Mailhouse reinvents itself and invests millions

Would you rather be a weedy piece of grass or an oak tree? As you might have guessed, it’s a trick question. It comes from a piece of advice Mark Sayle was given by legendary Chrysler chief executive Lee Iacocca at a conference in 1990.

“Being men, we all said we’d rather be the oak tree,” recalls Sayle. “That was the wrong answer. The times have shown you have to be a weedy piece of grass, blowing in the wind and bearing with the four seasons, because you will survive. You have to listen to what the market is telling you. People used to ask what kind of machinery you had. They don’t ask that any longer. Now they ask: ‘What is your point of difference?’”

For Sayle’s business, that question has had a number of different answers over the years. “The one thing you can be sure of is constant change,” he says, which might go some way toward explaining why Future Sources has gone through no fewer than four brand overhauls since he founded it in 1987.

The Sydney firm began life as a microfiche and microfilm specialist, moved into variable laser printing, then became a mailhouse and has now further evolved into offering complete mailhouse services for printers.

Sayle once worked in a sales role with Microsystems, the company that installed Australia’s first laser printer, a Xerox 9700. After joining in 1985, he worked his way up to divisional general manager. The past four generations of his family had all been entrepreneurs, so when Microsystems split into old technology and new technology arms, he thought the time had come to strike out on his own.

Future Sources began producing microfiche and microfilm for ANZ and Advance Bank. Other major clients came on board, such as General Electric, Shell and Metcash (then David’s Holdings). At one point, the client list included seven of the 10 largest credit unions and two of the top four banks, says Sayle.

Banks would supply customer account details each day for Future Sources to convert into microfiche. When the banks’ computers crashed – as they regularly did back then – tellers would use the microfiche to check customers’ balances.

Future Sources also provided microfilm services. One example, Sayle says, was Coal & Allied, now part of Rio Tinto, a mining company founded in 1843. It wanted 150 years’ worth of archives to be recorded. These days the documents would be scanned.

Blowing in the wind

Like that piece of grass, Future Sources blew with the winds of the market, says Sayle. Clients were asking the company to provide letters and statements, so it started variable laser printing in 1993. Then came requests to mail the documents as well, so Future Sources introduced that offering in 1995. Now there is a demand for a complete mailhouse service, so since 1997, Future Sources has progressively added printing, guillotining, folding, plastic wrapping, distribution and data management.

“Mailing is no longer just stuffing things in envelopes. Mailing is about offering the clients a solution: managing the data, understanding their market, personalisation and helping them to get ROI. That’s why we play in several markets, and printers are one of our markets. A business of our size couldn’t survive if we weren’t in several markets. We’re not in competition with the printers; we’re there to be of service to them. They don’t understand data like we do. We do a lot of data metrics and that’s what clients are asking for. The data is king.”

Despite his attachments to the firm’s microfiche and microfilm roots, Sayle put sentiment aside in 1999 and offloaded the business to HPA, which was acquired by Salmat in 2007, only to be offloaded this year in the $375 million acquisition by Fujifilm.

“We saw that the technology was changing – as it does – and that microfiche was going to die. We had been in mailing and it was still growing, so we made our full commitment to mailing,” he says.

“It’s business. If you want to survive you’ve got to be able to emotionally let go and move into the next phase of your business and you’ve got to be able to grow with the market by identifying the market.”

That ties in with another, romantic lesson Sayle has learned during his corporate career – that “medium is beautiful”.

Bloated and inefficient

Future Sources currently has 108 staff, including casuals, but it had a headcount of 208 people in 2008 before the global financial crisis. The economic crash made him realise that a company that had begun with just one employee had become bloated and inefficient.

“We felt like a middle-aged man who woke up and had a big spare tyre. Thankfully the GFC was a reality check. When you’re growing too fast, it’s very hard to control, which is why now we don’t try to reach for the stars. It was a forced trimming that everyone went through. It made us ask: ‘What do certain people do in certain parts of the business?’”

Future Sources became leaner after conducting a “line-by-line” examination of its operations. But it wasn’t easy. “At university, they didn’t teach us how to reduce in size, they taught us how to grow.” As managing director, Sayle got a more comprehensive understanding of the company he had led for more than two decades and realised that the GFC had been blessing in disguise.

“We made a conscious decision we weren’t going to get too large. We call ourselves a medium-sized business. We realise that medium is beautiful, because it’s manageable. We can still offer service. We can still try to keep control of the service and the product that we’re offering. We have to be aware that in these times, the market is mature, tending on saturated, and only the strong ones will survive.”

Another conscious decision Future Sources has made is diversifying to manage risk, says Sayle. That way, if a venture fails – like it did with an earlier push into annual reports – the company can still rely on other revenue streams.

Future Sources made a profit in its first week, turned over $178,000 in its first year, earned $377,000 in its second year and then recorded 18 more years of consecutive growth until being hit by the GFC, says Sayle. He won’t disclose the firm’s current position, except to confirm it exceeds $10 million. He is also willing to reveal that Future Sources ended the last financial year one-third smaller than its pre-GFC peak.

Sayle describes himself as a private person with a strict division between his corporate and private lives. “I’ve kept it like that for all these years. It’s good to maintain the quality of your private life. I’m not a mailhouse. I’m not a piece of mail. I’m not my desk. I like people to try to have a work-life balance. That’s something we strive for. As a part of that balance, I like to be anonymous on the weekend,” he says.

When he’s not working, he likes to race cars, read about astrology or play soccer. Sayle also has a strong community ethos, which has seen him be involved with children’s charity Humpty Dumpty Foundation for more than a decade and also spend time as a director of his local soccer club. Sayle has also lectured to more than 500 businesses that have graduated from WorkVentures, a not-for-profit business incubator that helped Future Sources launch 25 years ago.

One of the tips he shares is to embrace technology – and he practises what he preaches. Sayle notes that Future Sources has invested about $2 million worth of kit in this calendar year. “We’ve got new stuff in nearly all areas,” he says, including a colour Xerox platform, folding machines and high-speed inserting equipment.

Fast, smart equipment

There has also been an investment in a Sitma 950-E, which he calls the “largest, smartest, fastest plastic wrapping machine in Australia”. It generally handles runs of about 10,000, but runs of 400,000 are not uncommon. Neatly, he acquired the machine from Salmat, which had once upon a time purchased Sayle’s microfilm business. The Sitma has lifted the firm’s wrapping and bundling rate from 9,500 to 20,000 magazines per hour, says Sayle. It performs “intelligent mailing” – putting different inserts into different magazines on the same run. It can also batch, glue and do inkjet printing directly on to the magazine. 

Publishing is a growing sector for Future Sources. While retail sales of magazines are falling, he says that subscriptions are rising – and the firm is cashing in. “Over the past three years, Future Sources has become one of the largest suppliers to the magazine and publishing industry,” says Sayle.

Predications are hard

The Alexandria factory processes such large volumes of mail that it contains an Australia Post site. Future volumes are difficult to predict, though, says Sayle.

“At this point in time, I think the industry will experience a further drop-off in mail, but I think that mail and printing have taken the big hits and will hopefully stabilise. There are still a couple of growth areas, but I’m not going to tell the world about those areas. Essential mail is dropping off at about 4% per year, but advertising mail is still growing, and the people that are spending more money on mail packs as opposed to email are getting a larger ROI by using their data sets.”

Sayle is pleased with how Future Sources is currently positioned and is cautiously optimistic about the future, even if he’s reluctant to look too far ahead. One thing he is certain about is that the Future Sources of tomorrow will look different from today’s version. He says he’s positioning the firm for the day when it inevitably moves into its fifth incarnation.

“It’s the job of management to continually survey the landscape in order to supply services to the market. After all, what we really are is a service bureau. As a service bureau, we have to listen to what our clients want. We don’t know what our next offering will be, but while our offering remains as it is, we have to try to offer the best we can with the technology at hand. That’s why we’ve got that $2 million worth of new technology, because it provides benefits to our clients in productivity, cost and additional services,” he says.

“I don’t think there’s any doubt that we’ll have to change. Because we’re a medium-sized company, we’ll be able to do that quickly, but we have to continue to stay light and lean. At our current size, with the management structure we have, we’re able to do that. We’re already looking at new technologies.” 

 

 


 

Resumé

Career history 1987-present: managing director, Future Sources; 1985-86: salesman and division
general manager, Microsystems

Education University of Technology Sydney, Bachelor of Business and Bachelor of Marketing; attended 13 schools in four countries (Scotland, USA, South Africa, Australia)

Family Wife is a former international netball umpire. Son, 13, plays representative soccer and daughter, 12, plays representative netball

 

 


 

 

Mark Sayle on…

Market volatility

“Once upon a time, you could do a business plan for three years, but that’s no longer the case. You can’t even budget for two years ahead. The furthest anyone can look ahead at this time is 12-18 months, because the market is so volatile. In this day and age, no one knows what the future is going to bring.” 

Credit where it’s due

“I couldn’t have grown the business without good financial guidance or good staff. I might set the course, but I’ve got a lot of people cleaning up my crap. I tend to blaze a trail, saying we’re going into this or that, but they make it happen.”

Staying in control

“Now the GFC is behind us, we’re starting to see the buds of the hard work that the team have put in – but so is the market. With the markets we’ve identified, the future looks good for the mailing industry, but you have to control your business.” 

Back to basics

“You’ve got to control the cash. You’ve got to have a good team. You’ve got to have good management. You’ve got to have a good offering. You’ve got to have integrated planning. Those five things together are the cornerstones of any business. We’re always learning about our business.” 

Walking the floor

“I’m participative. I like to walk the floor. I know everyone’s names, where they came from. We like to grow people from within. We like to give people opportunities. Then you have your own culture and then these people have a vested interest, because they trust you’re going to look after them and their families and they have a future with you.”

Spending plans

“It’s something we’re always keeping an eye on. You have to be abreast of technology if it’s going to enhance your own production and enhance your client offerings. You do plan for a capex budget which is linked to your depreciation schedule. However, you balance that off with the technology that is required for any business depending on the size.”

Extreme diversification

“I owned the distribution business for a company called Country Oven. We were the first distributors of carrot cake in Australia. No one knew what carrot cake was.”

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