Print quality and reliability are extremely important criteria for how the Heidelberg brand name is perceived by our target groups and their customers. A Heidelberg printing press is a high tech system that comprises tens of thousands of parts and components. In addition, high-performance software is utilized in order to control up to 600 individual drive shafts and as many as 300 pneumatic parts. Tolerances in thousandths of millimeters ensure the required precision. Because at the end of the production process, up to 50 metric tons of cast iron and electronics must function even more precisely than a Swiss watch – and this at a production speed of up to 18,000 sheets per hour. This kind of complex interplay presupposes long-standing experience in production technology. Heidelberg can build on 150 years of expertise.
By means of our Heidelberg Production System, which we describe in the chapter“Report from the Divisions” here, as well as via comprehensive measures and programs, in recent years we considerably reduced the cost of manufacturing of our systems. Nevertheless, we continue to stand for the highest quality – as well as for our global respect for social and environmental standards. Within the framework of our job manufacturing, we also offer our expertise in precision engineering to other companies.
We have adapted our capacities worldwide to the anticipated requirements of the print media industry in recent years. In Germany, we reduced and merged production capacities and centralized the development activities of high-tech areas in the city of Heidelberg. Furthermore, we strengthened manufacturing facilities abroad, with the principal focus on strategic considerations to better penetrate markets and the goal of compensating for exchange rate effects in manufacturing. During the reporting year, we expanded the capacities of our production site in Qingpu in China in order to satisfy a higher share of demand from China with locally built products. On Fokus China we describe the distinctive features of the Chinese market and our manufacturing there. During the current financial year we are planning to invest in a production site for the manufacture of our own coatings in the US.
In manufacturing, our focus is on parts for which quality is a key factor and on products that procure competitive advantages for us through specialization. The number of parts that we require in the manufacturing process has increased over the past decade. Based on a total cost of ownership analysis, we expanded the share of third-party supplies in prepress and printing from approximately 50 percent to over 60 percent. Due to the product types in the finishing area, the share in this segment was considerably higher. Since our capacities were not fully utilized in the past, we further increased vertical integration in the short term. As the market continues to recover, vertical integration will be reduced to its pre-crisis level.
Our supplier base is an important factor for our success. Accordingly, we take great care when selecting new suppliers. Selection criteria include, among others, suppliers’ innovative power and standard of performance as well as their ability, working together with us, to optimize products and processes.
Close cooperation is the key to ensuring deliveries of parts and components of top quality that precisely satisfy requirements, even with short-term fluctuations in the order backlog. We continuously optimize inventories throughout the addedvalue chain in order to keep the capital commitment as low as possible.
Since we generate approximately 60 percent of our sales beyond the borders of the euro zone, we are expanding our global procurement, thereby making the Group less dependent on exchange rate effects. Additionally, we take advantage of differences in the wage levels. Over the past three years, we nearly doubled the procurement volume denominated in currencies other than the euro. We are especially emphasizing local procurements for our production site in China. More information on this topic is provided in this section.