Q&A WITH JAMES DUNN — RIDING GROWTH WAVE

On the heels of Heidelberg’s announcement that it had enjoyed a successful 2006 fiscal year (ended March 31) worldwide, Heidelberg USA President James Dunn discusses the factors that enabled the venerable manufacturer to complete a successful campaign in the U.S. market specifically.

PI: On a worldwide basis, the Heidelberg Group reported 12 percent sales gains, higher incoming orders and net profits that more than doubled during its recently completed 2006 fiscal year. What factors most led to Heidelberg’s U.S. sales gains during the past 12-month period?

DUNN: Several initiatives drove our success in our 2006 fiscal year. Among the most significant were the introduction of new products and services and our investments in regional offices around the country. On the product side, we expanded our portfolio across the enterprise with offerings for all of our customers--from small business print shops to packaging houses to general commercial and high-volume industrial companies.

One of our largest launches of the year came with the introduction of our newest press, the Speedmaster XL 105. It has set new standards for productivity and offers the fastest makereadies and highest real production speeds in the industry. And the XL 105 enabled us to expand our offerings in the growing packaging market.

We also continued to invest in R&D initiatives and introduced new technologies such as our Saphira chemfree thermal plate designed for our Suprasetter line of CTP devices. Our carefully tested and selected consumables offerings continue to provide a competitive advantage for printers looking to maximize their investments in Heidelberg equipment.

On the workflow side, we launched new versions of our powerful business management and production workflow solutions, such as Prinect Prinance 4.5 for estimating and order management and Prinect Printready 2.1 with MetaDimension for improved JDF handling and MIS integration.

Last, but certainly not least, we rolled out our systemservice 36plus offering and established six new regional offices to provide comprehensive service and support coverage for our customers.

PI: In the sheetfed offset press arena, you enjoyed a 73 percent increase in 20” format press installations. Is this the result of devoting more sales and product development efforts toward small commercial and quick printers?

DUNN: There are several components to our success in sheetfed during the past fiscal year, including:

The breadth of Heidelberg’s offering, especially in the 20” market, where we offer everything from the entry-level Printmaster GTO to the Printmaster PM 52 and all the way up to the industry-leading Speedmaster SM 52;

Targeted programs and campaigns that provided special value to small printers, such as our recently introduced Printers Advantage Program, which is designed as a comprehensive resource to help small business owners succeed in today’s marketplace;

Heidelberg’s ability to go beyond the small-format press into other small-format-oriented areas, such as computer-to-plate, computer-to-polyester, workflow, color management, cutters and folders, etc.;

Heidelberg’s range of trade-in programs for older presses; and

The overall improvement of economic conditions and the return of confidence to small printers.

PI: For the 40” format press market, installs are up a reported 58 percent. What is driving Heidelberg USA’s success in the highly competitive 40” press market? Also, how is your new systemservice 36plus program being received?

DUNN: Our success in the 40” market is driven largely by the breadth and depth of Heidelberg’s 40” product portfolio and the fact that we have the right press for the right applications. Heidelberg’s three key offerings in the 40” market--the Speedmaster SM 102 perfecting press, the flexible Speedmaster CD 102 and our ultra-productive Speedmaster XL 105--are designed to meet the vast needs of this market.

As our newest press in this market, the Speedmaster XL 105 has been very well-received, with more than 16 installations to date across the United States. All of our presses are customizable to meet our customers’ specific business needs, provide greater flexibility and allow them to expand into new markets with technologies such as ultraviolet (UV) coating options.

Since its roll-out at PRINT 05, our systemservice 36plus program has been very well-received. In fact, many customers report that this comprehensive service offering was a key factor in their decision to purchase a Heidelberg press. Customers tell us that the annual “fitness checks” will be invaluable in helping them reduce unplanned press downtime and maximize their equipment investments.

PI: Prepress sales grew a reported 16 percent, buoyed by your computer-to-plate offerings and Prinect workflow solutions, and consumables sales increased nearly 15 percent. Are these normally bundled together as a package offering?

DUNN: Yes, in fact, bundling our CTP, consumables and workflow solutions has proven to be a very successful business model and accounts for the majority of our sales. Customers benefit from bundled solutions because they have the advantage of easy access to our service and support teams, who can help them with any issues they encounter in prepress all the way through plate-making and beyond, including color management in the pressroom.

Another advantage that customers see in working with us for their CTP, consumables and workflow needs is the integration of JDF. There has been a definite increase in the amount of JDF-enabled systems in the market, and all of Heidelberg’s systems are JDF-enabled.

PI: Heidelberg USA also reported a 44 percent increase in shipments of cutting systems, folders and stitchers. Among postpress products, where do printers and trade finishers seem to be placing the lion’s share of their investment dollars? And are you seeing any trends?

DUNN: Heidelberg sales across all three of these postpress areas--cutting systems, our TH automated folder series and stitchers—were very strong, and we expect this growth trend to continue as we introduce new products and technologies in the postpress area this year. Part of our 44 percent increase in postpress sales can be attributed to our expanded focus on the packaging market.

As far as market trends, the main movement that we are seeing in postpress is automation, automation, automation. In fact, 70 percent of the folders that we sold last year were automated folding solutions.

PI: What drove you to open regional offices in six key cities during the past fiscal year?

DUNN: Being near our customers and ensuring that they have convenient and easy access to Heidelberg specialists is very important. At Heidelberg, our customers’ needs are our needs. When we saw a need for more localized support in key regional areas, we answered that need with the opening of six regional offices in the metropolitan areas of Baltimore, Boston, Dallas, Detroit, Minneapolis and San Francisco.

These new offices provide access to a local Heidelberg support network and join existing Heidelberg offices in Atlanta (Kennesaw), Chicago, Los Angeles and New York (NJ). By integrating our sales and service teams into each office, Heidelberg is able to provide better service to our customers.