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FULL STORY
Never one to shy away from the fight for truth and justice, Andy McCourt again wades into the battle between Memjet and the Australian engineering manufacturer, Rapid Packaging. He reckons there’s more to it than meets the eye and delves back into history to search for answers.
Andy McCourt
Last week I wrote about the effective tearing up of the agreement between Australian label press manufacturer Rapid Packaging and Memjet USA. Memjet MEMS-based inkjet printhead and ink technology was developed and patented here in Australia over a number of years, by Silverbrook Research. Inventor Kia Silverbrook became the world’s most prolific registerer of patents, with over 5,000 either granted or pending.
In 2012, a legal battle between the US funders of much of the research: the George Kaiser Family Foundation and Argonaut Private Equity – also a Kaiser vehicle – ended with Memjet acquiring all of the patents; Silverbrook Research’s Sydney labs; many of the staff and total control.
Memjet and Kaiser entities alleged that fraud had taken place and that some of the estimated $600 million invested into Silverbrook Research was misappropriated. The final settlement was never made public; it ended suddenly with a May 2012 resolution just in time for Drupa in that year. At Drupa itself, a hastily assembled Memjet booth was visited by the Drupa Snooper and several new OEM deals were announced.
Memjet’s press kit USB states the following:
‘Memjet works with OEM partners and innovative start-ups, many of whom have asked to remain confidential until formally publicized through joint announcements. The following Memjet OEM partners have been announced as of January 2012: LG (Korea), Lenovo (China), Lomond (Europe), Astro Machine Corp. (North America), Colordyne Technologies, LLC (North America), Xanté Corporation (North America), Japan Electronics, Inc. (Japan), The Imaging Systems Group, Inc. (North America), OWN-X Kft (Europe), Rapid Label Systems (Australia)’ Fuji Xerox, Toshiba and Canon were also announced as partners at the trade fair.
Focusing on the label market for Memjet, a Memjet division that was headed up by former Kodak executive Dave Clark, who appears to be no longer with the company, of all the four projected applications for Memjet (Photo, Labels, Wide format, Office) technology, it was the label engine that was first commercialised.
But there was a problem – it didn’t work.
Things that work in laboratories in controlled environments often need a lot of refinement once mass production and real-world use happens. It took another Australia company – Rapid – to make the non-workable Memjet ‘Northstar’ generation print engine work as a short-run digital colour label printer. Thirty-three years of designing and making robust label presses, exported to over 50 countries, was applied to the unwinds, converting and rewinds. That took care of the web transport – the very thing that when inventor Kia Silverbrook first saw it caused him to exclaim ‘we need this’.
However, the early Memjet engines kept clogging but Rapid’s savvy was put to work on a new ink recirculating system which resulted in previously defunct print engines being made workable. Two weeks before Ipex 2010; Rapid worked 24/7 to get demonstrable ‘Powered by Memjet’ over to Birmingham, UK to show to the world.
Rapid says it has invested over $3 million of its own money in making Memjet label print engines work and bringing them to market. They say they have not made a return on the investment yet, but were looking good to do so over the next 2 - 3 years with the new XL220 iteration, increased ink sales and more opportunities for inhouse label production with the bench-top X1 model.
Then Memjet USA tore up the agreement and left Rapid high and dry.
So long and thanks for all the fish?
When asked what Rapid’s more than 250 customers could do for ink and printhead supply (the ink cartridges are chipped for Rapid specific machines), the response was to refer them, and Rapid resellers, to a direct competitor – RTI Digital of Canada which had acquired its Memjet license by buying Own-X of Hungary. Own-X was a contemporaneous developer of Memjet label printers with Rapid and Rapid’s founder Bruce Mansell has known Dr Jules Farkas of Own-X (now with RTI Digital) for many years from his Gallus and Comco label press days.
I contacted RTI Digital’s president Erik Norman for comment about how he proposed to supply Rapid’s customers with Rapid-chipped ink cartridges, in several countries where RTI has no representation. Comment is still awaited.
Memjet’s spokesperson Kim Beswick assured us that ‘no customers will be left high and dry’ by the decision to cut out Rapid. But this is not so in Australia at least – customers are already screaming for ink.
Ms Beswick whose title is Office and Desktop Manager – there appears to be no Label Divisional manager since Dave Clark’s apparent exit – may not be aware of the production requirements of the label industry. If a $600 office printer sits there not printing through lack of ink, it probably doesn’t matter too much. A label printer needing to get 5,000 labels delivered to a customer by tomorrow morning has a far more compelling argument.
Why has it come to this? Answer: Memjet won’t say and Rapid doesn’t know. RTI Digital is also saying nothing. The way it looks, a big American stick is being waved around to bludgeon a 38-year old successful Australian manufacturer out of business – all for no good apparent reason.
Or is there a reason?
Could it be that Rapid won’t toe the line on inkjet ink pricing? We all know that inkjet ink has been liquid gold for other manufacturers such as Epson, Canon, HP and so forth. In small office and home-style cartridges, $5,000 per litre is not unusual. Mid-level industrial applications can hover around $500 per litre. High volume intensive use inkjet press ink can be around $100 per litre.
Rapid say it has absorbed three Memjet ink price increases in two years (in a market where price is dropping) and it believes the commercial label market will not withstand the sort of ink pricing that desktop office printers typically command. It says Memjet wants over $1,000 per litre – double what Rapid thinks is the maximum the market would bear.
To put this into perspective; Louis Roederer Cristal champage is around $400 a litre from Dan Murphy’s; Petrol (98 octane) is hovering around $1.60 a litre last time I filled up at BP; Chanel’s No 5 perfume works out at around $1,750 per litre. A desktop-capacity (say 5ml) ink cartridge can be as high as $5,600 per litre.
Maybe, just maybe, the allure of such high pricing is driving Memjet’s thinking towards applications where $125 for a 250ml ink cartridge is peanuts by comparison. After all, the Label division now falls under the remit of Kim Beswick, General Manager Memjet Office & Desktop Systems.
Memjet ink is a tied system – due to the very small 1.2 picolitre ink droplet size and MEMS nozzles; you can’t use alternative inks as is the case with most other commercial inkjet systems.
In the absence of any explanation as to why Rapid is disenfranchised from being a Memjet OEM partner, only speculation exists. Approaches have been made at every level; all the way to the top – George Kaiser. The American Chamber of Commerce in Australia has also been approached.
George Kaiser, the 72-year old businessman, ultimately runs Kaiser Francis Oil, the Bank of Oklahoma, Argonaut Private Equity and the George Kaiser Family Foundation; a not-for-profit that is renowned for its philanthropy in poorer parts of Oklahoma and beyond. This includes early childhood education, rehabilitation of prisoners, health centres and re-landscaping parts of Tulsa. Kaiser is third behind Bill Gates and Warren Buffet in terms of American philanthropy, a very worthy place to be. With a nett worth estimated by Forbes magazine at around USD$10.4 billion, Kaiser accomplished all this from very modest beginnings – he presents like a classic American dream candidate whose parents fled tyranny in pre-war Europe to make a better life.
Give or take $10.39 billion, there’s not a lot of difference between Bruce Mansell and George Kaiser. One built a dream on great engineering, label presses and that most impossible of enterprises – manufacturing in Australia. The other built on oil, finance, investments and private equity.
From all that I have in front of me concerning the tearing up of Rapid’s agreement with Memjet, due to last until 2017, I summarise in two words how it appears.
It stinks.
*Footnote: Rapid’s Nick Mansell wrote last night that: ‘Production of all Memjet related product has stopped, though we have stock of completed systems. Memjet are not offering to buy them back and are denying permission to use them to complete additional machines.’
Also, RTI Digital’s president Erik Norman responded overnight saying he will answer questions re supplying Rapid’s customers.
Previous article from Andy McCourt and Print21 Australia on 29 October:
Memjet tears up Rapid's inkjet agreement
US Memjet prematurely terminates OEM agreement with Australia's Rapid Packaging Services for no apparent legitimate reason.
© Graphic Repro On-line, 5 November 2014.
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