IADD DIE-VERSE TALKS EPISODE #3: CHATTING WITH ALEX VOLERY GINO GUALTIERI: IADD VICE-PRESIDENT OF MEDIA & EDUCATION LISA BOYD: M&E COMMITTEE MEMBER ALEX VOLERI: BOBST SWITZERLAND

Gino: Hello and welcome to the IADD Die-Verse Talks Podcast. I am your host, Gino Gualtieri and my co-host as usual is Lisa Boyd.

Lisa:Hi Gino, Hi Alex. Good to be here today.

Gino: Great. We are really happy to have today as our guest, we are going overseas actually and our guest, we are lucky to have him today, is Alex Volery from BOBST Switzerland. Actually, I know Alex for quite a few years. He was actually living here in Montreal, Canada for I think 3 or 4 years maybe Alex can correct me, and I had a really good opportunity to work together with him on the IADD CAN-AM Chapter. How are you doing Alex?

Alex: Absolutely, good, thank you Gino. Hello everybody! Yes, I actually spent some time in Montreal. I spent a total of seven years in Montreal after three years in the US and now I am back in Switzerland since the beginning of 2014.

Gino: What is it that brought you back to your home country?

Alex: I mean originally it was family related. We decided, my wife and I who is Swiss as well, to come back to Switzerland after 10 years of a great experience in North America. And it turned out to be a perfect timing in terms of work as well since I was offered to take over our new Competence Center here in BOBST Lausanne in Switzerland. The Competence Center, being the demo center that we have here, which represents approximately 40,000 square feet of demo center with approximately 30 machines that are doing live demos. We are doing pretty much 400 to 450 demos every year in this center and it was the perfect timing and the perfect reason to come back to Switzerland. The fact that I really like to manage a team of instructors, I like to be close to the equipment, the machinery and close to the newest technology, I think I managed to get all of that in my new position here.

Gino: Wow, that sounds awesome all that equipment and all your availability right on the showroom floor at BOBST, it must be really something to be able to work with on a daily basis.

Alex: Yes, absolutely, it’s great and of course die cutting is very important here but we also have floor stamping, folding gluing for folding carton as well as for corrugated equipment. So, it’s very diverse, very innovative, very dynamic so I really like that in addition to organizing some of the big events such as Drupa where I had the chance to spend approximately six weeks. We saw each other over there. This is the Olympic games I would say for our business. So, it was also a great opportunity to be in charge of all the equipment, installations, start up, demo jobs and things like that. Drupa gave me a lot of opportunities to mix with people from all over the world and meet some of my colleagues and customers and friends from overseas. It was a great experience as well.

Gino: Yes, I couldn’t imagine, you were telling me over there at DRUPA that you had to set up all of that huge booth that you guys had on the floor over there. I couldn’t even imagine having to organize all of that, very impressive.

Alex: Yes, it was a lot of work beforehand. I would say we started a year before for DRUPA with over 40 different technicians and 30 truckloads, 7 full machines running. So, yes definitely, it was a hell of an experience and organization and of course there was a big team dedicated to that. But the good thing isthat it turned out to be a very positive event for the BOBST group and that’s what matters at the end.

Gino: Yes, I am sure it’s a huge responsibility as well and I mean BOBST is the pre-eminent name in our industry for die-cutting equipment and having being able to have all that on display at the show is a really big responsibility for you to have had. Very good.

Alex: Definitely.

Gino: Maybe going a little bit back you mentioned that you were in North America for 10 years and you were working with BOBST beforehand. How exactly did you get started? I don’t think I ever asked you that in the past? How did you get into BOBST and the die-cutting industry? Alex:In this industry, believe it or not, I started 24 years ago when I was 16 years old. I started what we call here an apprenticeship which is not very common in North America, but it is in Europe where basically we are spending four years between the manufacturing floor and technical schools, about 50% on the manufacturing floor here at BOBST and 50% in a technical school in Lausanne. So, this is what we do for four years to become a mechanic. Actually, I ended up with a paper of Mechanical Electrical Engineer and then I started to install and trouble shoot die-cutting machines starting in 1997/98. This is about a year and a half of training here in our manufacturing facility in Lausanne and then after that I started to travel. I would say around the middle of 1998 to 1999, I started to travel as a field service technician to install and troubleshoot die-cutters based always in Switzerland but traveling around the world to do that. And then at the end of 2003, I decided to move to the US to become a product specialist on the die-cutting side. So, I moved to the US and I was very involved with the latest model of a die cutter which was called Sprintera 106 back in those days and I was basically in charge of all the electrical installations and troubleshooting of those type of equipment for the entire North American region based in New Jersey now with an office in Roseland where I was doing about 30% of office work and 70% of field service intervention. And at the end of 2006, I was asked to move to Montreal which I did beginning of 2007 to take over the responsibility of the service for BOBST Canada, so I was the service director for BOBST Canada for seven years from 2007 to 2014. Gino:Wow! It’s really interesting that you bring up that you started off with an apprenticeship. In our last call, we had a call with Randy Norman from Preco, and we asked him how he got started and he was mentioning that well he kind of had to learn everything as he went along and he also mentioned that there is probably a lack in North America of apprenticeship type programs to get people really well trained and educated in what’s necessary in our industry and that, so that’s a very interesting background that you’re able to build up at the beginning of your career. Alex: Yes, the apprenticeship program is really something that I am a big fan of. I see how it works in Switzerland. There’s not every European country that can have an apprenticeship program that actually works as well. Basically, Germany, Austria and Switzerland are the three major countries in terms of apprenticeship but you can see apprenticeship of all kinds of different craftsmanship and other things, and it raised the overall level, I would say, in those directions which is really great and sometimes actually lacking in another part of the world where people have to learn the craftsmanship from senior people that maybe don’t have time or skills to exchange and to share their abilities. So, this is something that really works well here and we still do it. At BOBST we have over 200 apprentices as we speak, so every year we normally hire about 60 new young kids from 16 to 18 years old and after four years old. This is an expensive process obviously to train those young guys but after four years they are basically up and running and can be in the workshop all over our factory worldwide. We also train people here that will end up in China, India or Brazil where we have manufacturing floors. Lisa: Well, it sounds like an excellent way to bring young people into the industry which is something we talked about during our last discussion about how do you get younger people interested in the graphic arts printing industry? Alex: Yes, absolutely, this is something that we have been approached also by a lot of customers and to be honest, a lot of customers are telling us, oh BOBST should even open a BOBST University where you learn how to run machines and things like that which at the end of the day is a great idea. The problem is that some of these jobs need to be done directly by our customers. They need to spend the time and energy to train the operator who are not in the, how can I say it politely, in the human trade. Of course, we can definitely help, we have the machine and the knowledge to train. We do offer a lot of training opportunities to our internal people and customers. But it’s difficult for us to build a university to train operators for our machines that will then go to our customers. This is always the tricky part. A lot of people would love to have trained people but very little spend the time, money and energy to get it done. Lisa: Sure. So, Alex you have had 24 years of experience in the industry and you have I am sure, a lot of insights to what you have seen over the years. How have you seen equipment changes in that time and how has it impacted the printing arts industry? Alex: There is obviously a lot of technological advances that have been done since I am in the industry, the machine speed, accuracy, quality control and things like that have tremendously increased over the last 20 years. On the other hand, when I take this type of helicopter view, I would say, I always see a good old die-cutter with good old dies made out of 95 or 99% of the cases made in wood and this is still pretty surprising to me. Of course, a lot of people wanted to change the entire thing. Starting in 2000, we heard about the laser cutting. Now in 2017, there is still, as of today, no effective solution to laser cut any pieces of cardboard into the right creases, etc, etc. So, I would say, despite the old technology, this is a pretty stable down to earth type of industry that is relying on good old technology, good old mechanical machines to perform the work and it has been successful over the years. So, I really see it in the future is to remain like that. Of course, at BOBST, as most of the equipment manufacturer, we keep our eyes opened in the new technology, in lasers and things like that. But, to be honest, I don’t think this is going to change within a year or two. I don’t see any drastic change like I said, we have been hearing about those changes since 2000 but 17 years later we didn’t see it. Lisa: Sure. So, what would you say is the most exciting technology that you see available today for the industry? Alex: I mean, on the die-making side, for me the biggest step of course, I might not be objective in this industry, but I would say in terms of BOBST, this is the power register system which managed to die cut a box or piece of paper according to the print and not according to the edge of the sheet as we used to have. So, for me this is something that came out in 2000 and this has been the biggest technological jump I would say in our industry. It came out on those machines that I mentioned before called Sprintera and those printers went up also in terms of speed, up to 12,000 sheets an hour. So, this was the biggest technological step that I can recall, I would say, over the last 20 years in our industry. Lisa:So, is it registering to say a register mark or to the actual print on the actual graphics? Alex: You can actually do both. You can still register at the edge of the sheet if you don’t want print marks because of an old, for example, an old set file that you don’t want to change your plate and things like that, you don’t want to add special marks. You can add those special marks in dedicated areas to read them, to make sure that you have a mark in the right position and in some cases the print can be read. And depending, we have special areas in the sheet that the camera can detect on and if the edge of the box for example, the printed box is in this area, we can register directly on the original print of the sheet. So, we have the three options, edge of the sheet, dedicated mark or the print of the box. Lisa: Ok, very interesting. Gino: Alex, I want to know, you were talking a little before about the differences and maybe a little bit about the training between North America and Europe, how about in terms of maybe on the production side from facilities, do you see a lot of differences between say North America, Europe and even now you are talking about doing overseas in China and elsewhere in Asia, what are the main differences that you see between those areas? Alex: That’s a very interesting question, Gino. It’s pretty amazing that there is so much difference but, I wouldn’t say between North America and Europe. What I can say between those two continents is mostly on the logistical part, so the labor being so high in Europe. There are more companies that are leading towards full automated production lines. For example, pallets that are moving by themselves, from one machine to the other, automatic stocks, and things like. We see it more in Europe than in North America, even though some of the top players in North America are up there as well. The other thing is of course the price of the land so, everything is more compact. We see smaller factories in general in Europe than we can see massive factories in North America. And in terms of the skill, I would say that overall, I mean of course there are a lot of differences and companies that are leading in this, regarding in North America, but I would say in terms of the knowledge of the operator and the quality and speed of the machine, we are looking at much higher speed in Europe and quality of the products. Also, because as we discussed before this apprenticeship, the fact that people have the tendency to stay longer with the same company in Europe than it is the case in the US. So, this is the kind of things that I could see between those two continents. In terms of China, in terms of speed and quality, they are still quite a lot behind. But some of the companies that I visited in China are very close to companies that are in North America or in Europe. So, the gap is getting smaller and smaller. Some are starting to understand that the price of a machine is not to be calculated on the offer that they receive but on the cost per sheet at the end of the year and by saying that they are starting more and more to look at making the machine the most productive. They can organize around it. The labor is not as cheap as it used to be especially in the big cities area. In Shanghai in particular, the labor is increasing drastically. So, they have to automate. Automation is a big subject right now in China, surprisingly. When you look from the outside, they have so many people and such cheap labor cost that they can afford to hire two or three people to load machines but, this is not the case. And they are really looking at automation even in China or Asia in general. So, I would say there are always companies that are leaders, that are an example in their industry and they are top notch whether it’s in the US, Canada, Europe or even in China now. But, in average, this is what I would say is in terms of differences. Gino: Wow, interesting. How about in terms of, I guess, the globalization part of graphics arts and the printing industry in general, are there certain trends that you see or people things that are being done locally each in their own countries or are you seeing that are trending certain ways basically all around the world? Alex: Right now, I see, my feeling is that globalization is at its maximum level. To give you an example, I visited a plant in China a couple of weeks ago that was producing millions and millions of pizza boxes for the US. This absolutely doesn’t make sense to me because as far as I am concerned, we are looking at a cent of difference per box to produce in China than in the US and then you have to bring 90% of air through containers across the world. This is as far as globalization can go as far as I am concerned at least. So, I could really see a trend to go back to local things. The reason I am saying that is also because nobody wants to stock empty boxes anymore. Stocks are expensive, the boxes are becoming dry, the quality can change and we are not as reactive if we have to change something if we have six months’ worth of boxes in stock in the warehouse. So, the customers of our customers, which are basically brand owners or retailers, are ordering shorter and shorter terms for their boxes, smaller and smaller job lengths, so this tells me that it’s going to be more and more local because you cannot just bring 10,000 boxes from China three days later and this is the trend of the packaging. So, it’s getting shorter and shorter, faster and faster, no stock of empty boxes anymore so that will probably bring everything back into local scale I would say rather than global. Lisa: How interesting. So, where do you see the next fast growth or say emerging market in our industry? Alex: We see of course Asia has the top one, we are looking at 7 to 8 % growth every year in terms of the packaging conception in Asia. So, this is definitely the area where we are looking at. When I speak about Asia, I don’t only speak about China, but definitely India is growing fast and most of the country in South East Asia also are big areas where we focus our sales force at this time because we see a big growth in those countries, like Thailand, Vietnam, and countries like that. We also see a growth in Africa. Volumes are pretty low right now in Africa but it is slowly but surely growing. There is a big potential in the few coming years in African countries. As a matter of fact, we just opened an office is Lagos, Nigeria in the middle of last year to really make sure that we tackle all of the central African countries. So, this is definitely we see it as a big growth area in the future. Lisa: Interesting. So, I guess along the same lines, I see that our industry is subject to trends just like say the fashion industry in terms of graphics. What trends do you see as it relates to,you know, printing, packaging, maybe display work, anything that has to do with converted paper products. Alex: There are a few trends that we see in the market, basically the biggest one would be the packaging of one box. So, it all comes down to shorter run, digitalization, quick change over, this is really the big trend. Brand owners want to typically do some promotions in the special areas, special country. You probably don’t see it too much in North America because most of the package can be just printed in English. But in Europe, I can see more and more that some of the smaller countries that have their typical language, they have a hard time to have a special promotion in those areas because they would have to print the package in a special language just for a small area of maybe one million people. But the brand owners, they want to tackle these kinds of things. They want to go very precisely on promoting their product. Therefore, they need very special promotion packs and this is a big trend that we can see. The language to give you a concrete example about Switzerland, in Switzerland we are about 8 million and we have four official languages. So, you can imagine that each of the packages that are printed and produced in Switzerland need at least three languages and sometimes four, sometimes even five with English. So, it doesn’t make sense for brand owners who have five languages on a single small box, there is no more space for advertising or fashion or anything like that. So, this is something that brand owners want to try to avoid to hit smaller amount of people with the same product but diversify more and more. So, definitely one of the trials, mostly on the folding carton. Other trends would be, on the folding carton, anti-counterfeit, brand differentiation, more and more technologies in order to differentiate your brand compared to competitions, holographic images, things like that become more and more common especially in the cosmetic or high end pharmaceutical chocolate industry. On the corrugated side, the shelf ready packs are something that is growing extremely, extremely well over the last few years. We have here in Europe, a lot of big retailers that do not spend time to take products out of a box, of a good brown box, to put it on the shelf, but they use the transport so for the secondary packaging, they use it as the shelf to present the product. So that means that in terms of the packaging industry, the graphic industry, the good old brown box needs to be printed with the exact same color and station and logo as the primary pack that will betaken home by the consumer. So, this is a big change also on the corrugated side as well as the e- commerce. We have more and more e-commerce in the US. We have a company called Salento in Europe that is extremely big in terms of clothing, shoes, on-line retailing. So, this is a huge trend also on the corrugated side. Gino: Wow, we have some more changes to expect on that side but it’s quite a bit that’s going on right now. I wanted to ask you, how about if we just step away from the business side a little bit and if you can tell us a little bit about what are some of the things that you do in your spare time when you are not managing teams for die-cutting and coming up with new technologies for our industry? Alex: In my spare time, I am pretty busy in taking care of my two boys who are six and nine years old. As you know, it takes quite a lot of time to take care of those little guys. They are pretty active at this age. And I am actually enjoying a lot, the mountains, my Alps, this is what I missed in my ten years overseas, is my good old Alps, not only for skiing in the winter but for hiking, climbing and doing all kinds of outdoor activities in the summer. This is really something that I enjoy as soon as I can rent a little chalet or something, I do so. So, I am really enjoying my mountains right now. Gino: Sounds great! I know around here, we have St. Sauveur and Mont Tremblant and stuff but they pale in pretty much in comparison to the Alps so, I will definitely give you that one Alex, for sure. Alex: Absolutely, I mean there was a great area also in Quebec, no question there, and I have been quite a lot to the Rockies and when I could go to the Rockies, I enjoyed that too. But, here it’s so convenient, I mean you can hit mountains that are higher than four thousand meters within an hour of driving so it is definitely a little more convenient then flying six hours to the Rockies. Gino: Absolutely, for sure! Alex thank you so much for your time. I know your day is coming to an end and we are just getting started over here. But thank you so much for agreeing to come on the call and sharing with us your knowledge and experience over the years. It is very appreciated. Alex: Absolutely, no problem Gino, anytime. Thank you, guys, thank you Lisa also for organizing that. It was a pleasure. And if there is anything from your side or our IADD friends, I am always available to try to help, organize visits here, not only in the mountains on the weekends, but also visit the manufacturing floor here of course. And so, if there is anything else, please feel free to contact me anytime. Gino: No problem, I think you might have a few more takers than you might be expecting but thanks a lot. Alex:We will do group skiing next winter then. Gino:Sounds great! Thanks Alex! Lisa: Thanks Alex