The future of Gallus

 

Covid crisis

 

According to Rainer Hundsdörfer, the decision to sell Gallus was taken a little over a year ago, as the Covid pandemic was sweeping across Europe. But the subject of Gallus’ place in the Heidelberg operation was already under consideration.

 

We learned narrow web label is another market. Sheet-fed and in-mold label is not the same customer base, except maybe just at the top. Full integration had just cost time and money

 

‘We had started a restructuring program in 2019, and one of the aims was to make Gallus more independent, so Heidelberg could concentrate on its core business of sheet-fed equipment, services, software and subscriptions,’ recalls Hundsdörfer.

 

‘We had already tried to fully integrate Gallus into Heidelberg, because it is close to our core packaging business, but this did not prove to be the right way. We learned narrow web label is another market. Sheet-fed and in-mold label is not the same customer base, except maybe just at the top. Full integration had just cost time and money.

‘So we wanted to give Gallus back its management independence so it could chart its own growth in a more agile way. We looked for the best of both worlds – where independence was of most importance to Gallus; and where the infrastructure of Heidelberg could be used, for example in Heidelberg’s global logistics and sales service.’ 

 

The restructuring plan was finalized in March 2020. ‘But this was swept away a few weeks later when Covid threatened the whole industry.’ 

 

The Benpac deal ddid not come out of a clear sky. The company had already taken on Gallus technicians from the St Gallen operation who would otherwise have been made redundant and had expressed an interest in taking on Gallus’ wider manufacturing operations.

 

‘We had other deals with Benpac, and we had to secure Heidelberg’s financial stability, so it was a welcome offer at that time,’ explains Hundsdörfer. ‘In the tight economic situation from Covid it was a logical move for us to sacrifice a good piece of growth business to get us through the crisis.’ 

 

Hundsdörfer now insists that Heidelberg’s financial situation has greatly improved compared to a year ago because of the cost-cutting and rationalization measures the company has undertaken, meaning there is no further need to sell Gallus. 

 

‘We laid off more than 1,600 people – a program we pulled forward, so saving personnel costs, and we engaged in a number of M&A deals instead of selling Gallus, like getting rid of operations we do not need any more like high-tech coating and chemical companies, divesting Cerm and managing our operational network and capital in a better way. So in the end we could afford for the deal not to go through. We can keep Gallus and we are going back 

to the original strategy to give Gallus more independence. We are back to square one a year later.’

 

‘The focus for Gallus now will be to push its new products and become more competitive. I am optimistic about what we have already achieved. There is a good possibility Gallus will provide significant growth and contribute nice profits to the Heidelberg group.’ 

 

Digital future

 

Looking to the future, Hundsdörfer stresses the importance of digital printing to both Gallus and Heidelberg. ‘Despite the exit from Primefire, we believe that this is important for the future of Heidelberg and we will be back with new solutions. Heidelberg put a lot of effort in and this is still the best technology in the market. It is important for Heidelberg to save this investment because it will become valuable for the Group in the not too far future, and also very important for Gallus.’ 

 

Hundsdörfer confirms that Gallus’ digital assets were not part of the Benpac deal – the relationship between Heidelberg and Gallus here was too strong. 

 

In the end we could afford for the deal not to go through. We are going back to the original strategy to give Gallus more independence

 

Gallus perspective 

 

Dr Frank Schaum, head of Business Unit Label at Gallus, elaborated on the company’s technology roadmap, starting with digital.

 

Dr Schaum said the next step for Labelfire will be both a wider 430mm web and a 250mm 4-color model. ‘We are designing the Labelfire as a modular 

platform which can be scaled to customer needs, so the customer can build up their own digital system in terms of print speed, colors and width.’

 

In line with Heidelberg’s push towards total service offering, Dr Frank Schaum emphasizes that digital is a business model. ‘You have to include a service contract and maintenance and the full range of inks. We can now provide special inks for flexible materials or low migration and we have very good digital white, and printing at 70m/min. It is so important to have ink R&D in-house. Having a digital machine without having ink development in-house does not make business sense. Everything is in one hand.’

Hybrid inkjet-flexo is a major priority. ‘So a label with high coverage of ink and can use flexo printing units in the Labelfire. We are fully convinced that the hybrid concept is the way to go. Everybody is testing business models and brand owners have their own ideas facing pressure for more SKUs, marketing innovation and multiple-languages.’