Development: Pessimistic painting? Or a pragmatic view of reality?

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You will soon be able to read about this in the editorial section of the next issue of beyondprint unplugged. However, events are rapidly escalating. Therefore, we would like to give you an update here and now.

The news that is currently reaching us suggests that 2019 was not an all together successful year for the printing industry. Machine manufacturers are revising their sales and earnings forecasts to a downward basis, and the figures published by associations ranging from mechanical engineering and the paint industry to the German Printing and Media Industry Association are additonally showing little optimism. Furthermore the fact that the structural change in printing companies is far from complete is reflected in insolvencies, plant closures and takeovers – even in companies from which one would not have expected this.

Digitalization, transformation and environmental protection are the defining issues of our time. These enduring trends are flanked by a cooling global economy, trade wars, uncertain political conditions, Brexit – and now also the Corona virus which is virtually paralyzing the Chinese economy. However, neither Europe nor other economic areas are isolated from the effects of the decline in production of the world’s second largest economy. Apple, Adidas or Puma: they are all struggling with the consequences of the epidemic and are now reporting supply bottlenecks. This is because the economic ties with China are particularly close for tech companies and sports goods manufacturers. But not only for them.

Travel restrictions and other preventative measures are already showing their effects: for example, the Mobile World Congress 2020, the trade fair for mobile technology, in Barcelona was cancelled out of concern over the virus. These are not exactly the best harbingers for the year 2020.

A full dose of dynamite

It has already been announced in December 2019, a few days before the turn of the year, that Koenig & Bauer had reduced its sales and earnings forecast for 2019 and no longer expected growth but rather stagnation. This means that the last quarter must have completely ruined their expectations.

In mid-January, Heidelberg also reported a decline in sales and results. Although the fourth quarter of the financial year does not end until March, the Management Board no longer expects to be able to meet the annual forecast. On the contrary, following the renewed profit warning, the creditworthiness of the printing press manufacturer was further downgraded in the rating issued by the US financial agency Moody’s. And according to information from the Rhein-Neckar-Zeitung, reduced working hours were introduced at the Wiesloch headquarters until April. In addition, the product portfolio is to be streamlined, the organization and processes made more efficient and the international production network restructured. Heidelberg will most likely manufacture far more at its plant in China (if it weren’t for the virus). This is where massive changes are on the horizon.

The latest news from Wiesloch, for example, contains a large amount of explosive material. The Heidelberg Management Board will now be reduced to two people and will in the future consist of Rainer Hundsdörfer (Chairman) and Marcus A. Wassenberg (CFO). This is in the wake of Chief Technology Officer, Stefan Plenz, and Prof. Dr. Hermann, previously Chief Lifecycle Solutions Officer and Chief Digital Officer, leaving the company at the end of financial year 2019/20 (end of March). To this end, the level below the Management Board will be significantly strengthened with a newly established Executive Committee. At the Online Print Symposium on March 3 and 4 in Unterschleissheim, Rainer Hundsdörfer may tell us during his keynote address, whether the downsizing of the Management Board is due to necessity, or whether it is possibly the result of a serious desire for transformation and elimination of the traditional appointments in the Management Board.

Structural adjustments are unavoidable

Another announcement has caused, to say the least, some astonishment. In the summer of 2019, the Heidelberg Antitrust Office prohibited the purchase of MBO. Now, in order to continue its diversification strategy, Komori has grabbed the folding machine manufacturer. Although MBO is to remain independent, it is now in the hands of the Japanese.

Similar to almost the entire market, digital printing machines are now Japanese. Yes, there is still Kodak or Landa. But what do they matter against the superiority of Canon, Epson, Konica Minolta and the numerous others such as Kyocera or OKI?

However, anyone who thinks that the digital printing machine manufacturers are doing brilliantly and that the offset machine manufacturers are once again being hit particularly hard is sorely mistaken. HP, likewise, is currently undergoing a considerable reduction in personnel. And the fact that Xerox apparently wants to take over its major competitor, HP, with all its might (with ever more money) rounds off the picture.

“It is possible that the wrong topics are being discussed at the moment. Of course, new technologies are interesting and also absolutely necessary. But are these really the most pressing problems? Or do they only distract from the ever-increasing market changes?” – Bernd Zipper

The need for structural adjustments seems to be universally unavoidable. One study, for example, assumes that the office market and thus sales of equipment will collapse by 30% by the year 2030 as a result of ongoing digitization. Suppliers will have to be positioned quite extensively to be able to cope with this. Don’t forget: Less paper in the office also means less business stationery.

Does it all add up?

Simultaneously, the printing industry is preparing for drupa 2020 in June. Technical topics that the industry will be dealing with at the trade fair will be discussed in advance. As if that mattered at all. Anyone who analyses the genuinely relevant topics of the industry will very quickly realize that it needs everything but new product launches that are still years away.

The industry is undergoing profound structural change and an equally serious transformation process in which technology plays only a subordinate role. Instead, the industry must (firstly) internalize that a digitalized world demands new business models and more agility from it. It must (secondly) explore new ways of marketing, integrate its workflows with those of its customers, make business faster, more flexible and more transparent, and at the same time push the development and expansion of digital offerings on various channels. Thus, it is (thirdly) the mindset that has to change. Anyone who comes across new technology is welcome to look into the details, but at the same time should question whether this technology even fits into their workflow and business model.

It will no doubt be difficult

The printing industry will not find answers to most of these questions in Düsseldorf. This is because drupa is focusing on technical developments and has almost completely ignored e-business print as a separate topic, which now accounts for a quarter of the total print volume generated in the D/A/CH region.

This gives rise to doubts as to whether drupa year 2020 will be better for the printing industry than the past one. Traditionally, the trade fair is equated with new technologies from manufacturers and high investments by printing companies. However, you should also remember that it was drupa 2008 which was celebrated because of the industry’s high propensity to invest and which turned out to be a disaster for machine manufacturers due to the imminent economic crisis which prevented them from financing their contracts.

No, there is no need to repeat this, but the figures and developments at least suggest that 2020 will be a difficult year.

Bernd Zipper My Take: I am a little bit concerned about these developments. Perhaps it sounds exaggerated: But there is a certain amount of anxiety – and I hope that the markets don’t blow up on us and that things don’t turn out as badly as these predictions suggest. Of course, you can now say: Mr. Zipper is a pessimist, an alarmist and a spoilsport. Maybe (and hopefully) you are right. But those who raise false hopes today will have to live with real disappointments of tomorrow.
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Development: Pessimistic painting? Or a pragmatic view of reality?
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Development: Pessimistic painting? Or a pragmatic view of reality?
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You will soon be able to read about this in the editorial section of the next issue of beyondprint unplugged. However, events are rapidly escalating. Therefore, we would like to give you an update here and now.
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Beyond-Print.net

Founder and CEO of zipcon consulting GmbH, one of the leading consulting companies for the print and media industry in Central Europe. The technology and strategy consultant and his team actively support practical implementation in a wide variety of customer projects. His work involves developing visions, concepts and strategies for the players active in the print production process across a wide range of industries. His areas of expertise include online print, mass customization, strategy and technological assessment for print, and the development of new strategies in the print and media environment. Bernd Zipper is the creator and chairman of Initiative Online Print e.V. and, in addition to his consulting activities, is an author, lecturer and sought-after speaker, orator and moderator. His visionary lectures are regarded worldwide as trend-setting management recommendations for the print and media industry. (Profiles also in Xing, LinkedIn).

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