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 "schnellpresse" 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.
Muller 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 Schnellpressenfabrik A Hamm AG
Heidelberg. Hamm's name was soon dropped, and
the company was renamed Schnellpressenfabrik 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.
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.
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