Heidelberg to manufacture small offset presses in China

Initially planned to produce folders, the small-scale facility, at a location yet to be determined, is destined to produce the first non-German assembled Heidelberg presses. Although the first presses are some way off, after the hiring and training of a work force, they will likely be versions of the basic PrintMaster series.

At the end of year press conference in Heidelberg this week, driven by a vision of continuing hard times confronting the industry, chairman Bernard Schreier forecast that only by continuing reduction in costs will the press manufacturer survive. While discounting any immediate likelihood of merger or alliance between the major press manufacturers, due to the current trend of increasing orders, he predicted that at the first sign of a downturn the pressure to consolidate the manufacturing side of the industry would return.

Despite the China venture he expressed his belief that the experience and technology capability of the company’s Weisloch plant in Germany will ensure its survival in the face of low cost competition, at least for the next few years. Currently the company is experiencing a five per cent lift in sales, with a first half order intake up 23 per cent.

Pragmatic futures ahead

Stripped of its digital and web press divisions and buoyed by its first profitable quarter in nearly two years, Heidelberg is trusting its future to customised, innovative, offset sheetfed presses and increasingly sophisticated consultancy services. Confident that the digital sector, which he left behind this year, will not pose a threat to conventional commercial offset over the next three or four years, Schreier presented the pragmatic face of a company that must sail very close to the wind.

He maintained that the cost reduction programme, which has seen Euro 270 million taken off the operating charge of the company over two years, must continue, although he was short on specifics. He made the point that further reduction possibilities in the German environment are limited, a clear indication of the thinking behind the company’s manufacturing future in low-cost China.

According to the Schreier view of the future, the emerging economies – what he termed the BRIC countries; Brazil, Russia, India and China – will deliver the increase in volumes of printed material. The sheer number of presses going into the developing countries – last year Heidelberg delivered 1,000 printing units to China alone – combined with their low cost base, will make them increasingly effective competitors in an emerging global market for basic, commodity-based printing.

In these countries the rate of increase in the amount of printing will exceed that of the growth in GDP, while in the industrialised countries it will be two or three per cent below.

However Schreier pointed out that as 88 per cent of the world’s printing is currently done in the industrialised or developed world, the emerging markets should be seen as an opportunity, not an emergency exit. For printers operating in the developed economies increasing specialisation and flexibility are the keys to survival and prosperity.

An increasingly large part of Heidelberg’s production is geared towards making customized presses for this developed market. At the press conference, fellow board member Jürgen Rautert claimed that in Europe 30 per cent of print shops would disappear in the first half of this decade.

The ones remaining will require more sophisticated presses to deal with increasingly specialised markets. Among the examples he cited was the delivery last month of the longest sheetfed press in the world. Sporting the mind-boggling nomenclature of CD102-LY+8+YLYLY+1X3, the 16-tower behemoth is designed for flexographic printing before and after four-colour perfected offset with a final offset unit for matt coating. Rautert predicted that customized presses will comprise almost 50 percent of Heidelberg’s total production by 2008.

This end-of-year press conference was a lot more sedate and less dramatic than last year’s where Schreier dropped the bombshell that Heidelberg was getting out of digital and web presses. The company now has a lot less on its plate and it is clear that the chairman feels vindicated by the decision to cut the haemorrhaging web and digital divisions.

“Divesting was good. Looking at the NexPress sales we would not have made it. In the future Heidelberg will be lean and mean with an increased customer presence in consultancy and service,” he said.

And it will be building presses in China.