Plan to double market share

One hundred days on from Heidelberg's purchase of Jagenberg's Diana carton folder gluer operation and die cutting and creasing machinery builder WPM, plans to rebuild, rebrand and redirect are well underway, revealed Dr Jürgen Rautert, president of Postpress at Heidelberger Druckmaschinen.

"With a stronger mother company, the customer has safety of investment, but small can be beautiful. It can be very customer oriented. So we shall leave them as a smaller company able to offer service and special equipment," he emphasized.

When the acquisition was announced in January, chairman of Heidelberg's management board Bernard Schreier said "this take-over fits in perfectly with our strategy of strengthening and expanding our finishing operations…..we will be closing a gap in our portfolio and can therefore offer our customers extended solutions on the key growth market of packaging printing."

Good company

Just how does Heidelberg Postpress Packaging GmbH – as the new company is designated - fit into that strategy? "There are really two reasons for our interest," explained Jurgen Rautert. "Heidelberg is not the number one in converting, but we have the Speedmaster CD presses where we have a good share of the B1 and B2 market. The CD74 aims at the short run pharma market and, of course, the Gallus alternative for cartons or flexibles. In other words, we are familiar with packaging."

Combined with Heidelberg's prowess in digital, web and sheet, the company identified "two really big markets" on the postpress front – "mailroom and packaging. And in WPM we finally found a good company," he enthused. "It fits with our strategy; there are limited players in the field and there is close contact with the market. And, in the light of our interest already in the sheet-fed carton press market, it really made sense."

He added honestly: "Although sales were up on the WPM side, market share was being lost on the folder gluer front."

So where is the company going and how does he see performance improving? "We plan to move the Neuss (Diana) operation to Mönchengladbach – the two units are already run by one management and three people from Heidelberg have joined that team here." There is clearly plenty of room for expansion behind the existing plant. "Although it is managed by the postpress team, we are aware that folder gluer users have nothing in common with finishing, such as our stitchers, so the press people might be involved.

"On the sales side – about one third of the regions around the world have already taken on the sales of the equipment. By the end of the year this should be up to two thirds coverage." Naturally, contractural arrangements with agents and distributors have to be worked through, but the company is hoping to attract some of the individuals from those local companies to join its teams. "Heidelberg's philosophy is to have regional guys who know the basics for our full line. They would be supported by the packaging specialists. And the worldwide sales and service organization is an asset for our customers. We can get parts to anywhere in 24 hours."

Outsourcing

He stressed: "We will also streamline all the processes – there are some things that Jagenberg has done that are very smart and there are some things we do better. We are outsourcing all manufacturing, except for some core know-how, and we assemble here in Mönchengladbach. All this is cost and base (space) driven." A third company acquired in the deal was Jagenberg Slovensko Spol, based in Nove Mesto nad Vahom, in Slovakia, which supplies mechanical components and some pre-assembled modules to Heidelberg Postpress Packaging.

The global annual market for folder gluers and die punching machines is estimated at around €600M according to Heidelberg. The acquisition has enabled it to increase its share to around eight per cent. "We are currently number two in folder gluers and third in die cutting. I am not aiming at 50 per cent of the market share, but I would like to double our current share in the next few years."

Although he would not be drawn on detail and admitted that it was not an easy task, Dr Rautert did reveal that: "The product road map is in place. We will stick to our strengths and we have to develop step by step."

"Although I hate to use the word, we do have a lot of synergy – die cutting has much in common with a sheet-fed press. And we will strive for line integration."

Branding

Rebranding is the next thing to be tackled. "We are very close to chosing the names – they are in the fine tuning stage. Diana will be kept as a sub-brand, but the WPM machines will be re-named and we will change the styling towards the Heidelberg scheme in the summer."

Had there been a vacuum of sales in the first weeks since the takeover? "Although nothing was happening, the last four weeks have been much better and we have seen a few orders." Fastest growing market is Eastern Europe. In fact, two WPM machines were sold to Poland recently.

And the future? "We will keep our eyes and ears open on trends in the converting industry and if there is an opportunity for Heidelberg to make business and provide for the customer then there could be more steps in the future. But we are not proactively driving something in the next 12 months," he said categorically. Although he admitted that flexible packaging was an important area. By way of explanation he added: "The integration of a new company is not an easy task. Learning to run together takes time, so if in a year we are up to speed then I shall be happy. It has been made easier so far by the staff at Jagenberg being so supportive."

And watch out for something special in Düsseldorf in May. "Drupa is perfectly timed for the one company to show how things are done. There will not be just electronic workflow. There will be 'iron' there." An open house at Mönchengladbach during the fair could well be on the cards.

"We will invest and we will drive the R and D" – Heidelberg spends an impressive 10 per cent of its turnover on R and D. "But we have also learnt how important sales and service are.

"If you want to be a solution provider you have to be seen to be open and offer choices. Our major strength has to be listening," concluded Dr Rautert.

Heidelberg Postpress Packaging Tel: +49 6221 920 www.heidelberg.com www.jagenberg.com