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Last man

STANDING

European manufacturer SI MASS is further consolidating its position as the leading provider of private label polypropylene (PP) products in the office supplies and stationery segments

Even in declining paper-based categories such as filing, archiving and document storage, there will still be a demand for products for the foreseeable future. The advantage will go to those suppliers that achieve economies of scale, ensure good quality at the right price, have robust and reliable supply chains, and possess solid environmental and CSR credentials.

In the area of PP supplies for office, home and school use, a leading player for private label products that ticks these boxes is SI MASS. The company – originally known as Loer & Schaefer – was founded in 1984 near the city of Paderborn in central Germany by Bruno Loer and Johannes Schaefer. The goal of the two entrepreneurs was to replace PVC with cheaper and more environmentally friendly PP. They achieved early success with a number of German supermarket and discount chains, mainly with their report covers and desk mats.

Over the years, the manufacturer expanded its product ranges and developed international markets, thanks partly to several acquisitions. In 2020, the Loer family decided to exit the business, which led to second-generation brothers Benni and Jan Schaefer taking over the reins and rebranding the company as SI MASS.

Today, SI MASS has a dominant position in the private label soft plastics category among mass retail customers. With annual revenue of around €40 million ($44 million), it supplies clients in markets as far afield as the US, Japan, New Zealand, Korea and Latin America. Its position has been strengthened by the recent acquisitions of GERA Folien in Germany and Poland-based Inter-Folia, as the Schaefer brothers pursue their strategy of being the ‘last man standing’ in their product categories.

OPI spoke to CEO Jan Schaefer to find out more about this strategy and what makes SI MASS tick.

OPI: Jan, can you summarise your main production locations, what they produce and give an idea of their output?

Jan Schaefer: We have four factories for PP stationery and office supplies. At our headquarters facilities near Paderborn, we produce report covers, clip files, desk mats, punched pockets, L folders and all kinds of book covers. The GERA Folien plant specialises in punched pockets and L folders, but is also equipped with machines for special orders or different product sizes. From here, for example, we supply customers in the US and Japan.

Our entire production of indexes and dividers has been relocated to the city of Most in the Czech Republic. There, we make the full range of PP, manilla and mylar dividers. The latest acquisition – Inter-Folia in Lodz, Poland – adds further capacity for punched pockets, L folders and flat files. What’s special is that we extrude our own film and have recycling machines so we can reuse our own waste.

In total, this provides us with the capacity to produce more than two billion punched pockets and L folders, 100 million report covers, and 250 million sheets for indexes and dividers a year. This gives you an idea of some of the core items.

JS: For school supplies, our biggest markets are Germany and France, and we have a very good position there. In office supplies, much of our sales are from across Europe and there is still plenty of potential to grow. Internationally, we are aiming to expand our presence in the US because the country still gets 95% of products from China.

OPI: What is the advantage of working with SI MASS versus sourcing these items from other markets such as Asia?

JS: SI MASS is actually cheaper when compared with China-made products. We run a sourcing office in Hong Kong and have a good handle on prices. And then you have to factor in import duties and ever-increasing shipping costs.

We are very flexible, with extremely low minimum order quantities and short lead times. The sustainability topic speaks well for us as well.

OPI: You produce 100% for private label. Why have you not developed your own brands?

JS: We recognise that we are not good at things like marketing and design. We are a large-scale manufacturer and our focus is to always make productivity improvements with our machines.

We do not have an own brand because we do not want to compete with our clients

The small number of brands which still exist might have a future, but the main volumes in our categories already come from private label. And, as we produce for other well-known brands, it would make us a competitor to our clients. We don’t want that to happen.

For more information on SI MASS, visit www.si-mass.de OPI: How has the market for PP school and office supplies been evolving over the past few years?

JS: School supplies are still growing for us, in line with higher birth rates in Europe. This segment will not disappear – children will continue to learn how to write with a pen and paper.

Office supplies is different. Some accessories like indexes and dividers can only be used with lever arch files or ring binders. As they are declining, then so are indexes and dividers.

But other items are developing well for us as they can all be used standalone. So, while the overall market is shrinking, we have been growing share for the past five years.

OPI: Tell us a bit more about your ‘last man standing’ strategy?

JS: We are absolutely convinced many of our core items are here to stay. We may have to adapt the production materials at some stage, but that’s it.

As I mentioned, pens and paper will always be used at school and we also believe that comprehensive digitisation in offices will not happen as quickly as everybody thinks. The paperless office is not going to happen any time in the next 20 years.

OPI: Why do you believe the ‘last man standing’ will be SI MASS?

JS: A number of reasons: we’re a family business with a brilliant team; we have by far the most modern machines in the market; our flexibility and sustainability policies will contribute to us being the last relevant player within private label; and finally, we are totally focused on producing soft plastics made of PP.

As I said, we do not have an own brand because we do not want to compete with our clients. Our only relevant remaining competitor has a different strategy which, in our view, makes things complicated.

OPI: You referred to sustainability. What are the key initiatives you have implemented?

JS: Our German facilities will both run with 100% solar power starting from 2023. We have more than 20,000 sq m (200,000 sq ft) of solar panels on our roofs and have installed some of the largest industrial battery packs in our region. We are also investigating whether we can use solar panels in the other countries, and have invested in Africa GreenTec, which installs solar panels and small grids in Africa.

In Poland, our new recycling capabilities will enable us to process 100% of our PP waste to make new products, and we plan to expand this across the group. In our view, this is the only way forward. Unlike paper, PP can be recycled an infinite number of times. I also question the claims of so-called biodegradable products. These, in fact, do not disappear altogether, but break down into micro plastic particles, which will cause even bigger problems in the long term.

None of this is greenwashing. This is about us taking action in something we passionately believe in.

OPI: Is there a prospect of further acquisition activity in 2022?

JS: There are a few specialised players making single product groups. We are not proactively searching for further targets, but if an opportunity arises, we are prepared and could act quickly. This is one of the big advantages of being a family business – we can make strategic decisions in just a few minutes.