Muller Martini will take over the service and parts business relating to Heidelberg’s saddlestitching and adhesive binding products; while its packaging post-press products such as the Diana folder-gluer will in future be manufactured by Chinese OEM partner Masterwork Machinery, although Heidelberg will continue with sales and service of this kit.

Some 650 jobs will go worldwide, with two-thirds of the jobs being lost in Germany where Heidelberg will close its Leipzig manufacturing site. “In-house production at the Heidelberg sites in Germany is no longer competitive under the new market conditions,” the company stated.

In the commercial print space, Heidelberg will continue to make and sell folders and its arrangement with Polar for cutting kit is unchanged.

Its folder manufacturing facility in Ludwigsburg will also be streamlined as part of the revamp, although the product range will remain the same.

The changes were not entirely unexpected, after chief executive Gerold Linzbach announced a review of weak margin businesses in June. Post-press was viewed as a likely candidate for change.

However, it is the biggest single restructuring move since Heidelberg offloaded its web and digital divisions a decade ago. The manufacturer has undergone a huge amount of restructuring over the past two years as it attempted to return to the black following the financial downturn.

Post-press accounts for approximately 10% of group turnover of €2.4bn (£1.9bn) and despite the scale of the announced changes a spokesman said that “the majority” of post-press revenues would remain with the business. “Profitability will increase. The market has really been shrinking for stitching and binding products for years.”

Heidelberg expects to achieve a bottom line improvement of some €30m per annum as a result. The costs of the restructure are yet to be determined.

Linzbach stated: “Realigning these areas is an important step in improving the company’s economic situation and getting closer to the target EBITDA margin of at least 8%.”

In the UK, Heidelberg has around 350 installations of stitchers and binders. “We are contacting all customers directly and discussing how to achieve a smooth transition with Muller Martini,” said managing director Gerard Heanue.

“We have actually done very well in the UK with this equipment, so we are disappointed but we understand the reasons why. The number of stitchers and binders sold worldwide has gone down significantly.”

Heanue said it was too early to say what the impact would be on Heidelberg’s UK personnel. “Muller Martini has bought the rights to parts and service, there is no transfer of undertakings. Our transition team has just started work on the details, we want to ensure a good process and smooth transition.”

Muller Martini has confirmed to PrintWeek that is has no plans to continue manufacturing the machines.

In a statement, Muller Martini chief executive Bruno Muller said: “We will do everything we can to transfer the know-how efficiently to our organisation, because we want to provide Heidelberg customers with reliable support smoothly and seamlessly.”

One customer told PrintWeek that he was reasonably relaxed about the situation. "We've got a new stitcher that's under warranty. Muller Martini had the market, they lost a lot of it to Heidelberg and now they've bought it back again. I can see it makes sense."

Heidelberg has begun negotiations with its workers’ council over the restructure. PrintWeek understands the changes are likely to be implemented by the end of the year.

Heidelberg’s share price rose by 1.51% to €2.349 on the news.