In its heyday no-one would have put the words Heidelberg and humble together. The world’s biggest offset press manufacturer was used to setting the agenda itself. It had sales of €3bn, dwarfing any other company in the industry, one in every two printers around the world used its kit; it was used to making decisions with reference to no-one.
CEO Hartmut Medhorn in the nineties instituted a strategy where the then sheetfed press manufacturer Heidelberg was going to be a one stop shop, making and supplying web presses, sheetfed presses, digital presses, prepress kit, finishing systems and consumables. When Medhorn left to run Deutsche Bahn, the German train company, his successor Bernhard Schreier spent most of his tenure trying to extract the company from various commitments to take over the world, and then deal with the carnage that came in the aftermath of the GFC. But it was still Heidelberg with its we listen to no-one approach.
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The GFC though left the company reeling, it had to be bailed out of collapse by a combination of state and federal loans, and as is the dynamic with giant manufacturing companies the realisation that the company had to be severely restructured came late.
By last year Schreier went, along with almost half of the workforce, as sales which had plummeted in the years since the GFC showed no signs of recovering. In most western markets, including Australia and Europe, sale volumes dropped by two thirds. In the United States, which was Heidelberg’s biggest market, by three quarters. Salvation came from China, with cashed up Chinese printers eager to buy top quality German engineering, despite the myriad home grown presses available.
Into this scenario came Dr Gerold Linzbach as new CEO, an industry outsider and it could be fairly said, a breath of fresh air into Heidelberg. He had no sentimentality for days gone by, his focus was on creating a business able to deliver sustainable profits for itself and its customers.
Linzbach was initially thought of as a slash and burn merchant, a description which he rejects. Speaking to ProPrint at the recent Heidelberg press event, he says, “My role is to position Heidelberg to be a business that is viable, a technological leader, that is efficient and a valued partner for its customers. Heidelberg has been through the most tumultuous time in its history, but the restructuring is now over. We have the right business model, and we will continue to lead the market.”
That leadership though won’t be in its pre-GFC format, but rather, says Linzbach in a way that reflects the new order of things. He says, “We recognise that working with partners to develop innovative solutions is the most effective way forward. If a company is a world leader in its field it makes sense for Heidelberg to work with them, rather than try and compete against them or reinvent the wheel.
“I know this goes against our previous philosophy of we can do anything better than anyone else, but times have changed and partnerships are vital. Heidelberg was a proud company, now we are a humble company. We have a lot to offer, but we will not be averse to working with world leading companies to ensure we are bringing our customers the best possible solutions.”
So the new strategy at Heidelberg is to develop partnerships. Some, such as that with Ricoh, are essentially just sales partnerships, there is no co-development work going on. However others, like its partnership with Fujifilm that was revealed at the press event, will go much deeper. Fuijfilm technology is already in the Heidelberg labs, and the two companies will work on developing a range of print solutions. Already Heidelberg is looking outside of its box, the first development is for a 3D object printer, in the labs we saw it being used on soccer balls, but Linzbach says it can print on anything from pens to aeroplanes.
Linzbach opened his press conference with a wisecrack, signaling the beginning of a new era at Heidelberg after decades of super-formality. From the start he stated that Heidelberg now has a new ‘different approach’ and the company is now travelling down a track where it will combine the ‘scientific brilliance’ of its staff and staff from partner companies with its unrivalled ‘market knowledge’ of the print industry. He says, “Heidelberg has positioned itself to work with printers and solutions developers, it will be a two way conversation.”
Speaking to ProPrint later in the day Linzbach says, “I have no sentimentality for Heidelberg, I mean I obviously have a huge respect for everything the company has achieved and stands for, but my job is take the company from A to B, it is business.”
One manifestation of his lack of sentimentality and no sacred cows attitude means that it is possible that Heidelberg may not have its usual Hall 1 at drupa next time around. Linzbach is cryptic in his comments, saying only that Heidelberg will be there ‘in some form’ but this will in part be determined by ‘the direction that drupa takes.’
Having come from outside the printing industry Linzbach has no truck with the doom and gloom merchants, he says, “I can tell you there are industries which do have cause for complaint, try being in textiles for one. Print by contrast for sure is going through a restructuring, but at a core level local businesses will always need local printers, and there will always be a market for well run, well focused print businesses.”
Linzbach presents as an affable genial type, but there is little doubt that beneath the cuddly exterior lies a steely interior who is prepared to do what it takes to drag Heidelberg back into consistent profitability. He has for instance just sanctioned the move of the entire administratative staff, and the board, from the ultra modern headquarters in the middle of the delightful town of Heidelberg and off to the factory in the decidedly less delightful Weisloch 20kms down the road.
Heidelberg has just announced its first profit since the GFC, a razor thin €4m, but a profit nonetheless, and some would say no coincidence that it came in Linzbach’s first full year at the helm. He has negotiated flexible working agreements with the powerful German metalworkers union that will see employees at work for between 30-50 hours a week according to demand.
As part of the new atmosphere of glasnost that Linzbach has introduced around Heidelberg these days, he took 40 of the world’s leading print trade journalists into the Heidelberg labs, which for the past half century have been strictly off limits. There we saw the Fujifilm technology embedded in Heidelberg presses with a full Fujifilm JetPress 720 on the floor. We also saw an inkjet head on a robot printing soccer balls, and we saw the prototype of an inkjet label press that is likely to be released later this year under the Gallus brand, of which Heidleberg now owns 100 per cent.
There was no B1 sheetfed inkjet press in view, but it is on Heidelberg’s agenda. Linzbach says, “We will bring to market a press that will combine the benefits of digital and offset. It will be a Heidelberg machine, built to Heidelberg standards, with Heidelberg service and support.”
Heidelberg is of course one of the partner companies of Benny Landa’s Nano printing project, although in private Heidelberg is not at all sure that Landa will overcome what it sees as significant issues in the physics and chemistry of the presses. Linzbach says, “There will be digital presses with Heidelberg on the side, the form is yet to be worked out.”
Heidelberg is aiming for its digital business to make up some 15 per cent of its business in the next few years, with a €200m target for the business. The company believes that by focusing on its three digital areas of labels, 3D objects and sheetfed inkjet, it will be able to create a growing sustainable business. It believes the object printing business, or 4D as Heidelberg calls it, has huge potential, and has signed up German web-to-print outfit Flyer Alarm as the first customer. Flyer Alarm is a similar business to VistaPrint, a web-to-print only business that didn’t exist before the GFC.
Heidelberg has a track record with digital of course, with the Nexpress, which it eventually sold to its partner Kodak, but this time around says it has the right strategy. Linzbach says, “As far as inkjet goes this time we’re in for good. The concept with Fujifilm is good, the partnership is long term. Inkjet will offer printers certain benefits and Heidelberg will be providing them.”
Having got itself back on a secure footing for the first time since the GFC blew offset manufacturers completely off course Heidelberg is in no imminent danger of failing. Linzbach makes the point that a huge part of the company’s income now comes from service and consumable sales, he says, “Neither of these income streams is likely to stop in the way that press sales did.” Although always on the table, and seriously discussed at the height of the crisis, he rules out any merger with either KBA or manroland, saying the cost benefits don’t add up.
Heidelberg has been a perfect example of how quickly dynamics change. Only six years ago at drupa 2008 it was riding high in its dominant position, order books and factory output full. The following five years were the most tumultuous in the company’s history. When Linzbach came on board many in the industry were scratching their heads wondering why an executive in the prime of life would want to come into what seemed to be a sunset company in a sunset industry. Linzbach has turned those ideas on their heads, he exudes confidence in the print industry and in Heidelberg. He says, “As long as there is print, and that will be for a long time, there will be Heidelberg at the forefront.”
Inkjet key to Heidelberg future
Heidelberg will develop B1 sized inkjet sheetfed presses for commercial and packaging printers, an inkjet label press, and an inkjet object printer.
The label press will be out at Labelexpo in September, the object printer is going to its first customer this month, there is no firm timescale yet for the sheetfed B1 presses.
The press giant has just opened up a new partnership with Fujifilm as a core plank in its inkjet strategy, and has Fujifilm inkjet kit in its R&D facility including a JetPress 540W. The company let international trade press editors into its R&D labs for the first time in its history in order to let the print world know the company’s direction.
Heidelberg has now allocated a third of its R&D budget for digital printing, with its CEO Dr Gerold Linzbach describing inkjet as ‘key’ to the future development of print.
First off the Heidelberg inkjet blocks is the inkjet label press. It is a three way cooperation between Heidelberg, Gallus (which is 30 per cent owned by Heidelberg) and Fujifilm. Heidelberg says it will be a success in the increasingly crowded digital label colour press market because it will be a ‘no-compromise’ digital label press offering speed, quality at 1200 x 1200dpi, and flexibility with inline finish and embellishment, and will print on all regular label substrates.
The so-called 4D object printer is designed to print onto any shape and any size of object, from bottles to aeroplanes. Heidelberg will bring in robot technology according to application. The first system has just been sold to German printer Flyer Alarm, which is a web-to-print outfit using Heidelberg presses. In the lab the 4D printer was printing onto soccer balls.
The B1 sheetfed press is currently in the development stage, but Heidelberg says it is committed to bringing the press to market, and will aim it at commercial and packaging printers with short run work in the region of 250 to 2500 sheets as well as printers wanting variable data capabilities.
The new partnership with Fujifilm will not impact on Heidelberg’s relationship with Ricoh; the two digital print companies are in different markets with Ricoh supplying cut sheet toner based printers. There are no joint development plans with Ricoh. Heidelberg says its B1 sheetfed inkjet press will have Fujifilm heads but no other connection with Fujifilm’s B2 JetPress.
Like all major press manufacturers Heidelberg has been hit hard by the GFC, it had to be rescued by the regional and federal German governments, and it recognises that its offset press sales will never reach pre-GFC heights. Turnover at Heidelberg is barely half the €3bn that it was, and the 20,000 staff have been cut back to 12,000. However CEO Linzbach says the restructuring phase for Heidelberg is ‘over’ and this new partnership with Fujifilm represents a strategic forward move.
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