Gallus prepares for the uphill task to transform cost of ownership - The Noel D'Cunha Sunday Column

Hundred years of Gallus. Now that you are the CEO, how would you take Gallus to the next 100 years?
If you were to walk through the floors of our business today, you would see that our approach has changed. Two years ago, we sat down and decided to do things differently. We talked to our customers directly, asking them what they needed. We conducted VIP sounding boards, and signed NDAs with clients and other companies to get their honest feedback. We asked them to tell us about their current challenges and pain points. This helped us to understand our customers and improve our business.

What was the feedback?
After several meetings and very straightforward discussions with the customers, we discovered four major pain points. The first was labour. The second was input factors like energy costs, subject costs, and cost of capital. Pain point three was sustainability, and pain point four was industry consolidation.

How did your team react?
Through internal discussions, we identified that to innovate we must understand pain points more thoroughly. We delved deeper into sustainability as a pain point, considering underlying reasons and solutions. Additionally, we considered market trends, industry status, and predicted future trajectory

After analysing data and macro trends such as demographics and the cost of capital, we have derived insights that led us to conceive a new generation of machines. This new generation of Gallus is not just a machine, but rather a shift that will fundamentally change the entire ecosystem.

Although we love presses, and they play a crucial role in executing the final step in the printing process, it's essential to understand that the entire process leading up to that point is entirely data-driven. It starts with the human brain, which transmits electric-chemical signals, followed by a computer that uses a workflow system, a ripping process, and colour management software. Finally, the press shoots the ink droplet onto the substrate.

Technology in the industry has grown rapidly, and it does make it a daunting task to keep up with?
Therefore, we decided to build a high-quality press that supports both upstream and downstream processes, and created an ecosystem with Heidelberg and Prinect to address major pain points.

The result is our new machine, Gallus One that offers top-notch automation, ease-of-use, and sustainability. It overcomes labor challenges by eliminating the need for a press minder. Gallus One is designed to master industry consolidation and the wider ecosystem.

One of the Gallus One's features is the ultrasonic cleaning system. Can you share the fundamentals of the feature?
There are several reasons for putting the automated ultrasonic cleaning device in the Gallus One. Firstly, automation and secondly, reducing the cleaning time – these are key. They translate into cost savings.

Can you explain?
Ultrasonic cleaning systems offer a consistent cleaning process that minimises the need for manual intervention. Manual cleaning can sometimes damage critical components, especially if the operator is wearing jewellery or other metal objects that can harm an inkjet head, for example. By automating the cleaning process, you can significantly reduce downtime and boost productivity.

You spoke about sustainability. What's Gallus' approach to sustainability?
From a corporate sustainability point of view, it's been a 12-month-long academic programme involving an external company and Heidelberg to help us. We collected data from different scopes – carbon footprint emission we are generating in how we run our business, be it company travel, the heating and control systems in the machine, the raw material we buy such as aluminium and steel, and so forth. We split the numbers between the company carbon footprint and the product carbon footprint.

After analysing our company's carbon footprint, we discovered that we're able to compensate up to 100% of our emissions according to the Kyoto Climate Protocol gold standard. This includes planting trees and taking social responsibility by building schools or hospitals and providing services to the community.

What else in terms of sustainability does the Gallus One have?
Our attention turned to Gallus One, where we decided to make it a carbon footprint-neutral product. This involved compensating the Gallus' company scope one, two, and three emissions for the product. This resulted in compensation of close to 63 tonnes, which we consider an intermediate step in our sustainability journey.

Building a printing press that is carbon neutral is a significant challenge, as the manufacturing process requires raw materials like steel or rubber. However, we're committed to reducing the resources necessary to build our machines and are taking an evolutionary approach towards achieving our goals.

It's an evolutionary process with many steps. For example, Gallus has many years of experience in sustainability projects - in conjunction with the Swiss district of St Gallen. The government programme that Gallus has been part of for many years now motivates people to reduce energy consumption and waste. Because there's a recycling system in place, the city has been able to reduce its waste drastically.

You also linked sustainability with Gallus Classics, your machine refurbishing arm?
At Heidelberg, we prioritise sustainability through our strong strategy of reducing or eliminating resources. This vision is also incorporated into our Gallus strategy, specifically with the Gallus Classics.

We take back end-of-life Gallus flexo machines and upgrade them with controls and servos - or whatever’s required within the framework of mechanics - to make them state-of-the-art. We offer these machines to the market with warranties, making Gallus Classics a part of the circular economy.

How does the approach work?
This approach preserves the resources initially invested in the machines, such as aluminum and steel, by cleaning and upgrading them for a second life. Our emphasis on Gallus Classics is driven by our commitment to reducing the impact of our industry on the environment.

I believe sustainability involves focusing on three key elements: people, planet, and profit. Companies must implement effective mechanisms and leadership procedures to achieve sustainable operations to work with their people. Without this, a company cannot truly be sustainable.

As a label equipment manufacturer, what are your views on down-gauging?
We are not substrate manufacturers, and we don't have the technology to produce thinner substrates. That's the job of the big substrate manufacturers, but we still incorporate technology into our machines that allows thinner substrates to be used. It's on our radar.

Glancing at the Gallus Experience Centre, you will find that 75% of the activity is digital, with flexo just about 35%. This doesn't augur well for the future of flexo, does it?
We will continue to produce conventional machines as they still have a valid purpose. Digital technology is not intended to replace conventional machines entirely. A significant amount of label production still relies on conventional machines. We view digital technology as complementary to conventional machines.

Our digital technology was originally developed for the Labelfire. We dismantled the technology and created a Lego-like system of technologies that we can use to build new products. We have now transferred our digital technology to the Labelmaster platform, developing the Gallus One, our first product from this innovation cycle.

The Gallus One was initially launched as a reel-to-reel digital press. However, we recently announced that we will offer the Gallus One as a hybrid machine. Since the Gallus One is built on the Labelmaster platform, we can easily add additional building blocks to customise the press to meet our customers' requirements.

So, now we have two hybrid presses – the Labelfire and the Gallus One? Which one should the label converter pick?
There is no generic answer to that question. Our aim is to provide a portfolio of cutting-edge technologies that can match our customers’ exact requirements, and enable them to succeed – both today, and critically, tomorrow.

But there must be a way why should I pick one over the other?
That’s one of the reasons why we have the Gallus Experience Centre, a place where customers can come and discuss their requirements with us. They can explore the job structure, the pain points, such as reducing TCO or standardisation, and discuss whether they need data-connected devices. We have a broad portfolio for customers to choose from. For example, if the customer needs a conventional machine today, they can pick one and be assured that we can do that for them if they wish to add a digital unit to it later. Or if they want a digital press to begin with, they know that they can add conventional units when they’re ready.

So we can discuss the best way forward with the customer in order to be successful. That’s our endeavour.

Is short-run digital printing, particularly labels, really profitable? That’s a question many ask.
At the end of the day, the label converter must sit down and make a calculation. Our job as a technology provider is to support that objective, and we do that by drastically reducing the total cost of ownership (TCO).

How do you define TCO?
I like the concept of total cost of ownership (TCO). It incorporates 360 degrees of the operation – speed, consumables cost, equipment footprint, energy consumption, makeready time, and cleaning time – almost all aspects of an operation.

I will come back to the question of profitability in short-run jobs?
Okay. I have noticed that some customers are running short-run jobs and doing so successfully. However, some customers typically do medium- or long-run jobs and have attempted short-run jobs. These customers realise that they must change their entire operation to succeed. Suddenly, they find themselves shipping 50 boxes of labels per day, with 50 invoices and 50 collections.

In my opinion, a different structure is necessary for short-run jobs compared to medium- or long-run jobs. However, it is ultimately up to the customer to decide which approach they prefer.

Our job is to provide the best possible ecosystem with the lowest possible TCO to make our customers successful. We do not force our ideas onto our customers; instead, we hope that every label converter makes an investment that will benefit their business and provide the necessary tools to do so.

A business case that justifies an investment?
Yes, we must know the surroundings and framework of their possible future business. We have customers come to us and say, "we have a potential business case, but some cornerstones are missing. Can you help us with some data, bits and pieces of information to plug in the gaps so that they can create a business case that justifies an investment in whatever equipment they want to buy?" We very happily help.

A little bit about compliances. We recently saw Avery Dennison talking about falsified medicines directives (FMD). Labels play a big role in combating counterfeiting...
As a station in the value chain, we place great importance on preventing the spread of counterfeit goods. For this reason, we focus primarily on engaging with brands. We use various channels to communicate with them and collaborate as an industry to fight against counterfeit products.

Our technology boasts anti-counterfeiting measures, which we test at our Gallus Experience Centre. If you require sensitive testing, we can provide a closed-off area and have NDAs in place. Our ultimate goal is to bring your ideas to life, and we have the infrastructure to test and integrate new concepts.

We strongly believe that working together as an industry will help us better support brands and ensure our long-term success. So, we invite everyone in the industry to come and experiment with new ideas at our centre. Of course, this process is managed professionally and with all the necessary NDAs in place so all parties can proceed confidently.

We hear talk of narrow-web going wider. So, where does narrow-web flexo end and CI flexo begin?
The application.

When producing products, it's essential to consider the substrate you'll be using, the type of inks (water-based, solvent, or UV), the embellishments you'll add, the run size, delivery time, and cost structure. It wouldn't be fair to pick a technology without considering the specific application.

As a manufacturer of narrow-web flexo presses, there are many possibilities with this type of press. We can produce a complete product in one go using inline processes like die-cutting, embellishing, and slitting.

At Gallus, we don't just manufacture presses. We are also systems integrators, with control over our software and APIs (application programming software). We're not just welding metal together and adding rollers - we're a sophisticated systems integrator that caters to our customers' needs.