It would be easy to think of Gallus as the unwanted child caught up in a domestic dispute between its parents through no fault of its own. The headlines over the last year or so have been about the prospects of its sale to a company called Benpac and the suitability of this business to buy, manage and develop one of the best known brands in the label industry. Like any melodramatic soap opera, there have been unexpected twists and turns, clear heroes and villains and cliff hanging episodes before the deal collapsed. Heidelberg found out that narrow web label printing has very different dynamics to sheetfed offset, even where the product is a label. And at the time Heidelberg needed to raise funds for the core business. Like the decision to sell its coatings business, Gallus was deemed surplus to requirements.
Now, in another twist, Heidelberg has rediscovered its love for the child and Gallus is firmly part of a Heidelberg with much stronger finances than before as well as a renewed commitment to the labels business. That has been the riveting narrative that has caught the headlines. It would be easy to think of Gallus as a business in turmoil.
Behind the headlines however, Gallus users have been continuing to print and Gallus employees have continued to work on the technology. Now Heidelberg has made Gallus a quasi independent business “with the flexibility and autonomy to make its own decisions and to be creative and agile once more”, according to Heidelberg CEO Rainer Hundsdörfer. It means too that the For Sale sign has been withdrawn. “Gallus is definitely not for sale. During the pandemic, we received a very good offer – but now we are very happy that we did not sell the business,” he says.
Ferdinand Ruesch remains a ‘person of interest’ at Gallus, at least as senior vice president global key accounts. He had owned the Swiss business, bringing the label press company into Heidelberg in 2014 for enough shares to make him one of its largest shareholders, an anchor shareholder as the company describes it, and a supervisory board member. He adds: “When Benpac approached us at the beginning of 2020, Gallus wasn’t actually for sale. But following early discussions with them and our internal review, strategically the sale made sense for the wider Heidelberg business.”
The deal rapidly unravelled, says Hundsdörfer: “It took several turns that, through no fault of our own, either completely stalled progress or made us very uncomfortable, with the sale eventually collapsing.” By then Heidelberg had reordered its finances, implemented what the CEO describes as “a transformational process”, which is now bearing fruit, and the orders for sheetfed presses have flowed again. There is no pressure to sell the business and, with Heidelberg declaring its intention to be the dominant player in printing for packaging, the labels press business fits well. But is is not a return to business as it used to be before the soap opera kicked off.
Gallus now has a separate sales, service and R&D set up. Its management team reports directly to Heidelberg’s CEO and uses Heidelberg resources where appropriate. This includes Heidelberg’s know how for the inkjet technology used in the Labelfire 340 and new machines that will follow. Individuals that had departed the business have returned to pick up customer contacts and drive the business forwards, according to Hundsdörfer. This includes Dario Urbinati as director responsible for sales, service and marketing.
“We have a solid strategy in place, the right people, amazing products and the strength of Heidelberg besides us,” says Ruesch. “We have all the assets and potential to lead the labels and packaging markets and make a huge contribution to the group.
“We have the thinking and flexibility of a start up business where creativity is encouraged and nothing is impossible. Where we were fighting issues before, we are fixing them now.”
That energy is directed towards reforging customer relationships, to making the supply chain more efficient (current supply chain challenges for electronics notwithstanding) and focusing on product quality with an impact on revenues. “By the end of 2021, we are on target to be profitable for the first time in many years,” he adds.
There are new products waiting in the wings, both conventional and digital or hybrid machines. The presses are built at Laggons, a dedicated site just north of Frankfurt which builds the Labelmaster, ECS and RCS presses. The digital print unit is built at Wiesloch while the factory at St Gallen in Switzerland is carrying out refurbishment on remarketed presses, what the company calls Gallus Classics. Old presses can be cleaned, replacement parts fitted and up to date control systems added if required. St Gallen remains the head office with R&D, spares and service, if not new press manufacturing.
Labelfire remains the flagship and is very much the key to the company’s roadmap to the future, unlike Heidelberg’s Primefire, which was cancelled with just ten machines in the field. Gallus is not saying how many Labelfires have been installed, only that it is “factors more than that”.
And customers are finding new applications.
There is a new low migration UV ink for the Labelfire, which will open more food applications, and due to launch at the end of this year is a highly flexible UV inkjet ink. This is important because it paves the way for production of cartons which have to survive die cutting and creasing without flaking or cracking of the ink.
It was developed to produce cigarette cartons at the behest of one of the tobacco giants. Others are using the press for sleeves and plastic tubes. Narrower and wider versions of the Labelfire are also likely as the 340mm wide machine becomes the basis for a portfolio of digital and hybrid presses.
“We are now way beyond printing labels,” says Urbinati. “We are involved in the whole ecosystem of labels now, using Prinect for workflow and for vertical integrations. And we are a label press supplier that has its own ink development, which is how we are able to supply an ink which can be creased and folded without cracking or flaking.
“Now we are developing some super exciting offerings which it is too early to talk about.”
Announcements of these developments are likely to come in the latter part of next year, due to the scheduled Labelexpo in April coming too early. Before then Gallus will introduce a mid width 570mm press for flexible packaging as well as labels. That will be available from the start of the year, Urbinati says. “It will be a machine with amazing flexibility.”
Urbinati returned to Gallus in June this year after the Benpac soap opera had come to an end. He had previously spent five years at the business, leaving in 2016 to join rival manufacturer Omet before becoming chief sales and marketing officer of Actega Metal Print. He is part of a four-man team headed by business unit head Frank Schaum. Ruesch is on hand to advise, reality check and lend the benefit of his long experience, says Urbinati. He recalls: “I had a lot of conversations with Ferdi and asked the top management about where was Gallus going, what were the possibilities,” he says.
He clearly received the right answers, not least on the structure of the business. Could it have the energy of a start up business?
“The experience of the soap opera had a positive impact, even though I came after it had finished. It enabled the company to reflect on itself and the whole organisation, taking it out of our comfort zone. We could view the business from a certain distance, which resulted in a new way for Heidelberg and Gallus to work together.
“There is a tight management team with clearly defined tasks and proper interfaces between the functions. As a consequence we have tremendously increased the speed of decision making and working speed through the whole company – coming from the old world we understood that we needed to change. We used to operate in separate silos, now we are turning into a networking organisation. It means that we have to train people for this future and now we are learning that this is giving us more room for productivity and creativity in R&D, creativity in solving problems in ways that we have not had before.”
As with the parent company, the orders are flowing again for Gallus, though issues with sourcing micro electronic components are causing some production bottlenecks, as across all industries. Hundsdörfer says: “Our business performance in June 2021 represented our best month for 10 years. Some of this was due to a pandemic bounce back, but our transformation process and new business lines were also a huge contributor to this turnaround, and we see this trend continuing.”
Ruesch adds: “We are also very optimistic. Not only are we making great progress, but we are seeing sales increase across the portfolio, especially for Labelfire and its ability to meet the new demand for ‘profitable’ digital label jobs and a post Covid consumer boom.” In short, Gallus is a renewed business, one that has its mojo back and working again.
