Durham’s Bell and Howell reinvents itself for a digital world

dranii@newsobserver.comMarch 8, 2014 

  • Bell and Howell at a glance

    Headquarters: Durham

    CEO: Ramesh Ratan

    Employees: 1,126

    Annual revenue: “Many millions north of $200 million”

    Owner: Versa Capital Management

    Business: High-speed mail sorting and inserting equipment and business software. Or, as Ratan puts it, “we design, develop, install and service technology solutions that help our customers enrich their communications and commerce, both physical and digital, with their customers.”

— For people of a certain age, Bell and Howell is an iconic brand known for its movie cameras, slide projectors and other consumer products.

This isn’t a story about that Bell and Howell.

This is the tale of a company with a storied name that years ago sold the rights to the Bell and Howell brand for consumer products.

Headquartered in Durham, where it has 250 workers, this Bell and Howell is the No. 1 producer of high-speed mail-sorting equipment. And it’s been diligently adapting its technology for new markets with higher growth potential.

The diversification effort is critical in light of the Internet’s disruptive impact on snail mail.

“We are reinventing the company,” said Ramesh Ratan, who took over as CEO of the privately owned business at the beginning of the year. “It’s not that we’re going to. We’ve already started and are well along the journey.”

Fortunately for Bell and Howell’s future, the technology behind the equipment it sells to large businesses and direct-mail companies was readily convertible to handling packages. That’s become a growth industry as e-commerce continues to grab market share from brick-and-mortar retailers.

“E-commerce is all about parcels, shipping, logistics,” said Ratan.

The company’s performance in January and February has stoked the new boss’s enthusiasm.

“Part of what I am really excited about is our traditional core business, which is all mailing-related, has stabilized,” said Ratan, who noted that direct-mail volume suffered during the recession but has stabilized and even started to creep upward. “And the new (products are) actually starting to gain traction. I can see the turn happening as we speak.”

The company was focused on transforming itself well before Ratan, who previously was president of two divisions at archrival Pitney Bowes, took the helm. But its recent path has been bumpy.

In 2011, after its corporate parent, Bowe Systec of Germany, became insolvent, Bell and Howell filed a bankruptcy plan that called for it to be acquired by Philadelphia private equity firm Versa Capital Management. A little more than two months later, that plan was approved, and Bell and Howell emerged from bankruptcy.

In the process, the company changed its name, which had become Bowe Bell and Howell when it was acquired by Bowe Systec, and moved its headquarters from Wheeling, Ill., to Durham – which was already its biggest site.

Back then, Bell and Howell had 1,600 employees companywide. Today its workforce stands at 1,126, a 30 percent reduction.

“We’ve done some consolidating, some shrinking,” Ratan said. A layoff announced in December, just before Ratan joined, eliminated 50 or so jobs.

Although the cutbacks predated Ratan’s tenure, he suspects that a driving factor was that the company had expanded its infrastructure in anticipation of growth that didn’t materialize.

Lengthy product list

However, Bell and Howell’s 250-employee local workforce has remained stable and is expected to expand a bit this year as the company consolidates all of its manufacturing at its Durham facility, which stretches one-quarter mile end-to-end.

Ratan anticipates hiring an additional 15 to 20 workers for the factory floor this year.

“Obviously, we flex that depending on the business,” he said.

In 2013, the company’s revenue was “many millions north of $200 million,” Ratan said. That was “a little bit” less than 2012 and fell short of expectation, a situation that was exacerbated by increased costs.

For 2014, Ratan has committed to Versa that the company’s revenue will be flat. But, internally, he has set a goal of a 10 percent increase.

Despite the company’s recent issues, Ratan said that accepting the CEO job was a no-brainer given Bell and Howell’s “incredible brand name,” strong reputation with customers and talented workforce. He also was impressed that, unlike some private equity owners, Versa is committed to strengthening the business.

“Versa has been investing in this company,” he said, “and they continue to invest.”

While overseeing Bell and Howell’s continued expansion in non-mailing-related markets, Ratan also anticipates pulling the plug on some older products whose time has come and gone.

Today Bell and Howell has a lengthy list of products, long enough that Ratan has divided the business into six strategic business units.

Its lineup of integrated hardware-and-software systems includes high-speed mail inserters and sorters priced between $200,000 and $600,000 that enable customers to send out bills and statements not only by snail mail but over the Internet, through either a Web portal or email, or to a mobile phone.

More personalization

Companies – especially credit card and insurance card companies – still see direct-mail as a cost-effective marketing medium, said Jerry Bernhart, principal of Bernhart Associates, a recruiting firm for the direct-mail industry.

“It’s still an important part of an integrated marketing approach,” he said. “In fact, as a consumer, I’m getting more catalogs than I’ve ever received.”

That said, the pull toward other media has been so strong, said Bernhart, that “as a recruiter, I have had to shift my focus more and more into the online space. I don’t know any recruiters who concentrate just on traditional direct mail. Twenty years ago, we all did.”

Bell and Howell’s latest mail equipment also enables more personalized, color-printed communications.

“The idea is to make an envelope not look like direct mail, but personalized and targeted,” said Mark Van Gorp, vice president and general manager of inserting businesses. “You only get so many opportunities to talk to your customers.”

The ability to sort mailings down to individual ZIP codes enables mass mailers such as financial institutions and direct-mail companies to take advantage of discounts for pre-sorted mail offered by the U.S. Postal Service.

“We’re in ZIP code 27713 right now,” said Van Gorp. “If you deliver 150 pieces all grouped together (headed for) 27713, you get a discount.”

The company has about a 65 percent share of the mail-sorting equipment market, said Van Gorp, and is No. 2 behind Pitney Bowes in mail inserting.

Bell and Howell’s automated parcel-handling equipment, which can cost up to $1 million, is aimed at the rapidly expanding e-commerce market. The high-speed equipment – which the company boasts is the fastest on the market – is used by online retailers and order fulfillment houses to sort packages, affix address labels to them, and track them on their way to the customer. Bell and Howell’s patented “linerless” label technology is a green alternative, dispensing with the peel-away backing of most labels.

The company also sells stand-alone software, including software that mines customer data for, among other things, more targeted communication. And in states such as Oregon and Washington that conduct elections entirely by mail, its software sorts votes by precinct and validates that voters’ signatures match the signature registered with the state.

A clean slate

Bell and Howell also has partnered with a trio of manufacturers to distribute and service equipment that produces credit cards and ID cards, such as driver’s licenses, that have security features designed to thwart forgery.

“We design, develop, install and service technology solutions that help our customers enrich their communications and commerce, both physical and digital, with their customers,” Ratan said. “And we tend to serve large companies.”

About half the company’s revenue comes from services, thanks to maintenance contracts that it sells with its equipment.

A typical contract, said Van Gorp, guarantees that the equipment will be up-and-running 95 percent of the time.

The guarantee includes a financial penalty for falling short, but “we almost never pay those because of the quality of our service,” he said.

Many of Bell and Howell’s 700 service workers are embedded at customer sites.

“Most of our customers will tell us, ‘I forget if your service people are my employees or your employees,’ ” Van Gorp said.

Back in Durham, Ratan is planning to bring in new senior management – out of necessity.

Today the company has an interim chief financial officer and an interim chief operating officer, both of whom were supplied for a limited time only by Versa. Ratan himself replaced an interim CEO, Kamal Advani, a managing director at Versa who took charge when former CEO Leslie Stern stepped down for personal reasons at the end of September.

“It’s a clean slate,” Ratan said. “It’s tremendously helpful to have the ability to build if from the ground up. But it’s important to keep in mind, there is an infrastructure here that is extremely robust.”

Ranii: 919-829-4877

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