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Heidelberg Implements Major Cost-cutting Initiatives: 2,200 Employees Affected

Thursday, October 24, 2002

Press release from the issuing company

Measures to improve productivity, maintain customer focus Heidelberg, October 23, 2002 -- Heidelberger Druckmaschinen AG (Heidelberg) has closely scrutinized all parts of the company over the last few weeks and has approved an extensive program of efficiency-enhancing measures. "The new measures will help us improve the productivity of the Heidelberg Group," stated Bernhard Schreier, CEO of Heidelberg. "Our objective is to ensure a sustained increase in the company's earning power, even when times are difficult." At the beginning of September, Heidelberg announced a program to boost efficiency and deliver sustained cost savings of Euro 200 million which is expected to be fully effective by the next fiscal year. "The measures approved by the Management Board will be implemented quickly and systematically. They will sharpen our competitive edge, increase our profitability and thereby secure jobs over the long term," stressed Schreier. The program of measures underpins the company's strategic positioning as the leading provider of solutions to the print media industry. Concentrating the production of digital printing presses on the Rochester site As part of the process of optimizing the international production network, the production of digital printing presses will be concentrated in Rochester, New York. In future, this site will produce both digital black/white printing presses and the NexPress digital color printing press. This will involve the relocation of the NexPress assembly work from Kiel to the U.S. This measure will enable better use to be made of synergies in this sector and will significantly improve the cost structure in the digital division. Ludwigsburg and Muehlhausen postpress sites to be merged Another measure that has been approved focuses on a greater integration of development and production operations for postpress solutions relating to the digital printing sector into the digital division. This will involve the relocation of the black/white digital products currently developed and manufactured at the Muehlhausen site to Rochester. All other operations at Muehlhausen will be merged with the Ludwigsburg site at a new, joint facility in the Stuttgart area. Closer integration of Prepress and Sheetfed Offset To integrate prepress operations more effectively into the sheetfed offset division, assembly of platesetters (Computer-to-Plate) will be moved from Kiel to Wiesloch. The production of printed circuit boards in Kiel will then no longer be required and will be discontinued. Streamlining the Web Systems Division The web division will concentrate in the future on new technologies in the web offset and newspaper markets. This will optimize the processes in this division, thus ensuring a positive result in the future. This measure will affect another 200 jobs at sites in the U.S., France and the Netherlands. Savings in all sectors at the Heidelberg and Wiesloch sites The savings in the operational units will be accompanied by cost-cutting measures in administration. This primarily affects the Wiesloch and Heidelberg sites. There are also plans to optimize international sales support and to adapt further development of the sales organization to the current market situation. In total, the planned measures will affect approximately 2,200 employees worldwide. This figure includes the reduction of 300 jobs already announced at the start of the fiscal year. The number of employees in Germany will be reduced by approximately 770 at the Kiel site. The merger between Muehlhausen and Ludwigsburg will reduce staffing levels in Muehlhausen by 140, while just under 900 jobs will be lost in Heidelberg/Wiesloch. The number of employees outside Germany will be reduced by 400. Negotiations about the job reductions are expected to be concluded by the end of the current fiscal year and will be designed to minimize the social impact as much as possible. "Implementing this program of measures will improve Heidelberg's cost structures, while also enabling us to respond faster and with greater flexibility to fluctuations in demand emanating from changes in the economic climate. We will have achieved this objective by fiscal year 2003/2004," stated Mr. Schreier. As of August 31, 2002, the Heidelberg Group had a workforce of some 24,500 worldwide.




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