Heidelberger Druckmaschinen AG

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Heidelberger Druckmaschinen AG

Kurfiirsten-Anlage 52-60
69115 Heidelberg
Germany
Telephone: (+49) 622-1920
Fax: (+ 49) 6221926999
Web site: http://www.heidelberg.com

Public Company
Incorporated:
Employees: 24,177
Sales: EUR 5.0 billion ($4.39 billion) (2000)
Stock Exchanges: Frankfurt
Ticker Symbol: HDD
NAIC: 333293 Printing Machinery and Equipment Manufacturing

Heidelberger Druckmaschinen AG (Heidelberg) is the world’s largest maker of printing equipment, ahead of second place Xerox Corporation. The Heidelberg, Germany-based company holds a 30 percent share of the world market for offset printing presses, its core market. Yet Heidelberg has been extending its range of products to include pre-press, post-press and digital printing technologies to reinvent itself as an all-in-one systems provider for the 21st century. In all, the company’s more than EUR 5 billion in annual sales give it some 20 percent of the total world printing equipment market. Some 85 percent of the company’s sales are made internationally. Europe generates about half of Heidelberg’s sales, while the United States adds another 30 percent of total sales. Heidelberg is well-positioned in the Asian market as well, which is expected to match the market potential of the United States and Europe in the early decades of the 21st century. Heidelberg, which celebrated its 150th anniversary in 2000, has been listed on the Frankfurt exchange only since 1997. Most of its shares are held by institutional investors, with German utility concern RWE alone holding 56 percent of Heidelberg’s shares. However, Heidelberg announced plans to increase its free-float shares to more than 30 percent and up to as much as 80 percent by 2002.

Ringing in the 19th-Century Printing Industry

While Gutenberg’s invention of the printing press revolutionized society, the printing industry remained largely unchanged into the 19th century. The advent of the industrial revolution was to bring large-scale transformations to the printing industry, as the use of new production techniques and the advent of new power sources enabled the engineering of larger and faster printing presses. The source of much of this innovation remained in southern Germany, where Gutenberg had first invented his press. An important step forward was the invention of the high-speed press, known as the “schnell-presse” in 1810; soon after, the first steam-driven presses were placed in service.

Georg Hamm went into business in 1844, opening a machine factory and bell foundry in Frankenthal. Hamm’s 26-year-old younger brother Andreas took over his brother’s company. Joining with partners, Hamm renamed the business Hemmer, Hamm und Compagnie in 1850, marking the official start of Heidelberg’s history. Andreas Hamm left the company the following year in order to found his own business, combining his two interests, bell-making and printing presses. In 1863 Hamm joined up with another printing machine maker, Andreas Albert, who had completed an apprenticeship with printing press manufacturer Koenig und Bauer (the future KBA). The new company, Maschinenfabrik Albert & Hamm, continued founding bells, but also began production of a series of printing presses that were to give the company quick renown. By the middle of the decade, the company had produced 14 presses, finding customers as far away as Odessa.

The partnership lasted until 1873—Hamm wanted to continue bell-making, competing for and winning the command to cast the 27-ton emperor bell for the Cologne Cathedral. The partners became competitors, with A Hamm OHG Schnellpressenfabrik und Eisengiesserei gaining the upper hand with the 1875 debut of Hamm’s “high-speed cylinder letterpress.” This press quickly won international acclaim. Hamm continued to innovate up until his death in 1894, introducing another successful press, the Pro Patria, which was to sell more than 500 units, and gain the company an international clientele of more than 400 customers.

After Hamm’s death, the company was taken over by his son Carl, who sold off the printing machinery division two years later to Wilhelm Muller, a Heidelberg-based industrialist. Millier transferred the assets and equipment of Hamm’s company to a Heidelberg factory in 1896. Three years later, the printing press company was opened up to private shareholders in order to increase its capital. The company was now named Schnel-lpressenfabrik A Hamm AG Heidelberg. Hamm’s name was soon dropped, and the company was renamed Schnellpres-senfabrik AG Heidelberg. The company’s Pro Patria line was meanwhile enjoying steady increases in sales both in Germany and internationally.

World War I interrupted the company’s expansion, cutting off its international sales. By 1916, the company had converted its production to support the German war effort, manufacturing armaments, including grenade blanks. The company also received a new shareholder, Mannheim industrialist Richard Kahn, who, by 1919, had taken over the Heidelberg printing press operation entirely. Kahn was to stimulate the development of the company’s first platen (“tiegel” in German) printing machines, and particularly the introduction of automated sheet-feeding. Early models were capable of processing more than 1,000 sheets per hour, and speeds were doubled by the 1920s. The process helped to revolutionize the printing industry during the prewar period, and the Heidelberger Tiegel quickly became one of the top-selling printing presses worldwide.

Postwar World Leader

The company’s fortunes were especially helped by the arrival of Hubert H.A. Steinberg to its managing board. Only 29 years old when he started with the company, Steinberg became the driving force for the company’s growth over a reign that was to last until the early 1970s. Steinberg proved to be a natural marketer—one of his ideas led the company to install a press on the back of a truck; salesmen could then drive to potential customers to give them a first-hand view of the machine’s capabilities. Steinberg also introduced payment plans for its presses. In order to meet the steady rise in demand, Steinberg adapted the production line techniques pioneered by Henry Ford for the company’s printing presses. By the end of the 1920s, Heidelberg was able to produce 100 of its Tiegel presses per month. The company merged with two other Kahn-held companies, Maquet AG and Maschinenfabrik Geislingen, in 1929, giving it added production capacity.

The collapse of Kahn’s business during the Great Depression led Heidelberg to be acquired by its creditor banks, enabling Schnellpressenfabrik Heidelberg to remain in business. The banks later sold their holding to German utility conglomerate RWE in 1941. Meanwhile, the company had another international top-seller in the 1930s, when it debuted a fully automatic high speed press in 1934.

Yet Heidelberg was quickly falling under the shadow of the Nazi rise to power. Publishing restrictions led to a drastic falloff in the company’s domestic orders, and exports were also coming under pressure. Heidelberg opened branches in Los Angeles and New York to help compensate for the drop in European orders, but these were crippled by increasing anti-German import legislation. By 1942, the company was forced to end production of printing presses. Instead, Heidelberg began manufacturing lathes, which saved many of its skilled workers from being sent to the war front. The company had also taken pains to maintain a distance from the Nazi party. This decision was to enable the company to stay in business after the Allies occupied Heidelberg.

The company continued to produce lathes, then began accepting orders for repairs and service of its printing presses, before returning to full-time production of printing presses by 1949. Heidelberg was to become an important part of the German economic miracle. By 1950, as the company celebrated its centenary, its sales had topped DM 21 million. More than 35,000 Heidelberg presses were then in operation around the world. The inauguration the following year of the Drupa international printing and paper trade fair at Dusseldorf was to provide a new showcase not only for Heidelberg but for the German printing press industry as a whole.

The 1950s saw the company expand not only its production capacity, but its entire product range. Heidelberg opened a new state-of-the-art production facility in nearby Wiesloch in 1957; the following year, as the company unveiled a new product line, its Heidelberg facility was expanded as well. After clinging to its letterset printing press technology for its first hundred years, Heidelberg entered the increasingly popular market for offset printing presses as well. The first offset press, the Heidelberg KOR, was introduced in 1962. The expansion of the company’s product line led it to take on a new name, Heidelberger Druckmaschinen AG, in 1967.

Industry Heavyweight for Another Century

By the time of his retirement in 1972, Steinberg had led Heidelberg to the top ranks of the world’s printing press manufacturers. The company was hard hit during the economic turmoil of the 1970s, yet quickly reasserted itself with the development of a new generation of products, such as the multicolor Speedmaster, introduced in 1974. By the beginning of the 1980s, Heidelberg’s sales had topped DM 1 billion. In 1982, Heidelberg further enhanced the scope of its products with the introduction of its first web-offset machines. Three years later the company started production at a new plant, in Amstetten, which had been held up by legal troubles for nearly a decade. The new facility gave the company much needed large founding capacity.

Company Perspectives:

Heidelberg develops solutions for the entire Printing and Publishing Industry. Our commitment is to be the best partner to the graphic arts industry, offering forward-looking solutions. Worldwide.

In 1988, Heidelberg made its first large-scale foreign acquisition, buying up Harris Graphics, a U.S.-based maker of web-offset machines, which also had plants in Mexico and France. The loss-making company, which cost Heidelberg $300 million, was returned to profits in the early 1990s, and saw its name changed to Harris Heidelberg. By then, Heidelberg had developed its new “direct imaging” technology, first incorporated in its machines in 1991. In 1995, Heidelberg launched its first fully direct-imaging press, the Quickmaster DI.

At that time, the company’s chairman seat was taken over by Hartmut Mehdorn. The new chairman quickly led the company on the development of a new strategy for the turn of the century. Recognizing the rapidly changing printing industry landscape—customers were increasingly seeking turnkey printing solutions, while the field was rapidly transferring toward fast-developing digital printing technologies—Heidelberg sought to transform itself into a full-service printing solutions provider. In order to meet the goals of its new strategy, Heidelberg needed to extend into pre-press, post-press, and other printing areas. To do this, the company hit the acquisition trail in 1996.

Among the company’s acquisitions that year was the purchase of Stork Contiweb, a Netherlands-based maker of reel splicers and dryers. The company followed up that acquisition in July 1996, buying up Eschborn, Germany’s Linotype-Hell AG, gaining that company’s well-known prepress technology. The two company’s operations were merged and centered on Heidelberg’s Kiel manufacturing plant in 1997. In the United States, the company completed a 28,000-square-foot extension of its Harris Heidelberg headquarters, boosting its prepress capacity. By then, Heidelberg had expanded its holdings to include post-press operations, with the acquisition of Sheridan Systems, a leader in the United States and United Kingdom markets. Post-press was then expanded in 1998 when Heidelberg acquired Stahl-Gruppe, a worldwide leader in post-press machinery and systems, such as folding, stapling, book-threading, and sealing equipment.

Fueling its acquisition drive, which saw its sales rise past EUR 3.5 billion in 1999 and past EUR 5 billion in 2000, Heidelberg went public in 1997, taking a listing on the Frankfurt stock exchange. The company became one of the country’s largest companies, in terms of market capital. Yet the limited nature of the offering (only 16 percent of shares were involved in the “free float” the remainder stayed with Heidelberg’s institutional investors) caused its stock to remain consistently undervalued. The company sought to rectify this, announcing its intention to increase the level of its free-float shares in 2000 to at least 30 percent. With the agreement of its institutional investors, including longstanding majority shareholder RWE, the company expected as much as 80 percent of its shares to reach the public market by 2002.

In the meantime, Heidelberg began to take steps to impose itself on the fast-growing digital printing market. The company formed a joint-venture with Kodak, called NexPress, in 1997, with the intention of competing with segment-leader Xerox. Heidelberg was also set to go head-to-head with Xerox when Kodak agreed to sell its Office Imaging division to the German company, further enhancing its digital printing and imaging technology. At the same time, Heidelberg was also taking steps to build up its position in the booming Asian market, acquiring trading company East Asiatic Co., based in Hong Kong, for DM 465 million. The acquisition gave Heidelberg a strong sales network covering most of the Asian markets. These markets, which remained relatively undeveloped, were expected to match those of Europe and the United States in the early decades of the 21st century. From its position as the world’s largest seller of printing machinery, 150-year-old Heidelberg looked forward to new printing milestones in the future.

Principal Competitors

Xerox Corporation; Baldwin Technology Company, Inc.; CreoScitex/KBA; Danka Business Systems PLC; Goss Holdings, Inc.; Indigo NV; KBA AG; MAN Roland AG; Presstek, Inc; Quipp, Inc.; Xeikon NV.

Key Dates:

1850:: Andreas Hamm takes over brother’s machine shop.
1851:: Hamm founds own bell foundry and machine factory.
1863:: Hamm forms partnership with Andreas Albert.
1873:: A Hamm OHG Schnellpressenfabrik und Eisengies-serei is founded.
1875:: High-speed cylinder letterpress debuts.
1896:: A Hamm OHG is acquired and moved to Heidelberg.
1905:: Company changes name to Schnellpressenfabrik AG Heidelberg.
1919:: Richard Kahn acquires company.
1920s:: Company begins production of platen presses.
1929:: Company merges with Maquet AG and Maschinen-fabrik Geislingen.
1934:: Company launches fully automatic high speed press.
1941:: RWE acquires full control of company.
1962:: Company begins production of offset presses.
1967:: Business changes name to Heidelberger Druckmaschinen.
1974:: Speedmaster press debuts.
1982:: Company begins web-offset press production.
1997:: Company goes public on Frankfurt exchange; forms NexPress joint venture.
1999:: Company acquires Kodak’s Office Imaging division.