Manroland is running out of time

Die Welt Print Evaluation Authors: Carsten Dierig and Andre Tauber

　　Insolvency administrator Werner Schneider seeks buyers for parts of the printing machine manufacturer. But experts are sceptical that the company can be saved at all

　Sales talks with competitors are already underway. Schneider has little chance of securing financial investors

　　Experts are criticising the company’s technology. They believe it is outdated. Moreover, potential interested parties have their own problems

　　Werner Schneider is spending a lot of time on motorways at the moment. The insolvency administrator is travelling the same route every day: he takes the A8 from his home in Neu-Ulm to the headquarters of the insolvent printing machine manufacturer Manroland in Augsburg – a good 80 kilometres away. The bankruptcy of the long-established group is the biggest case of corporate restructuring in Germany since Karstadt went into insolvency two years ago, an important mandate for Schneider. Nevertheless, the 68-year-old has decided against taking a hotel room in Augsburg. That would be “counterproductive”, he would be on-site all day, explains the administrator. After all, he needs to hold confidential sales talks. “And when I’m talking with an interested party that everyone knows, it should not be on company premises.”

　　The secret talks with potential investors have the highest priority because Schneider does not have much time to rescue the failing company. The employment agency in Nürnberg will be paying the employees’ wages for just a few months. This will bring some relief, but only until February. After that, the losses will skyrocket again. “We are facing a time problem,” explains the administrator, who has an office with 220 employees behind him.

　　The company is not likely to receive any new orders. Quite the contrary. “Manroland is now in a situation where it will lose customers,” predicts Equinet analyst Holger Schmidt. It has been reported that the company has been offering machines at predatory prices for some time now. However, no printer buys a machine without knowing for sure that it can be serviced at a later date and that spare parts will continue to be available.

　　And Schneider knows this. That is why he has invited a number of specialists in company mergers and acquisitions to a meeting on Monday. One or two of them will receive a mandate to collaborate with Schneider in the search for investors. They won’t need to make a lot of calls in this respect. The market is manageable. Just a handful of companies dominate the world market for printing machines, which is characterised by overcapacity. These include two Japanese firms and the three German companies: Manroland, Heidelberger Druckmaschinen and Koenig&Bauer. “There are no hidden providers that I don’t know about,” asserts Schneider. This also makes the restructuring a special case.

　　Initial talks with potential investors are already underway. There is interest from financial investors, in other words firms that specialise in the acquisition of ailing companies. However, Schneider is sceptical in this respect. “Financial investors generally need time to do market research and check out the competition. But we don’t have enough time for that. We need someone who already knows the market – in whatever depth and peripheral areas.” And it appears there are indeed such interested parties. Schneider, at any rate, tells of initial talks with representatives from the industry. German competitors, though, are at present denying this. However, “Not every denial is a genuine denial,” claims Schneider.

　　Then again, in terms of a national solution, there is the question of whether the remaining providers could financially support a takeover or merger. They too are struggling in the poor market. Even industry leader Heidelberger Druckmaschinen recently had to cut the hours of half of its 10,500 staff in Germany. Moreover, all of its divisions have been scrutinised. Staff at Koenig&Bauer are also working reduced hours.

　　Printers are suffering not only because of the uncertain economy and the Internet. They are also victims of their own success. “The machines are now too good,” claims analyst Schmidt. Instead of lasting four to six years like before, modern machines now have a service life of eight to ten years.

　　A takeover by a German competitor makes little sense from an industrial perspective. Manroland is deeply anchored in web offset, in other words machines for producing newspapers. However, HeidelDruck withdrew from that line of business seven years ago. And apparently the company does not want to re-enter that field because of the dwindling circulation figures.

　　Koenig&Bauer, on the other hand, remains active in the newspaper printing sector, but the cartel authorities would probably be against consolidation of the businesses. Manroland’s sheetfed printing business, however, is less attractive. According to industry sources, the machines are technologically obsolete. “If Manroland had better machines in this field, then the company wouldn’t be in the position it is now,” sources claim.

　　The chances of a complete takeover of Manroland are therefore slim. “The company will have a hard time finding an investor the way it is set up right now,” admits Schneider. However, he is still hoping to find buyers for parts of the group. “Broken up, it is thoroughly conceivable that there may be some logical alliances and constellations.”

　　In contrast, there is scepticism at the VDMA (the German Engineering Federation). “I can imagine that there are interested parties, but not from Europe,” says Markus Heering, head of the Printing and Paper Technology Association within the VDMA. But there have been no enquiries from potential investors from emerging countries according to Schneider.

　　So it is quite possible that the Manroland story will come to an end soon. “As harsh as it sounds, given the overcapacity, nobody would notice if Manroland disappeared from the market,” says analyst Schmidt. The 6,500 employees, however, remain hopeful. Given the skills shortage in engineering, quite a few of them may find work with companies in other industry sectors according to sources at the VDMA. But that’s only a small consolation.