On The Move: Thoroughbred Technologies

 
Thoroughbred Technologies

Thoroughbred Technologies continues to revolutionize the inkjet remanufacturing industry from the ground up.  “Few companies in this industry (refilled imaging consumables) are solely focused on inkjet manufacturing,” said CEO and President, J. Mark Appleberry, “With respect to companies that only remanufacture inkjets, I’d say size [makes us unique].  We currently produce thousands of cartridges a day.”

Quality inkjets are what Thoroughbred strives to bring to an industry saturated with toner and mixed (toner/inkjet/fax ribbon) manufacturers.  Inkjet processes are hard to develop and sustain, especially with the changing technology that OEM’s (Original Equipment Manufacturers, such as H-P and Lexmark) use to perplex remanufacturers.   “OEM’s continually refine their process to introduce new and tricky components to their products,” noted Appleberry.  Motive: refillers take profit margins from OEM pockets by selling recycled products, cutting them out of the loop on the one product that earns some OEM’s most of their profits.

“Printing and imaging, which at $5.5 billion represents 30% of [HP’s] quarterly sales, brought in a stunning $918 million in operating profits, 76% of the total.”  FORTUNE.COM, Thursday, May 22, 2003 Posted: 12:48 PM EDT (1648 GMT).

“Our reason for being is [to] spend the money to do all the hard R & D and figure out how to perfect the remanufacturing process on what are surprisingly difficult things to remanufacture…. Processes will only continue to get more and more complicated.  And we’ll have to spend more and more time to perfect that process,” Appleberry continued, “[OEM’s] have a lot of anti-recycling devices that they’ve been using, such as software programs, that we have to work around.”

Thoroughbred sells to small and large distributors and dealers.  Serving as an outsource partner, many distributors and other remanufacturers who do not make all their product in house buy from the inkjet supplier. Their min order is 25 inkjets, but they’ve had orders for up to 50,000 cartridges at one time.  The cartridges are backed by a “100% satisfaction guarantee”:  Thoroughbred will replace any defective cartridge within 1 year of purchase.

The Starting Gate- Louisville, KY

Thoroughbred Technologies is located in Louisville, KY where it originated in 2000.  It was started by J. Mark Appleberry; his brother, Tim Appleberry; his dad, Jim Appleberry; and, experienced businessman Marc Caparrelli. “I (J. Mark Appleberry) practiced as a lawyer for several years.  Tim has a masters degree in Fine Arts and Marc has a wide business background.”  Mark’s dad was president of The American Association of state Colleges and Universities for 7 years, completing the team’s diverse character.

Even though the backgrounds of the members gave them a varied business posture, none of them knew a thing about the inkjet industry, when they got started.  The group had been looking to buy a company and ran across one in the industry for sale.  While they passed on that venture, they thought that the industry itself was “worth looking into”.  And so, they began research that eventually led to the realization that “there was a niche space available for a large, high-quality inkjet remanufacturer (J.M. Appleberry).”

Legally formed on July the 20^th, 2000, Thoroughbred’s production lines were finished by Oct, and in Nov they were producing a black-line of inkjets. “We didn’t know the first thing we were doing or anything about it,” recalls Appleberry of their first Recharger World Expo Show in 2000.  “We walked around the show with our eyes open and said to ourselves, ‘this is interesting’”.  They met a company at the show that would later be their first customer.

At the time, they had just finished building their production lines and had hired a consultant to get them started on their initial remanufacturing inkjet processes.  “There was a big coincidence about the same time we were looking at getting into the industry.  A friend of mine knew this guy that was into inkjet production here in town.  He basically got us started with some of our initial processes; Tim was the primary [R&D] guy after him.” They were producing “4 or 5” different skews of HP and Canon cartridges, including 45’s 26’s and 29’s.  In early November, they made their first sell.  “A business supply company we met at the Recharger Show started testing [our cartridges] and giving us feed back.  They saw that the product was good, and we sold 50 inkjets,” reminisced Appleberry. 

1^st Turn

Growth rates at Thoroughbred Technologies have been exceptional ever since. “We had a couple of temporary employees that fall working in production. We hired an office person to answer the phones Dec. 12^th.  Then the temporaries left, the consultant left, and on the first of Jan., we hired a sales person and two production line people”.  To put things in perspective, in Dec of 2000 Thoroughbred had one employee, by Jan they had 5, in Jan of 2002 they had 30 and currently, July, 2003, they have 75 employees.  “We grew 275% between 2001 and 2002 and 240% in the 2002/2003 year.”  In fact, in their 2^nd and 3^rd years, they expanded enough to gain national acclaim, making Entrepreneur Magazine’s Hot 100 Fastest Growing Companies for two consecutive years.  They were also nominated locally in Louisville’s Business First Fast-Fifty Companies.

2^nd Turn

With this growth came technology.  Sophisticated remanufacturing machines now line their 40,000 sq ft facility; and, what were once simply “testing” processes have now evolved into solid, inkjet remanufacturing “SOP’s”. Processes which the industry acknowledged as some of the best by placing Tim Appleberry, R & D specialist, on a “Panel of Experts” at the Recharger Show in 2002.  The panel of 10 answered questions from attendees and exhibitors constructing their own remanufacturing processes.

Inkjet remanufacturing is more than just the right process.  It takes the right empty cartridge. Thoroughbred has also developed raw material relationships that have kept their products consistent.  “If you can get empties providers to screen what they’re giving you, then your rate of success will be higher,” said Jamie Hamilton, Executive Assistant, quoted in the Recharger: Feb, 2003, “Inkjet Trends:  Shipments Up, Quality Issues Remain”, Neal McChristy.

3^rd Turn

With Thoroughbred’s intensive growth and technological study, the company’s business model has also matured quickly within their 3½ years.  In 2002, Thoroughbred began a cartridge-recycling program called the GreenFund Network.  GreenFund collects toners and inkjets from large non-profit organizations across the country.  The inkjets it brings in go to Thoroughbred’s remanufacturing process. The collection program is essential because remanufacturers depend on recycled, raw materials before they can begin work.  In the inkjet remanufacturing industry, “Empties”- what they call the empty, cartridge cores- are sold by brokers.  “Virgin Empties”- empties that have only been used once and which are the most expensive- are the only cartridges Thoroughbred will use to remanufacture.

When asked how empties prices affected Thoroughbred’s pricing model, Mark said, “Usually we try to swallow that fluctuation in the market.  What we end up doing is changing our prices after long upswings or downswings in the price of empties. I can see us continuing to vertically integrate by using our own internal collection processes and not relying on brokers so much up-stream.”

Down the Stretch

“There is a lot of consolidation in this industry.  So, a lot of the small players will continue to find it difficult to compete as companies merge, consolidate, and get purchased,” said the president and CEO. In Thoroughbred’s future, Mark saw the next “logical step” to be keeping up with current inkjet trends, such as the new lines of HP (56’s 57’s & 58’s) and Lexmark (16’s and 26’s) which he will introduce soon.  Business wise, he emphasized that in order to continue their wire-to-wire expansion rate, Thoroughbred would have to keep taking “intelligent and qualified risks”.

“The company continually strives to bite off more than we can chew, to push ourselves to succeed and grow.  [Early on] we developed relationships with companies that were larger than companies we should have developed relationships with. Basically we worked 24 hours a day to satisfy their need, [working] overtime, temporarily running second shifts, whatever it takes to continue to grow.  And I think taking those types of intelligent and qualified risks have stimulated us to the point where we have seen aggressive growth,” said J.M. Appleberry.

While the 3½ year-old Thoroughbred has come a long way in a short time, it will not let these accomplishments distract it from reaching the full potential it has envisioned. “In four years, I think hopefully we will continue to be a leader in the technological field and in manufacturing processes.  I think we will explore our vertical integration options and continue to perfect our inkjet quality,” noted J.M. Appleberry.

Resolute to becoming the best, Thoroughbred Technologies offers its customers an inkjet that stands on its own- guaranteed.