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Responding to globalization

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Ron Barry says he had always dreamed of building a $100 million company.

The Des Moines entrepreneur achieved that distinction as the chairman of Color Converting L.L.C., which he sold in December to the Siegwerk Group, Europe’s third-largest printing ink manufacturer.

Founded by Barry in 1975, Color Converting has grown to become the second-largest U.S. producer of inks for high-end packaging of consumer products.

In the midst of an industry consolidation, “we were the only ones left in the U.S. that were in the medium-sized segment of the (packaging ink) market,” said Barry, who retired from the company following the sale. “So we had to make a decision to sell out to one of these large multinational companies.”

An aggressive business plan, backed by $5 million raised in a private equity offering in 2001, allowed Color Converting time to find the right partner.

“We decided we needed to carve out a niche, and to do that, we needed cash,” he said. “And to my surprise (given the weak economy), when we went to the community, we found investors that were willing to provide cash.”

The lead investors in that private offering, Barry said, were Bill Trebilcock, who ran Mid-Continent Bottlers Inc. before it was sold to Cadbury Schweppes, and Mike Whalen, owner of Heart of America Restaurants & Inns, based in Moline, Ill. Among the 13 other investors were Jerry Chicoine, former chairman of Pioneer Hi-Bred International Inc., and Bill Knapp, chairman emeritus of Knapp Properties Inc.

“It was an interesting time for us,” said Dan McDowell, Color Converting’s president and one of four company managers who invested in the offering. “We had just built this (100,000-square-foot manufacturing facility) and found ourselves short on cash. We just weren’t big enough; we didn’t have the capital structure to be a globalizer, so we had to be a globalizee.”

The acquisition by Siegwerk added three factors that Color Converting lacked: additional capital, a global partner, and a transition strategy for a family-owned company, McDowell said.

There had been offers from a “major competitor,” Barry said, “but I don’t think it would have been as good for the city of Des Moines or our customers.”

With the acquisition, Siegwerk ranks as the world’s seventh-largest ink producer in terms of sales, with combined revenues of $500 million. Its largest competitors in the U.S. market are Sun Chemical Corp., a $3.9 billion wholly-owned subsidiary of Tokyo-based Dainippon Ink and Chemicals Inc., and Flint Ink, a $1.6 billion company based in Flint, Mich.

By aligning with Siegwerk, “I think we stayed ahead of the curve (in globalization) and it has been received extremely well by the marketplace,” Barry said. “For the city of Des Moines, I think it’s a really great thing, because they’re going to use this company to grow, with more jobs.”

With the acquisition, Siegwerk will transfer all of its North American packaging ink production to Color Converting.

Siegwerk had three different accounts involving four plants in North America that will now be managed by Color Converting, said Shannon Barry, vice president of marketing and business development and Ron Barry’s daughter. “That transfer alone will mean 6 percent growth, not including the internal growth the company will see.”

In terms of revenues, Color Converting has grown by an average of 12 percent for the past several years, “and moving forward we’re expecting to continue that,” she said.

Employment growth for the company, which operates two plants in Des Moines and one in Spartanburg, S.C., that it purchased in 1997, won’t necessarily be linear with sales growth, Shannon Barry said.

“Sometimes it’s more, sometimes it’s less,” she said. The company currently employs about 120 of its 320 employees in Des Moines. About one-third of the company’s employees are spread out in clients’ production plants in 22 states as well.

Ron Barry got started in the ink business in Michigan, working for what was at the time the largest ink company in the world.

The company transferred him to Des Moines in 1968 as a salesman. After going to work for a smaller company and finding it lacking in the quality and customer service needed to grow in the industry, he and his wife, Ginger, decided to start their own business.

They opened a plant on the East Side in 1975, forming relationships with Des Moines-based manufacturers, among them the bag companies owned by Marvin Pomerantz and his brother, Harry Pomerantz, and American Can Co., now Pechiney Plastic Packaging.

Color Converting still operates its original plant at 129 S.E. 18th St., and in 1999 it expanded to a state-of-the-art operation off Park Avenue at 3535 S.W. 56th St.

Siegwerk’s offer was “really the right thing at the right time,” said Barry, who said he had no intention of retiring at age 59. “Sometimes the stars just get in alignment and this was just one of those times. … People kept telling me, the time to sell a business is when you don’t want to or need to.”

Now, it’s likely he’ll become active with one or more non-profit organizations, said Barry. He and his wife are honorary co-chairpersons for this year’s telethon for Variety – the Children’s Charity; he has also has served on the board of United Way of Central Iowa.

“I don’t have the slightest idea of what I’m going to be involved with, but it’s time to put something back into the community,” he said.