“Future innovations will not be confined to digitisation”
Many publishing companies are seeking new business models for the future. As a press supplier with a long tradition that grew big with the newspaper business, Koenig & Bauer provides a perfect example for the change that the industry is undergoing. A conversation with CEO Claus Bolza-Schünemann about developments in the press market and success factors for the transformation.
Mr. Bolza-Schünemann, how do you see the newspaper press business at present – in Germany and worldwide?
It is difficult to assess the market. Worldwide, the market volume for new presses is in the region of between 150 and 200 million euro – there was a time when the turnover volume ranged between 1.1 and 1.3 billion euro. Accordingly, there was a consolidation on the part of the manufacturers. Besides manroland, Goss and ourselves only a small number of suppliers have survived. The major consolidation wave in the printing sector began 15 years ago in the USA and spread to Europe. New investments are now the exception. The newspaper companies are uncertain about what the future will bring. From the monetary point of view, the digital business models have not yet really taken off at many publishing houses. We are accustomed to a situation in which online news cost nothing, or should not do so. And in which the big revenue-generators have drifted off elsewhere in the Web. Nevertheless, we are pleased by every new order we receive.
How is it in Asia, where print continues to be of greater importance?
Major markets do still exist, such as the Philippines, Indonesia and naturally India. There are more than ten press manufacturers supplying the Indian market. But they offer a press technology that could not be marketed in Europe or the USA. I do not mean that in any derogatory way, but these presses are very basic, therefore correspondingly low-cost and that is not in line with our way of thinking. Consequently, these represent difficult markets for us in Europe with our quality demands. In addition, as a result of many customer wishes, our presses resemble a made-to-measure suit. This starts with the newspaper format that in turn influences the cylinder geometries, axle distances as well as gear wheel diameters. This limits the possibility to Copy & Paste.
Today, the newspaper business only accounts for 10 percent of the Koenig & Bauer turnover. How do you compensate for this?
Our service area recorded very positive growth after we actively directed our focus towards it. For us, this was a logical step once new business was longer going as well as in the past. Because customers were investing less, they ran their presses longer than before, which in turn expanded the service possibilities. At the same time, we see the obligation to look for new business to keep our workforce occupied as well as to ensure our customers' overall satisfaction. This gave rise to the latest service offerings, such as a fast-reaction online shop for replacement parts. Our customers worldwide welcome this and our service has developed to become an important selling point for new presses. Besides additional sales of our Commander CL press, just recently we succeeded in gaining a new customer in Florida for a Commander CT 6/2.
Because the newspaper press business is in decline, we started many years ago to enter new markets, especially in the packaging area. It all began in 1991 with our takeover of Planeta in Radebeul that was already highly active in the folding box sector, especially in the USA. Today we print nearly everything in the packaging area, e.g. corrugated board, cardboard, tin cans and beverages cans, crown caps or glass. This accounts for about two-thirds of our revenues. In addition, our company has specialised for more than 150 years in the production of special presses for banknote printing. Our motto is to apply ink to all types of substrates and diversify with workflow solutions, finishing and service. The resulting extensive product portfolio compensates to a certain degree for any economic fluctuations.
This portfolio expansion meant that you had to manage several difficult restructuring and workforce downsizing phases. What are the most important factors that contributed to the success of your company's restructuring?
On the one hand, there simply must be the pressure to change in order to abandon familiar paths and further develop the existing business. On the other hand, everyone must understand that changes are necessary if the company has to undergo a radical transformation and enter new business areas because the existing business is in decline or has even totally disappeared. Supervisory board, management, works council, personnel, customers – in the final instance all must have confidence that the strength and the will to overcome a major crisis are there. Then they will again find new ways. Personnel and customers often have marvellous ideas that should be seized upon. For example, one customer gave us the idea that we could also build presses for beverage cans for which we already supply the dryers. Then it is up to the manufacturers to act decisively, conduct thorough research, develop a suitable concept, put money on the table and get going!
For this, you need to have personnel who genuinely contribute and have a say in decision-making ...
Naturally, we cannot dictate from the top every detail to our 5,700-strong workforce. Every company has enormous internal strengths that must be set free. It is a case here of creating a spirit of trust and allowing both management and personnel to get on with it, while at the same time guiding and supervising their actions. These are the keys to success. Mistakes will be made, that is completely normal, but not twice if at all possible. When I think of our founders: 200 years ago they had to tackle many imponderables, unimaginable as seen from today's point of view, but they succeeded in inventing and realising revolutionary components, of which some can be found in every press even in 2019.
In 2015 you completely restructured the corporate group and split the public limited company into numerous companies. What was the thinking behind this?
Each individual Business Unit, from newspaper, sheet-fed offset, securities printing to flexible packaging and glass-printing operate completely independently as Legal Entities. In addition there is a small holding company with management, finances, personnel and IT resources that provides services to the individual companies. Production is also an independent company that manufactures components for the individual companies and that also must deal with outside competition. This individual responsibility and the will to succeed have introduced a major drive into our corporate group. But it is a completely different way of thinking and working. Our sales and development team work permanently on delivering the best products and services for our customers to make them even more successful. This absolute customer-orientation is part of our success.
Instead of KBA, the company once again goes under the name of Koenig & Bauer. What was the thinking behind this move?
In the last years we have acquired several companies, such as Iberica, Kammann, Metronic or Flexotecnica. At the time of acquisition, each new addition had KBA added to its name, though each brought its own CI with own branding and market image. The 200-year anniversary in 2017 provided the best occasion to sharpen the Corporate Identity for the group and combine all subsidiaries under a single name and logo. We all quickly agreed that this could only be Koenig & Bauer and the “new” – “old” name has been well received by the outside world.
What is your vision for the company?
Everything a person physically needs to live comes packaged in bottles, cans or boxes, or wrapped in paper respectively, and cannot be replaced by virtual alternatives. The world population and levels of prosperity are growing and we do not carry the sugar home in our bare hands. For this reason, we are confident that we are well-positioned with our technologies and products. Future innovations will not be confined to the area of digitisation – by now a somewhat overworked term – but also affect procedures and manufacturing processes. In contrast, print media are in a difficult position here, as news as such has been almost totally digitised. Even though I personally find a print product, such as a book or a newspaper, much more comfortable compared to reading online, there is no stopping the technical and structural transformation. I see Koenig & Bauer also in the future as as manufacturer of high-quality capital goods that are used mainly in the packaging industry as well as well as for the production of security documents.
IFRA 2019 is coming soon. What do you expect from the exhibition?
I expect most of our newspaper customers to attend, at least those from Europe. For this reason, our exhibition is both important and efficient. It is a great pleasure to greet the large, medium-sized and small companies on two days in Berlin. There has been much restructuring and merging also in the newspaper market in the last years, leading in some cases to astounding results. We are looking forward very much to hear about plans for the future and how we, as manufacturers, must react. It is essential for us to stay in contact with our customers, also to obtain impulses for improvements and optimisation as well as new offerings and services. For this, IFRA has been and is the meeting place.
Interview: Stefanie Hornung