Persistent poor demand prompts capacity adjustment at KBA web press plants

Initially the impact on KBA’s web press facilities was less severe, but concern is now mounting. While the inflow of orders for sheetfed presses picked up in the second quarter, demand for newspaper and commercial web presses, which has been slack since the second half of last year, has slowed still further since April. Although KBA has increased its share of the newspaper press market to almost 50%, the volume of new orders has fallen well below the target for 2009. The situation in the commercial sector is even worse, buffeted as it is by price erosion, sliding ad revenues, regional overcapacity and banks’ credit squeeze. In both sectors the number and volume of projects due to be awarded in the next few months have dramatically declined. 

With prospects unlikely to improve for many months to come, management sees no alternative but to adjust capacity and sales at KBA’s web and special press facilities. Global demand has halved, and merely hoping for better days is not a viable corporate strategy. Short time, which was introduced at KBA’s web press plants at the beginning of the year, is no solution to a prolonged period of underutilisation. There is a lot of excess capacity, both in house and at KBA’s competitors, so a reduction of several hundred in the core workforce will be necessary. The exact number will be revealed once the board has concluded negotiations with worker representatives and unions. At present the three factories in Frankenthal, Trennfeld and Würzburg have 3,170 employees, including apprentices. 

The consensus in the printing-press industry is that the recession is unlikely to be followed by a revival in global demand to the heady heights of two or three years ago. Growth will be impeded by demographic trends in mature economies, changes in media consumption, ongoing consolidation in the print media sector and mounting competition from online players for advertising budgets that will not expand indefinitely.