The evolution of Oberthur Technologies from printer to security leader
09 October, 2008
category: Corporate, Digital ID, Financial, Government, Library
By Andy Williams, Contributing Editor
Oberthur Technologies may just be the ‘youngest old company’ in the card business. Sound like a contradiction? Consider this, it was founded in the mid-1800s but it was just twenty years ago that its first product was produced.
For 150 years, the company ran paper through printing presses. Today it is a world leading plastic card producer, but it didn’t produce its first card until very recently. Now they are changing once again, expanding from a payment card producer to a leader in the security business.
With sales of roughly $1.2 billion in 2007, Oberthur continues to surge forward, reporting sales and revenue increases that, particularly in today’s dour economic climate, would be the envy of most corporations.
Like one of its competitors, Giesecke & Devrient, Oberthur got its start in the printing business. François Charles Oberthur founded the company in 1842. Its 19th century history centered on the operation of presses to produce school texts, share and bond certificates, and what is claimed to the be the first telephone directories.
It was nearly a century later when, in 1940, Oberthur began printing banknotes for the Bank of France. Still, the company did not find its modern identity for 40 more years, until its bankruptcy and rebirth– not just in paper but in pastic card printing as well.
It was a Frenchman, Jean Pierre Savare, who rescued Oberthur Printing Works from bankruptcy. He took a leave from the bank where he worked and purchased the secure printing components of the business, restarting it in 1984 with just 49 employees.
Today, the company has 5,500 employees, 12 manufacturing plants, 38 sales offices, five research and development centers, and 30 personalization bureaus.
The Savare family still owns 72% of the company.
The move to plastic
A fear that plastic would eventually replace paper was what first led Oberthur into the card business, says Martin Ferenczi, CEO at Oberthur Technologies of America Corp. “We acquired a company called Kirk Plastics in Los Angeles in 1994. That was our first (significant) entry into the card business.”
Certainly the aggressive approach to mergers and acquisitions helped build the new company, called Oberthur Card Systems, as a world leader. In 1999 a merger with De La Rue Card Systems, which included a number of facilities around the world, was completed. So far this decade has been marked by purchases of Logica in Spain, Africard in South Africa, I’M Technologies in Singapore, XponCard in Sweden, as well as the opening of new plants in India, China and Brazil.
Over the past 20 years Oberthur has supplied more than 5,000 financial banking institutions with magnetic stripe and smart cards – including 500 million EMV cards and 30 million contactless cards.
Expanded product offerings leads to rebranding as Oberthur Technologies
As the card business was growing, the company was also building its other lines of business. At the close of 2007, the company was renamed Oberthur Technologies to better reflect its core business, which now includes smart cards, visas, passports and banknote printing.
As Martin Ferenczi, CEO at Oberthur Technologies of America Corp., explains it: “Although our name is Oberthur Technologies, the reason we have a new name is that we’ve now integrated our banknote business, our passport business as well as our Cash In Transit Intelligent System (also known as the CIT Intelligent System) which is an alternative method for transporting bank notes.”
Still, the cards produced by the company’s Card Systems division make up 80% of Oberthur Technology’s business. In 2007, secure printing accounted for 17% of revenues, cash protection was 3%, and card systems earned the remainder, some US$942 million. By region, 17% is accomplished in the Americas, 6% in Asia and 80% in Europe, the Middle East and Africa.
The U.S. focus
When Oberthur launched its U.S. operations its main business was producing checks for the U.S. Treasury, Social Security cards and the U.S. Visa that goes into foreigners’ passports.
Today, it’s more about card manufacturing and personalization. Oberthur’s South America and Mexico connections include a personalization center in Mexico City and a manufacturing and personalization plant in Sao Paulo, Brazil, with subsidiaries in Argentina and Columbia, says Ferenczi. With its U.S. facilities, including a large plant in Los Angeles, the company has around 1,500 employees in the Americas.
Ferenczi, who has been with Oberthur for 18 years, was the company’s first employee outside of France. That was in 1990 when he left then Chase Manhattan to open Oberthur’s first foreign subsidiary geared towards high-security printing.
Today the company supplies more cards to the U.S. government and related projects than any other vendor, Ferenczi says. They provide cards for FIPS 201 programs, the U.S. Department of Defense’s Common Access Card, the Transportation Worker Identification Credential, and the Registered Traveler program.
Oberthur is following the TWIC program, HSPD-12, Registered Traveler, the Common Access Card, Real ID and the First Responder Access Credential, just to name a few, says Patrick Hearn, vice president of Oberthur’s government ID market. “We support more than 70 federal agencies for HSPD-12 and the Department of Defense’s Common Access Card as well as the Registered Traveler program.”
Oberthur has a long history with the Common Access Card program, Hearn says. “We were actually the first organization to ever issue a CAC card back in 2001,” he says. “We were producing DOD cards back in the 1980s.”
“In the U.S. our ID business is substantially above $15 million. It’s one of our smallest business segments but one of our fastest growing,” Ferenczi says. “Worldwide, it is also the smallest of our segments but one with biggest growth potential.”
As for governmental ID programs outside the U.S. they run the gamut and include e-passports, national ID cards, secure military IDs and driver licenses in more than 50 countries.
And the future?
The card production and personalization industry is an increasingly challenging business. Forces including consolidation, commoditization, and globalization each put pressure on company revenues.
So can a company as large as Oberthur remain agile and succeed in the modern economic environment? Ferenczi thinks so and considers this agility to be Oberthur’s key strength. “Because of our corporate ownership, the result of an entrepreneur, we can adapt and make important decisions very quickly,” he believes. “That goes towards our number one goal to service our customers the best we can.”
Securing cash transport the Oberthur way
Imploding canisters use ink to destroy the same banknotes it created
The banknote transport business represents just 3% of Oberthur Technologies business, but it may be every armored car robber’s worst nightmare.
“Rather than have a secure truck with armed guards, we put the banknotes in small computerized containers. If it doesn’t arrive on time, it implodes and covers the banknote with inks,” says Martin Ferenczi, CEO at Oberthur Technologies of America Corp. “It requires no armed guards in the trucks. If there’s a holdup, the driver gives up the containers. It is our belief, they will not be able to get their hands on the banknotes.”
Of course, if someone tries to crack the container, the same thing will happen. “We use the same technique to protect ATMs. It’s proprietary technology. Sixty percent of fund transportation in France use our technology. We also have clients in a number of European countries and we’re now attempting to deploy in North and South America.”
Obviously you need a way to convert the soiled banknotes into good ones if the notes are recovered, “so we have to work with the banks to replace the notes,” adds Ferenczi. “The only cost is the manufacturing cost of the banknotes, not their face value. It has been a very successful system. We are in the security industry and our job is to be one step ahead of the bad guy.”