Talking to Ferdinand Rueesch and Thomas Fichtl of Heidelberg

On Heidelberg’s divestment of the Gallus Group to benpac

Ferdinand Rueesch at the Heidelberg-Gallus supported Avery Dennision Knowledge Center in Pune in December 2019. Photo PSA
Ferdinand Rueesch at the Heidelberg-Gallus supported Avery Dennision Knowledge Center in Pune in December 2019. Photo PSA

Yesterday afternoon (28 July 2020), we had a telephone conversation with Ferdinand Rueesch, the anchor shareholder and member of the Supervisory Board of Heidelberg and Thomas Fichtl, the head of Corporate Public Relations and press officer at Heidelberg. As most industry mavens know, Rueesch sold his remaining majority shares in Gallus to Heidelberg in 2014 in exchange for Heidelberg shares that make him, with approximately 9% of the shareholding, the largest individual stakeholder in the company. He became, from that time, what is described as an ‘anchor shareholder.’

As a member of the Heidelberg board, he maintained his deep links with the label industry in a role that looked after key Gallus Group accounts. The Gallus Group holding has just been acquired by benpac, a family-owned Swiss company. Rueesch will remain on the board of Heidelberg and as an anchor shareholder. With Gallus, he will be responsible for the key accounts as before. We asked Fichtl and Ruesch when the deal will close and when Heidelberg expects to get the Euro 120 million from benpac. Fichtl replied that all the formalities should be completed, and the money should come by Q3 or the end of the 2020 calendar year.

Benpac’s resources key for Gallus developments

Like many who know Rueesch’s style of visiting customers worldwide and looking at their Gallus label and wide-web flexo presses (used for a variety of applications including security printing and liquid packaging), we were curious. What does the divestment mean for both Heidelberg and benpac and the future of the Gallus Group? Ruesch and Fichtl assured us that the divestiture of the Gallus Group, is positive for all concerned, explaining, “It is an opportunity for benpac which has the financial resources to invest in Gallus and the development of the Gallus portfolio. It is a win-win for both as Heidelberg gains economically, as it currently needs to maximize its liquidity.”

Benpac produces filling machines, cappers, labeling solutions, plastic injection molding technology, and paper-based packaging machinery technology. Last year, the group took over one of Müller-Martini’s operations in Stans to use this centrally located site as a base for some of its activities in Switzerland. At the same time, the group, with some 3150 employees in Europe and the Americas, took over Packsys Global in Thailand. Renamed benpac packaging, the Thai plant specializes in high-speed aerosol tube production and filling lines.

Cash is king

As with other German engineering companies that rely on global exports, sales are estimated by the industry’s association to decrease because of the Covid-19 pandemic, from 30 to 50% this year. Fichtl said one could expect Heidelberg sales to decline by perhaps as much as 30%. “As they say in such times, cash is king. However, keep in mind that the transformation plan of Heidelberg began before the Coronavirus pandemic.”

Thomas Fichtl the head of Corporate Public Relations and press officer at Heidelberg. Photo Heidelberg
Thomas Fichtl the head of Corporate Public Relations and press officer at Heidelberg. Photo Heidelberg

Heidelberg will continue to sell and service the Gallus presses and supply Gallus with the digital systems that go into the Gallus Labelfire digital press. The Labelfire is said to have about 40 installations worldwide, and Heidelberg will continue to support its development, although it has stopped producing its B1 sheetfed digital press.

The main plan is for Heidelberg to stick to the core market of sheetfed offset that it still dominates in terms of market share and with a footprint of more than 5,000 machines around the world. Over 50% of this footprint is used for printing monocartons.

We asked about the nature of Heidelberg’s investment in printed electronics and organics that was also announced last week, preceding the Gallus Group sale announcement. Fichtl clarified that this was a project several partners initiated with the German government’s support in 2008. “It has fructified over ten years with the InnovationLab and Heidelberg deciding to become a manufacturer of printed electronics and organics and not as a seller of technology.”

Our customers must be successful for themselves

We asked Rueesch about what the forthcoming Gallus Group developments might be with benpac in control. He said that although cooperative discussions have begun, “It is too early to answer, and the work of evaluating the portfolio will happen in the coming weeks.

When asked about what he has learned in his time at Heidelberg, Rueesch said, “One has to understand that the label industry has its own language just as the folding carton industry has its language. It is important not just to know your machine but the customers and their applications. We have to make the customers successful for themselves, and we need to understand the domains in which they operate, in deep detail. And the shortest and most direct line for their success must be contained in our answers for them.”

2023 promises an interesting ride for print in India

Indian Printer and Publisher founded in 1979 is the oldest B2B trade publication in the multi-platform and multi-channel IPPGroup. While the print and packaging industries have been resilient in the past 33 months since the pandemic lockdown of 25 March 2020, the commercial printing and newspaper industries have yet to recover their pre-Covid trajectory.

The fragmented commercial printing industry faces substantial challenges as does the newspaper industry. While digital short-run printing and the signage industry seem to be recovering a bit faster, ultimately their growth will also be moderated by the progress of the overall economy. On the other hand book printing exports are doing well but they too face several supply-chain and logistics challenges.

The price of publication papers including newsprint has been high in the past year while availability is diminished by several mills shutting down their publication paper and newsprint machines in the past four years. Indian paper mills are also exporting many types of paper and have raised prices for Indian printers. To some extent, this has helped in the recovery of the digital printing industry with its on-demand short-run and low-wastage paradigm.

Ultimately digital print and other digital channels will help print grow in a country where we are still far behind in our paper and print consumption and where digital is a leapfrog technology that will only increase the demand for print in the foreseeable future. For instance, there is no alternative to a rise in textbook consumption but this segment will only reach normality in the next financial year beginning on 1 April 2023.

Thus while the new normal is a moving target and many commercial printers look to diversification, we believe that our target audiences may shift and change. Like them, we will also have to adapt with agility to keep up with their business and technical information needs.

Our 2023 media kit is ready, and it is the right time to take stock and reconnect with your potential markets and customers. Print is the glue for the growth of liberal education, new industry, and an emerging economy. We seek your participation in what promises to be an interesting ride.

– Naresh Khanna

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