Heidelberg back in the black - News commentary by Andy McCourt
Just one year after selling its loss-making digital division to Kodak and eight months after divesting its web press division to Goss, Heidelberger Druckmaschinen AG has staged one of the most remarkable Lazarus-acts in corporate history.
Highlights of the preliminary results are:
CEO Bernhard Schreier stated; "Even if the markets and the global economy did not exhibit the robust growth that we had hoped for, particularly in recent months, the figures nevertheless show that we are on the right track and that our measures are beginning to take hold."
Sheetfed offset press sales accounted for most of the turn-around, with a 5% increase in sales and a 10% increase in incoming orders - possibly the post-drupa effect. Post-press continues to make an operating loss but this has been reduced from - $30 million in 2003-04 to -$3.3 million for the current year.
Heidelberg's global workforce has been cut by 18% from 22,782 to 18,679 and concessions have been agreed between staff unions for extra unpaid working hours in return for improved pension terms.
Concerning this move, which alone will save $166 million, Dr. Herbert Meyer, chief financial officer at Heidelberg stated; “After controversial and difficult negotiations, we have arrived at a solution that is acceptable to all parties. This solution will raise earnings in the long term and will help to increase further the competitiveness of the Heidelberg Group.”
MY CALL
It's good for the entire industry.
The Heidelberg barometer has long been the scale of measurement for the overall health of the industry. Particularly encouraging are the forward-orders.
It's taken press manufacturers a long time to adapt sensibly to the technological and IT revolution but today a modern press can proudly claim to be a networkable, and valuable, peripheral in the communications matrix.
The insane global domination Heidelberg strategy of the 90s is gone, and so are its architects. At one stage, Heidelberg had a massive consumables warehousing and logistics structure being set up in France, supposedly to supply the world's print industry with every little requirement. Forays into digital and mainstream web proved unsustainable. The one-stop shop became the dead-stop shop.
You can't be all things to all people. Even supermarkets know this and where they do adventure into non-core lines, it's a low-risk strategy that 'skims' a few sales from specialist outlets, using convenience and value as the persuaders. They don't bet the farm.
Interestingly, Bernard Schereir - lifelong Heidelberg career exec and native Heidelberger - spent his formative management years in sheetfed offset and later headed up both Heidelberg-Harris (web) and the Digital venture. Now he's back with the 'knitting' that he knows so well.
It's also interesting to note how economies have been achieved at Heidelberg. The workplace agreements are axiomatic to safeguarding German manufacturing jobs and plants - and preventing those jobs from exiting to places like China.
Heidelberg was not the first to achieve this. KBA agreed with its workforce that 2 hours per week extra would be worked, by management and staff, for 2 years from January 2005. KBA too has reported good results and a bursting order book. MAN Roland is in a similar position.
However, with a strong Euro, soaring steel prices, (Australia's iron ore export price has increased about 70% in the past 3 months), high oil prices and the volatile state of global bourses, complacency is not advisable for Germany's press manufacturers.
Welcome back in the black, Heidelberg. Now stay there.