Hella KGaA Hueck & Co. - Company Profile, Information, Business Description, History, Background Information on Hella KGaA Hueck & Co.

Rixbecker Strasse 75
D-59552 Lippstadt

Company Perspectives:

Quality--from the rough design draft to the finished headlamp. Customer satisfaction based on quality in every aspect of a product is a decisive factor for success, now more than ever before. The corporate strategy of the international Hella Group has set its sights on three goals: First, offering customers first-class products and services at competitive prices. Second, providing employees with opportunities for dedicated, successful and personally satisfying work. Third, gaining and maintaining a position as a first-class automotive supplier.

History of Hella KGaA Hueck & Co.

Hella KG Hueck & Co. is one of the leading European suppliers of lighting accessories to the worldwide automotive industry with a global market share of roughly 10 percent. Key customers include car manufacturers Audi, BMW, Volkswagen, Ford, Opel, Volvo, Renault, Daimler-Chrysler, and Scania-DAF. Based in Lippstadt, Germany, the company operates more than 60 production facilities in 18 countries around the world. In addition to lighting for passenger cars, commercial vehicles, motorcycles, boats, and bicycles, Hella also makes automotive plug-in relays, sensors, and remote controls as well as whole front-end modules. Hella also supplies replacement headlights, rear lights, fog lights, and other lighting equipment to car dealers and garages, with this aftermarket business accounting for roughly 45 percent of total sales. Together with a number of strategic partners, Hella develops innovative electronic, lighting, and wiring systems for motor vehicles. The company is owned by the German Hueck family.

Growth in the Early 20th Century

While the Hueck family, a Westphalian family of industrialists, played a major role in Hella's history beginning in the early 1920s, it was the Jewish Windmüller family--one of the oldest non-aristocratic families in Westphalia with predecessors reaching back to the late 13th century--that determined the company's initial success. Company founder Sally Windmüller took over his father's feed store in Lippstadt, Westphalia, after his death in 1877 and expanded it slowly but steadily. By 1888, the business employed four people and sold its products to a growing number of customers outside the region. After marrying in 1891, Windmüller started making specialty metal products such as fittings and harnesses for horse carriages. In 1895, Windmüller acquired the machinery of Cöppius-Schulte-Röttger, a nearby manufacturer of lamps that had gone bankrupt. In the same year, a new factory building was erected in Lippstadt and 30 employees began to make lamps for horse carriages and bicycles.

Windmüller's new venture took off. By the late 1890s, the company had grown to a medium-sized business, employing 122 workers. To finance the company's further growth, Windmüller invited a handful of business partners to become investors in his enterprise. In 1899, the company was transformed into Westfälische Metall-Industrie Aktien-Gesellschaft--Westphalian Metals Industry Ltd. (WMI), a public limited company.

While fittings, harnesses and lamps for carriages, bicycle lamps, and lanterns remained a significant part of WMI's production in the early years, it was the rise of the automobile as a means of mass transportation that spurred the company's continuous growth throughout the 20th century. The first cars that cruised Germany's unpaved roads in the early 1900s had lamps similar to horse coaches: paraffin, candle, or gas lamps. However, lighting was not standard equipment in the already extremely expensive vehicles and was therefore considered a luxury. To drum up business, Windmüller, who was the first to own an automobile in his hometown, used his vehicle as a sales tool. He equipped his car with the lighting fixtures his company made and drove around town. He also visited trade shows in Germany and abroad, showing off WMI's products. Soon the company's product range also included bulb horns, which were crafted by some 40 instrument makers from Saxony that joined the workforce in Lippstadt. The company's newly established advertising department and traveling salesmen marketed WMI's products throughout Germany and Europe. By 1905, WMI was a thriving mid-sized business with almost 200 employees that exported its products to many Western European countries as well as to Hungary and Russia.

The year 1906 saw the first light bulb suitable for use in automobiles invented by German light bulb manufacturer Osram. Two years later, WMI began to make battery-powered electric lamps for cars, including sidelights, rear lights with a red glass cover, and license plate lights. In 1908, the company also launched an innovation of its own--the "Hella" headlight system. "Hella" doubled the range of illumination compared to the headlights used up until then and surpassed them by far in terms of the intensity of the light beam it put out. It became a bestseller. To keep up with the growing demand, a brand-new factory was built in 1911. WMI took on the production of additional accessories for carriages and cars, including whip holders, locks, ashtrays, and a variety of handles. By 1912, subsidiaries had been established in London, Paris, Vienna, Barcelona, Milan, and New York. During World War I, the company was required to manufacture war goods, including handguns, grenades, and other weapons components. While exports came to a sudden halt, WMI's revenues increased rapidly during the war but stood at roughly half of the prewar turnover in the following business year, 1918-19.

Although the company founder lost his majority stake in WMI soon after it became a stock corporation, Windmüller had never been challenged as the company's executive director by the other shareholders before 1920. His visionary leadership and skillful management was the driving force behind WMI's success. However, after Germany's defeat in World War I, Windmüller, determined to keep the business alive during a time of extreme shortages in raw materials and other supplies, approved the purchase of scrap metals, tools, and recyclable products from German army stocks, which was illegal. A regional law suit was brought against him in 1921 in which he was charged with causing damage to the state. Consequently, he was put on probation and was required to pay a heavy fine. Almost overnight, the company founder lost all of his business property, including his residence, as well as his post as executive director of the enterprise he had led to become one of Germany's leading manufacturers of lighting fixtures. Windmüller and his family moved to Berlin, where he ran WMI's sales agency for eastern Germany and Eastern Europe. However, the company founder retired soon after and died in 1930 at age 72, while his wife fled Nazi Germany and moved to Portugal shortly before the World War II broke out.

Battle for Economic Survival: 1920s-30s

After Windmüller's departure, WMI was left without a leader. Due to a number of share capital increases, the company's shares were widespread among various investors. This happened at a time when Germany slipped into serious political and economic turmoil. The government had financed the Great War by printing money and issuing bonds. After Germany's defeat, the national debt load became almost unbearable with the high reparations the country was obliged to pay. While the money printing presses kept putting out ever more bank notes, their value began to drop, then plunge, and finally vanish. Only a currency reform in the fall of 1923 was able to stop this economic nightmare which left a deep mark in WMI's balance sheets. With exports down to almost zero, the domestic market shrunk due to bankruptcies and the lack of purchasing power.

Meanwhile, there were two major groups of shareholders fighting over the company's management. One group consisted of bankers who tried to gain a majority share in WMI by raising the company's share capital in 1920. The other group was the Hueck family, whose company was a major supplier of semi-finished brass products to WMI. The CEO of the Eduard Hueck company, Oskar Eduard Hueck, had begun to buy WMI shares after World War I in order to gain more influence over a major customer. Hueck's brother Alfred, a lawyer, challenged the legality of the 1920 share capital raise and finally won the lengthy legal battle. By the time the case was settled, Oskar Eduard Hueck had acquired a 60-percent majority stake in WMI. In 1923, Hueck became chairman of the company's supervisory board. Three years later, he brought into the company Dr. Wilhelm Röpke, a cousin of his wife, who soon after became WMI's director of commerce.

While WMI's leadership conflict was resolved, the German economy went on a roller coaster ride. A short recovery after the introduction of the new Goldmark was followed by a severe plummet in sales in late 1925. To cut their losses, WMI's management decided to close the factory completely for the first two months of 1926. However, by the middle of the year demand picked up again and at times became so strong that the company was unable to fill all orders. Up until October 1929, when the stocks at the New York Exchange took a severe plunge, WMI's revenues and profits went up. The stock market crash turned the economic situation around once again. In the early 1930s, Germany, along with the rest of the world, slipped into a deep depression, resulting in a downturn on WMI's balance sheets. The German economy picked up speed again after Adolf Hitler and his National Socialist Party took over the political leadership. The Nazis pushed the country's motorization forward by abolishing the motor vehicle tax, which significantly boosted WMI's lamp sales for cars. In 1936, the company equipped the forerunner of the Volkswagen "Beetle" with lighting fixtures and horns. In the same year, the company secured an exclusive contract with the Ford Motor Company as their sole supplier for headlamps, horns, and other accessories. By 1939, Ford had become WMI's single most important customer. However, the outbreak of World War II in the same year suddenly cut the company off from its export markets once again.

As the size of WMI's workforce fluctuated heavily during these chaotic times, so did the company's product range. In the second half of the 1920s, WMI supplied headlamps and break lights to major German automobile manufacturers. In 1926, the "Hella" brand logo was introduced and used for all of the company's products. WMI's range of accessories for cars was expanded to include rear reflectors, rear-view mirrors, cigar lighters, and windscreen washers. However, when the demand for these items dropped during the Depression years, the company started making household goods such as kettles, saucepans, cans, and spoons. During the early 1930s, more than one-third of WMI's sales were generated by products for bicycles, motorcycles, and motor boats. However, in the second half of the decade, the company manufactured an increasing amount of military goods. With the onset of World War II, WMI produced specially designed lamps for military motor vehicles as well as tools, measuring instruments, and ammunitions. After an increase from roughly 350 in 1925 to 830 three years later, the company's payroll dropped to 300 by 1930. However, by 1939 the number of workers had grown more than fivefold, reaching 1,700 in that year. As most men left the company to serve in the military, WMI replaced them with female workers and later with forced laborers, prisoners of war, and concentration camp prisoners.

Headstart after World War II

Fortunately, WMI's facilities survived the World War II in good shape. Only a few weeks after the war had ended in Germany, the military administration of the victorious Allied Forces allowed the company to resume operations. Besides a few measuring instruments that were confiscated, the company's machinery and other equipment were intact. While Germany's car manufacturers and other industries rebuilt their plants during the postwar years, WMI began to make whatever was in demand: coffee pots, crankshafts, bicycle lamps, alarm clocks, headlamps for the British Rhine army, a vegetable drying installation, a sugar beet processing plant, and crop spraying equipment. Starting out with the remaining 45 employees after the war, the company's payroll soon grew back to a considerable size, reaching 1,500 by 1948.

By that time, the German auto industry began to pick up speed again. The number of motor vehicles in the country grew tenfold in the decade following the currency reform, reaching roughly 1.7 million by 1959. During the 1950s, a considerable amount of WMI's sales to automakers came from Volkswagen, which equipped its VW Beetle with lighting fixtures from Lippstadt. However, WMI was also able to revive its prewar business relationship with Ford and delivered the first blinking turn signals for the Taunus and Goliath models in 1951. Between 1950 and 1955, exports roughly doubled. Besides the United States, the company also shipped their products to Austria and Switzerland, Benelux, and Scandinavia. In 1957, a Brazilian manufacturer acquired a license for a number of Hella products.

In 1950, Oskar Eduard Hueck's second son, Arnold, a physicist, joined the company. One year later, the Hueck family was able to acquire the remaining shares in WMI, which was then transformed into a limited liability company. In 1959, WMI's legal form was changed again. The company became a private limited partnership and Hueck's son became an executive general partner besides Wilhelm Röpcke. Röpcke's son Reinhard joined the company in 1957 and became an executive general partner nine years later.

The new management team led the company through the explosive growth years of the "German economic miracle." In the 1950s, the company's product range was expanded by windshield wiper and washer control systems and rotating beacons for police cars and special vehicles. To keep up with demand, production capacity was continually expanded during the 1950s. When the company ran out of space at its site in Lippstadt, new facilities were acquired in other German cities, including Todtnau, Paderborn, Hamm-Bockum-Hövel, and Bremen. A second building in Lippstadt was acquired in 1958. As a result, WMI's sales tripled during the 1950s, passing the DEM 100 million-mark in 1959 for the first time. In that year, the company's workforce had grown to more than 5,500.

International Expansion: 1960s-80s

The extraordinary growth of the "economic miracle" years in Germany, along with mass motorization in the 1960s, provided a solid basis for WMI's growth in the coming decades. However, it was the company's early international expansion that later enabled WMI to quickly follow its customers from the auto industry to wherever on the globe they set up shop. The first step into that direction was the establishment of WMI's first production plant outside of Germany, set up in 1961 in Australia. During the 1960s, 1970s, and 1980s, the company expanded its network of foreign subsidiaries into South America, Asia, and Western Europe. In 1986, WMI was renamed Hella KGaA Hueck & Co. After the Berlin Wall fell in 1989 and the Soviet Union dissolved in 1991, the company also expanded into the eastern part of Germany, the Czech Republic, Slovakia, and Slovenia.

By the mid-1990s, Hella had become a global supplier to some of the world's biggest automakers with roughly DEM 3 billion in sales and a workforce of 17,000. A worldwide network of production plants--often right next to the customer's assembly lines--made "just in time" delivery possible. However, competition among automakers was rising, resulting in constant pressure on their suppliers to lower cost. In order to compete as an original equipment manufacturer (OEM), Hella had to integrate not only its production regimen, but also its research and development efforts ever more closely with the new product development cycles of the company's customers. While these development cycles became shorter, the variety of designs increased. As a result, Hella's engineers had to do more development work while profit margins were shrinking.

The company responded by introducing new, innovative lighting solutions, by venturing into new markets, and by initiating a number of joint ventures with other suppliers to the auto industry. In 1991, Hella introduced the xenon headlamp at the International Auto Exhibition in Frankfurt. The innovative lamp, based on xenon gas, doubled the light output compared with conventional halogen headlights and cut the energy consumed by the lamp by one-third. Mass production of the xenon headlights for BMW began in 1992. Five years later, Hella launched the bi-xenon headlamp system with both a high and a low beam. Although more expensive than halogen lamps, xenon lamps significantly increased a driver's field of vision at night. To lower development and production cost for the growing variety of car models--each with a distinctly different headlight design--Hella's engineers came up with a modular system based on tiny light emitting diodes. This LED-technology allowed the combination of pre-produced light modules in an unlimited number of variations. First introduced in 1992 for break lights in a BMW convertible, the modular system was soon also used in other rear lights. In addition to use in passenger cars, Hella lighting fixtures were also employed in commercial vehicles and trailers, motorcycles, bicycles, boats, and trains. In 1996, the company spun off Hella Aerospace GmbH as an independent subsidiary for aviation lighting, which was later sold to Goodrich Corporation in the United States. Along with lighting fixtures, the company took on the production of other components, such as switches and relays, remote controls, electronic controls, and sensors.

Company Transformation in the 1990s and Beyond

To counteract dwindling profit margins in the auto lighting business, Hella's management decided to broaden its strategic focus and to transform the company from a component supplier to a systems partner. Because of its limited size and financial resources, Hella aimed to achieve this goal by forming strategic partnerships with other independent component suppliers. Beginning in 1992, a new Hella plant in eastern Germany put out whole front-end modules for a number of Volkswagen models. In the late 1990s, Hella launched two joint ventures for front-end modules--one in Argentina and one in Brazil--with its first licensee, Brazilian lighting component manufacturer Industrias Arteb. In 1999, Hella established a joint venture with the German Behr group, a supplier of air conditioning and motor cooling units and a long-standing business partner. The new venture developed a front-end module for the Czech car maker Skoda. In 2001, Hella entered two strategic partnerships that resulted in new joint ventures: one with Japanese lighting components manufacturer Stanley Electric and one with German automotive wiring specialist Leoni Bordnetz-Systeme. Two years later, Hella announced a strategic alliance with Japanese manufacturer Taiko Device Techno & Co. to jointly market automotive relays. Another joint venture was established with German automotive electronics manufacturer Micron Electronic Devices in 2004.

At the beginning of the 21st century, the company's OEM-business for automotive lighting components slipped into the red. However, Hella's aftermarket business remained a strong and profitable revenue source. To further strengthen this area, Hella introduced the "Hella Service Partner" system aimed at building strong loyalty to the company among German car repair shops. Dr. Jürgen Behrend, a personally liable partner since 1987 and Hella's CEO since 1993, saw the company's future in intelligent automotive systems that are developed, manufactured, and marketed by a network of independent suppliers such as Hella. While it remained to be seen if this strategy would secure the company's future as a family-owned enterprise in an increasingly consolidating market, it was clear that Hella's future heavily depended on the continued success of Europe's automakers.

Principal Subsidiaries: Hella Handel Austria GmbH; Hella NV/SA (Belgium); Hella Australia Pty Ltd.; Hella Arteb S.A. (Brazil); Hella North America, Inc. (United States); Hellamex, S.A. de C.V. (Mexico); Hella, Inc. (Canada); Hella Trading (Shanghai) Co.; Hella CZ, s.r.o. (Czech Republic); Hella Polska Sp. z o.o. (Poland); Hella A/S (Denmark); Hella A/S (France); Hella Limited (United Kingdom); Hella Ireland Ltd.; Hellanor A/S (Norway); Hella B.V. (Netherlands); Hella s.p.a. (Italy); Hella S.A. (Spain) Electra Hella's S.A. (Greece); Hella Hungária Gépjármüalkatrész-Kereskedelmi Kft. (Hungary); Hella Korea Inc. (HKI) (South Korea); Hella-New Zealand Limited (New Zealand); Hella-Phil, Inc. (Philippines).

Principal Competitors: Valeo SA; Visteon Corporation; Magneti Marelli Holding SpA; Robert Bosch GmbH; Delphi Corporation; Catalina Lighting, Inc.; Johnson Controls, Inc.; Koito Manufacturing Co. Ltd.; Ichikoh Industries Ltd.


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