13 August 2017 Business

Heidelberg to spread production in the name of efficiency

Heidelberg is becoming less fixated about producing everything at the main factory, aiming to use facilities elsewhere in Europe and China.

Heidelberg will make better use of other production facilities around the world under its Operational Excellence strategy, part of CEO Rainer Hundsdörfer's approach to improving both Heidelberg's sales and its bottom line. It aims to deliver savings to the business of approximately €50 million by making better use of its worldwide production network.

It will continue to produce digital and high performance presses at Wiesloch, but will make greater use of its Brandenburg and Chinese factories, he says. It is already sourcing some impression cylinders from Masterwork’s factory in Slovenia. Masterwork is Heidelberg's partner in China producing finishing equipment for packaging and could also produce components from its main factory in Tianjin.

The move will be a gradual one. “With retirement production capacity at Wiesloch will drop,” Hundsdörfer told analysts on a call to mark the release of the company’s first quarter figures. “And optimal use is not being made of the factory in China. We will in future build the bread and butter machines there.” However, he reassured the workforce in Germany that “job cutting on a grand scale is finished”.

Simplification of manufacture began under he predecessor with the idea of using common designs across the product range. Hundsdörfer is taking this a step further, trimming the Gallus label press platform from four machine types to one, the Labelmaster. At Labelexpo this will be available in three levels of automation and in configurations to suit the customer, being built from two-print-unit modules.

Gallus has spearheaded Heidelberg's transformation into both digital printing and packaging. The Labelfire, the first machine to use Fujifilm Samba print heads, is proving successful, Hundsdörfer told analysts. One of the first customers for the machine has ordered a second, he disclosed. The press is proving to have cost of production advantages over rival digital machines, Heidelberg claims.

The second press to use inkjet technology is the Primefire 106. The first machine to reach the field is in operation at MPS in Germany and a second customer, August Faller, has been named. It will receive its machine in the early part of next year. Indeed the entire order book for the next two years as Heidelberg starts to ramp up production is now full. The market for digital packaging it reckons is growing at 20% a year.

There is already a strong position in industrial packaging. “Heidelberg is the clear No1 in the offset sector. It has sold as many presses in the packaging sector as its closest rival has sold across all areas,” Hundsdörfer added. Packaging in general is an area that Heidelberg is concentrating on.

It does not break out figures for packaging, but the sector is clearly one that will help the company achieve the €500 million extra in sales over the next five years. This will take the company to revenues of €3 billion. €200 million of the growth will come from digital presses, a further €250 million through adoption of a digital business model, including its ecommerce platforms, and €50 million from new digital platforms, typified by the recent acquisition of Docufy as part of adopting Industry 4.0 thinking.

The Heidelberg Shop, which it intends to become the Amazon of the print industry, will not only sell Heidelberg branded consumables but those from third parties. Not every printer wants to buy Heidelberg's selection of products, but they will want to buy through the e-commerce platform, and third-party suppliers will be keen to sell through Heidelberg's online presence, paying a transaction fee for the business, Hundsdörfer explained.

In Q1 this year incoming orders received a boost from China Print, but not enough to counter the Drupa peak a year ago. Order intake fell 22% to €629 million (€804 million). Sales were slightly up at €495 million (€486 million) in line with forecasts and thanks to a 20% increase of business in China. “Compared to the same period last year, we have substantially improved profitability,” Hundsdörfer pointed out. Ebitda revenue moved from a marginal €1 million profit to €14 million in what is always the weakest quarter for the business.

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China production

China production

Heidelberg's factory in China will help produce bread and butter machines in future as the Wiesloch plant focuses on high performance and digital presses in a shift to underpin the Operational Excellence part of the company's strategy.

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