Heidelberg renewal program will impact on local operations

Heidelberg in Australia and New Zealand expects a further reduction in new machinery installations but an increase in maintenance contracts.

The slower activity reflects the worldwide situation for the press giant that has launched a global efficiency program ‘Focus 2012’ to reduce costs and increase revenues.

The efficiency program, announced this week by Heidelberg HQ in Germany, will deliver an operating result of around EUR €150 million in the financial year ending 2014, and turn around the company’s falling revenue amid volatile global markets.

The company expects this target to be achieved through a marked reduction in production capacity and sales, marketing and structural costs, with up to 2,000 jobs cut worldwide. While 1,200 jobs are expected to be lost from the company’s German operations, around 800 will be cut from Heidelberg’s international businesses. Internationally, Heidelberg plans to reduce its production capacities by 15 per cent.

According to Heidelberg Australasia’s managing director, Andy Vels Jensen, although it’s a drupa year and printers can achieve 30-60% productivity improvements by investing in latest technology, he doesn’t expect to see any huge improvement in new press sales, rather growth will come from non-equipment revenue; organic growth alongside new business ventures.

“We will continue to grow the non-equipment revenue and it goes without saying that a drop of new printing unit sales by 60% - as compared 2008 - will already have forced us to make changes within HAN” says Vels Jensen.

“The industry has changed, our customers have evolved and we have had to move with these punches. Since the last drupa, our revenue has shifted from new equipment to services, parts and consumables business; alongside digital. The service contract business has increased and has partly made up for the reduced service work coming from new equipment installs. However, the overall number of engineers in ANZ has dropped, with fewer machines being installed as compared to the good days of 2005-2007 and overall, less machines being installed in the market place.”

Heidelberg Australasia has been undergoing productivity improvements locally over the past three years, with reductions already having occurred across the company by not filling vacancies while also improving efficiencies.

Of the 800 jobs to be cut globally, however, Vels Jensen has not ruled out that some of those will be from the company’s local operations. “When you’re part of a big group, everybody has to chip in, [and] we will be asked to chip in somehow,” he says.

While Heidelberg will be implementing much of its ‘Focus 2012’ program before the end of the year, it intends to gauge some of the primary industry trends at drupa in May, before deciding on a full plan of attack for its cost-reduction strategies.

“Drupa can be a guide for the year,” says Vels Jensen. “Some decisions will be held back for us to see what comes out of drupa. That was key even before the Focus 2012 came out.”

In the meantime, Vels Jensen says Heidelberg Australasia will continue doing business as normal, with four press orders already to fill this year, and more to follow. The main drive for the company locally, however, is the continued expansion of its service, maintenance, and other non-equipment revenue streams, which currently make up around 80 per cent of its business.