Wed, Aug

Jeppe Frandsen, executive vice president industrial and production solutions, Canon Europe

In the last issue of Image Reports we reported on the launch of the first printer to use Canon’s much trumpeted UVgel technology. But how does the company’s R&D in this sector fit in with its own overall development strategy?

Canon’s chairman and CEO Fujio Mitarai wants “the Canon of 2020 to look completely different from how it does now”. Indeed, it has already changed quite significantly since he implemented the first phase of the ‘Excellent Global Corporation Plan’ in 1996 to strengthen its financial base and transform its mindset to focus on profit, with the consolidation and reform that required. Phase II (2001 - 2005) saw Canon focus on strengthening its product competitiveness as well as structural reform; Phase III (2006 - 2010) saw the implementation of supply chain management, IT reforms, and real-time management so that it could be more responsive to change; Phase IV (2011 - 2015) saw Canon revise its management policy from a strategy targeting expansion of scale to a strategy aimed at further strengthening the financial structure; and in 2016 Phase V began and will continue until 2020. In this timeframe Canon aims to “embrace the challenge of new growth through a grand strategic transformation.”

The bottom line is that Canon needs to improve its numbers. In 2016 revenue fell by 10.5% to $29.3bn and net profit slumped 35.6% to $1.97bn. To be fair, Canon was hit by the yen’s strength against the dollar and euro, and management predict revenues and profit will both grow this year.

Canon has three business units: Office (into which most large-format falls along with MFDs, laser printers and continuous sheet-fed units like the VarioPrint), Imaging Systems (mainly cameras but also the imagePrograf inkjet printers), and Industry and Others (including ophthalmic diagnostic scanning systems, digital radiography systems etc). At the moment the revenue from those three units is split 54.5% office, 32.8% imaging, and 12.7% industrial. But those ratios could well change as Canon’s focus shifts to areas where it expects the most growth and profitability.

Jeppe Frandsen, executive vice president industrial and production solutions,
Canon Europe, confirms that medical and security products are key focus areas for the realigning company. “We already have systems in these areas but our footprint there is small and we have room to make a real impact,” he says, pointing to the acquisition of Axis in the security space in 2015, and to the Toshiba Medical Systems Corporation buyout last December

“We have declining traditional markets. We were the leader in black and white transactional printing market for instance but that market has declined. Likewise we’ve seen a tail off in certain other sectors so the shape of the business has to change. It’s why we embarked upon the ‘Excellent Global Corporation Plan’. By 2020 we will still have photo and print products, but we’ll see medical and security grow more quickly.”

He confirms however, that large-format colour inkjet continues to be “one of the biggest growth markets for our print offering”. And of course he points to the company’s development of UVgel technology, the first printer to use it being the 55,000 Euro 64in-wide Colorado 1640 that will “fill the gap in the market between low-end 20,000 - 30,000 Euro eco-solvent and latex, and 150,000+ Euro high-end 3m-wide UV and latex and UV roll-to-roll printers”.

The first Colorado went into Comdatek in Germany a few weeks ago but commercial sales will only begin after its customer launch at Fespa 2017, with the first deliveries expected in the third quarter of the year. “By 2018 we’ll see the first expansion of the UVgel family,” says Frandsen, admitting that pricewise they will “later come up to the top end of the gap”.

UVgel is interesting in that it’s a low-heat process using LED curing. Canon’s own UVgel ink is instantly ‘pinned’ on contact with the substrate for highly controlled dot with minimal gain. A LED-UV curing system moves independently from the printing carriage so that the prints are instantly dry and ready for finishing or laminating.

UVgel ink contains no water, which reduces media swelling, and is said to reproduce a large colour gamut comparable with eco solvent inks, but with the environmental and safety profile of latex and UV inks. Canon says UVgel prints are durable, colour-fast and highly resistant to the stresses typical of outdoor applications, while the odourless and VCL-free prints satisfy the highest environmental standards for sensitive indoor uses. UVgel printheads incorporate patented continuous nozzle monitoring using acoustic sampling to detect and correct any underperforming nozzles, allowing for unattended printing.

The Colorado 1640 is designed for low total cost of operation and Canon says the UVgel technology used reduces ink consumption by as much as 40% compared some other competitive technologies thanks to the way it works, significantly reduced maintenance inks, and by removing the need for optimisers.

This first UVgel printer is a four-colour machine and Frandsen says that while white and clear inks “have not been high on customers’ wish lists, it is something we’re looking into longer term”. And what about transitioning the UVgel technology to textile printers, or a flatbed model for rigids? Frandsen pulls no punches: “It’s about profitability for Canon. UVgel will make a big difference to us because it is used in highly productive roll-to-roll printers that consume a lot of ink. In terms of textiles, we are looking at applications and we will bring out a dedicated machine for soft signage. But the flatbed market does not generate a lot of ink sales! When it comes to flatbeds we’ll be looking more at automation on the Arizona range than looking at taking UVgel there.”

In conjunction with its ‘Excellent Global Corporation Plan’ Canon is also working on exactly how it gets its products - large-format or otherwise - to market. In terms of the UVgel printers the company is seeking distributors and Frandsen says some of those could also sell the Arizona for instance, admitting that: “We’ve struggled to sell flatbeds in Europe via resellers.”

That notion of multi-product selling is something Canon is moving towards in-house too. “We are shifting to a system of product sales teams where one guy will be specific to a customer and manage the whole Canon offering with that client - rather than say have someone trying to sell one of our machines and someone else another of our products. This change started in some territories in 2016 and has just started in the UK this year. By the end of the first half of 2017 all countries will have this structure, and this way of working will be passed down into the reseller network”.

This is one of seven key strategies Canon has outlined to reach its Phase V goal by 2020. Here’s the detail:
- Restructure the global sales network in accordance with market changes.
Review existing sales organisations and reinforce omni-channel marketing that integrates online and brick-and-mortar sales routes while strengthening and expanding solutions-driven businesses with the aim of solving issues faced by customers. Additionally, continue focusing energies on developing marketing in emerging countries.

- Reinforce and expand new businesses while creating future businesses.
Create and expand new businesses by accelerating the horizontal expansion of existing business. Additionally, concentrate management resources and make effective use of mergers and acquisitions to accelerate the expansion of promising business areas such as commercial printing, network cameras and life sciences.

- Enhance R&D capabilities through open innovation.
Discard the strict notion of self-sufficiency and construct an R&D system that proactively leverages external technologies and knowledge, promoting joint and contract research with various partners such as domestic and foreign universities and research institutes.

- Establish a new production system to achieve a cost-of-sales ratio of 45%.
Strengthen domestic mother factories by further promoting the return of production to Japan and the integration of design, procurement, production engineering, and manufacturing technology operations. At the same time, pursue total cost reductions through the promotion of such advanced production engineering technologies as robotics and automation.

- Complete the three regional headquarters management system.
Promote the acquisition of promising businesses and complete the management system under which Japan, the US and Europe will each roll out businesses globally.

- Cultivate globally competent human resources capable of performing duties while maintaining an all-encompassing perspective of the world map.
Examine personnel worldwide to identify candidates for senior management positions and develop the skills of these future leaders by rotating them through key positions in Japan and overseas.

- Re-instill the Canon Spirit as a foundation for new growth.
Revitalise the enterprising spirit and San-ji (Three Selfs) Spirit at the heart of Canon’s corporate culture.