(November 28, 2008) The financial crisis is impacting severely on Germany’s export-driven engineering industry, and Koenig & Bauer AG (KBA) is no exception. As the third-quarter figures issued on 14 November revealed, tumbling demand in key export markets caused the volume of new orders for sheetfed presses to fall 15.8% below the equivalent figure for 2007, while orders for web and special presses were 9.1% down on a weak prior year. 

The volume of orders on hand shrank by €160m to €721.6m, and this has caused major fluctuations in plant utilisation since the beginning of October. As a countermeasure, overtime and holiday accounts are being run down at KBA’s web press production plants, and the Christmas closure extended. As was also announced on 14 November, KBA’s sheetfed facility, which officially introduced short-time work at the beginning of November, is having to trim its payroll by 400. 
 
With many customers postponing projects, over the past two months the volume of new orders for commercial and newspaper web presses has fallen well short of expectations. As a result capacity utilisation will be exceptionally poor next year at KBA’s factories in Würzburg, Frankenthal and Trennfeld. Management therefore sees no alternative but to extend short-time work to these west German production plants from January 2009, and is about to enter negotiations with the Federal Employment Agency. Alongside production workers the measures will affect all departments not directly engaged in market development and customer support. Having just completed a capacity adjustment in the summer that involved several hundred lay-offs at its web press production plants, KBA is unwilling to lose more staff who will be difficult to replace when the economy picks up again. Management is hoping that the mounting uncertainty induced by the economic recession will ease in the next few months, and that demand for presses will pick up again as a result.

If this fails to happen, the need to control costs in order to remain competitive means that KBA cannot exclude the possibility of further retrenchments. At the end of October its west German web press factories employed just under 3,300 of the group’s 8,000-strong workforce.