ColorTree

Source: Manufacturing Digital

Date :08/05/2008 06:23:11

With an industry at full capacity, rising raw material costs and intense competition, the future could be gloomy for ColorTree Inc. But they’re made of sterner stuff in VA...

Written by Elizabeth Earle and Produced by Alex Hortaridis

When a group of salesmen at envelope firm, Union Envelope, recognized that the company that they had spent their careers at was changing and that customers’ dissatisfaction was high - with long turnaround times and jobs often turning up late - the seeds of ColorTree were sown. These four founders, two of whom, Dennis Whitcomb and Mike Heatley, still own the company and are actively engaged in it today, believed that a new business could succeed by giving customers what they wanted- more choices, on time deliveries and flexible manufacturing schedules.

Founded in 1988 in Richmond, Virginia, ColorTree is celebrating its 20th anniversary as this article is being written. Initially staffed by a hand-picked team, the reputation of ColorTree soon spread among the biggest direct mail marketers in the Mid-Atlantic region. The machinery was barely warm when orders started pouring in.

ColorTree’s primary objective is to make it easy for their customers to do business with them. If there is any possibility of an issue arising, it is solved immediately. ColorTree is here for the long term. Their reputation for doing what they say they will do is backed up by many customer testimonials.

Chief Operating Officer, Pat Patterson, came to ColorTree six and a half years ago and has 30 years experience in the graphics industry. In this time, he has seen numerous peaks and valleys in the industry, and he knows the value of having a quality workforce during difficult times.

“For the envelope industry, the recession started almost a year ago,” he says. “While the government has yet to declare a recession, this downturn has already had a dramatic impact on the industry as a whole.

“If we didn’t recruit good people we would die in this environment,” adds Patterson. “The changes we have made in the last four to five months are simply that we’re upgrading the quality of our people. When others are reducing their workforce, we find it a great time to recruit good people and upgrade our existing staff’s capability through training.” As Patterson says, “It’s the people that make us what we are. The equipment doesn’t do a thing without someone touching it.”

Evolution

Patterson is clearly passionate about ColorTree, and accepts the change in the economy not with bitterness, but with the wish to further develop the company to his customers’ needs.

“ColorTree has a strong customer base that understands its long suit; small to medium size orders of litho printed and converted full color envelopes with fast turnaround. But we still have to meet the market’s price. There is no premium any more for value add.”

The squeeze

Paper is ColorTree’s biggest material expense. With paper vendors shutting down their older plants and machines, capacity is becoming somewhat restricted and therefore prices are going up. “Hopefully, within reason,” says Patterson, “they’ve almost passed from the perspective of what the market can bear – but also, with the falling dollar they can export their products at will; they’ve got places all over the world where they can sell their paper.”

Patterson added: “Having said that, all suppliers are doing what they have to do to make a return in this environment. Companies providing us with raw materials are also dealing with higher costs – in many cases, just the higher cost of their components and energy. Everybody’s dealing with the energy costs across the country which they’re not used to. Everything you look at is going up in price. With the end customer faced with a limited amount of money to spend and multiple channels in which to spend this money, everyone in the supply chain has to adjust in order not to see the business just go away. So that means that everybody gets squeezed.”

Embracing a challenge

“On top of that, the decline in the value of the dollar is causing the cost of raw materials to skyrocket and the envelope industry is in a situation of over-capacity, which means there are too many envelope companies chasing too little business. We also have a postal service that has a mandate by Congress to meet certain criteria which makes them raise prices - and there is competition from the Internet and other channels in ways that we’ve never seen before. In short, there’s a nice little storm brewing. ColorTree’s goal is quite simply to figure out how to keep making money in this environment.”

Despite all this, ColorTree’s optimism is admirable. The company seems to embrace a challenge. They have molded themselves into a firm that deals with deliveries thought to be too difficult by most envelope manufacturers - and they positively embrace orders that are thought to be too small and too quick by others. The company’s function is to do what others can’t or won’t do, and never to think “inside the box”. That is why ColorTree will continue to exist.

Click here to view the corporate brochure on ColorTree