Goss CEO Bob Brown Speaks Out

By Cary Sherburne, Senior WTT Editor

March 14, 2005 -- Since I am located in the chilly Northeast, about a 20 minute ride from Goss International’s Dover NH operation, I recently took advantage of their proximity to visit the plant and to have a lively and informative discussion with Goss International CEO Bob Brown.

As our readers will be aware, Goss completed its acquisition of Heidelberg’s web press and high-volume postpress business in August of 2004 as part of Heidelberg’s divestiture of non-core operations. Several months into the integration process, the Dover plant was humming along, with a number of the company’s impressive Sunday presses in various stages of the manufacturing process. Greg Norris, Goss’ Marketing Communications Manager, started my tour in Goss’ state-of-the-art training center which contains a fully functional, single tower, full-color eight-page Mainstream newspaper press, equipped with Goss’ JDF-compliant workflow system. Norris indicates that installation of a Sunday commercial web press can take up to six weeks. Operator as well as mechanical and electrical maintenance programs are offered at Goss training centers to optimize press operation. He also reports that the Dover training center is made available to paper and ink manufacturers for testing purposes.

Between its Dover and Durham NH plants, Goss manufactures several press types, including several of its Sunday web presses featuring gapless blanket technology, as well as finishing equipment including inserters, saddle stitchers and binders. Norris indicates that Goss is the only web offset supplier that produces both press and post-press components , and is also the only truly global manufacturer of web presses, with operations in North America, Europe and Asia. Because of the number of possible configuration variations, the company’s web presses are generally built to order for the purchaser and are sold into the commercial and newspaper markets.

I wrapped up my Goss visit with a discussion with CEO Bob Brown, who shared his thoughts on the company, its products and the industry as a whole.

WTT: Bob, thanks so much for spending time with me today. It seems that in some respects, your career has come full circle, since you had been running the Heidelberg web operation prior to moving to Goss. 

BB: I have had a long career in the industry. Some would say that is good news, and some would say it is bad. I started in the industry in 1978 with Harris, and went through a number of changes there. After leaving Heidelberg, I took a little time for myself and my family, and in the fall of 2002 went to Goss.

WTT: Now that you are involved again, what are your thoughts about the operation and some of the things you might want to do differently?

BB: I don't know that there is a lot that I will do differently. Prior to my leaving the web side of the business for Heidelberg, we focused on building a technology platform that delivered economic value. That includes innovations like automatic plate changing capability as well as the gapless platform which we think certainly changed both productivity factors and waste factors within the industry. It certainly has made the economic proposition a better package.

You hope over time that you learn to execute better and make better decisions. I believe that a supplier must offer a platform with which the printer can gain economic value, and if you can’t, you are going to lose. So that is what we are trying to do.

WTT: In reading through the literature on the acquisition and on Goss International, it looks like there are a number of synergies between the existing and new operations.  Can you comment on that?

BB: Goss was the leading newspaper supplier, and we have had a couple of bumps along the way financially. Since 2002, we have charted a course within the newspaper side of the business to address the issues we had. We have done that and have reestablished ourselves in the market. When the opportunity came along to purchase the Heidelberg web business and combine it with the Goss newspaper business, it made a lot of sense. I think it is pretty clear that as a result, we are certainly a market leader. And we are recognized as being innovative and having a top notch technology platform.

Also, as a result of this integration, we now have a global manufacturing base, with the ability to produce in Europe, the U.S. and Asia Pacific. I believe we are one of the only manufacturers of printing equipment that has global manufacturing operations in all three major markets.

Most importantly, we have extremely talented people from Goss and Heidelberg Web. Both sides shared similar histories and cultures of innovation, so there is a high level of compatibility.

WTT: It would seem that there are not a lot of companies who can afford the type of presses you manufacture. Do you think the market is reaching a saturation point?

BB: That is a question that has certainly been debated. When I joined the industry in 1978, I will never forget walking into the building on my first day on the job, and having a long-time Harris engineer come storming down the hall. He asked me who I was, and said, “You want to be an engineer? You can have my job because I just quit.” Desktop publishing was coming in and computers were going to take over the world of advertising and printing. That was 25 years ago, and it still hasn't happened.

If you look at the number of pages of ink on paper, including newsprint, catalogs and magazines, it is still growing on an absolute basis. Are we reaching a saturation level? This industry is like every other industry out there: there is excess capacity. The question is whether it is competitive, productive capacity. Can you be in this industry with noncompetitive capacity and win? We don't have to be geniuses to figure out the answer to that.

I think there are still opportunities in the web offset side. Seven or eight years ago, people talked about the crossover between gravure and offset being 750,000 to a million. Now offset is competing at higher and higher run lengths. Today you also see web guys doing very short runs and quick changeovers. Increased press automation has allowed web printers to compete for some jobs that were previously in the exclusive domain of sheetfed printers. The space we can play in has gotten bigger. We can compete in the shorter runs that once were the domain of sheetfed, and we can compete at the higher end where gravure used to be the only choice. Is the old space saturated where web offset was viewed as long run lengths? Maybe. But I think the real question is, 'how can we use technology to open up new opportunities—to reshape and expand the range of web offset applications?'

WTT: Since you had the opportunity to take some time off from the industry, I was interested in what pulled you back in?

BB: I get asked that question. I step back and say, what industry would you go into—telecommunications, semiconductors, software? Are the dynamics of the web offset industry dramatically different than the dynamics of other industries? There are growth opportunities. For us, it is a matter of creating the opportunity and satisfying our customers. At the end of the day, it is a pretty simple thing. If you can deliver a proposition that your customers want, there is opportunity. I see that opportunity in our business at Goss.

WTT: Can you talk a little about what you have done relative to ISO 9000 certification and lean manufacturing in the Dover/Durham operation as well as other Goss operations?

BB: We are very aggressive on process improvement, and are ISO certified in the 9000 and 14000 environments in most of our facilities. We will continue to take advantage of any improvements we can gain. Like every other manufacturer out there, we are applying various manufacturing techniques to reduce cycle time, inventory and working capital requirements. The other angle is that our teams, both here and throughout Goss, have done some great things with 5S—a process that conceptually comes out of some of the Six Sigma thinking where you focus on the work space and you limit the amount of material and types of tools that are available. I think you saw some of that in action when you toured the plant floor.

WTT: Since you have manufacturing operations in the Asia Pacific market, I wondered what your thoughts are about China, in particular.

BB: We will continue to leverage our global capability, including China. We have done very well there, and it is a strong asset for us.

Right now our Chinese joint venture builds the popular Goss Community 4-page newspaper press. It is fully engineered and assembled in China, and exported all over the world. Last year we shipped 1,000 community units from that facility for new presses and tower additions. We have been successful with it, and the quality of the product is well accepted around the world. So the model is proven that you can build product there. We supply the domestic Chinese market from our Shanghai facility. We have a pretty strong position there and will continue to grow that. We also see strong opportunities there in heatset; in fact, we just sold the first Sunday press in China.

WTT: What are your thoughts about the Chinese printing market, including their adoption of technology and the impact on the U.S. printing market?

BB: I don't think there are too many places in the world where there is much of a difference in technological capability these days. The rest of world has caught up pretty quickly. The theory that developing nations like China will skip generations of technology is probably valid.

In terms of the impact on the U.S. market, certain printed products, like coffee table books, etc, can be produce in China if they are not time sensitive. And that is the China price challenge. It forces everyone to reexamine their operations to make certain they are as competitive as possible. Smart printers are looking at their platforms and trying to retool their platforms so they can continue to compete. Many of the larger printers are either partnering or leveraging their own capability in China while at the same time trying to figure out how to invest in newer technology to be more competitive.

WTT: What are your top initiatives for 2005 and beyond, and what do you expect them to yield for the business?

BB: We want to continue the integration of the two companies, so we will be very focused on that. We will also be focused on the technology side. We have a solid technology portfolio, and we also have some innovative things—like Automatic Transfer technology, our Goss Web Center workflow and control systems, advances in postpress product personalization and some other programs—that we are working on. Technology is so important that you don't want to fall behind there. And then frankly, getting our story out there with our customers, making sure that we are delivering the support our customers need so they can excel in a competitive environment.

WTT: How is the integration process for the Dover/Durham web offset operation going now that you are several months post-acquisition?

BB: Integration is an ongoing activity. Every day we are making changes, integrating business processes, and I don't think it will ever stop. Manufacturing in general is faced with the constant process of integrating and changing and revamping and reengineering processes. I don't see an end point. For some reason, there is a mentality that, at a specific date, it will end. We should know by now that our economy and our industry are dynamic. We have to be constantly trying to drive out inefficiency and improve utilization of resources, if we are going to compete. That's why I think the important thing for us is to focus on our technology and the processes around that and focus on the customer. At the end of the day, if we can’t satisfy customers, we don't have anything. There is no magic. It is all heavy lifting and disciplined process.

WTT: How does 2005 look for Goss?

BB: Our backlog going into 2005 is strong, and we feel good about that. Our liquidity position is strong, so we feel good about that as well. Our shareholder is in this to create value long term and that's what our focus is. So we are not driven by the quarter-over-quarter mentality we see all too often in public companies in the marketplace. We are working fast and delivering, and we aren’t afraid to try things. We are implementing a lot of operational change in all of the sites and we will continue to do that while maintaining continuity in terms of our strategy and focus.

We have been fortunate in the short term to have had some good order activity. When you think about some of the other questions you asked, everyone is challenged today with improving their competitive position. There is only so much you can do with certain platforms. The players that are going to be here tomorrow and down the road realize they have to make investments and they are making them. The thing we will continue to do is improve efficiency, reduce waste in the process, improve quality, and improve productivity through our platform. If we can make that case, then the investment decision is fairly easy and printers and publishers will invest. If we can't, they won't. The economy in general has had some pretty incredible challenges. Who knows what tomorrow brings? Those uncontrollable events tend to have an impact, positive and negative, on economic growth. The currency situation can be a challenge as well, and it is hard to project what will happen with the dollar. All we can do is drive our costs out, be as efficient as we can, make sure we are investing in and developing the best technology platform, and support the customer the best we can. We know we have opportunity to improve in all areas and all we can do is commit to make those improvements.

WTT: What do you think will be the biggest change we will see in the industry by the time we reach drupa 2008?  drupa 2012?

BB: It will be automation driven, as it has been for a number of years. If you go back to drupa 90, it was the first time we ran the M-1000. In 1995, we ran a technology demo of the gapless press with fully automated robotic palletizing at the end of the folder. In 2000, we ran three gapless presses with the new integrated cooling technology in the dryer area, and one of those gapless presses was a newspaper press called the Mainstream. We will continue to focus on improving the process, working with our customers to drive waste down, and that will be the emphasis in the next couple of drupas—automation and waste reduction. Of course, you will continue to see wider, faster technology. Joel Quadracci raised a great issue in the interview you did with him. Years ago the boundaries between offset and gravure were pretty clear. Manufacturers of gravure presses are doing what they can to improve their value proposition for lower run lengths, and that puts pressure on offset. Web offset will have an impact on the sheetfed arena. There will be some interesting dynamics across the board. And that's just looking at conventional. When you throw digital into the mix, that's another whole question. We will continue to think our way through these issues.

WTT: What are your thoughts about the future of print as a viable communications medium?

BB: As I said, I have been in the industry for 25 years. The day I walked into it, some people were saying it was a dying industry. I am always amazed at the level of technology and innovation this industry has used to keep itself competitive. Print still must deliver competitive financial returns in terms of influencing consumer buying habits. That is still working because there is still a lot of ink on paper. But the dynamics have changed—run lengths have gotten shorter, and personalization capability has helped keep print competitive, as has the productivity equation. The industry has some innovative suppliers and printers that have found a way to keep the value proposition alive, and I don't have any reason to believe that will change. It is really a generational question. Does the next generation read? I don't know. They will certainly use a broader mix of communications technologies than the generations that came before, but I am not sure you can draw any conclusions that the impending death of print is near. As long as print can continue to add value, and it obviously does, it will be there into the future.

WTT: Bob, thanks so much for your time and insight. Is there anything else you would like to add before we close:

BB: Just that Goss is here. We are in a solid position, and we are committed to innovation, execution and value. Our strategy, ownership structure and expanded resources as a result of the Heidelberg Web acquisition differentiate us among suppliers and put us in a strong position to deliver what our customers need.

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This Interview was conducted by Cary Sherburne. She can be reached via email at cary@sherburneassociates.com, online at www.sherburneassociates.com and by telephone at 603-430-5463.

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