President Barack Obama’s plan to engage the European Union in a new transatlantic trade and investment partnership is great news to a small Middletown company that’s already supplying mail handling equipment to European clients.
ID Mail Systems is an example of one company that is taking advantage of international opportunities. The Middletown company, which provides mailing equipment and software to assist businesses and mail centers with mail and parcel barcoding, identification, processing and sorting, recently inked a $12-million deal with PostNL, a mail, parcel and e-commerce company in the Netherlands.
In 2012, U.S. exports outpaced imports and a new partnership could further heighten overseas opportunities for U.S. businesses. According to Francisco J. Sánchez, the undersecretary of commerce for international trade and the leader of the International Trade Administration, more than 6 million private sector jobs have been created in the U.S. in the past 35 months due to the growth in exports. Exports grew to $2.2 trillion in 2012, up $1 billion from the year before, Sánchez noted.
For ID Mail, growth has been more measured.
Among the company’s employees are a number of contractors who have been added due to the PostNL contract. They include software, hardware and electrical engineers.
“These are extra resources we need for this contract,” said Jerry Fenerty, president, CEO and also one of the founders of the 16-year-old private firm.
This is the second contract PostNL has signed with ID Mail, having previously agreed to a smaller contract about five years ago, Fenerty said.
While all of ID Mail’s full-time employees are based in Connecticut, Fenerty said there is a long-term contractor working on sales and marketing for the company based in the U.K.
“We hope to have a presence in the Netherlands next year as we begin phase 2 of the [PostNL] contract,” added Fenerty.
PostNL has installed ID Mail’s Dispatcher MX, a more robust system than the mixed-mail sorting Dispatcher system, which debuted in 2009. PostNL needed a system that would sort flats (which are any rectangular or square mail piece too big in at least one direction to be a letter) thicker than 10 mm and sort irregular and non-machineable mail at a rate of up to 10,000 items per hour.
The Dispatcher MX, one of three products in the signature Dispatcher line, includes a color imaging camera, alignment and gap correction modules, a 30-second delay for OCR and video coding, a compliant belt labeling and printing solution and 72 sorting bins. ID Mail also updated the design of the labeling and printing modules to improve consistency of applying labels.
“ID Mail Systems is a small engineering and manufacturing company,” said Fenerty. “Our forte is understanding customers’ mail processing requirements, usually involving sorting, and being able to adapt our systems to meet their needs.”
Fenerty said the company, located in a 15,000-square-foot manufacturing facility within the Connecticut Enterprise Development Zone in Middletown, is small by competitor standards with just 35 employees, including contractors.
“For the type of technology we deliver to customers and the types of equipment we provide them, we’re a very small company,” Fenerty said, adding that the company targets businesses with “low- to mid-volume mail streams.” ID Mail’s equipment generally handles less than 10,000 pieces per hour, far below the needs of large companies such as a Pitney Bowes, which might handle 60,000 pieces per hour.
ID Mail was actually born out of a company that was shut down by its investors. Fenerty was CFO of that firm. He and a small group of employees from that company purchased some of the assets and launched ID Mail, which initially focused on domestic mail systems.
Today, between 40 and 60 percent of the firm’s revenue in any given year comes from foreign clients, although Fenerty admits that there is greater risk involved in foreign contracts due to language differences and local regulations that must be met.
ID Mail offers a number of mailing solutions, although its Dispatch line is its most popular.
Postage One, a presort company based in Valencia, CA, found success with the Dispatch Max M product. The company is now collating, sorting and shipping more than 15,000 parcels per day, in addition to its letter mail business while increasing revenue. This was accomplished because the Max M allowed Postage One to pass along discounts to parcel shippers due to the ability to comingle packages.
The Max M system scans delivery addresses, assigns delivery point barcodes and creates manifests. It has also allowed Postage One to expand into other types of mail such as first class flats and priority mail.
Another business, London’s Citipost Ltd., found similar success with the Dispatcher solution that enabled it to take advantage of downstream access discounts available from Royal Mail. Dispatcher allowed Citipost to process letters and packets (flats) as well as international and private delivery mail. It also can weigh and label items while in they are in motion.
“The different products have a different range of abilities,” Fenerty said. “They each can be used for different purposes with minor changes to the software.”
While the U.S. Postal Service has struggled with declining mail volumes, Fenerty said that is only a small portion of the mailing pie.
“Standard class mail has actually grown,” he said. “It dropped during the recession, but it has rebounded. Now you have eBay parcels, or person-to-person parcels. The whole e-commerce [economy] has changed the market.”
Fenerty pointed out that the mail equipment market is challenging in modern times, due in part to companies running their machines longer to save costs, but “while the mail industry is smaller, it still represents an excellent way to reach your customers and potential customers,” he said.
And while ID Mail Systems has found success overseas, the U.S. market, which still produces 40 percent of the world’s mail volume, remains an integral part of the company’s success.
“It’s easier to do domestic business, from a language and support [perspective],” Fenerty said. “I think the reason we are able to compete with larger companies, and we don’t compete in all areas, is we’re good at being able to provide solutions at a price point that meets a customer’s needs.”
