Heidelberg Ramping Up for Debut of VLF Presses

HEIDELBERG IS preparing for what will surely be one big celebration in Germany this September. The planned festivities will honor both the 50th anniversary of its Wiesloch manufacturing complex, as well as the grand opening there of Hall 11, designating the press manufacturer’s initial foray into the very-large-format (VLF) sheetfed offset press market.

In an exclusive one-on-one interview with Mark Michelson, editor-in-chief of PRINTING IMPRESSIONS, Heidelberger Druckmaschinen CEO Bernhard Schreier reveals why the world’s largest press manufacturer has chosen Drupa 2008 as the official unveiling of two new VLF press sizes in tandem with compatible large-format prepress and postpress offerings. He also addresses whether Heidelberg will eventually re-enter the digital press market, as well as provides an update on the company’s Chinese manufacturing facility and how it is positioning itself should there be an economic downturn.

PI: I understand that the new VLF Hall 11 in Wiesloch, Germany, is scheduled to open this fall?

SCHREIER: On September 15 to be precise. The planned opening is a fixed date because we will also be celebrating the 50th anniversary of our factory in Wiesloch at the same time.

PI: When the VLF factory is fully operational, what will be the maximum production capacity there for the new 56˝ and 64˝ (XL 142 and XL 162) models? And about how many employees will be working in that hall?

SCHREIER: We don’t reveal capacity figures. However, the total worldwide market demand is roughly 1,600 printing units in the very-large-format sheetfed size and, assuming we capture at least 30 percent of that market share, our target will be to produce about 400 to 600 printing units per year. This will require about 250 workers.

PI: Will the new VLF hall be configured as a mass production assembly line operation or will it be designed for more customized press production?

SCHREIER: When producing 400 to 600 units a year, which means one to two units a day, you cannot talk about mass production. It will be very specialized assembly. These very-large-format presses will not be a standard product; there will be many options available for special applications. Customers who buy such a big and expensive device seek customization—straight presses, perfecting presses, 4-color, 8-color or 10-color capabilities, presses equipped with or without UV, and on-press varnishing, as examples.

PI: Which options will be available initially?

SCHREIER: We want to get out into the market with both straight and perfecting presses. Straight presses will come first and perfecting models shortly thereafter. In the end, we will offer a full range, which is necessary to satisfy the current needs of our customers.

PI: Do you foresee a VLF model being offered with the double coater option, as well?

SCHREIER: We will offer all of the options that will be on the XL 105 because there will be no limitations for the very large format. The question is only when. I cannot tell you today if it will be in 2009-2010 but, say in five years from now, there will be the full range available also for the VLF presses. There is a clear demand within the industrialized countries—our target regions of Central Europe, Western Europe and the United States—for maximum productivity. We need a high level of efficiency increase and this can be done with larger formats. Knowing the quality and productivity that very-large-format presses are now able to deliver, Heidelberg knew it had to become a player because that market will be a major part of the future of printing in the industrial countries.

PI: Why did Heidelberg wait until now to enter the VLF sheetfed press market? Why didn’t you do this years ago like some of your competitors, KBA and MAN Roland, for example?

SCHREIER: If you were to ask printers five years ago, ‘why aren’t you printing in a large format?’ in most of the cases the answers would be that they couldn’t print the same quality on a very-large-format press that they could achieve on a 40˝ press, for example. Since that time, though, the capabilities of computer-to-plate (CTP) have grown enormously. The manipulation you can do to a plate on a CTP device today compared to what you could do five years ago is completely different.

So, with today’s prepress/press combination, we are more much flexible than years before. For instance, the fanout of a large sheet on a very-large-format press can be compensated for in platemaking today, which was not the case in former times except by stretching the plate or things like that. Today, you can do this all electronically.

Heidelberg will also set a new standard for VLF machines, both quality- and productivity-level wise. If you think back over the decades, Heidelberg never was first to market. We weren’t the first in inventing offset; we came late into the offset process. We were not the first ones to have a double cylinder system. We came late, but we made it more productive than other press manufacturers. So, in general, we are a fast follower.

But we are producing more in volume than the others did before us because we try to do things better. Therefore, I wouldn’t say we are late. I would say we arrived at the right time to meet the quality and productivity requirements for our customers today.

PI: Printers often like to stick with one manufacturer. You have a good shot at selling existing Heidelberg customers entering the VLF market for the first time. But how about those printers that have already invested in a couple of large-format KBAs or Rolands? How will Heidelberg approach these people?

SCHREIER: We appreciate loyal customers, whether they are loyal to us or to our competition. The question becomes: what kind of product will fulfill the requirements of the customer? When I talk to customers about their requirements, some of them say they need more capacity. Others just need a larger press format for work that cannot be produced on a 40˝ press. They think that our VLF presses might be an option for them. I believe the market demand for very-large-format presses will become a big business for Heidelberg.

Customers who might not have been satisfied in the past with the availability and productivity needs of competing products might also consider what we offer to be their best solution. So, I am not afraid of the competition. There will be sales opportunities for everybody in this environment.

PI: Obviously, as a full-service provider, will you then be expanding your product line both on the prepress and postpress sides to handle the larger formats?

SCHREIER: When we present the very-large-format presses to the public at Drupa 2008, there will also be a large-format platesetter available. Polar will produce the proper cutter and we will have the right folding devices. If you don’t have the right folding device, the entire efficiency and productivity increases that you attain on a very-large-format press suddenly stops at the delivery of the press. We want this productivity gain to extend into finishing as well, and this is why you need the right folder.

PI: Will Heidelberg’s systemservice 36plus program also be offered on the new VLF presses?

SCHREIER: All presses come with 36plus service. The sophistication of the new presses also obligates us to connect with remote service. It doesn’t make sense at all have a multimillion-dollar device just sitting there waiting for repair service. If you think about all the sensors, actuators and motors found in a highly modern press, it’s not up to the service technician to come look at whether a motor has a failure or not. You can just check it remotely. Therefore, the standard offering will be to have a remote service connection and to have systemservice 36plus on these presses. Then the printer is secure from a productivity standpoint and can manage the future.

PI: With the new press offerings, how much retraining will be necessary for existing Heidelberg service technicians and installers? Is that much of an issue?

SCHREIER: Technicians who can service an XL 105 press will also be able to service the XL 142 and XL 162. Clearly, there will be some special features on the very-large-format presses that they’ll have to learn and be trained about. But the fundamentals, the platforms, the technology, the controls—all of this is fundamentally taken from the XL 105 and incorporated into the 142 and 162.

PI: Do you see packaging applications as the biggest market for VLF presses?

SCHREIER: No, I wouldn’t say biggest. Our estimation is that it will be a 50/50 split between the packaging market and the commercial printing market because VLF provides an enormous productivity increase if you have the right set of orders in-house. All work isn’t suited for a very-large-format press.

We develop calculation tools for customers. We sit down with a client and look at his last three to six months of order intake to analyze what his order structure looks like. From that, we can clearly calculate what kind of presses would be more profitable for him. Not from a speed or quality standpoint, but more productivity- and money-wise. The customer can clearly see what his results would be with just operating 40˝ presses vs. having a combination of press sizes.

PI: Do you see VLF press users as being mostly crossover shops—those doing both commercial and packaging work?

SCHREIER: No, it will be a mixture. Those who do commercial work generally don’t just run very-large-format presses. They also have 40˝ presses. For example, they may even have a 20˝ press outputting covers for a book and then printing the book itself on a very-large-format press. Commercial printers offer a variety of products to fulfill their customers’ needs.

Packaging printers, though, might be more focused on a certian type of work. Our daughter company, Gallus, has acquired BHS in Germany, which manufactures web package printing machines. It will even be a discussion whether a very-large-format sheetfed press or such a web press would be the right solution for packaging customers.

By offering such a comprehensive portfolio, we think we can provide the right solution for any customer. Our total portfolio is more and more about completing our solutions approach.

PI: As such, do you see some type of digital press offering coming back as part of Heidelberg’s portfolio down the road? Maybe not a device you manufacture, but perhaps something you distribute?

SCHREIER: Up to now, we are not being asked by our customers to do so. Many of our customers are not getting into high-volume digital printing. They are going mid-volume just to get started or to satisfy the variable data printing needs of their clients. Then they go shopping for the KonicaMinoltas, the Canons, the Indigos, the Nexpresses, or a Xerox with its entire range of products.

We are providing value through our Prinect workflow systems. We provide the plug-in for these workflows. We have cooperations with all of these companies. They can just plug their digital device into our workflow. We think Prinect is the best product to manage commercial print shops, whether they’re solely offset or both offset and digital.

We’ve been primarrily discussing very-large-format presses, but consider what we offer with our Anicolor short inking system available on the SM 52 that enables very short runs. This is the perfect solution for the printer that’s doing very short runs, but with no demand for variable printing. The Anicolor press does offset and very short runs at much less cost than a digital press. But you cannot print variable data via offset. This is why digital presses are necessary but in most of the cases mid-volume presses, not high-volume devices.

Another element of digitalization is that there should also be digitalization on our presses and/or our finishing devices. This is why we care about ink-jet heads, for example. We see ourselves as integrators of ink-jet solutions into our existing devices. But we will not sell digital printing presses because there are already so many companies in the market providing them. That’s a commodity that can be purchased wherever.

PI: Can you discuss any of Heidelberg’s Drupa 2008 exhibition plans at this juncture?

SCHREIER: We also keep a few surprises for Drupa but, in general, the roadmap is clear for Drupa. On the press side, we will show the new very-large-format presses. There will also be some expansion within the Anicolor environment.

You will see workflow improvements that will better integrate prepress with press. The new very-large-format Suprasetter will satify the needs of VLF printers. And, on the finishing side, you’ll see an update in the packaging arena for folding cartons, including folding/gluing and diecutting. More automation in Polar cutters will also be shown.

Our scope is sheetfed printing, including prepress and postpress. We will cover this completely in even more sophisticated ways than the way we are doing it today.

PI: Aside from Heidelberg’s presence at Drupa, do you think there will be an overall theme that will prevail at next year’s event?

SCHREIER: As you know, the last Drupa was dedicated to JDF. There will be more JDF advancements at Drupa 2008, and I don’t think that will change. Many of our competitors will also be aware of us entering the VLF market. So it could be the very-large-format Drupa because, in the past, they didn’t display many very-large-format presses because it is expensive to bring in such a press. But us being there with a VLF press might encourage MAN Roland, KBA, Komori and Mitsubishi to come and say, ‘Hey, we are also there.’ Maybe this time Drupa will be remembered as the very-large-format or the high-productivity, high-quality Drupa.

PI: Your plant in China is now producing folding equipment and small-format Printmaster PM 52 presses for the local Chinese market. Do you see the day, though, where more manufacturing intended for export moves over there?

SCHREIER: We have no plans for export. That was always a very clear message to everyone that we will only manufacture in China for the local market. Why? There are approximately 100,000 print shops in China. They need entry-level equipment. We already have enough to do just to satisfy their needs for this entry-level equipment, which they can also buy from Chinese manufacturers.

We want to show these Chinese printers that they can start out with an entry-level product that produces good quality and then later order a bigger machine manufactured in Germany. This is also a good message for our employees in Germany. They completely support this approach—to us opening the door to smaller Chinese print shops. Those are the companies that will then come back and order bigger machines produced in Germany. That is our strategy. We don’t produce for exports; we produce for local needs.

PI: Heidelberg has enjoyed a very good balance sheet recently. You’re on a March 31st fiscal year that has just ended. What is your outlook for the next fiscal year, partly given fluctuating U.S. stock markets and predictions of an economic slowdown?

SCHREIER: We realize that we’re in a cyclical business. For us, as a machine manufacturer, the only target is to be prepared. We cannot predict the future, but we can be prepared for the future. At some point, there will be a downturn. I don’t think that his downturn will be in the next 24 months, but after that I don’t know. This is why we are preparing very well for a downturn. Not because we are producing bad products, and not because printers don’t want to produce print.

It’s just that the economy will weaken at some point of time. Germany is still growing and will grow faster in 2007 than it did the year before. And 2006 was a record sales year for us in Germany. We sold more printing presses in Germany than we did in the United States. The U.S. has been flat the last three to four years. It’s just now picking up.

But when I talk here to U.S. customers, everybody is complaining about weak pricing. Even so, they’re investing in more capacity, more flexibility and more applications, so that they can better adapt to the needs of their customers. Despite the fact that consumption might go down a little, industrial products like printing presses will still have a good year.

And how is Heidelberg preparing for the future? We have a very clear target to also move more in consumable sales and in services. We want to increase our service and consumables businesses in the future because we think that, by being present at customer sites with our machines, we can also be a good partner for their entire solution. This will help protect us in a downturn.

A downtourn is always a downturn in investment, not so much a downturn in print. Continuing to provide services, spare parts and consumables will cover most of our fixed costs for the sales and service units we have throughout the world. This provides a good buffer if, and when, there ever were an economic downturn. PI