Luminescence Sun Chemical Security – Combining Family Values with Global Reach

Three years ago, the family-owned security ink business Luminescence was acquired by Sun Chemical, the world’s largest manufacturer of inks and pigments to create, in its words, a new global player and an enormous growth platform for the company in the $2.7 billion security ink market. Since then, whilst the company is now called Luminescence Sun Chemical Security, it seems to be very much business as usual in the highly specialised security ink market, where technical requirements are exceptionally demanding and competition relatively limited.

Paul Cooper.

Currency News™ marked the third anniversary of the acquisition by speaking to Paul Cooper, one of the four family members running Luminescence at the time and now its President, to find out about life under Sun Chemical and the future prospects for the company.

Q: Can you give some brief background to both Luminescence and Sun Chemical, and how the organisation is now structured?

A: Sun Chemical is, as you already mentioned, the world’s largest manufacturer of inks and pigments and is structured as a regional organisation, so every country or region is responsible for their own production, with all supported by central operations and technology centres which are very extensive, and very valuable, resources. In the last year or two the business has shifted towards having global Business Units that operate more focused on the different markets in which we operate, ie. packaging, publishing, etc.

As part of this there is a division within Sun Chemical called Global Specialties, and we form a part of this as the security business. We have full control of our own operations and our own technology, we have an operations director and a technical director but there are also dotted reporting lines to the central resources.

Sun and parent company DIC have amazing R&D facilities all over the world and huge operational capabilities, so to be able to call on those any time we want is a dream come true for someone that’s running a business like this. Usually, we wouldn’t be able to access those type of facilities.

We have those central resources to call from, and then within the security business there are three sites in Harlow (UK), a site in France which is primarily supplying the eurosystem printers and other European customers, and a site in São Paulo, due to the recent acquisition of Seller Ink.

Q: When you were acquired, was there much rationalisation, or are you carrying on with your product portfolios as before?

A: I would say that there’s been no rationalisation needed whatsoever, either in product range or in anything else. We decided to keep the name Luminescence because it was known in the security market, and we’re still in the same premises in Harlow and have expanded and taken on more sites. This is an indication of how much Sun recognised the need to keep the business as it was, but also to put more resource in and to grow the business, rather than to absorb it into Sun Chemical.

What we have done is create a clear structure for our products, categorising all our inks and technologies in four distinct product groups. HelioNOTE covers all our inks and technologies for banknote production. HelioID is for the ID market (passport, drivers licenses etc.) and includes our passport stitching threads. HelioMARK covers the growth markets for tax stamps and product authentication; apart from inks and taggants this also includes special readers or authenticators. And finally, HelioSEC is for the wide range of security inks that are used on certificates, tickets and other security documents.

Q: What would you say sets you apart from other businesses in the industry?

A: We still very much have the ethos of a small/medium-sized business so we’re very agile, very customer focused, and can move quickly. But at the same time, we have all of the resource of the larger company.

To have all that resource behind us yet still retain that agility and the freedom to develop what we want to develop and to work with who we want to work with – that sets us apart from the rest.

Q: Do you think there is room for you all in the market?

A: The security industry is not a particularly small one, and there is one major player that holds the vast majority of the market. But there’s additional work out there at the moment and the idea is obviously to level the playing field and to make a much more balanced market for the future so that customers have more choices going forward.

In short, I do think that the market is big enough to sustain two or three players comfortably.

Q: Those three main companies are European based. Are you seeing much competition developing in, predominantly Asia, or elsewhere in the world? Or is it still very much a market dominated by the three of you?

A: I think what we’re not really seeing any big companies springing up out of Asia that are exporting globally. We are seeing one or two of the state printworks in Asia wanting to support themselves, but realistically I think because of the level of quality control and the raw materials needed for the security business, customers recognise that it’s not an industry where price is everything.

Central banks and printworks still value the extra that they get by dealing with companies that are more customer-focused and more focused on quality control, rather than just delivering at a price.

Q: How much of your business is in the banknote market versus, say, passports, ID, tax stamps, brand, general security?

A: In volume terms, there’s certainly a lot more in banknote. Not sure if that’s the case in revenue, it’s closer to a 50/50 split in revenue, but banknote inks by their inherent nature are higher in volume and lower in revenue.

Q: What does your portfolio look like?

A: We have a very wide range of high-security inks. But when we focus on banknote inks, we supply for all the banknote processes, including intaglio inks which is the main part of the volume) along with offset, screen, numbering inks and anti-soil coatings.

On the security feature front we offer the whole range of known features on all levels like colour shift, magnetic and infrared absorbing inks with spectrographic signatures.

There are one or two products that are protected by IP which we currently can’t supply, or we can only supply under licence in certain parts of the world, but barring those we supply an entire package.

It is interesting to note that we supply our inks and pigments throughout the supply chain so there are paper mills who use our inks to create their security threads or our iridescent screen inks, and we also offer staining inks for IBNS cassettes to secure the post-issue cash-cycle. We have some really good cost-effective solutions that we have obtained from Sun Chemical, so that’s another major benefit from the acquisition.

Q: Are you doing any work currently on anti-COVID or anti-viral products?

A: I can’t really say too much on this for the moment, but the answer is yes, we are. This isn’t just on the security part of the market, it’s in the commercial side as well. Sun has been developing coatings for this kind of application, but there’s quite a lot involved in getting these approved so that public health claims can be made.

Q: What is your strategy for the banknote market?

A: We’re a very customer-driven company, so the strategy is to listen to what the market wants and then try and develop new products along those lines, rather than trying to think up some product that we think the market wants.

As a marketing strategy, what we can bring to the customers is cost-efficiencies, fast turnarounds – things that Luminescence was always known for – and just being very customer focused and giving good technical support. While price is a major driver and is becoming more so, we never want to become a purely cost-driven company. We always want to maintain that customer focus and give those high levels of customer support that people expect.

Q: Do you find that Sun Chemical is helping you to expedite your product development pipeline?

A: It does help because we now have all these resources to which we can subcontract parts of the work. We’re very aware that we want to keep anything that’s secure in-house, but anything else can go out to the more central Sun Chemical technology teams. Having those resources and R&D sites doesn’t necessarily speed up what we do, but it certainly gives us more resource to develop far more innovative products.

Q: What are you doing in terms of your processes and products to reduce their impact on the environment?

A: This is somewhere where Sun Chemical has had a big impact on what we’re doing.

Environmental health and safety (EHS) in Sun Chemical is very important. Following the acquisition, the first action was to inspect the factories and address potential environmental, health and safety issues. I was really blown away by the level of detail that Sun Chemical go into on these topics. Our wastage has been reduced, everything is recycled wherever possible, and all the cleaning solvents that we use, which are unfortunately a necessary evil, are environmentally-friendly non-volatile products.

For products, we’ve tried to change the volatile compounds that we’re using to less harmful and more sustainable products. We’re focusing on developing products so that we can move away altogether from solvent-based and onto more environmentally friendly and sustainable features.

Q: Do you think that digital print, and therefore by association digital inks, have any place in banknote production?

A: It’s certainly not the same now as it was a few years ago. Although digital print hasn’t yet been embraced by the banknote world, and I don’t know if it will be, I do see a place for it in the future.

I don’t think you’d ever see an entirely digitally produced banknote as you’ll never replace the traditional systems and characteristics that people associate with banknotes. But certainly, for parts of the banknote such as an isolated feature, there could be a place for it going forwards.

Q: How has COVID affected your operations, and have you managed to keep everything going?

A: We have kept going on all sites throughout the pandemic. We didn’t use the government’s furlough scheme as we wanted to keep everyone engaged in the business. We put in place social distancing measures from the start, and initially we implemented a rotation scheme but now everyone carries a fob and if they come within 2 metres of someone else it alerts them and it logs onto a database. So social distancing breaches can be monitored and necessary actions taken if appropriate.

As far as the business side of things go, we’ve had a few small issues with getting raw materials in and dispatching, but nothing too major. The business levels have held up through 2020 and we’ve expanded in some areas.

Our growth rate hasn’t been what we would have expected it to be in normal times, but there’s certainly not been any downturn and it’s more like a pause button has been pressed than anything else.

Q: Do you see that growth being in the banknote sector or other areas of security? Or both?

A: Certainly in both. Luminescence is very strong in the passport and tax stamp sectors, so there’s probably less opportunity for growth there, but there is a lot of space to grow in the banknote market. It seems to be an area in which customers are looking for a more customer-driven supplier, or second suppliers, so this is the main area with growth potential.

Q: Do you think there is a future in banknotes, and would you encourage your children to go into this business?

A: It’s a fantastic business to be in, it’s interesting, innovative, fast-moving, and it’s certainly got a future as well.

Looking long into the future certainly there may be some slow decline as things go to more electronic solutions, but it has a very strong future. I’d have no hesitation at all in encouraging my children to enter the business. From an industry perspective I’d absolutely encourage them to be involved.

Q: You were, prior to the acquisition, a family company. In addition to the technology and experience, do you think you’ve managed to retain that sense of a family team, even under your new owners?

A: Absolutely. We are just a bigger family now. Many of us are still very much part of the business and I think that helps keep a strong family influence.

I think that the biggest influencing factor is the fact that we have managed to keep this as a standalone security business, which is expanding in various parts of the world on various sites, benefiting from our ownership by Sun Chemical but not being absorbed by it.

The past three years for sure have been exciting and we look forward with confidence that the coming years are only going to get better.