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Asleep At The Wheel?


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By:  Nick Howard  |  Date: December 2011  |  Contact the Author
Part 1 | Part 2

Cont'd from Part 1


Financially, one supposes the banking crisis of 2008 to present will subside.  But, manroland was struggling even before 2008. Allianz Capital Partners clearly was not able to see a future.  MAN had Roland under its watch for years, but being a €15 billion company and in growing markets outside print, wanted divestiture. The printing business was a hindrance or as Wall Street likes to say “non-core”.

If there was a chance 5 1/2 years ago, when Allianz purchased a 65% stake in manroland, I’m sure MAN would have sold the 35% they still have. The Harris Corporation made a similar exit from print in cutting off and selling its sheetfed business in 1975. Harris took a major hit and blew off its holdings completely while holding onto the web business (subsequently sold later too). Harris emerged a stronger company for it. MAN will probably loose their interest in a write-down and can withstand the pain easily.  For that matter so can Allianz.

In the boardrooms of the remaining German competitors, there is a sense of relief but no plans for a party yet.  Werner Schneider, the appointed administrator, must try and arrange the next steps and ultimate outcome for manroland. Several scenarios are possible: 1. Sell the web division as an entirety, 2. Sell-off chunks of the group and allow a buyer to purchase the IP (intellectual property) patents and machine tools, 3. Sell the sheetfed division to an outside third party (China?), 4. Go to auction and sell-off the parts and service business, or 5. Possibly find a European backer who would re-structure the company. 

Any of these are possible and each comes with pros and cons.  Heidelberg and KBA just want manroland to disappear as neither would gain by taking over any part of it.  Certainly, Heidelberg will gain market share especially as they by default gain a second place standing in size 7+ XXL machines behind KBA. Another potential issue may also involve the German government and Trade Unions as both have vested interests financially and economically. Subsidized hours and governmental relief are part of major corporations in Germany.

Product and technology are not the reasons for failure as some comments may suggest. manroland was always a technically equal player.  It’s Just simply because at this moment the print industry needs some relief from over capacity and someone had to go. 

Our company has, over the years, bought from, sold to and competed against manroland. They were a great company with some outstanding people, caught in the perfect storm of a financial and technological crisis. Pointing to any number of perceived miscalculations as the reasoning behind the failure is erroneous. With sales falling more than half in the last six years what else could have kept the company afloat? Just imagine what it must be like in the days and months ahead for manroland? The downward spiral has just hit warp speed and “beam me up Scotty” isn’t available. Scotty left the galaxy. Somehow, even competitors seem it all unfair.

manroland has been through financial distress before. When the 700 came out, rather large write-downs of Rekords and 600’s had to be absorbed. This took years to deal with. Ironically, during this past week AMR’s American Airlines also filed in the USA for bankruptcy protection. There is a world of difference. AA is widely held as a stock with hundreds if not thousands of stake holders. manroland is not. AA’s bond holders know that a re-structure of debt is possible because they can calculate how many bums are going to fill the seats of their planes going forward. Previously, other airlines have filed and came back to life setting a benchmark of sorts.

manroland has essentially two major stock holders - neither of which seems to have faith in finding a buyer to preserve or allow them to get their money back. The manroland stakeholders also have to deal with a perception by financial markets that there is no future in print. Should this change, then manroland may get a second life. By early spring 2012, if not earlier, we should know the outcome. However, our hope as an industry resides in the faster implementation of a reduced size industry that designs and builds printing machines. If any of the remaining members of this group think for a minute one failing will fix an oversized structure they are in for more bad news.

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