Langley: the man behind Manroland

It's barely three months since the British industrialist Tony Langley bought the sheetfed division of insolvent manroland AG. On the eve of drupa 2012 the eponymous owner, Chairman & CEO of the highly successful engineering group he founded more than 35 years ago, gives his impression of his latest venture as the first 100 days with manroland approach and talks about how he manages a group which employs over 4,500 people, whilst keeping his finger on the pulse of every one of the 70 plus businesses that comprise this diverse and remarkable engineering group.

Interview with Crista Baxter, Managing Editor Tony Langley

What have your priorities been during these first three months since you acquired the manroland sheetfed business?

The same as with every other business we have acquired in the past. The first priority is to let the company's trading partners know what the new owner is about. Langley is a complete unknown in the sector, as it was with the other businesses we have acquired, so I think it important that the company’s customers and suppliers know who is behind manroland sheetfed. The main way we do this is to via the group’s Annual Report & Accounts, which we publish in brochure format that includes a profile section on each of our divisions. This can be downloaded from the langleyholdings.com website but this year we printed several thousand hard copies and the sales people are being supplied with these to hand to customers as they visit them. I think that stakeholders in all of our businesses have a right to know who is ultimately behind the company they are engaged with and what we stand for. This kind of transparency gives a certain impression about the sort of organization we are.

“...stakeholders in all of our businesses have a right to know who is ultimately behind the company they are engaged with and what we stand for”

In parallel we map out what needs to be done in terms of bringing the sort of change that we as a private group are bringing to the business. The first 100 days are the time that we get over 95% of the changes we are going to announce and if all are not implemented in that period, then at least they are well on the way.

What changes are you making at manroland?

Well first of all we stop managing by consensus, which is very much the big company way. It wastes time, nothing gets done very quickly and it's just not the way we do things. We set out a central strategy with management then help them implement it. We have a pretty good idea about what makes a successful engineering business and just get on with it. Those that can adapt to our style do so and those that can’t leave, but that is usually very few. The vast majority of the management we took over with this business were fully behind our strategy, the few that weren’t have already gone.

Then we look at headcount, that’s the biggest cost in the businesses and once that is about right then it’s on to every other cost line, there's no single thing that in itself is fundamental but in total the changes we bring are enormous. We look at every single aspect of the business and basically question whether it makes sense. The devil is in the detail. In large, formerly institutional-style managed businesses like this and the others we have acquired in the past, there are ways of doing things that to the owner of any SME spending his own money would seem well, stupid. Many companies over a certain size seem to lose touch with the value of money. Our job is to put the ones that we acquire back in touch. “…companies over a certain size seem to lose touch with the value of money. Our job is to put the ones that we acquire back in touch.”

“…companies over a certain size seem to lose touch with the value of money. Our job is to put the ones that we acquire back in touch.”

So is the headcount "about right" or are there further staff reductions to come?

I was satisfied early on that staff numbers were there or there abouts in Germany after the restructuring during the AG insolvency, but there has been some house-keeping to do in some of the subsidiaries which weren’t part of that. That exercise has now largely been completed.

What about R&D, has that been cut back and if so, how can manroland possibly maintain its reputation as a technology leader?

For sure manroland sheetfed is spending less now than it did in the past, but this is one of the first things we look at in a business we acquire and without exception, those businesses who boasted about how much they spent on R&D were invariably littered with projects that came to nothing. More money wasted. Why? Because they lost sight of what the market actually needs and were so arrogant that they became disconnected from what the market and even their own sales people were telling them. We take R&D very seriously and in all of our divisions we have a strongly focussed R&D program that ensures the business will remain at the forefront of its field. Manroland sheetfed is no different.

“...strongly focussed R&D program that ensures the business will remain at the forefront of its field.”

What has the reaction of the employees been to your takeover of manroland sheetfed?

Extremely positive, in fact the most positive yet. That's probably something to do with the circumstances the company was in and our not stepping in until the eleventh hour, but nevertheless the goodwill towards Langley has been tremendous and there is a very real sense that the company is beginning a new era.

“…a very real sense that the company is beginning a new era.”

And the competition?

Certain ones and one in particular, have been really quite aggressive but I think the business will manage whatever they can throw at it. Manroland’s competitors have no idea just how efficient this company is becoming under our stewardship and it seems to me that they all have some pretty fundamental issues of their own to address. Prices of presses have collapsed to the point that anyone can see that the manufacturers cannot carry on as they did indefinitely and in my view those who continue to sell at a loss and continue to spend heavily whilst only tinkering with the cost base, still have their day of reckoning to come.

“…those who continue to sell at a loss and continue to spend heavily whilst only tinkering with the cost base, still have their day of reckoning to come.”

Will you be attending drupa?

Yes, of course. I will be there for a few of days before the opening and plan to meet at least the majority of our people that are coming in from around the world before the show opens, hopefully all of them. There are over 40 manroland subsidiaries world-wide, plus numerous independent dealers and agents. Drupa is one of the few occasions they all converge at the same time and as it will be quite a while before I manage to get around to meeting our people on their own turf, it’s a good opportunity to meet in person. After that I will be visiting the show.

“...over 40 manroland subsidiaries world-wide, plus numerous independent dealers and agents… it’s a good opportunity to meet in person”

Will you be meeting customers?

I don’t plan to specifically, the company is expecting literally thousands of customers to visit the stand and I can’t hope to meet even a fraction of them personally. As a parent company we are very much behind the scenes of all our companies and it’s the guys that know the products and the markets intimately who are customer facing. That said, I dare say I will meet some customers, which I do enjoy from time to time.

The Langley group will have over $1 billion of sales this year. You are known for being very hands on, how do you manage it all?

Well you’re right about being hands on, particularly in the early stages of a business becoming part of the group, although I do tend to step back once the business is settled in, usually after about a year. During the early days we establish our reporting structures and that helps me enormously. This is not only financial reporting, but commentary from the head of every business unit we have on every topic involved in running a capital equipment business and these are all in exactly the same format, whether the business is involved in packaging equipment for the food sector, cranes for nuclear power plants, UPS [uninterruptible power supply] systems for financial institutions, or welding systems for automobile producers; or printing presses. Our businesses, although diverse in their products and markets, are all essentially very similar and the BUR [business unit report] enables me to understand what is going on in every one of the 70 or more business units we now have. Most importantly every month it puts me in direct contact with the individuals that are running our businesses.

And you read every one of these “BUR’s”?

Every one, every month.

“Our businesses, although diverse in their products and markets, are all essentially very similar…”

Pre-tax profits for 2011 were around $100 million, and no debt. That was a very successful year for Langley Holdings, how is 2012 looking?

The group started the year with good order books in all divisions and Q1 results were ahead of target. The group is still debt free, despite funding the manroland deal and currently has around $250 million of cash on hand. Order intake and cash flow have both remained strong through January - April and everything is pointing towards another good year.

Better than 2011?

From today’s perspective yes, I expect so. “[manroland sheetfed]……profitable in 2012 on about one third of the revenues it enjoyed four years ago.”

And how do you expect manroland sheetfed to perform financially in its first year under your ownership?

We have built a model for manroland to be modestly profitable on about one third of the revenues it enjoyed four years ago. I think that is realistic in the current market and it’s on track so far. The business is correctly structured for that level and as we acquired all of the assets of a business capable of three times the level we expect to see in this first year, if there is any increase on what we have planned, the business is capable of managing that.

Thank you and enjoy your first drupa!

Thank you, I’m looking forward to it.