Will the Last Remanufacturer to Leave Please Turn Out the Lights?

by Amy Weiss, Editor, Actionable Intelligence

by Amy Weiss, Editor, Actionable Intelligence

When I read the news of the merger between Clover Technologies and MSE last week (see “Clover and MSE Announce Strategic Merger”), I was surprised but not shocked. Merger and acquisition (M&A) activity is nothing new in the aftermarket supplies industry. Particularly over the last few years most of us have gotten used to seeing the news that one long-standing company was merging with or being acquired by another—so much so, in fact, that sometimes it is easy to forget exactly who began where. For instance, in reading Charlie Brewer’s analysis of the Clover/MSE merger (see “Mega Merger Mania: The Big Just Keep Getting Bigger!”), I had a couple of “oh yeah” moments—“Oh yeah, I forgot about Laser Imaging International,” for example.

It got me to thinking about just how different the industry landscape is today than it was 10 years ago, and led me to dig up my May 2002 issue of Recharger Magazine, which is the first one I ever worked on. Just for fun (proving that I have a seriously distorted definition of “fun”), I decided to see how many advertisers in the pages of that issue were either no longer operating or operating under new ownership. It took about three pages (thank you Static Control for being consistent all these years) for my head to begin to explode.

The consolidation of the remanufacturing industry has been going on for a decade or more. As Charlie pointed out in his post, Clover has been purchasing companies since 2005, first with the acquisition of Dataproducts from Ricoh and the buyout of Cartridges Are Us, GRC, and much more. But Clover wasn’t the only one feeling the urge to merge. PTi also acquired QIP in 2005 and later MKG was acquired by West Point Products, which also acquired Multi-Laser after Multi-Laser had acquired Teckn-O-Laser’s wholesale laser division. Then, of course, West Point as well as Clover were acquired by Golden Gate Capital.

And remanufacturing companies have not been the only ones to merge. Many of their suppliers have followed the same course. For example, components supplier Summit Laser, which merged with Graphic Technologies in 2004 to form Summit Technologies, was in turn acquired by parts distributor UniNet Imaging in 2007. Oasis Imaging, which has now long ceased to be, had its toner assets and formulations acquired by UniNet. Mitsubishi, in the meantime, decided to purchase its toner and drum distributor Future Graphics. Imaging Resources, which has now been shut down, was first acquired in 2011 by Printer Essentials (PE) and then PE had its assets acquired by XSE Group (see “XSE Group Acquires Printer Essentials”).

I could go on (and on and on … I’m only on page 50 of a 220-page magazine), but I suspect there’s neither enough Advil for me to write it nor for you to read it. It feels a bit like revisiting your childhood home—echoes of familiarity in a landscape that’s changed dramatically. But does different mean bad?

Overall, consolidation isn’t necessarily a bad thing. It is a sign of a mature market, which the aftermarket has certainly become. There are pluses and minuses to consider when looking at all this M&A activity in the remanufacturing industry. On the one hand, consolidation may lessen competition, having the potential to drive prices upward, but on the other hand it can create greater infrastructure and internal resources, allowing aftermarket suppliers the scale needed to compete with the OEMs. It can also mean a win in terms of product quality, as divergent firms leverage their unique strengths.

The aftermarket of today is not your father’s aftermarket. In some ways it made me a little sad to read the names I’d already forgotten like QIP, MKG, LII (maybe having a three-letter acronym as your name is bad luck?). But if you look at it as a type of aftermarket Darwinism at work, then maybe what we’re left with is an industry that can take on all the challenges—lawsuits, illegal clones, economic pressures—and survive and even thrive. If not, well, I’m sure some other company will swoop in and buy them up!

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