy behind the move.
WTT: What were the drivers behind the current restructuring effort?
DS: As you know, we took the company private last October, and we have taken a six-month view of the company to determine what needed to be done for the business to turn it around and produce a successful, sustainable, profitable company. As part of that, Stan Freimuth, who had been on the Board and who stepped in as CEO when Jeff Jacobson departed, has decided to return to his Board position and I am taking over the reins as CEO. Stan has been instrumental in guiding the company from public to private the last year and we owe him a debt of gratitude. From the review, we determined that the business infrastructure was too complex for the level of revenues we were generating.
WTT: Let’s talk about each of the primary facilities. You had a distribution and sales operation in Des Plaines, Illinois, the old A.B. Dick acquisition. Is that still in operation?
DS: All of the people, facilities and resources are still in Des Plaines and its headcount did not change. They will continue to represent the sale of some of the consumables and equipment manufactured by Presstek as well as the third party consumables they have been handling for years.
WTT: What about South Hadley, Massachusetts, where you have a plate manufacturing facility?
DS: That also was not touched. Our plan is to continue our focus on the plate market, and South Hadley is an important part of that strategy.
WTT: The company headquarters had been moved to Greenwich CT when Jeff Jacobson took over. What happened there?
DS: The Greenwich office was supporting the infrastructure of a public company, and since we are now private, much of this overhead has been eliminated. I believe that the executives and the administrative operations should be where the bulk of the people are, including sales, marketing, engineering and R&D. We will be closing that office as of June 28th and moving the Accounting and Legal functions back to Hudson NH.
WTT: Overall, what was the headcount reduction?
DS: It was about70 people, about 15% of the work force, about a quarter of whom were in Greenwich. These are very difficult decisions. These were all good people, and the fact of the headcount reduction should not reflect on their capabilities or dedication to the business. We simply had too complex of an organization to be sustainable. The decisions were made as a function of market dynamics, not as a function of the capabilities of the people.
WTT: And the other two-thirds of the headcount reduction?
DS: Some of that came from Hudson NH, but we also reduced our headcount in Europe. We determined that we needed to shrink our geographic focus because we simply were not delivering an ROI on the geographic expansion the company had undergone. In terms of the rest of the headcount reduction, it is focused on simplifying the business, having more direct lines of responsibility and accountability, and greater focus and alignment across the company. While Europe, Africa, Latin America and Southeast Asia are important markets, right now the company simply cannot support the infrastructure required to continue to try to grow those businesses in the way that we had been operating.
WTT: From a product development and customer support perspective, what does the future of Presstek hold?
DS: One thing that was very important to us was the engineering and R&D resources, and those were not touched. In fact we will be growing that part of the business as it relates to plate development. It is also important to note that our customer support focus has not changed, either. We will continue to focus on service, support, refurbishment of used equipment, as well as the sale of new equipment. But you have to keep in mind that this is not the business environment it was 10 years ago, especially in equipment sales, and we have to be realistic about that.
WTT: It is my understanding that there were significant changes in the sales structure.
DS: Yes. We are moving to more of a product specialist model, integrated with our field service organization. They will fly more and support specific customer opportunities, and again, that is driven by the consolidating market for the type of equipment we sell.
WTT: What does this say about DI presses and the relationship with Ryobi?
DS: We will continue to manufacture DI presses, and refurbish used DI presses, and I believe we have a good relationship with Ryobi. We will meet with them in Hudson next week and I will be going to Japan for more meetings with them soon.
WTT: It seemed to me that the 52DI, and especially the 75DI, was starting to gain some traction in the packaging market. Will you continue to pursue that market?
DS: Yes. There is tremendous growth in packaging, especially in Asia, and we haven’t taken full advantage of that. As I indicated, our focus will be on plates and equipment—DI presses and platesetters—and we will also focus on the core customer base for Presstek, which is the small to mid-sized commercial printer. The bulk of the activities will be in North America, and we will still be doing some business in Europe and Asia, but scaled back to be more realistic for a company of our size and scope.
WTT: Will you be at Print 2013?
DS: Yes, we will have a presence there. I haven’t really had the opportunity yet to closely look at that event and what the investment and presence there should be, but we will be there.
WTT: Anything else you care to share?
DS: We don’t like to see people lose their jobs. Unfortunately, this has been necessary for the simplification of the business. I do believe the leadership needs to be in one place and needs to be involved in the factory, the product development efforts, and sales, marketing and customer support in order for the company to be successful. Sadly, some really good people doing a really good job are not going to be with Presstek going forward. But we must make this a profitable, self-sustaining business, and we believe we can get there with the changes we are making, which will allow us to focus on our customers, execute effectively and respond quickly to their needs.