Heidelberg and KBA face falling demand with further redundancies

Albrecht Bolza-Schünemann, president and chief executive of German press manufacturer KBA,  surprised the market by resigning following substantial losses incurred by the firm’s sheetfed division in Radebeul near Dresden last year.

Preliminary figures published yesterday show group sales fell 10% to €1.5bn (£1.4bn) in 2008 due to below-capacity production levels, particularly in KBA’s sheetfed division, which reported an operating loss of over €180m.

In contrast the company reported an operating profit of more than €100 on web and special presses. The group posted EBITDA of less than €10m.

KBA anticipates a further 20% drop in sales and so will reduce staff numbers at its sheetfed plants from nearly 8000 in December to 7000 by the end of the year.

Managing director of KBA UK Christian Knapp said he thought the move would “strengthen our focus on core segments, packaging being one of them”.

The company has reduced its workforce by 15% in the UK since last year and is in the process of completing this process at the moment.

“We’ve adjusted our head count and focused our people on the areas where we are strong in the UK,” said Knapp. “We’ve been fighting this problem longer in the UK.”

Redundancies are also on the cards at Heidelberg, which announced plans to reduce headcount by 2,500 jobs, on top of the 2,500 redundancies announced in November, in order to achieve its €400m savings target by 2011.

The company recently doubled its cost saving target which includes personnel and non-personnel cuts in research and development, production, administration and sales.

Heidelberg chief executive officer Bernhard Schreier said he anticipated a “further slump in demand” and no improvement in the short term.

“We have made the necessary structural adjustments to optimise our company’s earnings on a sustainable basis and ensure it is primed for the upturn when it comes,” he said.

Heidelberg UK reduced staff numbers by 40 jobs in January. Managing director George Clarke told Packaging News that the “measured redundancy plan” in the UK is nearing completion.

He said: “We’ve had quite a good month, but the trouble is there is 12 months in the year so we have to see how it turns out.”

The company also announced the termination of its collective agreement on safeguarding the company’s future that was extended last in October 2007.

“This is the only way we can ensure our competitiveness and efficiency, something that is also in our workforce’s interests,” said Schreier.

Nicholas Mockett, partner at Europa Partners said that the impact of the credit crunch on press manufacturers could be “compounded by the volume of second-hand printing equipment as a result of liquidations”.

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