Essilor's Fontanet Offers 'Recipe' for Blending Satisloh Equipment Into Lens Mix

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PARIS—For Essilor, the world’s largest ophthalmic lens manufacturer, the acquisition of Satisloh will open up a new tier of the optical market—manufacturing lens surfacing and coating equipment for optical labs and retailers. Essilor executives see the Swiss company as a strategic fit on many levels: with Essilor’s extensive global network of prescription laboratories, with independent labs as well as with Essilor lens finishing equipment businesses.

 
Xavier Fontanet
In an exclusive interview with Vision Monday, Essilor chairman and president Xavier Fontanet discussed Satisloh’s strategic importance to Essilor and why he believes it will enable Essilor to expand its international business while growing the optical industry at large.

Fontenet characterized the Satisloh acquisition as a “deep investment” with considerable long-term payoff for Essilor in terms of servicing existing customers, opening up new markets and fast-forwarding new technologies.

“This is a very big move—the R&D of Essilor and R&D of Satisloh will generate better machines and products for everybody,” said Fontanet. “If the global market grows even one percent, it has a huge effect on Essilor’s value…We think of Essilor, but we also think of the industry as a whole, because [this combination] is beneficial.”

Fontanet characterized the investment in Satisloh as a new direction for Essilor. “It’s not a classical investment,” he said. “It’s about R&D and technology.”

In describing how Essilor will grow the market, Fontanet draws an analogy between the Satisloh acquisition and Essilor’s establishment of a prescription laboratory network in the U.S. in 1995, a move that consolidated Essilor’s distribution and gave it a platform to introduce advanced coatings and progressive lens designs.

“Fifteen years ago, the level of AR development in the U.S. was low. The quality of [lens] surfacing in the U.S. was low…That was one of the reasons we invested. We helped the market to make good progressives and good AR coatings…Bringing good, semi-finished lenses at the time was good way to help the industry.”

Fontanet pointed out that, in addition to putting advanced technology such as its Crizal AR coating into its own labs, Essilor has grown the market by providing the same technology to independent labs.

“We extended Crizal,” he said. “The same technological weapon as Essilor labs had was given to independent labs. Therefore everyone benefits.”

Essilor intends to use Satisloh’s proprietary technology, including digital surfacing and other capabilities, in a similar fashion, Fontenet said.

When asked about digital surfacing and its potential in the marketplace, Fontenet used a culinary metaphor to explain.

“Let’s talk about cooking. You need several components.You need to have good materials—the lens. You need a good recipe, which is the manufacturing and design. You need good spices, all the little things you use to make surfacing better like consumables. So Essilor will help a lot with the recipe. It will be a big complement when Essilor and Satisloh join forces, because it will result in a better process.”

Fontanet noted that without the proper process, even good equipment can produce bad digital lenses.

“Of course, you can improve the machinery, but it’s at the service of the recipe. Essilor will of course help Satisloh to improve the machine because we know the recipe. We want all the ‘restaurants’ to be good,” he remarked.

As another example of the synergies between the two companies, Fontenet talked about coatings. “‘AR’ coating is not a good word,” Fontanet said. “Five years ago, it really began to be described as ‘multicoating’, which is better than ‘AR’ coating because AR is one function. Today, there are 25 layers in an Essilor sophisticated lens. We put the same name on different products. But the sophistication of a machine with 25 layers is not same as one with five layers.”

Fontanet, expanding a bit on what the company told analysts previously, said Essilor intends to tap Satisloh’s technical expertise to expand its lens finishing business.

“Essilor makes an edger for opticians. We also have company in the U.S. [National Optronics] that makes edgers for polycarbonate and small labs. It’s absolutely clear that we can leverage Satisloh by working on edging for big labs. That’s another dimension we will bring to Satisloh. This new field will advance our strategy to make more sophisticated lenses.”

Lab management software will be yet another area of focus for Essilor and Satisloh. Fontanet said Essilor is working on developing “recipe software” that can be shared by lens designers, labs and software and hardware vendors. “We want to help the industry use a common language with one platform,” he said.

Fontanet sees the Satisloh acquisition as part of Essilor’s long term strategy, particularly in terms of growing its international business.

“This [acquisition] is not intended be be a sales booster,” he said. “This is a deep investment. It will allow us to put more sophisticated labs in developing markets such as Asia. “We’re working deep into the market…developing more partnerships with independent labs…They can become partners with Essilor; they can get good technology to compete…That’s exactly what we did with the Crizal in the U.S.”

Fontanet believes that Essilor’s experience working with independent labs in the U.S. will be a good model for growing its business in other parts of the world.

“The rest of the world—Asia, India and Latin America—will be more like the U.S. model, with lots of growth and segmentation,” said Fontanet, using the term “gazelle markets” to describe the rapid growth he sees taking place there.

“When they transition over [to developed markets] they will do it with both chain and independents. We want to put in turnkey labs in those emerging markets. We need entrepreneurs.”