Conquering the Crisis
An interview with Werner Albrecht, director of Heidelberg's
Market Centre Germany/Switzerland, which discusses the challenges
and opportunities faced by the German and European printing
industry. Jürgen Ströbele, editor of Heidelberg
News.
Werner Albrecht has been chairman of the Executive Board at Heidelberg Druckmaschinen Vertrieb Deutschland GmbH and director of the Market Centre Germany/Switzerland since 2004. The interview is about the greatest challenges and opportunities facing the German and European printing industry today.
Werner Albrecht has been chairman of the Executive Board at Heidelberg Druckmaschinen Vertrieb Deutschland GmbH and director of the Market Centre Germany/Switzerland since 2004. The interview is about the greatest challenges and opportunities facing the German and European printing industry today.
'The typical "German" print shop or printing industry is a thing
of the past, just as there are no more typically "French" or
"English" print shops.' Werner Albrecht.
Jürgen Ströbele: what are the most important benchmark data for the printing industry in Germany?
Werner Albrecht: The German printing industry is one of the most efficient and largest printing markets in the world. At Heidelberg, Germany was our worldwide number one market in terms of revenue in 2005 and in 2006 as well.
JS: ...even with the turbulent economy of the past four years?
WA: Yes, because even after the slump of the past four years, there are still about 11,500 printing companies in Germany. True, this is about 4,000 companies and almost 40,000 employees less than in 2001, but we should not overlook the fact that the drop in these numbers is also due to some businesses closing and others being bought out. If you look at the remaining 11,500 companies, about 1,300 are positioned in the industrial sector, employing some 100,000 people. This makes up more than half of the approximately 180,000 people working in Germany's printing industry. At the same time, these companies do about two thirds of Germany's entire printing volume. This year Germany's entire printing production is valued at just under 23 billion US dollars (18 bn. euros), which corresponds to more than 13 per cent of European or about 5 per cent of worldwide print production.
JS: Can we see the light at the end of the tunnel yet?
WA: Well, actually, it's even better than that. I believe that quite possibly for the first time the number of start-ups will balance the number of companies shutting down. I am of course especially happy about these start-ups because they show that people are seeing opportunities in this craft - despite all the prophecies of doom.
JS: What lessons can be learned from the past four years?
WA: Even in this crisis, the structure of the printing industry has proven to be amazingly stable. This indicates that the percentage of small print shops has remained steady - and, interestingly - not only in Germany. In this country the percentage of small print shops is about 80 per cent and is thus in about the same range as 10 or 30 years ago - before and after the boom periods and slumps we had during that period. Admittedly, there has been a concentration of large printing companies or, put differently, the big companies have got bigger. At the same time, it would appear that the smaller print shops are profiting from their greater flexibility because at any given time they are developing alternative business models which help them compete with the industrial printing companies.
JS: Can't a large printing company manoeuvre through an economic slump better than a small company?
WA: No, actually it is the large printing companies that 'suffer' because of their specialisation and focus on high volume. In an economic slump, they cannot sufficiently utilise their printing presses which quickly becomes a serious problem because that equipment is so expensive. Typical commercial print jobs of rather short runs are often done more efficiently by small and regional print shops, especially since these are also closer to the customer - a key point. Proximity to the client and a wide customer base ensure survival for these smaller companies, even in tough times.
JS: Is there such as thing as a typical German print shop?
WA: The typical "German" print shop or printing industry is a thing of the past, just as there are no more typically "French" or "English" print shops. Print shops in France are pretty much like the ones in the United Kingdom, Germany or Poland. The printing industry has now become European. The surprising thing, however, is not "Europeanisation" or internationalisation; it's not the takeovers or mergers, but the fact that the structure of the business is identical throughout Europe. About 80 per cent of these companies have less than 20 employees. Therefore I would rather use the term "the typical European print shop". These outfits are generally mid-market size, have a staff of 15 to 20, run two shifts, operate a midsize-format four-colour printing press and perhaps one other small-format press, have their own prepress with CTP and a postpress that comprises a cutting system and folding machine. In a nutshell, these companies offer their customers the whole range of services and do not specialise in certain products.
JS: Do Western European print shops need to be afraid of 'cheap' foreign competition from Eastern Europe or even Asia?
WA: No, quite the opposite. It's not just a few companies in Eastern Europe that are afraid of the high productivity, quality, and low prices of their colleagues in Western Europe. After all, the slump we mentioned earlier resulted in tough competition and thus lowered prices. Not to mention, throughput times for assignments are getting shorter all the time, which makes short distances and smooth logistics imperative - not to mention lower transportation costs. For this reason, the big "sell-out" of Western European or German print shops everyone had been afraid of has not occurred.
JS: So - despite their high labour costs - Western Europeans are competitive?
WA: People have been whining about high labour costs ever since the concept of employment was invented. What we need to do is talk about the causes. There is a direct correlation between wages and taxes. Our main problem in Germany is high taxes plus the lack of flexibility in working conditions. Nevertheless, printers are able to defend themselves against what they perceive to be low-cost suppliers, regardless of whether the suppliers are domestic or foreign. When a company is well run and has sound structures from a technical and HR point of view, competition is not a risk but rather provides a stimulus. Furthermore, the wage factor - which, as you know, is higher in Western Europe and is regarded as a key disadvantage vis-à-vis low-wage countries - is in reality only one component of the production costs. Capable printing companies are able to compensate for the high labour costs by higher productivity.
JS: If the wage factor is not really such a big issue after all, in your opinion, then what is?
WA: Let me explain. Most business owners understand that good employees are entitled to good pay. Highly productive staff contributes to the bottom line of a company. Or, put another way: Employees who are motivated and well paid are not a drag on the company. On the other hand, less efficient staff drag down the company's growth and profit even if their wages are seemingly lower.
JS: ...so it would be more important to select the right staff than to try and drive down wage costs?
WA: Yes, I would say so. There are countless examples that it is not the number of people on the payroll or their wages that are decisive for the success of a company but primarily their motivation and qualification - particularly in the industrial nations. Especially with today's modern, high-tech machines you need well-trained staff if you want to offer your customers optimal results. This is particularly true for innovative application techniques and finishing processes at companies that want to stay ahead of the pack. Almost all printing equipment delivers good quality these days but it is the person operating who really leverages the full potential of the equipment.
JS: Isn't this also a problem of the printing companies' corner office?
WA: How the company is led is most certainly a key point. Creativity - especially the capability to make the right decisions in a crisis - is not something that everyone is gifted with. For instance, if successions in business are not prepared well, this can quickly lead to problems. Here's where Heidelberg comes in. We can help. For example, in our Print Media Academy we offer seminars on how to transition from one generation of corporate top management to another.
JS: What costs should a printing company avoid by all means?
WA: Depending on the company, 28 to 33 per cent of costs are wages, whereas materials are between 37 to 42 per cent, the lion's share of which is paper. This is why waste paper is such a big issue for us. Here is an area where companies can actually cut costs and save big money. Many companies throw away too much money in this area because they do not calculate properly. Usually this is also due to poor data gathering. But total cost control is possible and it will soon pay for itself. This is why our integration solutions with Prinect are so successful.
Jürgen Ströbele: what are the most important benchmark data for the printing industry in Germany?
Werner Albrecht: The German printing industry is one of the most efficient and largest printing markets in the world. At Heidelberg, Germany was our worldwide number one market in terms of revenue in 2005 and in 2006 as well.
JS: ...even with the turbulent economy of the past four years?
WA: Yes, because even after the slump of the past four years, there are still about 11,500 printing companies in Germany. True, this is about 4,000 companies and almost 40,000 employees less than in 2001, but we should not overlook the fact that the drop in these numbers is also due to some businesses closing and others being bought out. If you look at the remaining 11,500 companies, about 1,300 are positioned in the industrial sector, employing some 100,000 people. This makes up more than half of the approximately 180,000 people working in Germany's printing industry. At the same time, these companies do about two thirds of Germany's entire printing volume. This year Germany's entire printing production is valued at just under 23 billion US dollars (18 bn. euros), which corresponds to more than 13 per cent of European or about 5 per cent of worldwide print production.
JS: Can we see the light at the end of the tunnel yet?
WA: Well, actually, it's even better than that. I believe that quite possibly for the first time the number of start-ups will balance the number of companies shutting down. I am of course especially happy about these start-ups because they show that people are seeing opportunities in this craft - despite all the prophecies of doom.
JS: What lessons can be learned from the past four years?
WA: Even in this crisis, the structure of the printing industry has proven to be amazingly stable. This indicates that the percentage of small print shops has remained steady - and, interestingly - not only in Germany. In this country the percentage of small print shops is about 80 per cent and is thus in about the same range as 10 or 30 years ago - before and after the boom periods and slumps we had during that period. Admittedly, there has been a concentration of large printing companies or, put differently, the big companies have got bigger. At the same time, it would appear that the smaller print shops are profiting from their greater flexibility because at any given time they are developing alternative business models which help them compete with the industrial printing companies.
JS: Can't a large printing company manoeuvre through an economic slump better than a small company?
WA: No, actually it is the large printing companies that 'suffer' because of their specialisation and focus on high volume. In an economic slump, they cannot sufficiently utilise their printing presses which quickly becomes a serious problem because that equipment is so expensive. Typical commercial print jobs of rather short runs are often done more efficiently by small and regional print shops, especially since these are also closer to the customer - a key point. Proximity to the client and a wide customer base ensure survival for these smaller companies, even in tough times.
JS: Is there such as thing as a typical German print shop?
WA: The typical "German" print shop or printing industry is a thing of the past, just as there are no more typically "French" or "English" print shops. Print shops in France are pretty much like the ones in the United Kingdom, Germany or Poland. The printing industry has now become European. The surprising thing, however, is not "Europeanisation" or internationalisation; it's not the takeovers or mergers, but the fact that the structure of the business is identical throughout Europe. About 80 per cent of these companies have less than 20 employees. Therefore I would rather use the term "the typical European print shop". These outfits are generally mid-market size, have a staff of 15 to 20, run two shifts, operate a midsize-format four-colour printing press and perhaps one other small-format press, have their own prepress with CTP and a postpress that comprises a cutting system and folding machine. In a nutshell, these companies offer their customers the whole range of services and do not specialise in certain products.
JS: Do Western European print shops need to be afraid of 'cheap' foreign competition from Eastern Europe or even Asia?
WA: No, quite the opposite. It's not just a few companies in Eastern Europe that are afraid of the high productivity, quality, and low prices of their colleagues in Western Europe. After all, the slump we mentioned earlier resulted in tough competition and thus lowered prices. Not to mention, throughput times for assignments are getting shorter all the time, which makes short distances and smooth logistics imperative - not to mention lower transportation costs. For this reason, the big "sell-out" of Western European or German print shops everyone had been afraid of has not occurred.
JS: So - despite their high labour costs - Western Europeans are competitive?
WA: People have been whining about high labour costs ever since the concept of employment was invented. What we need to do is talk about the causes. There is a direct correlation between wages and taxes. Our main problem in Germany is high taxes plus the lack of flexibility in working conditions. Nevertheless, printers are able to defend themselves against what they perceive to be low-cost suppliers, regardless of whether the suppliers are domestic or foreign. When a company is well run and has sound structures from a technical and HR point of view, competition is not a risk but rather provides a stimulus. Furthermore, the wage factor - which, as you know, is higher in Western Europe and is regarded as a key disadvantage vis-à-vis low-wage countries - is in reality only one component of the production costs. Capable printing companies are able to compensate for the high labour costs by higher productivity.
JS: If the wage factor is not really such a big issue after all, in your opinion, then what is?
WA: Let me explain. Most business owners understand that good employees are entitled to good pay. Highly productive staff contributes to the bottom line of a company. Or, put another way: Employees who are motivated and well paid are not a drag on the company. On the other hand, less efficient staff drag down the company's growth and profit even if their wages are seemingly lower.
JS: ...so it would be more important to select the right staff than to try and drive down wage costs?
WA: Yes, I would say so. There are countless examples that it is not the number of people on the payroll or their wages that are decisive for the success of a company but primarily their motivation and qualification - particularly in the industrial nations. Especially with today's modern, high-tech machines you need well-trained staff if you want to offer your customers optimal results. This is particularly true for innovative application techniques and finishing processes at companies that want to stay ahead of the pack. Almost all printing equipment delivers good quality these days but it is the person operating who really leverages the full potential of the equipment.
JS: Isn't this also a problem of the printing companies' corner office?
WA: How the company is led is most certainly a key point. Creativity - especially the capability to make the right decisions in a crisis - is not something that everyone is gifted with. For instance, if successions in business are not prepared well, this can quickly lead to problems. Here's where Heidelberg comes in. We can help. For example, in our Print Media Academy we offer seminars on how to transition from one generation of corporate top management to another.
JS: What costs should a printing company avoid by all means?
WA: Depending on the company, 28 to 33 per cent of costs are wages, whereas materials are between 37 to 42 per cent, the lion's share of which is paper. This is why waste paper is such a big issue for us. Here is an area where companies can actually cut costs and save big money. Many companies throw away too much money in this area because they do not calculate properly. Usually this is also due to poor data gathering. But total cost control is possible and it will soon pay for itself. This is why our integration solutions with Prinect are so successful.
'In the printing business, the basics are paper, cardboard, and
colour - and being able to work with these components in a sensible
way. You've got to master this business 100 per cent.' Werner
Albrecht
JS: What developments will characterise the German printing industry in the years to come?
WA: With a bit of luck, in the current year the printing industry will once again generate the same level of revenue it had in 2001. This is why we are very optimistic about the future. During the slump, German printing companies reacted by consistently streamlining their structures and processes. This has made them more productive than ever before. By now most companies realise that you cannot retain customers with price alone. The price spiral is moving only one way: down - towards a slow but certain collapse. This is what companies which engaged in these price wars have experienced. It takes years to work your way out of this rut - and this of course hurts the growth of the company in the long run.
JS: the long-term?
WA: Successful companies seek to retain their customers by providing excellent service and customised solutions. Size alone is not really a decisive factor for surviving in the marketplace. These days cost, quality, flexibility, reliability and speed are all key. Companies waiting for customers to knock on their door are a thing of the past. In forward-looking printing companies practically every employee is in sales because every individual employee is responsible for the whole company. If you lose a customer, it doesn't really matter if you lost them because they were unhappy with your consultation, price, quality or because of poor service in delivering your product. Losing that customer hurts your entire staff and the whole company. Everybody has got to understand this.
JS: Are there new growth areas in the printing industry?
WA: You often hear that diversifying your field of activities will open up new revenue streams for printing companies, say in digital printing, cross media, or print and fulfilment. However, let's not generate false expectations because, to begin with, all of these technologies cost money, require investments. And they also require a lot of patience before they pay for themselves. These fields of operation are only suitable for large, healthy companies. We should not succumb to some flowery illusion of the modern media world. In the printing business, the basics are paper, cardboard, and colour - and being able to work with these components in a sensible way. You've got to master this business 100 per cent. Only then should you look for additional mainstays. If these new operations work, then that is of course very positive for a printing company. And here is one other thing we need to hang on to.
Just how do we wish to achieve this?
Basically, every printing company's client structure is the same. So is their printing equipment and the technology. Today everyone is capable of printing well. People simply expect this and it's a prerequisite. Basically, anyone can buy and use the best equipment. The difference is - and I wish to stress this once more - well-trained staff who can squeeze just a little bit more out of the printing equipment, people who are able to improve customer retention thanks to their stellar focus on customer service.
JS: How can Heidelberg help printing companies stay competitive?
WA: We listen! We try to understand! We only want to sell equipment to our clients that they really need to grow their company profitably. Our R&D sector is also important because it continues to improve our technology. We are now seeing a resurgence of offset printing, among other things because of our R&D results.
The pioneering spirit at Heidelberg and the power of this printing technique - which is the most popular in the world - become apparent when you look at state-of-the-art platforms such as our Speedmaster XL 105 or our Anicolour short inking unit, recently premiered at Ipex 2006 in Birmingham, England. Or just take our comprehensive Prinect workflow management system, or our Speedmaster XL 142 and XL 162 - our up and coming large-format printing presses. We still have a long way to go before we reach the end of the road in this area. With our cutting-edge technology, we will continue to advance offset printing as the decisive printing technology of the future.
Facts & Figures
Werner Albrecht - personal information
Werner Albrecht (54) is married and father of a son and a daughter. He studied law and now lives with his wife in Nußloch near Heidelberg.
JS: Mr. Albrecht, how do you keep in shape?
WA: I like to jog with my co-workers. Every Friday at 5:45 a.m. we run through the woods in Sandhausen near Heidelberg. I am also a passionate marksman.
JS: How do you renew your spirit?
WA: A leader who does not read loses his power to lead. I enjoy reading biographies, philosophy and books on history. I am currently reading volume five of Studies in German Histories by Karl Lamprecht.
Professional Career
1978 Joined Heidelberg as head of the legal department.
1988 Appointed sales director.
1995 CEO of the Heidelberg holding for Eastern Europe in Vienna, Austria.
2001 President of Heidelberg Web Systems, Inc, headquartered in Dover, New Hampshire, USA, and thus responsible for all of Heidelberg's web offset activities.
2004 Chairman of the executive board at Heidelberg Druckmaschinen Vertrieb Deutschland GmbH and director of the Market Centre Germany/Switzerland.
JS: What developments will characterise the German printing industry in the years to come?
WA: With a bit of luck, in the current year the printing industry will once again generate the same level of revenue it had in 2001. This is why we are very optimistic about the future. During the slump, German printing companies reacted by consistently streamlining their structures and processes. This has made them more productive than ever before. By now most companies realise that you cannot retain customers with price alone. The price spiral is moving only one way: down - towards a slow but certain collapse. This is what companies which engaged in these price wars have experienced. It takes years to work your way out of this rut - and this of course hurts the growth of the company in the long run.
JS: the long-term?
WA: Successful companies seek to retain their customers by providing excellent service and customised solutions. Size alone is not really a decisive factor for surviving in the marketplace. These days cost, quality, flexibility, reliability and speed are all key. Companies waiting for customers to knock on their door are a thing of the past. In forward-looking printing companies practically every employee is in sales because every individual employee is responsible for the whole company. If you lose a customer, it doesn't really matter if you lost them because they were unhappy with your consultation, price, quality or because of poor service in delivering your product. Losing that customer hurts your entire staff and the whole company. Everybody has got to understand this.
JS: Are there new growth areas in the printing industry?
WA: You often hear that diversifying your field of activities will open up new revenue streams for printing companies, say in digital printing, cross media, or print and fulfilment. However, let's not generate false expectations because, to begin with, all of these technologies cost money, require investments. And they also require a lot of patience before they pay for themselves. These fields of operation are only suitable for large, healthy companies. We should not succumb to some flowery illusion of the modern media world. In the printing business, the basics are paper, cardboard, and colour - and being able to work with these components in a sensible way. You've got to master this business 100 per cent. Only then should you look for additional mainstays. If these new operations work, then that is of course very positive for a printing company. And here is one other thing we need to hang on to.
Just how do we wish to achieve this?
Basically, every printing company's client structure is the same. So is their printing equipment and the technology. Today everyone is capable of printing well. People simply expect this and it's a prerequisite. Basically, anyone can buy and use the best equipment. The difference is - and I wish to stress this once more - well-trained staff who can squeeze just a little bit more out of the printing equipment, people who are able to improve customer retention thanks to their stellar focus on customer service.
JS: How can Heidelberg help printing companies stay competitive?
WA: We listen! We try to understand! We only want to sell equipment to our clients that they really need to grow their company profitably. Our R&D sector is also important because it continues to improve our technology. We are now seeing a resurgence of offset printing, among other things because of our R&D results.
The pioneering spirit at Heidelberg and the power of this printing technique - which is the most popular in the world - become apparent when you look at state-of-the-art platforms such as our Speedmaster XL 105 or our Anicolour short inking unit, recently premiered at Ipex 2006 in Birmingham, England. Or just take our comprehensive Prinect workflow management system, or our Speedmaster XL 142 and XL 162 - our up and coming large-format printing presses. We still have a long way to go before we reach the end of the road in this area. With our cutting-edge technology, we will continue to advance offset printing as the decisive printing technology of the future.
Facts & Figures
Werner Albrecht - personal information
Werner Albrecht (54) is married and father of a son and a daughter. He studied law and now lives with his wife in Nußloch near Heidelberg.
JS: Mr. Albrecht, how do you keep in shape?
WA: I like to jog with my co-workers. Every Friday at 5:45 a.m. we run through the woods in Sandhausen near Heidelberg. I am also a passionate marksman.
JS: How do you renew your spirit?
WA: A leader who does not read loses his power to lead. I enjoy reading biographies, philosophy and books on history. I am currently reading volume five of Studies in German Histories by Karl Lamprecht.
Professional Career
1978 Joined Heidelberg as head of the legal department.
1988 Appointed sales director.
1995 CEO of the Heidelberg holding for Eastern Europe in Vienna, Austria.
2001 President of Heidelberg Web Systems, Inc, headquartered in Dover, New Hampshire, USA, and thus responsible for all of Heidelberg's web offset activities.
2004 Chairman of the executive board at Heidelberg Druckmaschinen Vertrieb Deutschland GmbH and director of the Market Centre Germany/Switzerland.
